The Government flexed its majority in the House of Representatives over proposals from the Opposition to give Parliament more authority over the use of Petrocaribe Venezuelan oil facility funds on Tuesday.

At the heart of the conflict was a bill tabled by Minister of Finance and Planning, Dr Omar Davies, for the establishment of a fund which will be responsible for receiving the loan proceeds that will flow to Jamaica under the Petrocaribe oil agreement with Venezuela.

The fund will also provide financing for approved projects and meet debt service obligations for Jamaica under the arrangement.

But, Opposition spokesmen insisted on full parliamentary control over the spending, stating that this was necessary to avoid the funds being used in a “run wid it” fashion.

This was in reference to Davies’ famous post-2002 general election speech, in which he suggested that he had allowed public spending on some projects he would otherwise have not, in an election year. Davies subsequently apologised for the statement.

The Opposition called for a divide (a vote) after Dr Davies rejected a proposal from its spokesman on finance and planning, Audley Shaw, for the insertion of a clause to subject the funds to normal parliamentary scrutiny, as part of the budgetary process. They were defeated 27-16.

But, undaunted, Leader of the Opposition, Bruce Golding, proposed an amendment to clause 17(h) which would, ensure that the funds would only be available as loans to the government for projects whose expenditures are financed by appropriations through the budget.

Golding said that his would effectively “place every penny of expenditure under the programme within the budget, or the Consolidated Fund, and subject it to Parliamentary scrutiny”. But, that amendment was defeated 26-15.

The bill was brought to Parliament by Dr Davies to amend the Petroleum Act to create the Petrocaribe Development Fund, which will be responsible for administering the resources which will flow into Jamaica under the oil facility arrangement with Venezuela.

Established in June, 2005 the facility allows Caribbean countries to purchase their oil from Venezuela on conditions of preferential payments. These include reduced upfront payments, while the remainder is paid through a 25-year financing agreement at one per cent interest.

A ministry paper (number 91/06), tabled by Davies Tuesday, said that actual inflows to Jamaica commenced in February this year, and that as at October, a total of US$174.3 million (J$11.4 billion) flowed to Jamaica under the agreement.

He said that while efforts had been underway to formally establish the Petrocaribe Development Fund, the Petroleum Corporation of Jamaica (PCJ) had held the resources as deposits and short-term instruments in a number of financial institutions.

A total of J$217.8 million has been earned in interest income during the period.

He said that advances amounting to $9.3 billion had already been made from the proceeds to Central Government and several public entities including – the Sugar Company of Jamaica (SCJ), $2.2 billion; Clarendon Alumina Production (CAP), $2.2 billion; Air Jamaica, $1.7 billion; the Ministry of Housing, Transport, Water and Works, $1.7 billion; the Port Authority of Jamaica (PAJ), $726.5 million; and the Urban Development Corporation (UDC), $257.5 million.

However, he said that Cabinet had now decided to put in place special arrangements to administer the inflows, as well as manage the build-up in liabilities to Venezuela, settle obligations when they were due and to ensure that the resources were utilised effectively to finance the country’s development.

He said that it was also intended that the funds were managed prudently, within the context of the overall macro-economic programme and in accordance with the overall debt management strategy.

Dr Davies said that Cabinet had decided that the proceeds should be utilised to raise primarily the social and physical infrastructure. He said that the Fund would not be managed by the political directorate, but by a group of technocrats under the chairmanship of the Financial Secretary.

He said that the amendment to the Petroleum Act, which he was seeking, would establish a governance framework for the management of the resources.

However, this did not appease the Opposition and Golding insisted that the minister was planning to “run wid it” again with another general election approaching.

Saying that he “smell a rat”, Shaw suggested that the minister needed to review the way the issue of loans was handled in the Ministry Paper compared to the bill.

“Any money that is coming out of the Petrocaribe Fund must be a loan. Wherever it is going, it is a loan and, therefore, the law must specifically circumscribe that it is a loan,” he insisted.

“In the context of the importance of the Petrocaribe funds, and the fact that it is a loan that must be paid back, I believe the minister would want to use the opportunity to remove all ambiguity from this issue,” Shaw added.

