Put it on the budget: Let the people see!

In sequence, the head of the National Works Agency (NWA) and the portfolio minister resigned, and the permanent secretary in the Ministry of Transport and Works proceeded on leave to facilitate investigation. If the focus remains at the superficial level of extravagance and misdirection of resources to office refurbishment and furniture, this may appear to be an adequate response. Deeper consideration will however, indicate that this mis-direction or profligacy was facilitated by the lack of transparency in the funding of the project, its procurement processes and in its project selection and implementation.

At the outset, the Road Maintenance Fund (RMF) was used as the vehicle for borrowing. This fund is financed by Special Consumption Tax (SCT) on fuel to undertake road maintenance. It is not a profit-oriented trading organisation and its normal scale of operations and funding are dwarfed by the sheer scope of the JDIP. The Government has not been transparent about the commitment of SCT funding to RMF and at the outset of JDIP, its management indicated its absolute inability to service the loan. The use the RMF allowed the expenditure of billions of Jamaica dollars requiring the involuntary commitment of a guarantee by Jamaican taxpayers, to entirely escape the scrutiny of the parliamentary representatives of those taxpayers. This is borrowing, expenditure and taxation without representation.

Abuses revealed

The abuses already revealed and those which may yet be revealed are facilitated by this lack of parliamentary transparency. If individuals have absolute control of large sums of money for which they bear no personal responsibility for repayment, then mis-judgement and mis-allocation are the likely end-result. This goes to the heart of off-budget operations: as they are off-budget, they are outside of the prioritised expenditure items as identified in the budget; destined to be ill-designed; mismanaged; unaccounted for; and, improperly financed.

This "cleverness" in non-transparent borrowing and spending of money while pretending not to borrow and spend, has contributed immeasurably to Jamaica's debt and debt servicing problems. The methods have included "deferred financing" (non-government entities spending pro-government on the basis of bank loans guaranteed by government), the non-transparent use of off-budget funds (including the RMF and the Tourism Enhancement Fund (TEF)) and government guarantees of loans for public enterprises that don't have a "ghost of a chance" of making repayment.

Deferred financing was discouraged by a logical insistence by the auditor general's office that debt cannot be accumulated without expenditure (need for double-entry accounting). Significant loss making public enterprises have been divested, but others remain. There has to be transparency and vigilance to cauterise their drain on the public purse. The special funds were established with the good intentions of earmarking funding for prioritised expenditure in the face of scarce budgetary resources. In many instances they have become non-transparent special budgets, financed by but not open to the scrutiny of taxpayers.

The JDIP will not be able to shake its increasingly sordid reputation unless it is properly accounted for through the budget and subject to effective parliamentary scrutiny. The JDIP/NWA/Ministry of Transport and Works nexus has also highlighted an imperative for clarifying the appropriate governance structure and roles and responsibilities of executive agencies, their "advisory" boards, the portfolio minister and the permanent secretary as accounting officer. The "advisory board" pleads absence of information and the minister often appears to be the chief project implementer, while the permanent secretary without effective executive authority, retains legal responsibility as the "accounting officer".

The non-transparency of the special funds has to be addressed preferably through integration with the budget. At a minimum, there has to be full transparency through periodic tabling of their financial and operational status and flows for scrutiny by the elected representatives of taxpayers.

In the final analysis, any new minister of finance is expected to be briefed by the technical staff of the ministry of finance regarding his or her ultimate responsibility for the accumulation of public debt by whatever means. This makes the minister the most legally powerful potential ally of the debt-burdened taxpayer in protecting the public purse. And in like manner, he or she should also be held ultimately responsible for misuses of same. It therefore behoves the minister to ensure that all Cabinet members and their technical staff at all levels behave circumspectly with respect to all expenditures and contracting of debt.

Colin Bullock and Christine Clarke are lecturers in the Department of Economics, University of the West Indies at Mona. email: colbul3@gmail.com, clarke.christine.a@gmail.com