Public Finance and Political Influence
In a previous article, reference was made to the recently passed Public Finance and Management Act. This Act, which seeks to govern the oversight and the management of public entities, state-owned enterprises (SOEs) and commercial state-owned enterprises (CSOEs), is a laudable addition to Barbados’ integrity regime. Before the Bill became law, it was reviewed by a select committee of parliament where some provisions were added, changes made, and others omitted. Additions included the Comptroller General, who has a supervisory role over various standards and financial practices of public entities, SOEs and CSOEs. Further, changes were made to the penalties for criminal offensives which moved from 170, 000 to 200, 000. Yet, despite these commendable amendments, there were changes and omissions of with provisions that warren attention and an explanation.
Omissions and changes
Omissions included statements of assumptions and methodologies underpinning government’s forecast in the fiscal framework. Whereas, changes were made regarding how frequent SOEs and CSOEs are required to hold public meetings. Rather than on a yearly basis, the amendments stipulated that these public meetings be held once every two years. This is a questionable adjustment since the provision further states that during these meetings, the performances of these entities over the previous year are to be provided. Arguably, this provision should stipulate that the two preceding years ought to be reviewed rather than the single previous year.
Political interference
More substantively, amendments were made that may have potentially diminished the effectiveness of the Act in governing public finance in a prudent manner. In the original draft, under the ministerial standing instructions provisions; Section 102, attempts were made to limit ministerial interferences in SOEs and CSOEs. Conceivably, this provision was included since political interference is a major contributing factor to financial losses, wastages, misfeasance and potential malfeasance. These limitations stipulated that the minister responsible for the SOEs or CSOEs could not give directions that curtailed the independence of these entities or that sought to achieve particular results.
These included matters relating to the hiring, dismissal, promotion, pay or other employment arrangements for any employee; on the awarding of a procurement contract; on the use of any coercive powers; or on the use of any discretionary powers of the CSOEs or SOEs to confer benefits to a third party. These provisions would have superseded those within other SOEs’ Acts such as the Barbados Water Authority and the National Housing Corporation, where ministers are permitted to give directions of a broad or specific nature to these SOEs’ boards. Arguably, these ministerial directions permit political interference into the affairs of SOEs that can result in financially imprudent decision making. As such, political interference can undermine the general objectives of the Public Finance and Management Act.
Future amendment needed
Therefore, the ministerial standing instructions provision gave merit to the perspective that ministerial interference is a concern in when seeking to achieve prudent public administration and financial decision making. For this reason, Government’s decision to omit this provision is unfortunate and worthy of an explanation. More importantly, within the foreseeable future, this omission should be reconsidered and reincluded through an amendment. Given the severity of problems that Barbados confronts, this administration must be transformative in the reconstitution of government’s operations, as fortune favours the bold.