He said that this was a major deficiency in the bill and, if it is passed in its present form, it would be leaving an avenue for “running with it” or “arbitrarily dipping into the Fund, as a giant cookie jar, to carry out favourite projects, without knowing how it is going to be paid back in the future”.

Shaw added that in terms of the auditing of the fund annually, for “absolute transparency”, it should not be audited by auditors appointed by the Fund, but by the Auditor-General and this should be stipulated in the bill.

“It should be subject to the annual audit of the Auditor-General. This is a specific recommendation we are making and we see no reason why the minister should object to that,” he said.

He also expressed concerns regarding the reporting procedures. The expenditure would be subject to annual reports tabled in Parliament four month after the financial year ends.

“We believe that, in regard to the expenditure of these funds, it should not be done outside of the review and scrutiny of parliament,” Shaw demanded. “A model exists in the Capital Development Fund. Every major drawdown comes to Parliament. We don’t believe that a fund so substantial should be spent outside of some kind of rigorous parliamentary scrutiny. It’s just not good precedent. It’s just not good practice and this is significantly larger that the Capital Development Fund.”

He said that if the Fund produced $150 – $180 million per year, as projected by Davies, then why can’t the House’s Standing Finance Committee, which examines every area of expenditure of Central Government prior to the passage of the budget, examine the Petrocaribe Fund?

He said that the Opposition was proposing that an appropriate clause be put into the bill, that would subject the Petrocaribe Development Funds to normal parliamentary scrutiny, not just after the funds had been expended but, more importantly, at the time of the budgetary process.

Golding also raised the disparity between what was in the ministry paper and what was crafted into the amending bill, arguing that that could not work, because the funds could not be kept out of the budget but when repayment time came, the budget had to bear the burden.

“It can’t work that way,” he said. “If the House is to have the burden of approving the repayment, then the House must have the authority to approve the expenditure.”

“I urge the minister not to let us argue and quarrel on this one, because it makes such eminent sense. If you are setting up a fund which is to be the custodian of the proceeds of this loan, then you have to protect the integrity of the operation of the fund. You can’t leave the funds in a position where ten years time government will consider whether the money should be provided to repay the loan,” Golding commented.

He said that he was also concerned about the provision in section 17 h, where authority was being given for the funds to be used for other related purposes on such terms and conditions as may be prescribed.

“Prescribed by whom and subject to what scrutiny?” Golding asked.

“The minister has been given the power, in the substantive statute section 26 (2), to make regulations and it allows him to prescribe such things as are necessary for the proper functioning, or carrying out of the purposes, of the bill. It is not subject to affirmative resolution. It is not even subject to negative resolution. So the minister is under no obligation to come here to seek approval, and we would have no opportunity even to raise a motion before the House to ask the House to deny approval. It means the minister could run with it.”

He proposed that it should be subjected to affirmative resolution.

He also questioned the regularising of the disbursements that were made prior to the establishment of the fund and the ability of Air Jamaica and the Sugar Company of Jamaica to repay their loans.

Responding to the Opposition’s concerns, Dr Davies said that whatever had been done would be “formalised, regularised, tidied up,” once the bill was passed and the funds were formally in place.

In terms of the request for the audit, he said that nobody had to invite the Auditor-General to do so and nobody could stop him, if he wished, from auditing the fund.

“What we spoke to, is the fact that this entity will be required to have formally audited statements which will be tabled in this House,” Dr Davies said.

He said that an essential point raised by the Opposition was for the recording of everything, and requiring that bill, explicitly, dichotomises the debt and the need for repayment, either between public sector entities or central government.

He said, however, that one critical factor was overlooked by opposition.

“This fund, if you look at the loan terms, they provide a spread for the fund above the terms of its repayment and the management of the fund. Here is scope for a little bit more in terms of interest rates being charged.

” I do not legislate to them as to the terms, but I think the Port Authority at five per cent is somewhat kind.

These funds are going to make some money and President Chavez realised that what he was doing was providing the government with soft funds which would allow the fund, properly managed, to make money,” Davies added. “So it is not by error that it is allowed the flexibility, because the money will not be onlent at one per cent except to central Government.”

