That 50% salary increase

After less than five months in office, members of the Granger Cabinet have decided to award themselves salary increases of 50%. The increases take effect from July 1, so that the increase of 50% was after less than six weeks the Ministers had been on the job. When the press approached him some months earlier, Governance Minister Mr. Raphael Trotman had said there would be no astronomical increases. But is it not astronomical when compared with what Cabinet approved in the Finance Minister’s Budget for government employees and pensioners?

In that Budget, the minimum salary in the public service was increased from $42,703 per month to $50,000 per month, or 17.1%. But there was a catch: unlike every other year in the past thirty years, the increase was for half the year only. The effective increase then, for the people at the bottom of the scale, for 2015 over 2014, is 8.5%. For public servants receiving a salary of $100,000, the increase was 10%, or 5% over a full year, and for those receiving $200,000 and $500,000 the effective annual increase was 3.75% and 3.0% respectively. There was an additional increase of $5,000 per month for persons above the minimum wage. Note that for public servants the higher salaries attracted lower percentages and lower salaries attracted higher percentages. Cabinet clearly did not think that principle applied to them. The APNU+AFC’s 100 days commitment was “Significant salary increases for government workers, including nurses, teachers in primary, secondary and tertiary education; security personnel; and civil servants on the traditional payroll.”

And how about pensioners? Ram & McRae’s Budget Focus 2015 had noted that 2015 pension increases were subject to no retroactivity. And while the Finance Minister announced a $3,875 increase in the monthly pension from September 1, 2015, the Budget withdrew the monthly subsidy of $2,500 and $990 for GPL and GWI previously enjoyed by pensioners. Net increase: $385 per month but payable from September 1, an increase in 2015 of less than 1%! The APNU +AFC’s 100 days commitment was “Significant increase in Old Age Pensions”.

It seems however, that no percentage, however egregious, can truly reflect the palpable outrage felt by citizens over the increase awarded to themselves by a Cabinet in office after less than half a year. This is not about bad optics, bad timing or bad politics as some are suggesting without any regard for the finances of the country. Unless the Government can transform the 2015 projected $50,000 million deficit into a surplus, pay its public servants a living wage, and afford its pensioners some dignity, the increase will be as bad next year as it is now.

The unprecedented increase has been justified on some unusual grounds: this is about wage-led growth; that Cabinet is made up of quality persons; the beneficiaries were earning more in their private practice; they deserve the increase; or the increase will stop them from thieving. The merit of each of these is not only arguable, it is dubious.

The question for me is if the financial situation which confronted Cabinet when it took office was worse than they thought, and which therefore prevented them from honouring commitments they made to voters, how come they can meet commitments they did not make? That is not the integrity and transparency which many thought would be the principles on which an APNU+AFC Government would operate.

I remain open to persuasion and therefore invite my professional colleagues in the Cabinet to make public their tax returns to show the kind of income which they now demand, because, as they claim, that is what they used to earn. And if that is indeed the case, why did they not tell us about their plan? And is there no element of public service to their work? And can they confirm that they have all shut shop and have given up their private businesses?

Many commentators and bloggers argue that the increase is really about income maximisation, and that what was involved was the use of creative counting to achieve the desired result. So take the salary of the Attorney General which in turn is the salary of the Chancellor. Now, because the Chancellor gets a tax-free salary, the thinking is that the AG’s salary should be treated as net. And since the AG cannot earn more than the Prime Minister, the Prime Minister’s net salary has to be higher than the AG’s, followed by VP’s, followed by Ministers and MP’s. One has to ask, why stop there?

But the base is clearly wrong. Only three persons are statutorily permitted a tax-free salary: the President, the Chancellor and the Chief Justice. Anything else is illegal and even Cabinet cannot make it so. I respectfully recommend that they read the Income Tax Act and the Financial Administration and Audit Act.

As the Ministers make their case for entitlement, they must not ignore the range of benefits which they receive at taxpayers’ expense: 24-hour security; all expenses paid vehicle and chauffeur; tax-free gratuity for their chauffeur; free electricity; free telephone; housing or housing allowance for Senior Ministers and the Attorney General, even when they live in their own homes; entertainment allowance when everyone knows the Ministers are the ones to be entertained; free crossing on toll bridges; no airport tax; generous leave and leave benefits; access to valuable medical benefits; and perhaps as valuable as all the other allowances put together, the right to duty exemption on a vehicle every three years.

