|Governor issues detailed report on milestones||| Print ||
|Thursday, 19 January 2012 13:25|
“Good progress” has been made on the milestones set for return to elected government in the Turks and Caicos Islands in 2012, His Excellency the Gov. Ric Todd says in a six-page report released Jan. 19.
“The achievements made against the milestones so far is the result of a real team effort across the territory,” Todd said. “I believe that we are going in the right direction. Ministers made clear in Parliament earlier this week that elections will be held this year if the milestones are met.”
The report comes just days after Foreign Minister Henry Bellingham misspoke when he told Parliament that he believed elections would be held in 2013. The error has been corrected in the record, with Bellingham saying 2012 is still the target for return to local government.
The U.K. suspended local government and parts of the country’s Constitution in 2009 after a Commission of Inquiry revealed evidence of widespread corruption and the country was nearly bankrupt. The governor called on everyone to continue to work hard toward meeting the milestones set by the U.K. and thanked those for efforts made so far.
“In particular, I must thank the Advisory Council, Consultative Forum, other stakeholders such as civil servants, citizens and the Islands’ media for their part in delivering key activities and stimulating public consultation and debate. What remains important is our joint and continued commitment and determination to meet the milestones and achieve lasting positive reform for the good of the Turks and Caicos Islands.”
Here is the full text of his report.
Governor's Office Paper
The Milestones on the Way to Elections
The 2009 Commission of Inquiry (CoI) report identified a high probability of systematic corruption in the Turks & Caicos Islands (TCI) elected government and others. The Inquiry also found a serious deterioration in the systems of governance, public financial management and control of expenditure. The inquiry report set out a number of recommendations including twenty-six with respect to addressing systematic weaknesses in the past administration of the country. So serious were the findings that British ministers took the view the only practical option was to suspend parts of the TCI Constitution for an interim period, the effect of which was to suspend ministerial government and the Legislative Assembly. This suspension created a breathing space to undertake the necessary reforms with the aim of avoiding the prospect of such a situation returning in the future.Importance of the Milestones
The milestones were set out by the FCO minister Henry Bellingham and DFID minister Alan Duncan in a joint Written Ministerial Statement to the UK Parliament on 9th December 2010. They built upon but do not replace the CoI recommendations. They are a summary of the principal legal and administrative changes and safeguards to be put in place in TCI before elections can be held. Collectively, they are designed to restore the principles of good governance, sound financial management and sustainable economic development by providing a future elected administration with a new Constitution, an updated set of laws, restored public finances, robust financial procedures and an improved, supportive and impartial public service with a renewed sense of purpose to serve the citizens of the TCI. Support has been provided by the UK, the EU and Canada. These investments are as guarantor for TCI's national debt repayments; the stabilisation of the territory's economy; the reform of the civil service; the provision of specialist assistance to modernise government services; and the preparation of new legislation. New elections are the end point for the milestones but not the end of UK and international expectations for sustained high standards in good governance and sound financial discipline.
There are eight milestones to be delivered, each one an integral part of a modernised administration. Four have a distinct end product (Milestones 1, 2, 5 and 7), which once delivered and put into operation can be regarded as completed. The remaining four represent changes to the status quo and set a clear direction ahead (Milestones 3, 4, 6 and 8). With these, judgement is required on when sufficient change has occurred to give confidence the problems of the past have been overcome and a robust and sustainable situation has been achieved. During 2012 progress reports will be prepared by the Governor and submitted to UK FCO ministers. In turn, they will inform the UK Parliament when they assess the milestones have been met and the Foreign Secretary will authorise the Governor to put the new Constitution into effect.End Products
Milestone 1 – Implementation of a new TCI Constitution Order, in support of recommendations of the Commission of Inquiry, which underpins good governance and sound public financial managementDuring 2010 and the first half of this year there was an extensive series of consultations on the scope and substance of the new Constitution. This work culminated in discussions between a TCI delegation, which included members of the political parties and civil society, and ministers in London. The Order in Council containing the draft Constitution was subsequently laid before the Privy Council in London in July 2011. The new Constitution will be put into force when UK ministers judge, having considered the information available, that the time is right for elections and election preparations are completed. The preparations necessary were announced in October and four principal tasks were identified: the drafting of two elections related ordinances is well under way; and following the national census planned to commence on 25th January, an Electoral Boundaries Commission (EBC) will define ten new assembly constituencies during the Spring; and a new Register of Voters will be compiled during the Summer. These measures are expected to take up to September 2012 this year to complete and have been estimated on the basis the preliminary census data is available in April. When the new Constitution comes into force a general election is required to be held within thirty days. To avoid any unnecessary delay in the preparations for elections an opportunity arose when legislative drafter became available in the UK in November last year to prepare an Order in Council to lay before the Privy Council. This Order reproduces the text of the new Constitution that describes and authorises the Governor to form an EBC when appropriate.
