Questions from the budget
THE Standing Finance Committee of the House of Representatives concluded deliberations on the 2013/14 Estimates of Expenditure just prior to the start of the Budget Debate by minister of finance, planning and the public service, Dr Peter Phillips last Thursday at Gordon House.
The committee is comprised of all 63 members of the House and is chaired by the speaker, Michael Peart. Its primary job is to review the estimates and table a report in the House, which becomes the basis of the annual budget debate.
As pointed out last week, there was an unusually high number of changes to the original estimates, especially in terms of the supportive information provided in the Public Bodies document, which is an essential companion to the budget book.
Some of the changes were very substantial, some were minor and some are still unexplained. For example, there was no explanation about why the figure for the projected net profit for 2013/14 for Petrojam was decreased by US$11 million, from US$21 million.
According to the Public Bodies, Petrojam was projected to earn US$1.9 billion in revenue this year, just over US$40 million over last year, while pre-tax profit was projected to remain at US$28 million. However, after paying over $7 billion in income taxes to the Government, it was projected to make US$21.2 million in net profit. But the Standing Finance Committee report said that the $21.2-billion in the Public Bodies book will now be corrected to read US$10.1 million net profit.
Question is, where did the other US$11.1 million go? This will likely be explained by minister of science, technology, energy and mining, Phillip Paulwell, when he speaks.
The report also points out that the projected deficit in the Public Bodies for the National Health Fund (NHF) has moved from $314.4 million to $762.7 million, which should raise some questions as to why the NHF seems to be taking on more and more responsibilities with a loss projected for this year.
The Public Bodies says that NHF’s total assets are projected to decrease from $10.5 billion at the end of 2012/13 to $9.9 billion at the end of the current financial year. The reduction was attributed to a transfer of $747. 6 million to finance institutional benefits projects with the major beneficiary being the Ministry of Health, as well as a reduction in its income caused by losses from the National Debt Exchange (NDX).
In addition, the public bodies revealed that the NHF inherited a high level of receivables from the Health Corporation Limited (HCL), which are still growing as the payments have not kept pace with the delivery of goods.
The Cabinet has approved the winding up of HCL, and the NHF is assuming responsibility for procuring, warehousing and distributing its pharmaceutical and medical sundries, as well as the government-owned Drug Serv pharmacies.
The combined result of all this was projected at $314.4 million which, according to the Public Bodies book, was exactly what was projected as the NHF’s deficit for this year. But, with the figure now changed to $762 million, the NHF’s financial health certainly needs some explanation.
The NHF was established in 2003 to reduce the burden on health care in Jamaica. However, it does seem to be taking on much more than it can handle. But the fund’s management is insisting that it will continue to serve the purpose, even while taking on benefits for additional ailments like sickle cell as part of its coverage, not to mention Cabinet’s approval of the NHF’s purchase of the Oceana building in downtown Kingston for the price of $350 million.
Hopefully, the public will not have to wait until the sectoral debate in the summer to get some answers from Health Minister Dr Fenton Ferguson.
Incidentally, the report also produced some figures for the Parochial Revenue Fund (PRF), which is paid by central government to the councils to finance their expenditures.
It is projected that approximately $9.4 billion will be paid over to the councils this year, an increase over the $5.6-billion the local authorities got last year, due mainly to $7 billion from property taxes and $2.4 billion from motor vehicle licence payments expected this year.
Expenditure of these funds will include $2.4 billion for road maintenance, $2 billion for public cleansing, and $3.4 billion for street lighting. There is only $192 million to meet the expenses for public standpipes, $106 million to repair minor water supply systems, and $160 million for the upkeep of parks and gardens.
However, last year’s figure was $1.3 billion below what was projected, and will again depend on the level of property tax compliance this year.
Hopefully, by the time minister of local government and community development Noel Arscott speaks in the sectoral debate, there will be a clearer picture of both tax compliance as well as the effect on the councils of these developments.