Finance Minister Hasssink: “Fixing 2013 budget is a waste of my time”

POSTED: 09/3/13 2:08 PM
martin hassink
Finance Minister Maarten Hassink (middle) during yesterday’s Central Committee. Photo Pearl FM

St. Maarten – “80 Percent of my time is spent on getting the 2013 budget fixed. For 50 percent, that is a waste of time, and it does not give me time for other areas, like the 2014 budget that should have been presented already,” Finance Minister Maarten Hassink said yesterday morning in a Central Committee meeting where he presented his report over the first half year. The minister said he aims to have the draft 2014 budget ready before the end of the year.

There are some major areas of concern, Hassink said. “They have also been identified by my predecessors, so that is nothing new. They were also on the table ten years ago when I was director of resources.”

The minister said that he does not have political ambitions (“I don’t need to be elected next year”) and that he took office to do a job. The two main areas of financial concern are cost control and tax compliance.

Hassink took in particular aim at the government’s personnel costs that went up from 158 million guilders in 2011 to 180 million in 2012. “This is nothing new, but something needs to happen. We cannot continue with automatic salary increases. We need to pay specific attention to the development of personnel expenses. A core task study would have helped but instead we prepared organization plans. That core task study should have been done six years ago; we did not look at the long term consequences of the formation plans.”

The biggest chunks from the budget go to personnel costs, goods and services and subsidies, Hassink said. The minister pointed out that the 2013 budget was “thrown in my lap in June with a 30 million guilders deficit” and that he had been looking at several “what if” scenarios against the background of the Kingdom requirement to balance the budget.

Allowing a 2,.5 percent deficit in 2010, would within four years and 3 months have resulted in an additional national debt of 87 million guilders, Hassink said.

He reacted to the questions VVD-MP André Bosman posed to Kingdom Affairs Minister Plasterk after his remarks about a zero-deficit budget and how this would be a near mission impossible. In The Hague, this was interpreted as if Hassink thought balancing the budget would be impossible.

“If you know the movie Mission Impossible, you also know that Tom Cruise always succeeds,” he said. “I don’t look like Tom Cruise but at times I do feel like him. I never said it is impossible to balance the budget. Otherwise I may have sung that Harry Belafonte-song There is a Hole in my Bucket.”

In the first half year the government generated 227 million in revenue while its expenditures amounted to 208 million and capital expenditures to 8 million guilders. “It shows a surplus but the income in the first half year is traditionally higher than in the second half. That has not only to do with the seasonal pattern, but also with the receipts of profit taxes and road tax in the first half.”

The finance minister expects revenue for the year to be around 440 million guilders and expenditures between 425 and 435 million. The contribution to the AWBZ and the SZV (18.2 million guilders) for the co-insurance of family members of civil servants and also for former employees has been taken out of the draft budget.

Hassink furthermore trained his guns on the government-owned companies – the harbor, the airport, TelEm and Gebe. “They also should control their expenses. Sometimes it seems like the sky is the limit at those companies, but we do not receive any dividends,” he said.

The harbor and Gebe pay concession fees for a total of 10.2 million guilders a year. TelEm pays fees to the Bureau Telecommunication and Post and this entity is supposed to pay surplus revenue to the government – but it doesn’t.

“The airport is not paying dividends or concession fees and because of a new loan agreement it may be difficult to get this,” Hassink said. “We need a better control on dividend and concession fees, but cost control is also important.”

While interest payments are at 11 million guilders a relatively small part of the total budget, the government is not allowed to contract any loans for capital investments as long as the budget is not approved. Based on the interest burden standard, the interest-ceiling currently stands at 28 million guilders. “Our borrowing capacity is high,” the minister commented.

Another area of concern is the government’s liquid assets reserve – currently 30 million guilders. This reserve has gone down because the government has used part of this money to finance projects for which it was not allowed to borrow. “There is no policy in place to determine the buffer for liquid assets the country needs to overcome a period of disaster,” Hassink said. “I am sure that 30 million guilders is not enough. That hardly covers the expenses for one month. It would have to be near 100 million if we wanted to cover three months. The support from the Netherlands is minimal and I have no idea how they would react if something disastrous happened here.”

Attempts to collect more taxes have backfired on a certain level, as Minister Hassink revealed that there are “more negative than positive tax assessments” – meaning that there are more citizens that are expecting a tax rebate than citizens that owe money to the tax man.

The minister said that the 2013 budget, after the amendment, requires a positive advice from the financial supervisor Cft. “Otherwise the governor will not sign it into law.”

Hassink said that he has “no clue” where tax compliance stands at the moment. “Some say it is below 50 percent. When the Chamber of Commerce said that 50 percent of the businesses are not registered, some people jumped to the conclusion that we were missing 50 percent of the money but that is nonsense. The largest businesses are all registered.”

The minister furthermore announced that he is pushing for the integration of the receiver’s office and the tax office. “I have said to the Prime Minister: as soon as you have one floor ready in the new government administration building I want to move in.”

DP-MP Leroy de Weever asked the minister to submit the annual accounts of all government-owned companies to the parliament, and also financial data about the pension fund APS and the Bureau Telecommunication and Post and Winair. “When these companies are taking decisions that have financial consequences for the country the parliament ought to be able to support the minister’s position. It seems to me like these companies are at times running on automatic pilot.”

NA-MP Lloyd Richardson wanted to know from the minister what transpired with the sale of the American University of the Caribbean in Cupecoy and how the project set in motion by Taxand is proceeding.

DP-M Roy Marlin wanted to know how much the country is able to borrow and what percentage of the budget is taken up by personnel costs. “It sounds good for the unions to scream about the cost of living adjustment but the government cannot continue to allow the salaries to rise.”

Marlin called remarks about the salaries for ministers and Members of Parliament “a non-discussion.”

In general, Marlin said, if expenses continue to increase this will have an adverse effect on services like education and on investments in infrastructure.

NA-MP George Pantophlet asked what would happen “of all fifteen parliamentarians voted that they will no longer support the agreement about financial supervision.

He also addressed the fact that casinos do not pay their fair share, an opinion that was shared by UP-MP Jules James: “It is a crying shame that casinos continue to owe money to the government. We need to instruct the government to go after that money.”

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