Additional Funds Sought for Pension Payments, Royal Oasis Payments and Prison, Police Force and BTVI Recurrent Expenses
Communication by Prime Minister and Minister of Finance the Rt. Hon. Hubert Ingraham to debate on Supplementary Appropriation Bills on recurrent account for the 2007/2008 fiscal year.
THE PRIME MINISTER: As members would know, the requirement of the Constitution with respect to expenditure of public monies voted by parliament is that the amount authorised by parliament is not to be exceeded except under circumstances which warrant the issuance of a contingency warrant or under circumstances which warrant the passage of a supplementary appropriation bill.
It does not matter whether or not the expenditure is less than the total amount expended by the government, so long as it is in excess of the amount granted for that head, you need a supplementary appropriation bill to add to the head.
For instance, parliament authorised a recurrent expenditure of $1.465 billion for this fiscal period. We are not going to spend $1.465 billion on recurrent account; we are going to spend less money than that. But the head of the budget dealing with pensions (head 5) makes provision for pension payments and gratuity for public officials to be of the order of $54 million.
That $54 million is going to be inadequate to pay the pensions this year. Notwithstanding that overall we are spending less money than was approved by parliament, we have no authority to increase the expenditure under head 5; which is the Department of Public Service, above the limit of $94.3 million that had been approved by parliament – hence the request for an increase in the expenditure of $6.5 million for pensions to public officials.
At the beginning of a year an estimate is taken. First of all there is certainty as to the persons who must retire. There is no question that if you are 65 years of age you must retire. So we can calculate quite easily how many of such persons are going to retire, what their gratuity is going to be and what their pension entitlement is.
The second stage is to make an estimate based upon past trends as to how many people who are not yet 65 are likely to retire. Sometimes you have indications from such people in advance and so it is easy to include those persons in your calculation.
Then you have a category of persons who would have served the public service for 25 years, have the age entitlement and who may choose at their own volition and accord without any notice to yourselves to retire.
Teachers as an example during summer months have a tendency to take advantage of this, and so do other persons in the public service if they think it is most advantageous for them to do so. But whenever they retire they are entitled to be paid. Whether the government knew they were going to retire is irrelevant from their point of view.
The Public Service tells me that their estimate was exceeded by 152 in the 2007/2008 period; 152 more people came forward and retired than they had expected and as a consequence of that they were short of $6.5 million dollars.
Hence the request before you today to approve the $6.5 million.
Such persons will be paid. We are seeking though to further modernise and make efficient the administration of the public sector and its finances. For instance, not long from now whether it will take one, two or three years, I hope to be able to come forward and say not only that we may have a shortfall of $6.5 million, but to be able to determine all the areas where we are going to have monies left over and only come to parliament for authority for the differential between the two sums.
Because while $6.5 million is needed for pensions, indications are that there may be other savings in head 5 which ought to be netted off rather than having to wait for the final accounts to be presented for that to happen. But we are not there yet and we hope to get there.
I might also advise members that the projected outturn for this fiscal period is roughly on target as to what I projected when I presented the budget on May 28. The recurrent expenditure is likely to be of the order of $1.44 billion. There might be a differential of about $10 million in terms of overall recurrent expenditure and recurrent revenue is likely to be a differential of between $10 and $20 million in terms of what I said the projected outturn was on the 28th.
On the revenue side we have been fortunate in that we received up to $65 million in unanticipated revenue. Having not received that we would have had a shortfall of nearer to $100 million on revenue account. We just happened to have been fortunate this particular year in terms of that extra $65 million.
Also, I note that the Member for Englerston had raised this issue before and so I am going to seek to be clear on it again.
We had projected on recurrent account that there would be a surplus of $25 million, meaning that when the government collected its revenue and paid its recurrent bills for the fiscal period, there would have been a difference in favour of $25 million dollars.
That is, in effect, a paper difference because you still have to spend the money for the capital account and that would be eaten up in capital expenditure. But it is true to say that we had a budgeted surplus on recurrent account and the recurrent surplus is likely to be of the order of $20 million for this fiscal period. All indications are, up to yesterday, that that is likely to be the case. We are likely to also only spend on capital expenditure about $210-$220 million.
We still hope to be able to make the mobilisation payments for the Eleuthera roads before the end of this month. That is proving to be challenging and so if that is not done then the expenditure is likely to be nearer to the $210 rather than $220 million as we projected.
We paid $64 million for debt redemption, meaning that is the amount of debt we paid down. And the government has an overall GFS deficit of $126 million, and that number is likely to remain at around $126-$130 million by the end of this month.
With respect to the second Bill, the Prisons Department needed additional monies for gasoline, diesel and food to the extent of $241,000, $1.3 million for the Royal Bahamas Police Force for transportation of persons within The Bahamas, telephones, gasoline and clothing.
We are hoping that the Police will not continue to be a perennial entity insofar as not being able to have reasonably accurate budgeting. They made efforts last year, they made some improvements this year. Hopefully we’ll see evidence of further improvements next year.
And the same thing applies to BTVI where another $350,000 is required, and we are hoping that BTVI would have more discipline than they have evinced to date.
Members will also see for Royal Oasis $810,000. Members will recall that we did a supplementary appropriation bill for $4 million to pay the people who were working at the Royal Oasis Hotel. And we paid them just over $3.5 million of that. There were some complaints about persons who said they did not get paid their vacation money, people who said they were entitled to be paid as supervisors but only got paid as regular workers. We’ve done an analysis of that. Lehman Brothers has come forward and paid the government the monies that they agreed they would pay and so we are now in a position to consider the request of the additional workers.