How many worms are in that can?

| 11/06/2012

The role of senior civil servants, and in particular whether they are held accountable, is a question that always surfaces, especially during a crisis. Mr Duckworth’s recent response to a commentary regarding party politics contained a reference to the role of the Financial Secretary that in effect opens a can of worms that should be addressed.

I will assume that Mr Duckworth’s reference to “the Financial Secretary’s radical reassessment after the 2009 election” is not meant to intentionally open this can of worms. At the same time, his reference does remind me of the suggestion, usually made by the PPM, that the FS’ fiscal reassessment post-election was not just a case of an error or incompetence but that it may have been politically motivated. This has been suggested often enough publicly to address it here.

I will try not to make too much of a judgment here about the FS or his performance, but I'm not so convinced that his actions are as political as they are sometimes made out to be and here's why:

First, it should go without saying that the FS is accountable to the public. So, for example, when we witness financial mismanagement, poor government budget forecasts, a surplus pronouncement one day and deficit the next, some of that blame should be placed squarely on this senior official and his team.

But elected officials should also be held accountable for these mishaps and we should not buy the political cop-out that elected ministers have no control over the civil service.

Irrespective of the constitutional position that is used when they wish to run away from public criticism, ministers in particular do have a material element of day to day control over what goes on within their portfolio. They should not be allowed to claim victory and political points when an initiative goes well and yet say “we are not responsible” when things go wrong. The truth is if they are in control enough to claim credit then they are in control enough to also take the blame.

When we focus on the role of the FS post the 2009 election, we should also recall his role (and the role of other financial secretaries) in the years before the 2009 election as well. We might recall that for years we have accepted the practice of having unaudited financials used as the main document by which the public assesses how the country is doing (since the audited financials were usually anywhere from several months to a year behind).

We should also accept that the FS and his team have always carried out projections and that those projections have frankly not always been accurate. In other words, these errors are nothing new.

We should also remind ourselves that this is the same FS who gave the go-ahead, according to the PPM, for their projects and they had no reason to doubt his judgment then. And finally, the PPM should remind itself that for four years straight they accepted his work, for better or for worse, as being credible enough to approve the annual budget in the Legislative Assembly. Same goes now for the UDP.

If all wewere saying was that the FS and his team made some serious errors and one of those errors was that they got the size of the deficit wrong in 2009, that would be a reasonable opinion for anyone to have. But what has been suggested (and strongly implied by the PPM on occasion) is that he first suggested a deficit of one size and then “all of a sudden” projected that the deficit would be 81 million post-election day (with the emphasis being on ‘post-election day’).

I, for one, have also lost confidence in these numbers, but we should also consider the direct role of elected officials because that contributes significantly to the problem. Here is how that part of the process works:

A group of politicians and several senior civil servants from the finance department get into a room to finalise the annual budget. The officials provide their reasons for the projections. The politicians come up with some other ways to earn revenue or claim to commit to reduce expenditures further (i.e. they don’t like the projections). The actual projections agreed are based on the unsubstantiated claims and proposed actions of the government as promised by the politicians. The senior officials and his team then get blamed for publishing an erratic budget.

If there is anything that shows just how elected officials can muddy the waters and their true influence/control (yes, I said control) over civil servants, it is the above example, which does reflect reality on many, many occasions. But what may surprise you is to find out how often this occurs and for how many years it has been going on.

All of this is to say this: feel free to criticise the FS and the current “system of financial management” all you want, but it is highly unlikely that the reasons for the financial debacle are mainly due to errors or incompetence of a few senior officials, or worse that they are simply politically motivated. This way of looking at things is equally alarming, whether we view the system under the PPM or the UDP. The FS and his team have been a constant in this process for both groups. In other words, whether you believe he is very competent or not that good, he has been the same. So who really then is to blame? Is it not the politicians themselves?

Whether it is the failure of our elected officials to heed warnings from senior civil servants or their political maneuvering to get the numbers they prefer, the truth behind this story has a lot more to do with the actions of the politicians (both present and past) than any of them would have us believe.

Ironically, if we were to start looking deeper into this issue we would likely need an accountant to help us assess the overwhelming number of worms in that can.

Category: Viewpoint

Comments (18)

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  1. Anonymous says:

    I can answer the question. There are exactly 9 worms in the can and that’s the Udp members. Get rid of them and most if your issues will disappear!

  2. Anonymous says:

    First off the current minister of finance knows absolutely nothing about finance. That was a mistake in the first place. I knit he’s a politician and they don have to be qualified but seriously he has screwed everything up

  3. Anonymous says:

    Proof will be in the pudding old boy. I predict the next budget for end of june will have a nice projected “surplus”.

  4. Anonymous says:

    This is spot on. The politicos can’t stand the scrutiny so they put the blame elsewhere. But also its clear that there are major issues with the whole finance system. I don’t think this is politics by any civil servant but its definitely politics!

    Can someone explain why the budget looks like its going to be late again..afraid to tell us the truth mr minister?

    Maybe having some of those meeting like the article described to get the right picture to us if you know what I mean..

