Wastage and ‘fat’ in the budget taking money away from critical areas

Apr 14, 2013 AFC Column, Features / Columnists

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The 2013 National Budget debate has concluded and now Members of the National Assembly will turn their attention to examining each line item, each allocation – and the government will have the opportunity to justify each allocation.
The Alliance For Change is of the view that most of the allocations are indeed necessary and do serve the best interest of Guyanese, and will therefore support these allocations by voting in favour of them. On the other hand, there are some allocations where the government has provided very little details, forcing the AFC to propose that such allocations be amended. However, should the government provide good and sufficient reasons for such allocations, it will get the support of the AFC. Then again, there are allocation set aside that are simply not necessary at this time and only serve to increase our national debt or fuel corruption.
As the line-by-line examination of the estimates proceeds, the AFC’s approach will be to support necessary and meaningful spending and priority projects, even as it trims off excesses and wastage, so that savings can be reallocated to other critical areas.
Only recently, residents of the East Bank of Berbice protested, because once again they were being told that no money was available to rebuild their main road. If the government should practice prudent spending and cut wastage and ‘fat’ from the budget, these savings along with money stashed away in slush funds and other funds not deposited into the Consolidated Fund, can go towards critical projects like the East Bank Berbice Road, a new bridge across the Demerara River, teachers’ accommodations at hinterland communities or a range of other projects which are desperately needed.
While the government would want the population to think that the best possible use of money has been put forward and that the 2013 budget has a ‘basket of goodies’ especially for low income earners, closer examination reveals a few wormholes in the ‘goodies’.
Like David Copperfield, the Finance Minister during his presentation, with dramatic effect and to resounding applause from his colleagues in government, announced the lowering of Income Tax from thirty-three and one-third percent to thirty percent, a reduction of three and one-third percent. The only things missing were the dimmed lights and enchanting music. The Finance Minister, like a great magician, held out the lowering of Income Tax and captivated his audience.
Following the presentation of the estimates, the headlines the next day proclaimed, ‘Income Tax Reduced’. This became the new ‘buzz’ around town and many people, from all walks of life, hailed the lowering of the income tax. The captive audience paid little attention to what was occurring on the other side of the stage. The increase in NIS contributions! For those persons earning more than $50,000 per month, from June 1, 2013, an additional 1% will be deducted from their gross earnings.
Let us examine the effect of the lowering of Income Tax and the increase of NIS deductions on a person earning $75,000 per month. This is the earning of many teachers, nurses, firemen, prison officers, clerks and so many others in the public sector and many more in the private sector, including security guards.
Before June 1, 2013 the deductions would be – PAYE (Income Tax) $8,325 and NIS deductions $3,900 leaving net earning of $62,775.
From June 1, 2013 the deductions would be – PAYE (Income Tax) $7,500 and NIS deductions $4,650 leaving a net earning of $62,850.
The increase in disposable earning for this person is a paltry $75 and the government would want us to rejoice over this. What can you do with an additional $75? This is not even enough to buy a ‘soft-drink’.
What the Honourable Minister and the PPPC government have attempted to do, is a sleight of hand, where they distract you by making a lot of noise and waving around of the lowering of Income Tax and slyly slip in the other hand, the increase in NIS deductions. This is the first bit of trickery the AFC has uncovered in the PPPC 2013 National Budget Estimates. The truth behind the illusion created by ‘The Great Ashni’ has been revealed!
Again this year, we see the Estimates loaded with ‘Miscellaneous’ expenditures and ‘Other’. Vast sums have been allocated to these shady expenditures and the government would want the opposition to approve these expenditures. The AFC, like it did last year, will be demanding details for these line items. It is absurd for the government to think it can list billions of dollars as ‘Miscellaneous’ expenditures and have it approved by the National Assembly. The AFC would be failing in its responsibilities to the people who voted for us, and indeed the entire electorate, if we do not demand explanations for these allocations.
Another set of expenditures to be carefully examined are those described as ‘Fuel and Lubricants’. Here again vast sums have been allocated. It begs the question, how many vehicles do some of these ministries and departments have?
The 2013 budget estimates make provision for considerable infrastructural works. How can we be assured that these projects will deliver value for money? The Public Procurement Commission, which is designed to be the ‘watch-dog’ over public contracts, to ensure that tax-dollars are not filtered away into private purses while taxpayers are left with sub-standard projects, has not been set up. There are some contractors who have failed to perform on contracts they were awarded, yet the government continues to award more contracts to these ‘slippery’ contractors.
The government, while it is blowing its own trumpet over the largest ever budget, has failed to show how it intends to create employment for the thousands of young people without jobs.
During the 2012 Budget Debate, the government in its request for a $5 billion bailout for GPL was questioned on the need for the allocation. This year, they have allocated a further bailout for GPL but within the past year, GPL has failed to make any advance in reducing line loss.
Does GPL deserve a bailout while the same managers who failed to improve the company’s performance are still at the helm? Did GPL implement the improvements it promised with the bailout it received last year?
As the Assembly examines the estimates, it is up to the government to provide the information that would secure the support of the opposition. The ball is in the government’s court!

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