Phillips, Shaw clash over info on Gov’t arrears

Inside Parliament

With Balford Henry

Sunday, April 20, 2014    

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A row between Minister of Finance and Planning, Dr Peter Phillips and Opposition spokesman Audley Shaw over

access to information on Government's arrears, is developing into a major underlying budget issue.

Shaw first raised the issue of government's arrears and its impact on the expenditure side of the estimates, during the discussions on the 2013/14 supplementary estimates in March. He raised it again during the Standing

Finance Committee's (SFC) deliberations on the 2014/15 budget, during which Phillips committed to providing him with details of the arrears by last Tuesday.

However, up to Thursday's start of the budget debate, Shaw told the Speaker that he had not received the information from the minister.

"I just received a folder from him, but critical pieces of information are missing. Tomorrow is a holiday and Monday is a holiday. When will I receive the information?" Shaw asked the Speaker, Michael Peart.

Dr Phillips said that he had provided Shaw with all the information that he had been able to acquire from his staff.

"Everything that he has asked for that we have, he will get," Phillips said. "I indicated to him when I gave him the information, that there will be additional information that he shall receive before the end of this afternoon."

"And those you do not have?" Peart asked.

"Any information that he has asked for that is in the possession of the Government of Jamaica, appropriately collated, he will get. There is nothing that we have, that he will not have, once we have it," Phillips responded.

"The public officials who are putting together the information under the direction of the financial secretary, have been working at great pace to get the information together. They can only give him what they have. There is no plan to withhold, to disguise, to hide or anything else with the information," Phillips remarked.

"I just want to remind you that the Honourable Minister had promised to provide the information within one week, which would have been last Tuesday, (and) I just want to remind him that in respect of the arrears owed by the ministries, departments and agencies (of government), this certainly would be information that the Government has and must be made available, as I have requested," Shaw stated.

"He will get that later today," Dr Phillips said.

Shaw confirmed yesterday that he has received additional information from Financial Secretary Devon Rowe. However, he is insisting that the information does not include the details of the arrears owed by the Government ministries, departments and agencies (MDAs), which is the critical information that he is seeking.

"I have gotten a summary of the arrears. What I want is a detailed breakdown of the arrears in each of the ministries, departments and agencies. I have informed Mr Rowe that the summary is not enough," Shaw said, noting that there are several MDAs which are of particular interest to him, including the Ministry of Health and the Jamaica Defence Force (JDF).

The Fiscal Policy Paper (FY2014/15) tabled by Phillips on Thursday admitted that "for some time now, the Government has built up payment arrears for goods and services provided to

the MDAs".

"While it is expected that there will be some arrears, from time to time, the Government acknowledges that arrears which remain outstanding for long periods, will have a negative impact on the sustainability of any business and impose significant risks on the budget," the ministry commented.

The ministry added that, in light of this, strategies were being utilised to better manage the arrears built-up by the MDAs.

Under the heading, "Non-Wage Non-Debt Expenditure", the ministry stated that the government intends to maintain a cap on the arrears through the following startegies:

"Under the EFF (Extended Fund Facility), a cap has been placed on the over 90 days domestic arrears at the level of that at end-March, 2013.

"Domestic arrears were identified including statutory deductions for PAYE, NIS, NHT and Education Tax, drugs and medical supplies and other purchases of goods and services. The total sum of these arrears became the cap against which performance is monitored. MDAs are required to submit monthly reports to the MOFP (Ministry of Finance and Planning), which are monitored to ensure that the cap is not breached. Where there is a threat to the cap, resources will be strategically allocated within the limits of the expenditure budget to make the requisite payments, as was done in FY 2013/14, where resources were reallocated in the supplementary estimates to pay down arrears for public utilities and statutory deductions.

"The Government of Jamaica will also seek to set off obligations it has to suppliers of goods and services, against amounts owed to the government by those same suppliers. With respect to electricity arrears for street lighting, the MFOP and the Ministry of Local Government will be collaborating early in FY 2014/15 to develop a sustainable strategy for addressing the problem. The strategy will include a programme to convert the current light bulbs to energy- saving LED bulbs".

In terms of the withholding of statutory payments at source, the FPP stated:

"Recognising that the build-up of statutory deductions arrears was presenting a serious risk to the arrears cap, the MFOP issued financial instructions to allow for the withholding of all statutory deductions (PAYE, Education Tax, NIS and NHT) by the Accountant General (AG), and for those sums to be transferred directly to Tax Administration Jamaica (TAJ). The instructions extended to all educational and health institutions which were not covered under the previous arrangement, where only PAYE and Education Tax were withheld by the AG. Those instructions took effect on March 01, 2014".

The FPP also noted that the revised system will ensure that commitments to spend can only be made where a warrant exists to cover the funds required to support the issue of a purchase order. The purchase order is an electronically generated document, which is sent to a supplier or vendor authorising the supply of goods or services.





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