Editorial | Welcome Fiscal Commission
In the midst of his recent over-packed Budget presentation, two significant announcements by Finance Minister Nigel Clarke have been largely overlooked.
First, the minister revealed the appointment of a former deputy financial secretary and former senior adviser at the International Monetary Fund (IMF), Courtney Williams, as fiscal commissioner, an office for which the law was passed two years ago. Having already been sworn in, that should mean that Mr Williams has begun to identify and recruit staff, and that his first report on the efficacy of the administration’s fiscal policies should be ready not too long after the end of the third quarter (December 31) of the current financial year.
Dr Clarke’s other important disclosure was Jamaica’s grant of J$200 million to help launch a Fiscal Research Institute (FRI) as a think tank/training centre within the Department of Economics at The University of the West Indies (UWI), Mona campus.
The minister promised further Jamaican endowments. The expectation is that this will be a self-sustaining institution.
This newspaper welcomes the concept of the institute and its proposed financing model, but hopes that the FRI does not remain a purely Jamaican initiative. For the problems and weaknesses in fiscal analyses and public policy discourse identified by Minister Clarke do not belong only to Jamaica. They are common across the Caribbean.
It is therefore in the interest of other UWI shareholder governments to contribute to the endowment, so as to enhance training and informed and independent public debate on fiscal and broader economic issues.
IDEA NOT NEW
The idea of an independent agency to referee the Government’s fiscal data and related economic policies has been around for a long time. While several models for fiscal authorities exist around the world, the closest Jamaica has, until now, come to having such as an arrangement is the Auditor General’s formal review of the Government’s annual fiscal policy paper, and the private sector-led Economic Programme Oversight Committee (EPOC), established initially to police the Government’s implementation of Jamaica’s fiscal reforms under loan agreements with the IMF.
As an office of auditors primarily concerned with how government ministries and their departments and agencies spend taxpayers’ money, The Office of the Auditor General’s Department was wholly unsuited for the job of analysing and pronouncing on the worth of the complex macroeconomic issues contained in the fiscal policy paper. It will return to what it is designed for and is good at.
Despite seeming recent unannounced shifts in the interpretation of its mandate, to include declarations on the political economy, EPOC, too, which is without full-time staff and as a post facto reviewer of data, is not designed for the job as a permanent, independent, specialist arbiter of fiscal efficacy.
It did a good job in tracking the Government’s adherence to the targets, and could well evolve, if appropriately funded and staffed, into a private sector think tank for broad economic and fiscal matters.
The new body, the Independent Fiscal Commission, which will operate as a commission of Parliament, is, on the face of it, well suited for the role. It is intended to be staffed to carry out that job.
Importantly, the commission will not be under the direction of the minister, and its specific obligation in law will be “to provide the public with an informed and independent opinion of the soundness and sustainability of Jamaica’s fiscal position, in keeping with the fiscal responsibility framework as set out in … Fiscal Administration and Audit Act”.
AVOID BEING INSIDER-FOCUSED
As part of that process, it will take over the review of the fiscal policy paper, conduct ex-post analyses of fiscal programmes, and publicly report on its findings at least twice a year. It is mandated by the Act to make those reports available on a website in a timely manner. It can also publish reports on matters relating to its office.
The Gleaner would have preferred if the law had specifically provided the commission with the authority to analyse the cost and fiscal implications of government initiatives at the request of parliamentarians, including Opposition members. If the council goes this route will depend on how Mr Williams construes what in the law provides for such undertakings. He must give it the widest possible interpretation.
Regarding the UWI proposed fiscal institute, it should avoid the inclination of too many institutions at academies to be insider-focused, disconnected from the people whose lives their work is likely to impact. Without compromising the quality of its research and analyses, the institute and its fellows must, in the tradition of think tanks, be purposefully outward-looking in its orientation. Much will depend on who they perceive to be their partners and clients, and its strategies for communicating with constituents.
Engaging those constituencies in language that they understand will enhance the institute’s ability to influence the formation of public policy and support for the idea it promotes.