Brown was responding yesterday to a letter to the editor published in CINews, in which regular political commentator Scott was critical of government expenditure on Te Mato Vai project.
In a letter to CINews yesterday, Brown said all the information Scott had requested on the project was readily available to the public either online or from Parliament.
“Government expenditure on TMV is transparent and this is a message that we have consistently made.
“Our development partners have expressed no concerns at our ability to manage both our funds and their funds. One just has to look at the excellent attention given to our use of New Zealand grants.
“We score very highly on the Public Expenditure Financial Assessment (PEFA) across the region, which is a reflection of how well government manages public funds,” Brown said.
“And lastly, in terms of TMV, we continue to work closely with the Pacific Financial Technical Assistance Centre (PFTAC) an International Monetary Fund (IMF) regional technical assistance center. The goal of PFTAC is to strengthen the institutional capacity of Pacific countries to design and implement sound macroeconomic and financial policies.
“I have taken the liberty of repeating and responding specifically to each of John Scott’s questions.”
John Scott: Te Mato Vai has had government raising loans and letting contracts and my question is, can they advise where is the evidence that they have been complying with the requirements in our legislation relating to such activity or is this just once again evidence of them giving the finger to their statutory responsibilities and proceed as a law unto themselves? Sections 53 and 54 of the MFEM Act tell us that the Minister of Finance on behalf of the Crown and with the concurrence of Cabinet may raise loans, and provide security, for public interest purposes and shall report the details of the loans at the next sitting of Parliament.
Mark Brown: The TMV loan was initiated by the late Sir Tereapii Maoate and included in the budget speech 2008/09. However, it was only taken up in the 2012/13 Appropriation Bill with the loan being signed in December 2012. The process to get an Appropriation Bill tabled and passed in Parliament satisfied the requirements of the MFEM Act.
John Scott: That is all well and good, and assuming the former requirement was complied with, what about the details and indeed the summary report required by s.12 of the Loans Repayment Fund Act (LRF Act)? Did the people’s representative body, Parliament, ever get to see these?
Mark Brown: The LRF Act 2014 was passed by the current government in April 2014. This did not apply to previous loans. However, the related debt sustainability assessment (DSA) was undertaken for the TMV loan and clearly indicated that the additional debt (of around $23million), was below the fiscal responsibility ratio 30 per cent of GDP. We have since taken on additional debt and we still remain below the 30 per cent benchmark.
John Scott: It is several years now since Te Mato Vai was launched with all the associated fanfare. A petition seeking to examine the cost and other detail was given a short shrift obfuscation by government. Since then Opposition finance spokesperson, James Beer asked for such details in a CINews story on March 16 this year and this writer did the same on March 9. Minister Brown, in CINews on March 12 this year, admitted Te Mato Vai would exceed the $60m first thought, but this went no further towards satisfying the requirements of s. 54 of the MFEM Act or the LRF Act.
Mark Brown: The Te Mato Vai Project Select Committee was established by parliament in June 2016 in response to the petition and included the MP James Beer. The report is available for public review. The initial cost estimate of $60m was an estimate. Over time, with more design details and information, these costs have increased. Increases have also been caused by increased project supervision and delays in implementation. These additional cost have been included in the Appropriation Bill when identified to authorise expenditure in the forthcoming years.
John Scott: Then what about contracts? There must have been a contract with the Chinese as there must have with other contractors. Can the finance minister therefore clarify where specifically can we find the statutory authority for these? The minister will of course recognise that if the law requires statutory authority and there is none that he, or he and such other parties as are in league with him, could become personally liable.
Mark Brown: As previously mentioned, the Appropriation Bill is the statutory authority, debated and passed through Parliament as legal document. Projects and contracts are included in Appropriation Bills for authorisation of Parliament.
John Scott: Readers may recall an earlier article in which I suggested, quite seriously, that the members of the Executive Council who had collectively, and wilfully, chosen to abuse the 1.5 per cent limit on unauthorised expenditure might be advised to confer with their bankers and accountants in readiness for when the law went chasing them for the recovery of their illicit spending.
Mark Brown: The information on expenditure authorised under Article 70.3 of the Constitution is published quarterly in the Cook Islands Government Quarterly Financial Reports for public information and made available through the MFEM website. Your advice has been duly noted and dispensed with.