Archive for June 27th, 2009

Opposition demands answers

Opposition demands answers

| 27/06/2009 | 17 Comments

(CNS): As the Legislative Assembly met to debate the government’s interim budget appropriation on Friday, the opposition also demanded answers from Financial Secretary Ken Jefferson about why his advice to the previous Cabinet on the state of government finances had been so dramatically revised only a few weeks after the election. Pointing out the dependence of any government on the financial secretary’s information to plan their policies, Alden McLaughlin said if it could not rely on that no matter who was in office the country was going to “Hades in a hand basket.”.

The opposition raised a number of questions about the statement by Leader of Government Business McKeeva Bush on 12 June that the country was facing a record deficit and debt. Aside from the obvious question of how the financial secretary could be predicting such an entirely different financial scenario from 5 May to the beginning of June, Leader of the Opposition Kurt Tibbetts also described Bush’s statement as “craftily crafted” as he was not comparing like for like figures and had mislead the country about the state of the country’s reserves. He said the statement had suggested that cash balances were only $17 million when in fact the combined reserves when the PPM left office were $110 million.

He said he understood politics very well and how information is presented to the public but he said playing with the presentation of figures had wider ramifications and made it look as though the country was in dire straits when it was not. Tibbetts acknowledged that these were challenging times and as a result he had asked the financial secretary to keep tracking the finances to ensure government remained within the boundaries of the PMFL. He said that the sudden change of financial predictions had made the previous administration out to be liars, which was not the case.

“I do not practice deceit and I will not stand idly by when someone tries to say I do,” Tibbetts said. However, it was of the financial secretary that Tibbetts demanded clarifications and explanations of how he could have told the PPM government one thing on 5 May and such a wildly different thing a few weeks later to the UDP government.

Tibbetts asked how the financial secretary could suggestion that another $19 million was now needed for government expenditure, a further $9 million to cover loses by statutory authorities and that revenues were out by a further $17 million following the election when he had given the PPM true figures on 5 May.  “It is obvious to me that this $19 million does not reflect a simple and straight forward increase of needs……Where has this sudden increase in expenses come from?” he asked. “It has to reflect policy decisions by the new government, and that is their prerogative, but don’t craft a statement of this nature and say it is us,” Tibbetts told the government benches.

He demanded that Jefferson give a full explanation of the circumstances and what had happened before the new budget was voted as he suspected what was going on was that  the new government was bundling up more spending and dumping it on the opposition. “Someone will have to prove to me that was not the intention.” Tbbetts said he suspected that he would have to wait for the exact year-end figures to see what the $19 million is for but he hoped someone might say (before that).

While Tibbetts was reserved in his demands of the financial secretary, McLaughlin held no punches and said he could not believe the complete absence of context from the financial secretary when he move the motion for the temporary budget.  “I am astounded with all that has transpired in relation to this that at the very least this House and the country would have had the benefit of an explanation,” he said, accusing Jefferson of a dereliction of duty. “If I sound aggrieved it is because I am,” McLaughlin added.

He said he considered the third official member a friend but something was radically wrong if what he now says is the truth. He noted that all governments had to be able to rely on the predictions made by the FS. “I don’t care who sits in government , the country is going to Hades in a hand basket if it cannot depend on the financial information it is given,” said McLaughlin adding that now more than ever in tough economic times the information had to be dependable because government revenue was exceptionally vulnerable to the global crisis.

He said the difference between the information Jefferson had given on 5 May to what was stated in the LoGB’ statement was all the more shocking as the financial secretary had given no indication of anything going awry.

“I don’t have much but my integrity and honour,” said McLaughlin, adding that both had been challenged by this and that the financial secretary had made it appear that he and his colleagues from the previous government had been involved in a big conspiracy.  He said the 5 May note presented to the Cabinet had, according to the financial secretary, represented the actual situation in relation to the cash balances and the deficit and the next thing he knew the LoGB was making his 10 June statement saying the deficit had gone from $29million to $74million, which was endorsed by the financial secretary. McLaughlin said he was not prepared to sit idly by and have his integrity challenged. “I take real umbrage to this,” he said, adding that the truth had to be told and that he had kept detailed notes on exactly what the previous administration was told. 

