$46M in budget faces scrutiny

(CNS): According to the budget documents for this financial year, government will be spending more than $46.5 million on transfer payments on special services or non-government suppliers, which the Office of the Auditor General (OAG) will be examining over the coming months. Last year government spent close to $50 million, ten percent of core government spending, on issues as diverse as the Batabano Carnival to interest on loans for civil servants. The transfer payments are split into two separate output groups in the budget documents. The first is payments made to non-government suppliers and the second is payments transferred to government entities to spend on specific areas such as scholarships or poor relief.

Auditor General Alastair Swarbrick stated recently that he will be undertaking an audit that will examine a number of these transfer payments to see how they are made and what methods of accountability exist. In some cases government policy may be just to donate funds to what it perceives to be a good project without necessarily expecting a direct outcome or, in the case of relief for those in need for example, because it is simply a necessary support payment. In other circumstance the money is given in return for a specific outcome or result based on a set of criteria.

The premier’s controversial Nation Building Fund is only one of many transfer payments made to cover a wide range of programmes and projects, most of which are community based.

Many are education related, such as the $7.5 million for local and overseas scholarships and over $1 million spent on pre-school and other educational assistance. Other payments include more than $7 million on poor relief cash and voucher payments, as well as some $6.5 million given to veterans. Government’s internal transfer payments for the last financial year were over $27 million.

A further $22.5 million went to non-government entities for a range of services and projects. This year government has reduced the amount it pays to outside organisations and has appropriated some $17.7 million for non-government suppliers. This includes a further $8 million on tertiary care overseas as well as $1.6 million to private schools and $1.1 million for rental accommodation for people in need. Government also gives several payments to specific charities such as the NCVO, the Red Cross, the Crisis Centre and Mentoring Cayman, among others.

It also gives money to the islands’ fishing tournament, Batabano, Miss Cayman and the elite athletes programme. Services to refugees, help with school uniforms, burial assistance for the poor, and AIDS education programmes are some of the other diverse areas where government funds non-government organisations to deliver specific services on its behalf.

Although some ten percent of the overall budget is spent in this way, with no consolidated accounts over the last seven years the public has been unable to review exactly how or why that money has been allocated  and to assess whether it has been used properly.

Although statutory authorities and government companies are required to do annual reports of their own for the money they receive from government, a local sports club which is receiving a small amount of funding for running a youth sports programme does not have to report on how or account for how that money is spent in a formal annual report.

The auditor general said he will be taking a close look at government’s transfer payments to see how the system works and not just how the money is being spent and whether there is or should be accountability for the cash that comes from government. He will also look at how the cash is allocated in the first instance and what criteria is used to say who gets what and why.

See details of the appropriations to non-government supplier and transfer payments on pages 366 and 367 of the Annual plan and estimates budget document here.