WELL, the bell has been rung and the race is on. The Appropriations Bill has been passed in Parliament and so money can be spent. What’s the point in having a Budget Debate when the ruling side has already won it and there are more important things to attend to, like winning an election?
Why should a government have to spend days in Parliament justifying its past performance or having to explain to the population how the expenditure it proposes in the Budget will benefit the country? Just why should a government subject itself to this indignity when the law of the land doesn’t require it, even though it flies in the face of over 50 years of tradition?
And that “Throne” speech. What is that all about if not mere tradition? Are we to believe that the Governor General has written that speech after consultation with the Queen of England and delivered it to us on her behalf? But we keep it. It’s convenient.
We have come to the pinnacle of cynicism in the governance of this country, and it now seems that we can and will do anything once the law does not absolutely forbid it. It is a short step from there to bending the law to suit our own purposes, and a much shorter step after that to breaking those laws with impunity.
But the Prime Minister may have done the country its greatest favour in dismissing the Budget Debate and calling a snap election instead, as it might cause the country to finally take a closer look at what is contained in those Estimates. Having had to do that, here’s what was found.
As is to be expected, Budget Estimates adopted by the House of Assembly in any year are subject to revision, with the revised figures appearing in the Estimates presented the following year. The trouble is that these are not the final figures, and the “actual” figures for Revenue and Expenditure are published in the Budget Estimates of the year succeeding that in which the revision is published.
You are reading correctly. We have to wait two years after the money is spent before we know the actual amounts for Revenue and Expenditure in any particular year. In years when the actual amounts closely match the estimated amounts this may not be a major problem, but this is not what has been happening for at least the last three years.
If we start with fiscal year 2014/2015, it turns out that the Estimates for that year underestimated Revenue by nearly $60m, much of the subsequent increase coming from increased VAT collections, increased personal and corporate taxes, increases in import duty and excise taxes, and from the fuel surcharge on LUCELEC.
While the discussion on the effect which these tax increases have had on the economy is better left to the professionals, the increase in the fuel surcharge on LUCELEC is peculiar. That fuel surcharge exists today and was expected to generate an estimated $17m in 2015, an increased cost to Lucelec that has to be borne by consumers.
But with government responsible for increasing the cost of electricity, how can it at the same time also be promoting renewable energy as a means of reducing electricity costs?
Having then seen that the figures in the Estimates could be subject to significant change, the data from 2010 to 2015 was examined in order to obtain a better picture of what was happening. Attempts to locate the 2016/2017 Estimates which have recently been presented were futile however, as these Estimates are not available on any Government web site.
They are not available on the web-site of the National Printing Corporation which carries the Estimates every year up to 2015/2016, neither is the document available for sale to the public from the Corporation.
We can only conclude that since the law only requires that the Estimates be laid in Parliament and that has been done, there is nothing to compel the Government to let the general public have access to this information, and so it is not available. It’s “none of our business”.
This means that in examining the Estimates, we are limited to the “Actual” Revenue & Expenditure for 2014, the Provisional Revenue & Expenditure for 2015, and the Estimated figures for those items for 2016. Here’s however what emerged.
While the recurrent deficit is usually just stated as a number, this in effect is what we have to borrow every year just to keep the country running. The actual deficit in 2012 was -$143m, it was -$$60m in 2013, and -$23m in 2014. Yet, it is estimated to rise to -$66m in 2015 – what accounts for this?
Wages & Salaries
Although civil servants’ salaries have been frozen by agreement over the last three years, April 2013 to March 2016, the Budget Item for “Wages & Salaries” has increased every one of those years, and from the year before that also, moving from an “Actual” expenditure of $450m in 2012 to an estimated $469m in 2015, an increase of $19m.
This increase in “Wages and Salaries” cannot be explained by NICE employment, as while the Budget Statement for 2012/2013 makes mention of an allocation of $35m for NICE, the programme is not found in the Estimates for that year. It however shows up as Capital Expenditure in subsequent years.
Even more importantly, this increase in Wages & Salaries isn’t a case of a one-off increase in cost. We’re now spending $19m a year more than we were in 2012/2013 for the public service, and the build-up to this level of increase occurred during a period when salaries and wages were fixed and the economy was contracting. This requires an explanation.
While the increase in tax revenue for the year 2014/2015 has been discussed above, the budgeted reporting of this item also bears examining. The “Actual” tax revenue collected has increased every year from 2010 to 2015 except for 2012 when it was $5m less than the year before.
The increases in actual tax revenue however rebounded to $55m in 2013 over the 2012 figure, with a further increase of $59 in 2014 over the 2013 figure. More efficient collection of VAT may have resulted in the increase in tax revenue for 2013, but we know that it is new taxes which have led to the increase in 2014.
With the economy in contraction during 2013 and 2014 and supposedly showing limited growth in 2015, what then accounts for that $59m increase in tax revenue in 2015?
Whatever the reasons may be, revenue from taxation was $138m a year more in 2015 than it was in 2010, none of which is attributable to any greater efficiency in the collection of arrears in taxes. In fact, collection of arrears was lower in 2014 than in the preceding four years.
Estimates for capital expenditure are usually higher than the actual amounts spent in any given year, much of this over-estimation being accounted for in earlier budgets by delays in funding from institutions, or by delays in the receipt of grants.
For the last three years however, this over-estimation is largely attributable to an over-estimation of financing expected from the issue of bonds. In 2013/2014 financing for capital expenditure from bonds was estimated at $203m while the actual that became available was $96m. For 2014/2015, the estimated amount was $130m, while the actual raised was $88m.
Yet for 2015/2016 the estimated financing of capital expenditure from bonds was $255m, nearly three times the amount generated the previous year. How realistic can this be when the Prime Minister repeatedly tells us in his Budget Statements that we cannot raise more financing from bonds?
The effect of this high estimated level of capital expenditure, no matter how optimistic, is that it leads to a high level of estimated overall expenditure, allowing the reporting of increasing budgets year after year. In fact, “actual” total expenditure has fallen every year from 2012 when it was $1,302, to $1,193m in 2014. Actual expenditure for 2015 is of course not available.
A drop in expenditure might be a good thing, but not when it is accompanied by increasing levels of salaries and wages, and suggests that we’re not investing in the infrastructure of the country.
Until such time then that the “Revised Estimates” can be presented within say 3 or so months of the end of a financial year, with the “Actual” Revenue and Expenditure to follow shortly after that, those Budget Estimates are not worth the paper they’re written on, and the Budget debates themselves don’t rise to the level of entertainment.
You didn’t miss a thing.