He demanded further explanation for the current finances and the newly proposed interim budget and said the whole thing required an examination by Finance Committee.

Responding to the opposition, Rolston Anglin said he did not know why the opposition was shocked by the state of government finances when they had live through a period of extravagance and rode on the back of the Ivan recovery. “They cannot run from their record,” he said before the House was adjourned until Monday morning, 29 June.

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Ezzard tells government to be bold over election date

Ezzard tells government to be bold over election date

| 27/06/2009 | 10 Comments

(CNS): The last minute scramble to establish a budget for government for the first quarter of the 2009/10 financial year has drawn into sharp focus the problem of the country’s election timetable once again. The member for North Side, Ezzard Miller, challenged government to go to the polls in November 2012 to address the problem. “I hope the government will be bold enough to have the next election in 2012,” he said, adding that the reason it was changed in the first place was to avoid the problem the House was facing one again.

Miller explained that he was particularly uncomfortable voting on a budget when no one knew where the money was coming from. In a short and succinct contribution to the House, Miller explained the fundamental problem:  “I am a lot more comfortable sending money when I know where it is coming from,” said Miller. “I hope the financial secretary will be able to give us some idea of what revenue there will be to cover these expenses. I have some concerns we are setting ourselves up and voting blindly. We may call these outputs but what we are talking about is expenditure.”

Answering the call to change the date, Rolston Anglin acknowledged there was a problem with the election calendar, and as the elected body the Legislative Assembly did need to consider what would be presented to the Foreign and Commonwealth Office when it came time for the next election. He said the member for North Side was correct to point to November, but he said that a 2012 election was not very attractive, especially to the newly elected members who would only serve three and a half years. He also questioned whether the country would want to coincide with the US presidential election cycle, alluding to the probability, but without being explicit, that the government was more likely to favour November 2013. The same political problem arose during this past administration when the opposition was not willing to waiting till November of this year for the election and the previous government was unwilling to go to the polls in November 08.

Consequently, with the elections now in May as a direct result of the cancelled November 2004 election owing to Hurricane Ivan, the last two administrations have come to office with only a matter of five weeks remaining in the financial year, which now runs from 1 July to 30 June. This means there is no time to plan a policy statement and an appropriation schedule to match, which includes sources of revenue as well as operational expenditure. The new United Democratic Party government therefore faced the exact problemfaced by that of the previous administration in 2005, with no money and no time to plan. As a result, under the Public Management and Finance Law, the government is allowed to create a law for temporary appropriation of funds for up to four months without setting out a full budget with revenue anticipation.

When Financial Secretary Kenneth Jefferson placed the government’s stop gap budget before the House on Friday 26 June, MLAs raised their concerns that, given the expected decline in government revenue over the coming months, voting a budget without knowing the revenue was problematic. Miller pointed out that if the government was asking for more than $573 million for one third of the year without explanation, the House could be voting for an annual budget approaching $2 billion. While Jefferson said that the members should not assume that each output would be a third of the budget, he did not explain which would be annual amounts that had to be paid in the first part of the financial year and which line items would be expected expenditure for the first third.

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SPIT requests another $1.5M

SPIT requests another $1.5M

| 27/06/2009 | 8 Comments

(CNS): According to the pre-appropriations list submitted to the Legislative Assembly on Friday 26 June for  the government’s temporary budget, the Portfolio of the Chief Secretary has requested a further CI$1,481,581 for the Special Police Investigation Team. With no Finance Committee to hear the details of any of the requests, members of the House questioned whether this would translate to $4.5million for the year. Leader of the Opposition Kurt Tibbetts told members that he was concerned that, when the investigation should be coming to an end, further requests were being made.

During the debate on the motion for the new government’s interim budget, Tibbetts asked whether the allocation was for just one third of the year or to year end. “I was wondering if there is any anticipated end to the funds the country has to pay,” he said. “We all know from history where the investigations reached and we need some indication on the way forward.”  The opposition leader noted that the investigation was supposed to be coming to an end and said the country needed an understanding about what time period the amount was for and what was going on.