At this point, the Leader of the Opposition rose on a point of clarification and expressed his concern that the minister seemed to be saying that since the fund was going make some profits, it should be allowed to spend money, whether from profit or inflows, without taking into consideration the contingent liability to repay.

But Dr Davies said that those remarks were based on the fact that nothing that the Opposition spokesmen said indicated their acceptance that the fund was going to make a profit.

“If you are acknowledging that this is so, and you are speaking about any expenditure above and beyond the profit being made that’s a different question. But, the manner in which your positions were couched did not seem to recognise that the fund, by virtue of having 25-year one per cent money, was in a position, with proper investment, to make a significant profit,” he explained.

He said that, in terms of the proposal to report to the Standing Finance Committee at the start of the financial year, this was not practical because what the fund would be doing was responding to requests and proposals which would be forthcoming.

” I would say to you, we did not know three months before that the Port Authority would be seeking funding. It is just not possible for us to be able to indicate what will be the pattern of expenditure by the fund over the fiscal year. Nor, are we in a position to even know the level of inflows, because these inflows are dependent on the price of oil which obtains at the time,” the minister said.

“We have sought to place on this fund a reporting requirement which is tighter than that which obtains at other institutions. An audited report four months after the end of the financial year… and while I understand the need for the knowledge of the expenditure, that can only be done at the end of the fiscal year,” he said.

“I understand the concerns about possible misuse of the funds. I understand concerns about the fund being used to expand government expenditure, but the reality is that, apart from Parliament, there is a reality in terms of public knowledge of what is expended.” he went on.

“The legislation provides adequate assurance to Parliament that there will be total transparency in the management of this fund. No legislation is perfect. We don’t feel we have a perfect legislation, but we believe the amendment provides a framework for management in which we can all have confidence.”

Tufton serves notice he has noticed the short notice for meetings

The issue of notification of members about matters on the agenda for sittings of both houses of Parliament has been an issue of conflict for sometime.

However, it was always felt that this was more an issue in the House of Representatives, where overcrowded agendas and late starts often result in matters being put off, time and time again. But it was the Senate which made an issue of it on Friday.

Opposition member, Dr Christopher Tufton was concerned that he was not notified of matters on the agenda in time for Friday’s sitting. He made the point that it was an omission that he had often experienced since joining the Senate.

Senator Tufton complained to the President that, on many occasions, he did not get notices, and other times he got the notice the day before the sitting, giving him very little time to prepare himself for the debate.

He demanded that the Senate ensure that the discussions taking place in that chamber were done in a manner which could lead to decisions that were based on intelligent information.

“I really would like for us to focus some attention on ensuring that adequate notice is given on what we are going to discuss at a particular time. Otherwise, it is very, very difficult for us,” Tufton pleaded.

He also raised the issue of the need for adequate research support for members, so that when they came to discuss and debate issues, “we, at least, can lean on a machinery, an infrastructure that can help us to inform our positions”.

Senator Tufton recalled that senators were not paid and, therefore, had to engage in their own economic activities in order to secure their own well being.

“I know there are some reforms on the table, but I believe this is a most important, I would think, part of the democratic process (especially) when we are left to conduct the affairs solely based on our efforts that we get notices of the things to be discussed,” he insisted.

Otherwise, he added, it undermined the attempt at ensuring adequate and effective discussion which should lead to better laws.

Senator Noel Monteith, who acted as Leader of Government Business in the absence of Senator A J Nicholson, said he assumed that the Leader of Government Business had always informed the Leader of Opposition Business of the agenda, and would expect that he would inform the members on his side. However, he promised to convey Senator Tufton’s concerns to Senator Nicholson.

Senator Trevor Munroe, responding to Tufton’s concern about the research facilities, said that it was a concern shared by all members and, arising out of which, the Clarke Committee had made recommendations that, as an interim measure, there should be collaboration between the University of the West Indies (UWI) and Parliament in the provision of parliamentary interns.

