Gov’t ‘output budgeting’ leaves more questions

Despite numerous questions raised over the past 18 months regarding the Cayman Islands’ current system of “output budgeting,” the government’s 2013/14 spending plan isn’t any more understandable to the average reader than it had been previously.  

The budgeting format leads to certain entries in the government’s annual plan and estimates such as $2.2 million being spent on the vague goal of “an internationally competitive financial services industry.”  

According to the records, that expenditure includes the drafting of “primary legislation supporting the areas of responsibility for the ministry” [of which there will be between 25 and 35 for the year] and “hours spent on policy and legislative reports and papers” [between 5,000 and 6,000 hours for the year].  

Another area of the ministry’s budget, “a business climate conducive to local commerce” will cost government $325,639 during the 2013/14 budget year. These expenditures include items like “small business workshops,” “hours spent providing individualized, confidential business counseling,” and “small business conference showcasing SMEs in the local market.”  

“The document used to approve spending is 380 pages long and with how the information is presented, I would personally find it very difficult to assess how the administration is going to spend $517.9 million of public money and what the public will get in return,” Auditor General Alastair Swarbrick, a chartered public accountant, said last week.  

The level of detail provided by the government output statements may seem a bit lacking. However, the chief officer responsible for the ministry, Dax Basdeo, provided examples to the Caymanian Compass about much more detailed, line-item expenditures under certain aspects of the “business climate” budget item contained in the Annual Plan and Estimates. Mr. Basdeo said the current reporting format used by government doesn’t allow them to provide more specific information.  

“We can’t,” Mr. Basdeo said. “There’s a specified format that I have to follow.”  

Numerous problems with the budget’s output-based format were identified in a report released by Mr. Swarbrick in June. Those issues go far beyond just the Ministry of Financial Services or even all the government ministries combined. The report stated that the system used to approve government’s plans and be accountable for the forecast results has not worked.  

Those problems apparently continued during the 2013/14 budget, the auditor general said. 

The output budget reporting process, Mr. Swarbrick said, is cumbersome, time consuming and complex. A large number of “outputs” that aren’t focused on key outcomes identified by the government.  

“A large number of the output measures also do not report on results of what has been delivered to citizens, but more on the activities of government,” Mr. Swarbrick found. “There has been little or no attempt to report on outcomes; the information needed to demonstrate that the government’s programs and initiatives that are delivering the results promised.”  

Mr. Swarbrick advocated simplifying the government’s budgeting framework to better link it to the actual plans and outcomes of the elected government.  

“I recently discussed these concerns with the Public Accounts Committee when it considered my report,” Mr. Swarbrick said.  

During the committee’s hearing on the matter, Deputy Governor Franz Manderson, who heads the civil service, repeated a view he stated earlier in response to the auditor general’s report in June. In his response to the report, Mr. Manderson said the public has a right to know – in detail – what money is being spent on their behalf.  

“{Issuing just] one financial statement to the Legislative Assembly could seriously undermine that requirement,” the deputy governor said. “I need a measurement regime that has more than a financial component. Any changes to [the law], should not reduce the accountability of my chief officers for the proper management of the financial affairs of their ministry.  

“We should publish more information about what we are doing both in financial and performance terms, not less,” Mr. Manderson said.  

However, Mr. Swarbrick noted that the accountability referred to by Mr. Manderson has not been achieved to date with the current budgeting process.  

“The audited consolidated position for the whole government has never been publicly reported in over eight years, leaving legislators and citizens with no reliable information on how government has generated and used significant public resources,” Mr. Swarbrick noted in his report.