During the last sitting of Finance Committee at the end of March, SPIT funding was increased to around $4.5 million for the financial year 2008/09, a sum which was added to around $1.6 million spent in the previous year. This new appropriation, if passed this week, will bring SPIT spending by October of this year to over $7.5 million. However, First Elected Member for the Sister Islands, Moses Kirkconnell, noted that if this was a reflection of how much the investigation will cost each quarter the country would be looking at another $4.5 million at the end of the year.  If that was the case, the inquiry could end up costing the Cayman taxpayer more than $10 million. “The people of this country are well aware of the expenditure but we need more information on what is happening and where we are with this investigation,” he said.

The opposition leader also pointed to the $479,693 set aside for the judicial tribunal and asked exactly what that reflected. The Justice Priya Levers case was heard in May but the three judges have yet to return a ruling. There is no indication inthe pre-appropriation request whether this is to cover the cost of the judges to deliberate, for further hearings or even a possible pay-out to Justice Levers.

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Interim budget over $573 million

Interim budget over $573 million

| 27/06/2009 | 12 Comments

(CNS):  The new United Democratic Party government presented a stop-gap budget to the Legislative Assembly on Friday morning of almost $574 million to cover its operations, loans, expenses and borrowings for the next four months until the full annual budget appropriation for 2009/10 can be calculated and settled. The figure includes around $178 million for day-to-day government operations for the next quarter, which, if transferred to a full annual budget, would represent an even greater operating expense than the 2008/09 budget.

Despite the political wrangling over the current financial situation at the end of this year, government still needs to get immediate authorisation to keep it afloat for the first quarter of the next financial year.

With no Finance Committee session called to examine the temporary appropriations, both the opposition MLAs and the one independent representative for North Side raised their concerns about the government’s request for $573.6 million to tide it over and again brought into question the mistiming of elections with the financial year which prevented a full Finance Committee hearing.

Financial Secretary andThird Official Member, Kenneth Jefferson, said that the appropriation should not be interpreted as an exact third of the 2009/10 budget as many of the specific items were amounts that would cover the entire year’s expected expenditure and that it would be misleading to multiply everything by three.

Ignoring the huge question about finances at year-end 2009, he focused on the new appropriation and explained that because the election had taken place once again almost at the end of the financial year (a throw back from the situation created by Hurricane Ivan and the change of election from November 2004 to May 2005), there would be no time for a full Finance Committee examination of the appropriations needed. Jefferson told the House that the temporary financial request was based on last year’s budget figures.

Following the presentation of the motion Jefferson faced significant criticism about his recent major re-adjustments regarding the current financial year from the opposition but still offered no response.

Opposition member Alden McLaughlin said that given the figure requested it appeared to be “business as usual”, and despite the claims by government that the country was in financial dire straits they had still requested operational expenditure which, if times by three, would represent an even bigger annual budget than that passed for 2008/09.

He said that this required some form of explanation, as on the one hand the government was declaring the country had no money but on the other was asking for expenses that far exceeded expected revenue. Pointing out that the government starts the new financial year with a clean slate and does not carry over the old deficit, McLaughlin noted that the new government, after all its criticism of the previous administration, was doing nothing to account for the expected lower revenue for the forthcoming year.

“Unless money falls like manna from heaven, there will be an even greater deficit for this new financial year,” McLaughlin said as he called for a sitting of Finance Committee to examine what he said was missing from the motion before the House – an explanation. He said there was a need for government to tell the people where they expected revenue to come from and where they intended to spend the appropriations.

With the leader of government business absent from the House, it fell to Rolston Anglin, the deputy leader, to defend the government’s position.He agreed that in an ideal world Finance Committee should examine the request, but with only two working days before the year-end there was no choice and that the country would not be facing the current fiscal problems if the previous government had not been fiscally irresponsible and created an overblown civil service. He said the government would indeed be looking to tightening belts, but in the interim it was necessary to secure funding.

The debate was adjourned until Monday morning.

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