Oh, and these are not all. MP’s are paid an additional $20,000 per month for being a member of a Parliamentary Sessional Committee; an additional $25,000 per month as a Chairman or Deputy Chairman (sic) of such a Committee; and an allowance of $15,000 per month as a representative of a Geographic Constituency. Conservatively, these are easily worth another million per month.

Oh, and I forgot. Members of Parliament earn a pension after four years while the average person has to work and contribute to the NIS for fifteen years!

Is there a way out? I think so. But Cabinet needs to admit that they have made a giant misstep. It is not too late to reverse the decision and have the National Assembly appoint an independent Compensation Committee to look into the question of compensation for Ministers, MP’s and other political appointees. Indeed, this should be a permanent arrangement which prevents what is a clear conflict of interest for Cabinet members.

The terms of reference of such a Committee should not be difficult to establish: not too high to make it a coveted job and not too low to deter suitable persons; comparability with jobs in the public sector; ability to pay (they tell public servants that all the time); and evaluating the compensation package in its entirety, including all perks. To the extent that there is any comparability with other countries, regard must be paid to the economic and other conditions of those countries.

Government’s decision to allow only three days for consideration of the Estimates is not justifiable on any grounds

If there is a single public issue in which Ram & McRae and I have devoted consistent interest it is in matters pertaining to the budgets of the public sector. Indeed, ‘Focus on the Budget’ can be considered the firm’s flagship publication, marking its 25th issue with the 2015 Budget. It is therefore with deep concern that I write to express my disappointment and displeasure at the decision by the government to allow only three days for the consideration of the 2015 Estimates.

The Standing Orders of the National Assembly set a maximum of seven days for consideration of the Estimates of Expenditure by the Committee of Supply made up of all members of the National Assembly. It is true that when the PPP/C was in power, it sought to restrict debate much to the displeasure of the opposition.

But it is also true that when the opposition APNU and AFC controlled the National Assembly they forced the debate to extend closer to the maximum. Why then is there a different standard when the same opposition parties are in government?

The three volumes of the Estimates for 2015 run to 1,616 pages compared to 1,305 pages in 2014. But it is not a matter of number of pages only. These Estimates contain expenditure for which there are three separate constitutional and financial provisions: the first is for the four months January to April, during which monthly expenditure to meet the cost of services of the government is limited to one-twelfth (1/12) of the expenditure for the preceding year; next is for the period May 1 to the passing of the 2015 Budget, during which expenditure is restricted to public services; and thereafter, expenditure approved in the Budget.

Anyone who has seen how the Audit Office’s incapacity has been exposed would realise that this is perhaps the only opportunity for any serious discussion and examination of the expenditure for these respective periods. The decision by the government therefore has the unavoidable effect of inhibiting any discussion and examination of expenditure not only up to April 30 but also during the second phase which fell under the old and the new administrations.

I reiterate that Guyanese of whatever persuasion or political affiliation need full and complete information on how their money is spent. There is no better forum that our parliamentary system has devised than the Committee of Supply.

Of the sixty-five members of parliament, there are eleven new MPs from the government side and ten from the opposition. They have hardly completed their understanding of the financial provisions of the constitution, the Fiscal Management and Accountability Act, and the Standing Orders pertaining to their role as members of the Committee of Supply before they are expected to act as if they are better equipped than their predecessors.

I fail to understand or accept as justifiable on any grounds whatsoever, the government’s decision. I am not at all convinced that the purpose of accountability, transparency and public education is served by this truncation of the debate.

Expenditure on new ministries would be unconstitutional

The Guyana Times of Sunday May 24 (New Ministries created by Granger illegal – PPP/C) reports former President Bharrat Jagdeo and former Attorney General Anil Nandlall as stating that “the formation of new Ministries is illegal since monies cannot be released to those entities, which are not represented in the Appropriation Act.”

This is a bit ironic. President Donald Ramotar did exactly that when he created the new Ministry of Natural Resources and the Environment and appointed Mr. Robert Persaud as the Minister. This was long before the convening of the Tenth Parliament and the passage of the Appropriation Act 2012, assented to on April 30, 2012.