  5. Democracy Now says:

    "II don't recall."  Anyone heard that before?  What it means is "it's done and there is absolutely nothing you can do about it."  Well there is something but perhaps it's too simple, although it would go a long way to getting rid of the constant surprises and incompetence we witness picture an election…any election. What we have and what we hear are speculative pronouncements from politicians about what they have done and in the case of their opponents, what they intend to do. No figures, no numbers. Too hard for us to understand? Then, more often than not,if the opponents win, they suddenly open the books to announce none or very few of the aforetmentioned promises can be kept. undoubtedly because of the absolute mess the previous culprits made of things. Ie. there is no money for any of it. Nada. On the other hand, if the incumbents remain in power their figures oftenturn out to be bogus election promises. With the same results: we must all tighten our belts. While they loosen theirs for another four years. To alleviate this constant shell game we as citizens must demand access to government figures BEFORE an election. How else can the electorate make an informed decision about the progress made, or lack thereof?  It would be so simple to do so and makes so much sense. Otherwise, we will continue to watch both sides fake it, come up with their standard excuses, continuing to blame each other whilst filling their pockets ad infinitum.  It must be done.  We are the stockholders.  It is our investment. We want to know with clarity what is being done with it. Now. Not just bad news from the Auditor at a later date.

  6. Anonymous says:

    The elephant in the room is still corruption.

     

    Incompetance is the rhino.

  7. Anonymous says:

    Proof will be in pudding. We will soon how the screwed up process works in 3 weeks…

  8. Danonymouse Man says:

    My problem with this article is this sentence:  "We should also accept that the FS and his team have always carried out projections and that those projections have frankly not always been accurate. In other words, these errors are nothing new". This is  a $52M difference, how can this be an error or miscalculation? This 179% difference, is this really acceptable to you? Must the average guy who works in the financial sector of the Cayman Islands accept this as an error, nothing new? Be real my friend, You must have life very cushy where you work! Are you  driving a truck and using a gas card, and double, triple and quadruple dipping!

     

    Get real!

     

     

    • Anonymous says:

      Mousey you have away too much confidence in government. We have huge mistakes being made everyday. This could easily be incompetence dude

  9. Anonymous says:

    I think the FS will be seeing the underside of another bus again here pretty soon after the Premier tosses him under for failing to have a budget in place by June 30th, I'm just saying.

  10. Anonymous says:

    Thank you 101, clearly you understand what goes on in Government. A budget consists of the planned inflows and outflows of Government funds.

    If a politician tells you that his or her plan is to spend X amount on X expenditure item next year, a technocrat cannot tell the politician "no", and that they want to put in a different figure, the politician is the one that has to go to the Legislative Assembly to defend the plan so therefore it must be their plan.

    This year is going to be interesting, when the Minister of Finance was suppose to have his backside in Cayman doing the budget, he was all over attending Jubilee party in England, party in Panama and party in New York. Don't hold your breath for a budget presentation this week, it nah happening!

     

  11. Anonymous says:

    I have to agree with this one. I will be the last to say civil servants are perfect, but often they get blamed for stuff that is the doing of elected members. Let’s see how the current budget process actually goes…they are late already!

    • Chris Johnson says:

      Budget preparation in Cayman serves no purpose when the powers that be suddenly start making donations to churches, surfacing driveways, flying around the world regardless etc etc. Any variance of budget should be accounted for on a quarterly basis as is now done in the Turks who seem to have conquered their deficit by careful planning. This is unlike Cayman where any variances are not explained until the end of the year by which time it is too late. Cayman must get back to quarterly accounting. There is no excuse.
      The Minister of Finance and All Tings needs get his act together before Cayman becomes a basket case like Greece and Spain. Mind you if we joined Caricom they could bail us out.
      One final note. Provision should be made in the budget for all contingencies arising from breaches of contracts and for all monies owing to individuals who have had their land seized over the past ten years who await restitution.

  12. Anonymous says:

    Of course it is the politicians and anyone who tells you different is full of it. Politicians are great at blaming and never admitting a fault or bad decision. Ask them a tough question and instead of answering they go off onto another topic.

    The PPM were there to first ignore gas-gate and it has continued to be ignored years later because no want to hold anyone accountable.

    The Miller report said to cut the civil service but they are voters so that was ignored so it goes either party or independent they are all the same.

    And don't delude yourself that OMOV is the magic bullet that will solve the problem of sub standard politicians running the country. Anyone with a big mouth and who is ego driven will run for government and just pick which district they see as their best chance at a place at the trough to run in.

    • Anonymous says:

      Gas boy gate was uncovered in 2010 the PPM having demitted office in 2009.

  13. Anonymous says:

    Another excellent Viewpoint from 101. His description of how deficits and surpluses are manufactured to suit the interests of the politicians in power on the day is quite accurate. It would be of great help to the electorate's understanding of budget numbers if every set of budget numbers was accompanied by a simple statement of the (often completely ridiculous) assumptions on which the numbers are based. Perhaps that is why the assumptions are not publicized the way the numbers are.

    • Anonymous says:

      Perhaps an FOI request for the assumptions conveniently missing from the financial statements might reveal something of help?