Still Valid Three Years Later: Austerity or Efficiency – Which First?

IN the field of physics and astronomy, there is a principle called escape velocity. Escape velocity is the speed that an object needs to be traveling to break free of a planet’s gravitational pull. An object leaving the surface of Earth needs to be going 7 miles per second, or nearly 25,000 miles per hour, to leave without falling back to the surface.

Economists have also embraced the term to describe the need for an economy to grow at a sufficiently fast rate to escape a recession and to return to a long-run rate of economic growth.
In carrying the analogy further, the escape velocity will change depending on the size of the planet. The smaller the planet, the lower will be the escape velocity.

However, small island states somehow need higher growth rates to escape a recession and to have a long-run rate of economic growth. The ECCB has suggested a rate of around 7% for St. Lucia. One of the principal issues preventing a country from reaching escape velocity is this nebulous word called confidence. How do you build confidence in a country? The question thus needs to be asked is whether an attempt at greater efficiency in the operations of government should have been pursued before austerity measures. One is of the opinion that the first activity should have been a determined effort to increase efficiency.

Having worked as a public servant, I can assure you that there is significant wastage in the public service and it should not be a difficult task to generate these savings. This increase in efficiency must have the buy-in of the public servants. Simple things like ensuring all computers are shut down on afternoons and during lunch, putting on the photocopiers only when needed, use of Skype to make calls, limitations on cell phone calls and back to the use of the good old radios, can become drops to fill the bucket.

Then there is the rental of buildings that can be consolidated. There are some buildings that are rented that can be shut down with no effect on the ability to provide a service. Many of these Education Sub-Offices are a waste of rental space and somebody needs to be reminded that we are 238 square miles and it does not take more than two hours to travel to any part of St. Lucia.

However, the most vivid picture can be drawn from a reading of the Director of Audit’s report for 2010/2011, which is available on the Government website. These are the findings of the report and the sources of increased efficiency:

Page 16: All of the Ministries and Departments we audited did not reconcile their accounts.

This is a most stunning statement. The Audit Department could not confirm the accuracy or correctness of the account balances in every government department they audited!!

Page 18: Most Ministries and Departments that we audited did not submit essential accounting records such as log books, receipt books, invoices, registers, etc.

Page 20: Our audit of the Victoria Hospital showed that the Hospital does not have an
adequate internal control system for the proper management of cash receipts, cash
disbursements and accountability for property.

There was one account in which the cash book was showing $635,436.67 and the records according the Accountant General Accounts was showing $1,211,961.62, thus $576,524.85 could not be accounted for.!!!

There are ‘too numerous to mention’ transgressions at Victoria Hospital that are stated in the report, that will shock the reader.

The same is written for the Ministry of Agriculture, Ministry of Labour, and the Post Office.
• Page 54: The Accountant General’s Department carried out an investigation of alleged fraud and embezzlement of cash held for the encashment of money and postal orders for the period April 1, 2003 and September 30, 2008. The investigation revealed that the
senior cashier failed to account for $1,566,000 remitted for encashment of money and postal orders.

The above speaks for itself. I assume that some effort at recovery is being pursued.

Finally, the report discusses two quasi-government entities that are financial strains, those being the St. Lucia Tourist Board and the St. Lucia Marketing Board, and did express concern on the levels of accumulated deficit. The St. Lucia Tourist Board stood at $8,155,513 as at March 31, 2008.

The Director of Audit has, therefore, generated a document that the Government can use as a basis to pursue greater efficiency within the public service. I am convinced from the reading that enough can be saved to make a significant dent in the fiscal deficit.

I remain convinced that the first move is to look at efficiency and as a last resort, if ever at all required, we deal with austerity measures like pay cuts. Every great business corporation looked at efficiency when they were in difficult situations. Governments of the OECS must do likewise.