The fact that the PPP/C created a new ministry before any Appropriation Act was passed does not itself make President Granger’s action legal, or illegal. In fact, the creation of a new ministry in 2012 by the PPP/C was as legal as the creation of new ministries by the APNU+AFC in 2015. Article 100 provides for offices of the Prime Minister, Vice-Presidents and Ministers of the Government as may be established by Parliament or, subject to the provisions of any Act of Parliament, by the President.

Article 120 of the Constitution gives the President the power to constitute offices for Guyana [and] make and terminate appointments to such offices…” There is no requirement for an appropriation Act before the creation of any ministerial or other constitutional office and It would have been useful for Mr. Jagdeo or Mr. Nandlall to have pointed out the illegality of President Granger’s combined acts.

The Cabinet has a number of lawyers, two of whom are affected by the creation of these new ministries. I have no doubt that all these lawyers would have considered the constitutional ramifications of the action by President Granger and offered their views to the Attorney General, who is the principal legal adviser to the Government.

Notwithstanding the legality of the appointments, it does appear to me that the Constitution forbids the expenditure of any money on those ministries without parliamentary approval. Article 120 goes on to state that “where the constitution of, and making of appointments to, such offices involve expenditure chargeable on the Consolidated Fund, such expenditure shall be subject to the approval of the National Assembly.”

In my view “approval” in this article can only be reasonably interpreted to mean prior approval, and not approval by way of any subsequent, supplementary Appropriation Act. On my interpretation, any expenditure on these new ministries, including any payments to and for the ministers and the supporting ministers, would be unconstitutional.

Challenging the Jagdeo myth

Introduction
Mr. Carl Greenidge, Finance Minister in the PNC Administration has been one of the chief targets of the PPP/C since 2011 for what they claim to be his mismanagement of the economy prior to 1992. This claim is at best one-sided and at worst totally dishonest, completely ignoring the performance of the economy when Greenidge demitted office in 1992. Perhaps as the calypsonian Chalkdust sang: “they ‘fraid Carl”.

A question for the PPP/C is if the Economic Recovery Programme (ERP) which they in opposition had dubbed Empty Rice Pot was so bad, why did they not replace it? The truth is that the ERP negotiated by Greenidge with the IMF and other international lenders and donors placed Guyana on a trend where its economic growth rate was well above anything the country has ever witnessed, before or after. Asgar Ally, riding on the wave of debt write offs initiated by Greenidge, kept the economy roaring until he was undermined by then Junior Finance Minister Bharrat Jagdeo.
Continue reading Challenging the Jagdeo myth

Justice Chang’s decision on disapprovals

Introduction
Chief Justice acting Mr. Ian Chang last Friday gave his decision on the case brought by Mr. David Granger, Leader of the Opposition in the matter concerning the spending of money on programmes contained in the 2014 Budget expressly disapproved by the National Assembly. Two men not unknown to take their professional image very seriously, Attorney General Mr. Anil Nandlall and the shadow Attorney General have been on television both claiming victory! Yet, notwithstanding the highly technical discussion on questions about declaratory orders as opposed to conservatory orders, some things are very clear:

1. That the Minister of Finance acted in violation of the Constitution and the Fiscal Management and Accountability in spending the sum of $4,553 million for purposes specifically disapproved by the National Assembly. Note that this spending was up to June 16, 2014

2. That the Court has no jurisdiction to restrict any authority granted on the executive by the Constitution or an Act of Parliament since “to do so would be to violate the doctrine of the separation of powers which indubitably inheres in the Constitution of Guyana.”

3. That the Minister cannot use one article of the Constitution to engage in spending that is disapproved under any other article.

4. That support of expenditure in 2012 and 2013 in similar circumstances did not mean that no court challenge could be brought in respect of 2014.

5. That the breach of constitutional authority regarding expenditure in 2014 is not a proper basis to fear that the government would exceed the limits of their authority in respect of any other period.

6. That the Court is more concerned about form rather than substance. There can be no other explanation for the decision by the court to deny on procedural grounds an application in respect of expenditure on disapproved programmes for 2014 that the court considers to be in violation of article 219 (3) of the Constitution and the Fiscal Management and Accountability Act 2003.

7. That having found that the Minister of Finance violated the Constitution and the law the court passed the buck regarding any cure or sanction by ruling that those are matters for the internal affairs of the National Assembly!
Continue reading Justice Chang’s decision on disapprovals