In a recently published report dated December 2013, the Auditor General looked at “The Accountability of Statutory Authorities and Government Companies” (SAGCs) in the Cayman Islands.
I suggest that the best way of explaining his report is to use the baseball analogy that SAGCs are stuck on first base and, since the Public Management & Finance Law (PMFL) was first made in 2001, have been for nearly 13 years.
Perhaps, in light of this obvious failure, we should be doing something else. Before making an observation on that issue, let us examine the current situation as stated in the AG’s report.
Up to bat: In our baseball analogy, a statutory authority or government company is up to bat when it lists the activities which government is to buy for the upcoming financial year.
First base: The SAGC advances to first base when the government appropriates money for the activities which it has agreed to buy.
Second base: An SAGC would advance to second base if it presented timely annual reports, including financial statements. Of the six SAGCs examined by the AG, by the end of 2012, none had tabled audited financial statements for the financial year ending June 30, 2011. Since the failure to produce or late production of annual reports, including audited financial statements, is a constant refrain from the AG, one must conclude that SAGCs are stuck on first base and have been for nearly 13 years.
Third base: An SAGC would advance to third base if the activities which it lists in order to obtain an appropriation of money were tied to “strategic goals and objectives” which are supposed to be stated in the annual ownership agreement produced under the PMFL. The AG found that SAGCs were listing activities as “strategic goals and objectives” which negated the purpose of management-by-objectives, as “strategic goals and objectives” are supposed to drive the activities; results can only be measured at the end of a reporting period by looking at whether the activities done during the reporting period fulfilled the “strategic goals and objectives.”
Home plate: An SAGC would advance to home plate if its “strategic goals and objectives” meshed with those of the government. The AG found that the government’s annual strategic policy statement was not sufficiently specific to provide guidance to the SAGCs examined as to what the latter’s strategic goals and objectives should be.
Who’s on first? The AG found that there was often confusion between the roles of a minister and members of the board of directors of SAGCs as to accountability arrangements and the nature of each other’s responsibilities. At paragraph 41 of his report, the AG said the following: “In speaking to ministers and board members, we found that the ownership and purchase agreement approach has not served either core government or SAGC community well as both parties are dissatisfied.”
This dissatisfaction and confusion is not surprising as, under the Constitution of the Islands, ministers are given responsibility by the governor for a certain aspect of the government’s business, and are made accountable to the Legislative Assembly for performance of that responsibility, but are not given any power to drive the performance of that responsibility in the Public Service Management Law.
What to do? The AG stated that: (1) the government, as represented by the minister, is responsible for developing and communicating government policy and developing a strategic policy statement which sets out clear strategic direction and, if this was done by government adequately, SAGCs would have a better understanding where they fit within government’s strategic direction and policies; and (2) the person to communicate that clear strategic direction should be the minister, thereby enabling him or her to have direct input into establishing what is expected of SAGCs . The AG recommended that government should provide training to chief officers of ministries and portfolios, board members and chief officers of SAGCs on the governance framework and the roles and responsibilities of those involved in the relationship between core government and SAGCs.
Some questions: Since the ownership and purchase agreement approach has not served well either core government nor SAGCs for approximately 13 years, it is fair to ask: (1) will it ever work? (2) should it be scrapped?
Is training the answer to the constitutional quandary that the minister has responsibility and accountability but no power?
The management-by-objectives approach works only when the “goals and objectives” are measurable. Is it possible for the government or SAGCs to set measurable “goals and objectives” for a lot of soft goals? Is it possible for all SAGCs to do so?
These are some things to think about; it is clear that the AG does not like the SAGCs being stuck at first base; neither should we.
Since the ownership and purchase agreement approach has not served well either core government nor SAGCs for approximately 13 years, it is fair to ask: (1) will it ever work? (2) should it be scrapped?