“That system is now in place,” Dr Munroe explained. “There are seven parliamentary research interns available to members of the Senate and members of the House of Representatives for research on various issues which arise from time to time.”

He said that the Speaker of the House had even commended the graduate students involved in the programme, for research that had been done at the request of Parliamentarians on a number of issues, including the Charter of Rights.

“The procedure is for the member to indicate to the Clerk what area of research they wish to have done. The clerk then forwards the request to the supervisory professor which, in this case, happens to be myself. It is then farmed out to the graduate students who then produce the research within a given period of time,” he said.

Senator Tufton thanked Senator Munroe for the intervention, but noted that it did not affect the substantial issue of the notice to the members.

“But, the last time I enquired about these persons (research students), I was informed that they are graduate students and they are overburdened. So, it does not fundamentally address the challenge that we face. I still want it addressed.”

Leader of Opposition Business, Senator Anthony Johnson, explained that he was not aware of the notice until he received an addendum correcting the original.

He said he usually got the notice by Tuesday, which did not leave enough time to prepare, but that the situation worsened when the technology (e-mails and faxes) does not deliver.

He suggested that the answer should be a follow up.

“I have suggested that what is required is follow-up. Somebody needs to telephone and ensure that the e-mail or fax is received, because the system is very inconsistent,” Senator Johnson said.

Well, to most of us that would seem the norm. Why is a fax or e-mail sent to the leaders in the House and the Senate without a follow-up call to confirm that they have received. That surely doesn’t sound like a system which should be taken seriously.

But, there are lots of things one cannot take seriously at Gordon House, these days.

For example, imagine that two galleries are reserved solely for the large number of police security that accompany the ministers, while the Press is forced to fit themselves and their cameras into their tiny antique gallery and the public is limited to a single gallery with less than a hundred seats!

I had commented before that Gordon House is fast becoming a fortress for politicians, rather than the people’s Parliament and every day it becomes moreso.

Monteith finesses MacMillan

There was an interesting exchange between Opposition Senator Colonel Trevor MacMillan and the acting Leader of the Senate, Noel Monteith, at the end of MacMillan’s maiden contribution to the State of the Nation debate on Friday.

Senator MacMillan: I thank you for the opportunity for making my first presentation in the Senate. I have every reason to believe it won’t be the last. I suspect that the next time it will be made on the other side of the House.

Senator Monteith: I am sure if an application is made to join us over here, you know, we will consider it. (Laughter).

THIS WEEK IN PARLIAMENT

Tuesday, December 5

Public Accounts Committee (PAC) meets at 10:00 am

The committee will continue questioning representatives of the Urban Development Corporation (UDC) and the former National Investment Bank of Jamaica (NIBJ), which were partners with Gorstew Limited in the development of the controversial Sandals Whitehouse Hotel.

The committee is probing the US$43 million overrun on the project. The chairman is Mike Henry, the opposition’s spokesman on transport.

House of Representatives sits at 2:00 pm

The House will debate:

(i) An Act to make provision for giving effect to the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children, and for matters connected therewith.

The bill is to be piloted by the Minister of National Security Dr Peter Phillips.

(ii) An Act to Establish the National Commission on Science and Technology as a statutory body – Phillip Paulwell, Minister of Industry, Technology, Energy and Commerce.

Wednesday, December 6

First sitting of Joint Select Committee on two bills

The Incest (Punishment) Act and (amendment to) the Offences Against the Person Act.

The amendments proposed seek to make incest offenders liable to punishment for life and allow sexual intercourse without consent in a marriage to be classified as marital rape.

The bills were initially tabled in 1995. However, they fell off the Order Paper because a joint select committee of Parliament considering the bills failed to reach consensus on all the proposed areas of changes reflected in the legislation.

House of Representatives sits at 2:00 pm

Thursday, December 7

Joint Select Committee, Proceeds of Crime sits at 10:00 am

Friday, December 8

Senate sits at 10:00 am

The Senate is expected to debate the amendments to the Petroleum Act establishing the Petrocaribe Fund which was passed after a lengthy debate in the House of Representatives on November 28 and the Interception of Communications Act.