By NEIL HARTNELL
Tribune Business Editor
The government was yesterday urged to be all over the Fiscal Responsibility Bill "like white on rice", as it will give Bahamians confidence their VAT sacrifice is not in vain.
Robert Myers, the Organisation for Responsible Governance's (ORG) principal, told Tribune Business it was "absolutely critical" that the government now turn its focus to the bill in the budget's aftermath, as its passage would introduce checks to prevent misuse of the targeted $400m VAT revenue windfall.
He added that the proposed legislation needed to be "passed in months", something the Minnis administration has previously indicated it intends to do, given the need for increased accountability and transparency to match the government's ever-expanding tax take.
"It's absolutely critical. This Fiscal Responsibility Bill, that has to happen," Mr Myers told this newspaper. "They [the government] need to be on that like white on rice. That has to happen in months; they need to get that passed in months.
"A large reason why we all got kind of blindsided by this budget is it takes so long for information to come out of these ministries and departments."
Mr Myers' concerns were echoed by Carey Leonard, the ex-Grand Bahama Port Authority in-house attorney, who said the bill's passage would give the private sector "more confidence and comfort" that the extra sacrifice they and Bahamian consumers are being called upon to make will not be wasted.
"The government really needs to get its Fiscal Responsibility Bill through sooner rather than later," the now Callenders & Co attorney told Tribune Business. "That needs to be passed along with the Budget.
"What worried some people is that when VAT was increased more, they thought there would already be Fiscal Responsibility, and there isn't. It would give more people, especially in the business community, more confidence by passing the Fiscal Responsibility Bill."
Mr Leonard continued: "Talking to a number of business people, they said they don't like it [the Budget and VAT hike], but it's the best way to go. They'd also like to see the Fiscal Responsibility Act.
"They'll feel a lot more comfortable. The Government really needs to push for that and get it through." The Government released the draft Bill for public comment, and feedback, just two to three weeks prior to the Budget's unveiling, but it has since been overshadowed by the fall-out from the subsequent VAT hike and other revenue-raising measures.
The Minnis administration, though, has moved to adhere to its principles before the legislation is passed. The $237 million fiscal deficit forecast for 2018-2019, equivalent to 1.8 per cent of gross domestic product (GDP), is intended to hit the first target in a three-year glide to an annual deficit of 0.5 per cent in the 2020-2021 fiscal year.
The Government is ultimately hoping to beat the latter target by achieving a $10 million 'fiscal surplus' in 2020-2021. K P Turnquest, the Deputy Prime Minister, reaffirmed the Government's commitment to the Fiscal Responsibility Bill's passage, and early adoption of its principles, to Tribune Business earlier this week.
"It's our desire to implement it now, even ahead of the passage of the legislation," he said. "We want to be prepared and hold ourselves accountable, even in the absence of the legislation.
Mr Myers yesterday said the Fiscal Responsibility Bill's treatment will be "a big indicator" of the Government's commitment to fiscal discipline, transparency and accountability, and called for its passage through Parliament and on to the statute book to be completed within the next six months.
"If we can implement the VAT changes in less than a month, then surely the Government can introduce Fiscal Responsibility in a short period of time," he told Tribune Business. "Six months should be adequate if they're really putting stock in it.
"If they don't, then the writing's on the wall in terms of how seriously they're taking it. We're going to be looking at it very closely to see if they put their money where their mouth is."
Mr Myers added that it was also vital that the Fiscal Responsibility Bill be accompanied by other transparency and anti-corruption legislation, such as the Freedom of Information Act, Ombudsman's Bill and Whistleblower Protection Bill, if the Bahamas was ever to "get ahead" of its problems.
"You need all three of them to really be proactive and fend off these losses, corruption, before it appears on the books," he told Tribune Business, "malfeasance or any number of other things that are causing the Government to bleed.
"You have to get out ahead of out. Putting this type of legislation in place allows you to get ahead of it, be proactive. There are good people in government who are scared of being victimised if they report things.
"The problem we have is the public sector has not been shown to be fiscally responsible, and nor have previous administrations. Getting used to that new culture, if that's what this administration is trying to get to, will be very difficult for the public sector."
Mr Myers also reiterated that the Fiscal Responsibility Bill needs "more teeth", and with penalties imposed on ministers and civil servants for non-compliance that match those levied on the private sector.
"That's pretty extreme, but given that nature of the beast that's appropriate," he said.
The Fiscal Responsibility Bill is intended to transform the Government's fiscal discipline by locking it into specific deficit targets and longer-term debt ratios, while boosting transparency and accountability in the management of its financial affairs through enhanced public scrutiny.
The latter role will be played by a newly-created Fiscal Responsibility Council, comprised of accounting, legal, financial analyst and business expertise from the private sector, while the legislation also attempts to introduce 'checks' that will prevent a repeat of the Christie administration's pre-2017 general election spending spree.
The Fiscal Responsibility Bill's key targets require the Government to slash the fiscal deficit to 0.5 per cent from 2020-2021 onwards, slashing 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.
The Bill's 'first schedule' sets out a 'glide path' or 'road map' for achieving this, acknowledging - as the IMF stated - that "significant fiscal adjustments" are needed over the next two Budget years to hit this objective.
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.