Shortly after taking office in 2011, Premier Dr. Orlando Smith’s government launched a raft of laudable fiscal reforms.
In April 2012, Dr. Smith signed the Protocols for Effective Financial Management, a version of an agreement ratified by most of the United Kingdom’s overseas territories following the corruption crisis in the Turks and Caicos Islands.
Around the same time, important amendments were made to the Public Finance Management Act, and needed changeswere implemented in the Treasury.
Another key initiative was the VI’s first three-year Medium Term Fiscal Plan, which was released to the public in late 2013. The second MTFP followed about a year later.
All of these measures were welcome. For too long, successive government had played fast and loose with public money, and dubious financial practices had become the norm: pork-barrel spending; political meddling; abysmally poor planning; and a lack of transparency, to name a few.
The reforms were a big step in the right direction, but if they are to be effective government needs to follow through with them. So far, leaders have been largely kicking the can down the road.
In the coming year, then, tough decisions will need to be made.
Though government has not released the most recent MTFP — which is troubling, especially since officials haven’t said when they will do so — Dr. Smith’s Monday Budget Address repeated several previously promised revenue-generating measures that apparently have been delayed.
These include restructuring work permit fees, increasing water rates, introducing an environmental levy, and revamping the payroll and stamp tax regimes.
Other previous promises — including plans to double alcohol import duties and to significantly reform the civil service in keeping with a 2012 job analysis — were not mentioned.
Such plans are not the only financial targets to be pushed forward. The first MTFP called for the territory to comply with the UK borrowing guidelines by the end of 2015. Largely because of government’s outsized spending on capital projects, this did not happen, and the goalpost has been moved to the end of 2017.
Meanwhile, the Protocols for Effective Financial Management apparently are being sidestepped even as government pushes for an airport expansion that would be the largest capital project in VI history.
The Protocols require a business case to be completed before the procurement process begins for any major capital project. A procurement process for the new airport started in 2012, but Governor John Duncan said last month that the business case has not been completed.
Such signs are troubling. VI and UK leaders should be working together to ensure that the territory sticks to the financial goals it has set for itself in recent years.
In the Budget Address, Dr. Smith defended recent spending by saying that it has been used for much-needed projects. He has a point: It would be hard to dispute the importance of recent initiatives like the new hospital, National Health Insurance, and roadwork.
However, this consideration doesn’t alleviate the need to make sound financial plans and follow them over the long term. In the coming year, we hope to see a renewed commitment to this goal.
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