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Bankrupt Government

Clyde Mascoll

Bankrupt Government

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I HAD INDICATED last week that I was changing the focus of this article from analysis of the Government’s economic mismanagement to outlining a framework for rescuing the Government finances, restoring economic growth and rebuilding confidence.
I have to change my focus and return to easily the most outrageous thing that the current administration has done from a moral perspective: the amendment of the Catastrophe Fund Act to allow the Urban Development Commission (UDC) and Rural Development Commission (RDC) access to the accumulated funds of $37 million.
I consider the presentation of the Catastrophe Fund Bill to parliament in 2006 to be the highlight of my short tenure in Government. From a purely public policy perspective, the beauty of the bill was captured in the objects and reasons which stated that “this bill would provide for the establishment of a fund to be known as the Catastrophe Fund to provide financial aid to any low income earner who owns and occupies a chattel house valued not more than $125 000, where that house is damaged or destroyed by a catastrophe within the meaning of the bill.”
To put the legislation in its socio-economic context, it is important to note that owners of chattel houses have been unable to insure their properties. Therefore for a Government to conceive of such a fund is to recognize and respect its role as a facilitator, especially to the most vulnerable.
The definition of a chattel house was left to the opinion of the committee, which was guided by “at least 75 per cent of the house is wooden”. Furthermore, a catastrophe may be caused by a fire, an earthquake, a storm, a hurricane, flooding, a storm or sea surge, lightning or any other catastrophe caused by forces of nature. What coverage!
The current administration has amended the Catastrophe Fund Act to allow the UDC and RDC access to funds simply because the Government is finally accepting that it is bankrupt. So it has now sunk to a new “moral minimum” in giving itself permission to use funds intended for poor people raised from private sector businesses and private individuals and has not contributed its $2.5 million for the last three financial years. What a catastrophe!   
Any Government that has to borrow over $40 million per month to pay civil servants is bankrupt. Any Government that is using accrual accounting and owes the University of the West Indies some $150 million and is still boasting of cutting spending is not only bankrupt but ignorant with respect to what accrual accounting means. Any Government that has not built a major road after almost five years is bankrupt.
Any Government that found a way to double its overdraft facility at the Central Bank without seeking parliamentary approval, while raising the local lending limit on more than four occasions, is bankrupt. Any Government that has been unable to give civil servants an increase in salaries for the last four years, in the face of galloping consumer prices, is bankrupt. And finally, any Government that has to sell its 2010 budgetary policies to the Inter-American Development Bank in 2012 for US$30 million is bankrupt.
It is obvious that the Government in its state of bankruptcy has stumbled onto a way to put funds into the Urban and Rural Development Commissions from the Catastrophe Fund even though there has been no catastrophe caused by forces of nature; but rather a catastrophe caused by men pursuing fiscal ignorance. The Government is so confused that it has to rob the poor to make funds available to the commissions for the upcoming election. A perverted Robin Hood!
The Government has certainly reached a moral minimum when it goes to Parliament and gets approval for spending by the commissions. Then some years later, the same Government, having already spent the money, seeks to replenish the budgets of the commissions by soliciting funding from outside of the Consolidated Fund. This time the NIS is not available, so the Catastrophe Fund is abused without its use being reflected in the fiscal deficit.   
This is an act of both economic and political barbarism on the part of Barbados’ weakest Government ever and is morally wrong.
Governments in the past have overshot budget allocations and wasted resources; but never has a Government of Barbados changed its character, through amending legislation, to qualify for funding that was not intended to be used by Government at just about any time. It is the final fiscal straw wrapped in immorality!
• Clyde Mascoll is an economist and Opposition Barbados Labour Party spokesman on the economy. Email [email protected]