Milestone 2 – Introduction of a number of new ordinances, including those making provision for: i) the electoral process and regulation of political parties; ii) integrity and accountability in public life; iii) public financial management
The Commission of Inquiry identified several deficiencies in the laws of the TCI and the interim administration subsequently found others needed to be revised. Over the past two years a large programme of detailed, specialised work to draft new ordinances has been under way and the pace of preparation is accelerating. This work is led by staff in the AG's Chambers, with additional legal drafting expertise funded by the FCO and the European Union. Six ordinances are being prepared by FCO funded experts including bills on public financial management, elections, consolidation of criminal offences and criminal procedures. EU specialists are drafting a further set on a broad range of other aspects of TCIG business. A Green Paper describing the EU work should be available in February. Focussing on the named ordinances in this milestone, a revised Elections Ordinance and a Public Financial Management bill are expected to be ready for consultation in February 2012 and the first draft of another on the conduct of political parties and standards in public life by March. A draft of a revised Integrity Commission Ordinance from the EU team should be ready soon, which will strengthen the scope of its investigatory powers.
Milestone 5 – Implementation of a transparent and fair process for acquisition of Turks & Caicos Islander status
A new pathway to Turks & Caicos Islander status has to be agreed and supporting legislation put in place to establish a robust infrastructure to deliver fair and transparent decisions in each case. The Consultative Forum launched a nationwide consultation on the options for the new pathway to Turks and Caicos Islander status, including the criteria for PRC, in November. The consultation process will finish on 17 February 2012. In light of the comments received, draft legislation will be finalised and the necessary organisational, policies, procedures and working practices will be set up. The target for this is the first half of 2012. In support of a fair and transparent process for acquisition of Turks and Caicos Islander status, the Ministry of Border Control and Labour is already taking forward a comprehensive change programme, addressing all aspects of border control, migration, employment services, enforcement and compliance, permanent status and citizenship and civil registration services. In its first year, this programme is delivering an overhaul of visa issuing arrangements; enhanced border enforcement, including a coastal radar station; improved compliance activity; improved employment services; and clearance of the backlog of PRC applications. The backlog of naturalisation applications is now being tackled.
Milestone 7 – Implementation of a new Crown land policy
Crown land is the largest asset managed by the government on behalf of all in TCI. Its misappropriation through questionable land allocations, under-reporting of land values and the avoidance of stamp duty and other charges were at the heart of the corrupt practices described in the CoI report. In an open and transparent government these practices would not be tolerated. Fundamental flaws in the former Crown land policy meant it had to be changed. After extensive consultations and drawing on experience from other jurisdictions, a new Crown land policy was prepared and widely reviewed during 2011. This new policy was published in October and is now adopted. It has been accompanied by major operational changes: a wide-ranging reorganisation of the Land Registry, Valuation Office, surveying and related functions under a Lands Commissioner reporting to the Attorney General; an extensive exercise over two years to establish the location of the remaining Crown land and Protected Areas; the creation of a computerised land database; appointment of an new Land Registrar and the issuing of an updated Register of Land Allocations. Data shows the excesses of the past have left only 23% of the usable land across TCI remains as Crown land. In some places, such as Grand Turk, almost no land remains in Crown ownership except for public areas, roadways and salinas. To implement the policy a new Crown Land Ordinance is being drafted and is intended to be available for public review in February. After approval, citizens will be able to apply once again, subject to strict criteria, for new land allocations and direct ministerial control over the distribution of Crown land will cease.Changes to the Status Quo
Milestone 3 – Establishment of robust and transparent public financial management processes to provide a stable economic environment and a strengthening of the TCI Government's capacity to manage its public financesNew financial control procedures and upgrading of financial management skills in the Ministry of Finance are being implemented during 2012. Weak control and accountability of public finances characterised the way things were done in the recent past. This created an environment for past administrations to run rough shod over the proper procedures to prevent the misappropriation of funds and resources. Prior to the suspension of the Constitution the failure of organised accounting left large numbers of government bills unpaid, a breakdown in revenue-raising functions, over-optimistic budgeted spending and a set of financial controls with little practical ability to