The process of “zero-based budgeting” is familiar to everybody who has ever been involved in starting a private business, and to most people who have bought existing businesses. All it means is, justifying every dollar spent. Right away, you can see why it’s not popular with government bureaucrats.
Every new venture of theirs starts with plenty of cash in hand and with instructions to spend it all. Their job is to provide the authorised service within the authorised budget; it is not to minimise expenditure. For existing government services, each annual budget is based on the preceding year’s expenditure. New expenses are required to be justified, but no existing line-item has to be justified ever again until the end of time. It is presumed to be justified, even when it obviously isn’t justifiable.
Whenever bureaucrats say they have cut back on expenses, they mean they have cut back on budgeted expenses, not actual ones. That’s the way they think. “We have cut expenses 10%! Are we being ruthless, or what?” Well, no, the reduced expenses are below the budget for the current year, but higher than last year’s actual. “Government accounting” is a different beast from real-world accounting. The former doesn’t even have to justify a purpose. That, too, is presumed to be justifiable, however many years or decades since it was originally justified.
Zero-based budgeting would require the closing down of Cayman Airways, for instance. Its formal purpose – bringing tourists to Cayman – could be served by paying foreign carriers a few million a year to guarantee a certain number of flights. Five million dollars, tops. We’d still be saving twenty or thirty million each and every year. Is Cayman Airways worth raising taxes for? Oh, please.
The formal purpose just wastes time and money; yet it goes on and on like the Everyready bunny. The true-but-unacknowledged purpose is to provide free trips to and from Florida for the families of government employees, past employees, friends, friends of friends, old Uncle Tom Cobbleigh and all. It’s simply a variation of the petrol-card scam – free use of the public’s assets.
(The total of all the Cayman Airways subsidies – overt and covert – over the years is about equal to the entire Public Debt. That’s irresponsibility of a very high order, surely.)
All these years, you know – all these years! – Cayman could have been running substantial Budget surpluses, not deficits. Ours is a wickedly rich little Island, and we should have no public debt at all. Our local representatives have acted with all the restraint of kids running wild in a candy store.
Well, now the British FCO has turned up and demanded that our local politicians and bureaucrats balance their budgets. Now, they must actually set aside some of the vast sums of taxes and fees that come in. They must stop borrowing. They must face the reality that Public Revenue may not increase year after year after year, and that new taxes are not the best option.
Let’s hope that the visiting FCO team has enough experience and wisdom to apply the concept of zero-based budgeting to all the state bureaucracies. If they don’t, then increased taxes will strangle our economy, sooner or later.
Some readers of these words may never have heard of zero-based budgeting before now, but it’s not a concept I pulled out of my hat. There are hundreds and hundreds of accountants here on the Island who could tell the FCO how it’s done. Those accountants are almost certainly all in the private sector, but the visiting team shouldn’t hold that against them. Come on, you FCO chaps: think outside the box!