Fiscal Responsibility needs 'more teeth for accountability culture'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A governance reformer yesterday renewed calls for the Fiscal Responsibility Bill to be given "more teeth until we get a culture of accountability" in the public service.

Robert Myers, the Organisation for Responsible Governance's (ORG) principal, told Tribune Business that the "only question I have" on the draft legislation was whether its provisions were sufficiently strong enough to properly hold ministers and civil servants to account for fiscal irresponsibility.

Branding the current situation as akin to "the fox guarding the hen house", Mr Myers said the Bahamas' history showed more than just "a slap on the wrist" was required for public sector workers who stole, misused or wasted taxpayers funds if this nation is to regain its fiscal health.

And, arguing that "what is good for the goose is good for the gander", the ORG principal argued that the draft legislation's penalties and sanctions should match those imposed on the private sector for offences such as late tax payments and incorrect VAT filings.

While satisfied with the Fiscal Responsibility Bill's targets and increased transparency, Mr Myers told Tribune Business: "The accountability is the question I have. At what level will the public sector be held accountable?

"I don't believe the culture exists within the public sector to be accountable. In my opinion, there are some great civil servants, but there are equally as many gaming the system. They're not accountable, and don't want any accountability because they benefit from the status quo.

"That's why I believe there needs to be more teeth, and more penalties, until we get a culture of accountability and people realise the seriousness of it and take it seriously."

Mr Myers' comments echo the warning delivered by the Inter-American Development Bank (IDB) which, in a policy brief released earlier this week, warned that the government must "entrench a new culture" within the civil service if the Fiscal Responsibility Bill is to succeed.

While generally backing the Bill as "a bold step" with many of the right ingredients to set the Bahamas back on a sustainable fiscal path, the IDB nevertheless said the Bill's improved fiscal governance objectives could be endangered unless the main principles and philosophy of such a shift were ingrained in "all members of the public service".

It emphasised that obtaining complete civil service 'buy in' for the Government's plans was essential, and said: "Public sector employees especially must be familiar with the requirements and provisions of the FRL (Fiscal Responsibility Bill) if its implementation is to be smooth and efficient.

"Therefore, it would be prudent for the Government of the Bahamas to hold orientation sessions for all members of the public service to promote and entrench a new culture of fiscal responsibility, transparency and accountability."

Taking up this theme, Mr Myers argued yesterday: "There needs to be equal penalties imposed on the public sector as the private sector. If you don't pay your taxes, it's a fine-able, sanction-able offence.

"What's good for the goose is good for the gander, and if persons in government in positions of authority do not adhere to and abide by these rules and laws, they should be fined and sanctioned.

"As far as I'm concerned, it's the fox guarding the hen house. They don't want these laws in place, but it's fine to fine the private sector. That attitude has to stop."

ORG and other civil society organisations, such as Citizens for a Better Bahamas, have already warned that the Fiscal Responsibility Bill could be "ineffective" without tougher sanctions due to "The Bahamas' poor history of non-compliance with similar laws".

ORG, in its recommendations on the draft Bill, said the main concern was the "lack of codified penalties [and] sanctions" for governments that breached its targets, or "incentives" that encouraged compliance.

"Throughout the Bill there is a noticeable lack of reference to penalties or incentives to encourage compliance and rectify behaviour in the implementation of fiscal responsibility and discipline processes," ORG said. "Where there is mention of penalty, said penalties are not defined or codified and are left to Ministerial discretion, allowing room for uneven or unfair application, or the perception thereof....

"Given the Bahamas' poor history of compliance with similar reporting laws, such as Public Disclosure, there is concern that without methods of enforcement there is a risk that the Fiscal Responsibility Bill could ultimately be ineffective despite its thorough reporting mandates and methodically outlined goals."

Mr Myers told Tribune Business that, over the past 25 to 30 years, "there has been no indication that the public service understands the necessity for accountability and fiscal prudence. That has to change.

"If they get a slap on the wrist, it does not do it," he added. "There are very few cases where public servants are being held accountable and terminated for their malfeasance, corruption or their lack of fiscal responsibility and lack of accountability.

"In my opinion, if you're not at least going to fine them, why do you think a slap on the wrist is going to create any accountability or fiscal prudence. It's not. They've [the Government] shown they don't care.

"Stiffer measures need to be put in place until such time as the public sector is shown to be accountable from a management standpoint. We're tired of them wasting our money; I certainly hope the majority of the public are tired."

The Fiscal Responsibility Bill's key targets require the Government to slash the fiscal deficit to 0.5 per cent from 2020-2021 onwards, cutting it from a sum equivalent to 5.8 per cent of GDP in the 2016-2017 Budget year. This means reducing it from near $700 million to around $54 million.

To enable the public sector and wider Bahamian economy "to achieve the fiscal objective in an orderly manner", and avoid unnecessary shocks, the Bill calls for 2018-2019 and 2019-2020 deficits that "shall not exceed" 1.8 per cent and 1 per cent of GDP, respectively.

The Bill also sets out a "long-term" target of reducing the Government's direct debt-to-GDP ratio from the current 58 per cent to "no more than 50 per cent". The year by which this target is to be achieved has to be set out in the Government's 'fiscal strategy report', which must be submitted to Parliament no later than the third week of November each year.

Nominal recurrent spending is also to be capped at a rate of growth that does not exceed nominal GDP expansion.