control unofficial or dubious financial practices. Considerable external support has been provided to the Ministry of Finance over the last two years by the UK to clear a considerable backlog of unpaid invoices, restore order to public finances and help build a new set of financial management processes. Equally important, is the development of a cadre of trained and financially-knowledgeable civil servants. Significant progress has been made but there are still gaps in capability to fill. Robust controls and accurate of payroll records and bill paying have been established and revenue collection and approval of all expenditure over $5000 has been centralised. More rigorous and realistic budgeting has been introduced, with more regular oversight of departmental budgets, including quarterly expenditure forecast updates and weekly cash flow positions, and corrective interventions taken if expenditures become too high or fail to be controlled. Reports on the state of public finances are being published quarterly. Financial statements have been produced for three of the last four years. Work on this milestone continues with the emphasis moving to building long-term sustainability by increasing delegated financial responsibility to managers. This will be supplemented by strengthening internal audit capabilities, training more civil servants in financial management and setting stronger rules on financial administration and contract management. New rules when prepared on financial management defined in the forthcoming Public Financial Management Bill (included in milestone 2) will be applied to all civil servants involved with the handling and disbursement of public money.
Milestone 4 – Implementation of budget measures to put the TCI Government on track to achieve a fiscal surplus in the financial year ending March 2013
This is the toughest milestone to fulfil given the starting point in 2009 of an inherited debt, unfunded liabilities and uncontrolled spending. This position when combined with the impact of a global economic downturn resulted in the near collapse of the TCI economy. To achieve a budget surplus requires balancing reductions in public expenditure with maintaining vital government services, as well as increasing revenues and their collection whilst being realistic about what taxes can be introduced and are possible to collect. It also requires steps to balance the wider economic need to encourage entrepreneurs to develop new businesses and create employment whilst ensuring any government incentives are affordable for TCI. There is no single formula to define this balancing feat. Unexpected local demands (e.g. a major unplanned expenditure or shortfall in income) or international events (e.g. an oil price rise or drop a tourist numbers due to currency devaluation) can change the assumptions that make up a budget. Consequently, the balance between cost control, taxation measures and economic expansion has to be monitored closely. The Ministry of Finance has undergone extensive changes during the past two years and together with the other ministries have been instrumental in reducing expenditure on the civil service from $82.7m (2009/10) to $66.5m in 2011/12. The forecasted budget deficit for 2011/12 at $26.8m will be larger than predicted at the start of the financial year though well below the $70.7m deficit in 2010/11. The new forecast has been reported publicly before Christmas and is due to various one-off causes including unexpected additional costs from the discovery of more old, unpaid bills, under-recovery in revenue to pay for the expensive health contract and a slower than planned speed in restructuring the civil service for the future. Remedial actions have been taken on these issues.
New revenue-raising measures have been introduced during 2011 and the interim administration understands and regrets profoundly these increases in the cost of living for citizens. It is perhaps small comfort to note the general tax burden (as a percentage of income) remains similar to other countries in the region. The longer term challenge for future elected TCI administrations is not purely the level of taxation but the need to address the Territory’s narrow and regressive tax base. There is a heavy dependence on indirect taxes and revenue from one of the most important, customs duties, is heavily influenced by the unstable level of activity in the construction sector. A move to direct income and property taxation would shift a higher proportion of the tax burden to the more prosperous citizens and businesses and away from lower paid people. At present, indirect taxation results in poorer citizens paying a higher proportion of their income in taxes.
Some of the tax measures introduced are temporary and designed to contribute immediately to improving public finances. They are planned to end when value added tax (VAT) is introduced in March 2013, whose purpose is to give TCIG a more stable and sustainable source of revenue. Further public finance measures are scheduled during 2012: e.g. continuing scrutiny of areas of high cost – health, tertiary education, building leases, statutory bodies; implement priority capital investments; continued quarterly reporting on the state of public finances; value for money reviews of major public contracts; economic comparisons between public and private sector delivery of some services; asset sales; implementation of new ordinances on audit, financial management and procurement; a new strong economic planning team; and a new medium term economic plan.
