|Spending and Savings
Published Thursday 29th September 2011
Discussion is revolving
around the country’s earnings from our energy resources and the likely
size of the next year’s budget, expected to be delivered in early
Given the fact that our
energy resources are reported to be declining in both quantity and
value, it is very important that we make best use of that stream of
resources to both sustain the existing arrangements and create a new
series of industries to replace those declining earnings.
In my view, our focus in
this critical transitional period has to be on making best use of those
limited tax dollars. Although that is an objective on which we can
assume broad consensus, there seems to me to be far too little
discussion on the ways in which that can be achieved.
When we consider that
most of the capital expenditure in the country takes place via the State
and its agencies, it is clear that proper control of that expenditure is
key to making the transition for our society. The other parts of State
expenditure are recurrent, such as salaries and rents.
The growth of corruption
in State expenditure is a clear danger to good order and national
development. White-Collar crime, as it is sometimes called, is a growth
industry because there is almost zero chance of being detected or
punished and huge rewards.
The danger to good order
is the fact that merit has a declining role in the way State spending
decisions are made. It is clear that other factors have become dominant
– things like friends, family and political affiliation are now
well-understood to be the ingredients of success in getting work from
the State. That is the case for all political administrations so far in
our country, but it must change if we are to make the transition to a
sustainable economy in which different values and income sources take
The budget of the
present financial year is the largest in our country’s history and it is
true that the major part of that expenditure could be classed as
exceptional items, having to deal with settling large debts of State
Enterprises and the huge CL Financial bailout payments. The point here
is that those huge expenses arose in situations with a distinct lack of
transparency and accountability, from the lack of accounts at UDECOTT
and HDC to the naked corruption of the CL Financial bailout, there is a
If there is no
transparency and no accountability, there will be corruption and that is
Expenditure of Public
money – Accountability – Transparency = CORRUPTION
refers to any expenditure or receipt of public money, which is money due
to, or ultimately payable by, the State. That definition covers all the
Ministries and State agencies as well as modern arrangements such as
BOLT, PPP, concessions and so on. In the PP’s first budget, there were
disclosed plans to spend almost $14.0Bn in the capital program of the
Ministries and State Agencies. We need a proper Public Procurement
system to manage these vast sums of money.
It is for this reason
that the People’s Partnership commitment to implementing a new and
effective Public Procurement system is to be welcomed. The JCC and its
partners – the Chamber of Commerce, the Manufacturers’ Association and
the Transparency Institute – have submitted a draft Bill for
consideration of the Joint Select Committee established by Parliament.
Finance Minister Winston
Dookeran made good on the PP’s pre-election promise to lay in Parliament
the new Public Procurement proposals within one month of the election.
The level of political
support for this initiative has been encouraging, but there is the issue
of priorities to confront in this matter.
I am referring to the
fact that the second part of the PP commitment to a new and effective
Public Procurement system was that it was to have taken effect on the
anniversary of the election.
That target has been
missed and the work of the Joint Select Committee has been preserved so
that it can proceed when the Parliament re-opens at the Waterfront.
The challenge we have to
confront is the race to implement public projects in a manner which
reminds me of the phrase I had coined for the last administration –
‘Project Fever’, like a new strain of political dengue.
The need to stimulate
economic activity is something everyone appreciates and the perceived
competition between Ministers is becoming part of the new reality.
Provided that there are effective local content provisions, the more
projects the country is doing, means more work for our professionals,
contractors, workforce and suppliers. No one would argue against an
increase in economic activity.
The problem is that, in
the absence of proper controls, those short-term imperatives can lead
directly to the dire long-term consequences which I referred to
earlier. The State now has to spend immense sums to clear up debts
which arose during an earlier spending frenzy, with operatives, who
would have all said at the time that this or that project was essential.
These frenzied moments
of activity are the correct place for the application of real leadership
in terms of the national priorities, particularly in relation to the
issue of expenditure. I am calling on Finance Minister Dookeran to make
this issue of controlling expenditure a number-one priority in this
Given that the ongoing
flow of projects is strong and constant, a proposed program would look
like this –
- New Public Procurement policy – Minister Dookeran must make this
new system an absolute priority with a firm commitment to have the
new framework made law by the end of this session of Parliament,
which is in December. That is an indispensable part of building a
new economy going forward and it would definitely be a manifestation
of New Politics.
- Embargo new projects – In relation to projects which are not yet
at the stage of Requests for Proposals, there needs to be an embargo
until the new Public Procurement system is in place. There will be
appeals that the struggle is for economic stimulus over proper
process, but those must be dismissed. There is no way you can get
to the right place after making a wrong turn. No way. Everybody
knows that. Expediency taking precedence over principle has cost
our country enormously, both in cash terms and lost opportunity.
- Projects ‘in the pipeline’ - Projects which are already at the
stage of Requests for Proposals must conform with the principles
underlying the new Public Procurement proposals – Transparency,
Accountability and Value for Money.
Without proper control
over expenditure, we will continue to lurch from crisis to crisis. We
need to stabilize the economy and restore the importance of merit in our
Afra Raymond is President of the Joint Consultative Council for the
Construction Industry (JCC) and Managing Director of Raymond & Pierre