Premier: Budget criticisms ‘have merit’

Premier Alden McLaughlin

Potential multi-year spending plan proposed 

 

Cayman Islands Premier Alden McLaughlin acknowledged that the territory’s annual budget process drains too much staff time and government resources, while not truly achieving the intended goals of transparency and properly measuring results.  

Mr. McLaughlin said there have been long-standing criticisms from several sources over the way the government’s budget is prepared and presented. He cited an editorial in the Caymanian Compass last week, as well as recent statements by Auditor General Alastair Swarbrick that indicated he could not determine how the government was going to spend $518 million this year.  

“[These] criticisms, I believe, do have considerable merit,” Mr. McLaughlin said on Wednesday.  

The premier said he did not believe the government would return to the time, prior to the introduction of accrual accounting and the Public Management and Finance Law, where it was revealed “precisely how much government spent on each pencil that was used in the government administration building.  

“But there is substance in the criticisms that many of the descriptions in the current budget are, I think, unnecessarily vague,” he said.  

The Compass reported last week that dozens of items in the government’s proposed 2013/14 spending plan appear not to identify any precise spending, or any measurable outcomes.  

The budgeting format leads to estimates such as $2.2 million for “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 of Financial Services’ budget refers to “a business climate conducive to local commerce” that will cost government $325,639 during the 2013/14 budget year. These expenditures include such items as “small business workshops,” “hours spent providing individualized, confidential business counseling,” and “small business conference showcasing SMEs in the local market.”  

The chief officer responsible for the ministry, Dax Basdeo, provided examples to the Compass about much more detailed, line-item expenditures under certain aspects of the “business climate” budget item. Mr. Basdeo said the reporting format used by government doesn’t allow them to provide more specific information.  

Premier McLaughlin said some changes were clearly needed to the government’s Public Management and Finance Law, and that the Progressives-led administration would be “carefully examining” the matter in the coming months.  

“The issue is really what it is government seeks to achieve, rather than how many programs or policies or how many meetings or how many discussions actually go into getting that particular result,” the premier said.  

The process needs to become more efficient, Mr. McLaughlin said, potentially providing more breathing space for government budget managers.  

For example, the newly elected Progressives government, which had to enact a temporary budget between July and October, is now in the final stages of approving its full-year spending plan through June 30, 2014.  

However, once that is completed, the government will – next month – go right back into the planning for the 2014/15 budget, starting with the strategic policy statement due in late November.  

“It essentially takes up about nine months of the year to get the budget presented,” Mr. McLaughlin said. “If we can, in some way, reduce the length of time and the resources that are devoted to budget preparation year on year, those resources can be … better utilized in other aspects of managing government.”  

One solution that could be considered is found in the Channel Islands, he said.  

“It is possible to develop a budget process that isn’t restricted to a single year, as is the case in Jersey. We are certainly looking at the prospect of changing our system so we don’t have to go through all of the tremendous amount of work and effort that it takes.” 

Premier Alden McLaughlin throne

Premier Alden McLaughlin gives details of the latest budget.
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