Milestone 6 – Significant progress with the civil and criminal process recommended by the Commission of Inquiry, and implementation of measures to enable these to continue unimpeded
Clear achievements, with more expected, have already been made by the civil recovery programme with twenty-nine separate recoveries of Crown land and cash. The aim is to maximise the return of misappropriated land back into public ownership and recover damages where they are due to compensate TCIG for its losses. Over the past eighteen months the team has been progressing dozens of cases and has already had several successful outcomes from court proceedings. Many others have been settled out of court. Publicised cases include land and payments related to the Emerald Cay and Joe Grant Cay developments. A substantial number of cases are still in progress and most should be resolved either in or out of court during the next year, although some may take longer, particularly if there are appeals which have to be dealt with. To date, over 900 acres of land have been recovered with a book value of many millions of dollars. The potential for further recoveries of land and payments for the benefit of TCI remains high.
The SIPT was confronted by a large volume of information to pursue about possible criminal activity involving many individuals. Understanding the extent of corrupt practices that defrauded the government and TCI citizens and gathering evidence to the standard required for criminal cases, has taken nearly eighteen months. Individuals have been charged and other investigations are at an advanced stage. Subsequently, the progress of future trials is a judicial matter, largely dependent on factors outside the control of the prosecution. It is not possible to predict when the trials will be completed although matters are progressing and sufficiency hearings are scheduled in Grand Turk for early February 2012. It is important to note the Governor and TCIG have no power to influence the judicial process. Looking ahead, safeguards have been placed into the new Constitution to ensure the civil and criminal cases currently under way will continue after the future planned election.
Milestone 8 – Substantial progress in the reform of the Public Service
This milestone requires the demonstration of impartial decision-making, reductions in the size of public service, number and structure of ministries and improvements in the volume and quality of services delivered. These are daunting changes to introduce but they are no different to similar ones taking place in other countries. The vision for a modern TCI public service is to have a smaller, innovative and responsive set of ministries, with motivated staff preparing well reasoned policies and delivering government services in a friendly, transparent and speedy manner using both public and contracted providers. A civil service where management skills are valued; continuous improvement is welcomed; promotion opportunities are based on merit not patronage; and strong personal performance is properly measured and rewarded. In the coming months as the pace of change accelerates with a new Permanent Secretary leadership team, simplified ministries and better ways of working, a sustained shift in TCIG's performance is achievable. Reform and change in a modern public service is a continual process of renewal and improvement. Nevertheless, significant progress should be seen over the next twelve months if the present momentum is sustained. This change will be driven by the selection of five, new high quality Permanent Secretaries in January.
In September the interim administration began a series of wide-ranging changes. Recent announcements include: the merger of existing ministries into five larger and more integrated ones; reducing the public service workforce by 300 to 400 commencing with a voluntary severance scheme; introducing changes in working methods to focus on the efficient delivery of government services; and an open and fair competition to select a new generation of permanent secretaries with an emphasis on leadership, strategy and financial management capabilities. In the near future, other posts will be advertised through open competition, a new transparent approach to recording senior staff remuneration and interests will be initiated, a strengthened Integrity Commission will investigate malpractice, General Orders will be revised and simplified and legally enforceable codes of conduct on public servants and future ministers will be administered by the Public Service Commission. In parallel, reforms to several statutory bodies, police, emergency services and prison service are also under way.
Considerable progress has been achieved since August 2009 in response to the CoI recommendations and the milestones. This has been a collaborative effort with considerable input, advice and support provided to the interim administration by the Advisory Council, the Consultative Forum, stakeholder groups and the public in numerous consultations, as well as from constructive media debate. It is an effort that has been underpinned by the hard work of many in the public sector in the TCI who, like public sector workers in numerous other countries, have had to help bring about considerable reforms against a backdrop of some uncertainty about their own future roles.
Inevitably, on occasions, there have been differences of opinion. This is to be expected and is a normal part of a mature and constructive dialogue between an administration, its advisers, stakeholders and the community. What remains important is a continued commitment and determination by all to meet the challenges that remain to fulfil the requirements of the milestones and achieve lasting reforms for the good of the Turks and Caicos Islands. The work will continue to be advanced as a partnership.Governor's Pledge
The Governor is actively involved in overseeing the progression towards concluding each milestone. To this end, and to inform everyone of the progress being made towards restoring to the TCI a locally-elected government, every quarter during 2012 the Governor will publish a 'progress summary' and meet with communities on each island. This summary will provide an updated assessment on what has been done and what remains to be fulfilled to deliver each milestone.
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