Fiscal Transfers Bill 2012 – Bill No. 20/20123577 07 Aug, 2013
FISCAL TRANSFERS BILL 2012 – Bill No. 20/2012
Minister within the Ministry of Local Government and Regional Development [Mr. Whittaker]: Mr. Speaker, I too would like to join in congratulating Members of the Special Select Committee who were able over time to achieve consensus on the menu of measures needed to be put in place, legislative that is, so that revenue garnered by local democratic organs can be based on some objective criteria. It is a major achievement, and as pointed out by both speakers before me it brings us in line with the requirement of Article 77(a) of the Constitution providing objective criteria for allocation of resources and the garnering of resources by local democratic organs.
Local democratic organs have depended primarily on revenue coming in the form of rates and taxes, market revenue, investment income and subvention grants. These by themselves have not proven to be adequate enough. High employment and operational cost and progressively increasing cost of delivering services within the boundaries of the Neighbourhood Democratic Councils (NDCs) and the municipalities have amounted to some dissatisfaction among residents with respect not only to the extent of services that these local government organs deliver but in many instances the quality of the services rendered. Even the annual subvention that is welcome by NDCs, and which is given by Government to execute new capital projects, we know is inadequate to meet the needs of the residents within these areas.
It is within this context that the Fiscal Transfers Bill, adoption of other revenue resourcing measures, is to be welcome. Including among these being the negotiating with central government for specific revenue sharing contract - I am aware that is already happening in many regions, but now it is in the legislation. Embarking on other revenue projects is welcome and so also are efforts to arrive at the objective formula for fiscal transfers that takes into account a number of variables including land mass, including population size and very importantly, including the ability of the local government organs to rake in revenue.
Mr. Speaker: Minister, sorry, what about the revenue that the region itself earns? Was any consideration given to that? For example, Region Nos.7 and 8 say they produce the wealth of Guyana, but little remains.
Mr. Whittaker: Mr. Speaker, that is a different thing. We are speaking here about the municipalities and the neighbourhood democratic councils. You are talking about the Regional Democratic Council (RDC).
Minister within the Ministry of Finance [Bishop Edghill]: They are not part of the local government?
Mr. Whittaker: They are not part of this. One is rewarded for effort. So while they get 50% of their allocation the balance of that allocation is subject to a menu of measures and performance indicators. That is very important here. It must be noted also that provision is made to allow councils, with the written approval of the Minister of Local Government and Regional Development, to procure financial and other resources in the form of grants. So no longer are they looking only to central Government and the traditional sources of funding. They could now reach out to other donor agencies, among these being the European Union and the Caribbean Development Bank - this is to be very much welcome - and also fiscal transfer to it from another authority.
To be eligible for fiscal transfers a number of conditions have to be met. Within the legislation there is a requirement for each local government organ to submit by a specific date, 15th of November of every financial year, not only its budget submissions for the ensuing year but also to provide data which shows actual revenue receipts, actual inflows and actual outflows. So if I am submitting for 2014, and I have to submit by 15th November, I would have completed the information for 2012 actual revenue and actual expenditure. That has to be submitted. That is very, very important. This allows us to measure performance.
Whilst this legislation looks at providing additional resources and opportunities for garnering resources - and all speakers have dealt with it - accountability for these resources and opportunities for measuring the benefits accruing to residents from these additional resources are very, very important.
The Bill seeks to give effect to Article 77(a). It allows Government to transfer funds to local government organs in a more equitable manner having regard to the objective circumstances to the local government organs, and having regard to its performance. We have had complaints from a lot of these local government organs such as, ‘how come you give me the same thing like a next local government body when in fact my population is greater and my performance is better. We have discerned it is not fair. If one NDC is able to rake in let us say 60 or 70% of its collectables, why should that NDC be receiving a similar allocation like one that has barely been able to rake in about 30%. So it is performance oriented. Under this Fiscal Transfers Bill more emphasis is placed on revenue collection. Increased revenue collection gives opportunities, because of additional resources, to be able to provide more services.
Fiscal transfer legislation cannot and does not dictate what central government must allocate to the local government organs. Even we at the level of the Ministry do not get what we would wish. What we get is a function of what is available and priority for its use. Local government organs will continue to be financed by their own efforts and by Government. So we must understand that the Fiscal Transfer Bill does not remove Government’s contribution, Government responsibility in terms of assisting these local government organs.
The measures which I have just outlined and which are captured in this important piece of legislation, the Fiscal Transfers Bill, have certain inherent and important principles which allow for resource allocation, use and monitoring in a very objective and equitable manner. It is for this and all the other good reasons advanced by the two speakers before me that I too join in supporting the Fiscal Transfers Bill 2012. [Applause]
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