Business Page – November 07, 2004

The Infrastructure Development Fund: A detour

Introduction:

It was perhaps just another irony of Guyana's political culture that the main opposition political party returned to the National Assembly after almost one year to be greeted by the Infrastructure Development Fund Bill, which the PNCR described as the creation of a slush fund. The Explanatory Memorandum to this most important piece of legislation simply and inadequately states that "the Bill seeks to establish an infrastructure development fund, to provide for its funding and due administration and for matters connected therewith."

The Explanatory Memorandum which serves to explain the Bill's purpose and contents also states that "it is hoped that the Government, with the establishment of the Fund can become a facilitator, even though a minor one, rather than a mere provider of funds for infrastructure project [sic]."

Business Page objects to this bill on several grounds. BP

1) questions the bona fide of the bill;

2) considers the bill unnecessary since it is not convinced that the absence of such legislation has inhibited infrastructural development;

3) anticipates that it will lead to more corruption and less accountability of taxpayers' money;

4) believes that the bill can be successfully challenged as unconstitutional; and

5) believes that the bill is not in accord with the Fiscal Management and Accountability Act which the Government passed into law less than one year ago.

Sowing confusion:

The Government has, as a matter of course, attacked the PNCR's criticisms of the bill as another misrepresentation by that party "clearly intended to sow confusion." A statement issued by the Ministry of Finance on November 1 completely ignored the severe and several criticisms of the legislation by Ravi Dev MP, in his column in the Kaieteur News. This statement was pure politics.

The provision in the bill that the financial statements will be audited by the Office of the Auditor General is no guarantee that the directors will make these available in a timely manner. The Minister of Finance is notorious for not tabling reports in Parliament despite his statutory duty to do so, yet here we are assigning him more responsibilities and powers over the finances of the country. Who needs to be reminded that he has failed to table in the National Assembly even a single report of the Guyana Revenue Authority - a clear violation of the law which this society now appears to accept as the norm!

A historical context:

It took some research to trace the source of the provision of the constitution under which the bill is framed, as this is not clearly spelt out. It came as a great surprise to my few politician friends that the permissibility of a separate fund was enshrined in section 109 - Establishment of the Consolidated Fund - of the 1966 (Independence) Constitution which provided as follows:

All revenues or other monies raised or received by Guyana (not being revenues or other monies that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund.

No one I spoke with has been able to explain the rationale behind the parenthetical exception but it was suggested to me that it might have been to allow for any independence golden handshake. This was a form of conscience-salving by the colonial power to the territories which they had exploited for centuries.

This Government has found the use if not the reason for the provision's existence.

Despite the fundamental changes to our constitution, first in 1970 to sever our ties with the Queen by the assumption of Republican status and then in 1980 when we went 'socialist,' and more recently when reason visited the country for a while and we set up the Constitutional Reform Committee which sought to undo some of the excesses of the 1980 constitution, section 109 has remained intact and is now found in section 216 of the current constitution.

The general specific?

What is interesting is that this is the first time in thirty-eight years that the provision about "some fund established for some specific purpose" is being invoked, and credit is due to whichever lawyer would have pointed out the possibility. Someone was clearly being clever, but was it clever enough? And even if without the famous comma, the language actually permits diverting revenues payable into the Consolidated Fund to some lesser fund. Is this consistent with the spirit of the constitution and the principle that all public monies other than with a few exceptions should go into the Consolidated Fund which is subject to a considerably higher degree of scrutiny than some special fund?

And can a bill which seeks to provide funds for the construction of bridges, wharves, building works, improvements and replacement of other capital assets including vehicles, vessels, machinery, instruments and equipment "required in respect of or in connection with the economic development or general welfare of Guyana" be considered as having been "established for any specific purpose"? Can something be both general and specific at the same time?

And to add to this vast array of unspecific purposes, the Schedule to the act allows for the funds to be applied in the acquisition of land (anywhere in Guyana one presumes, and for no stated purpose), making grants or loans or other investments in any public authority, or even to pay for depreciation. Even a passing acquaintance with the most basic concept of depreciation is sufficient to know that there is no payment for depreciation charges and that is, in fact, a mere book entry! (The payment was made at the time of acquisition and in the future you will have to pay for maintenance or replacement.)

Dangerous precedent:

Whatever have been its limitations - and the PNC has a poor record when it comes to the Consolidated Fund - the fund is considered so important that it is accorded a special place in the constitution.

It is reported on annually by the Auditor General under some very strict rules, is subject to specific accounting and reporting in the national budget that forces accounting and accountability by the Minister of Finance, and very importantly is subject to parliamentary scrutiny by the Public Accounts Committee made up of representatives of all the parties in the National Assembly. The so-called Infrastructure Development Fund is relieved of any such impediments, and interestingly, the Government refused to seek the views of the PAC, the public or the accounting profession in tabling this legislation.

This is a dangerous precedent which the Government can repeat whenever rules get in the way, since all it has to do is use its parliamentary majority to pass legislation diverting revenues from the Consolidated Fund to a special fund. Is that good for accountability or democracy, and is it fair to taxpayers?

(To be continued)

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