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August 22, 2014
Government had to take care of ongoing obligations – Gonsalves

Prime Minister Dr Ralph Gonsalves has declared that his government has set an example by being transparent about not paying their contributions to the National Insurance Services (NIS) and finding a suitable way to deal with the situation.

A resolution, which was not supported by the Opposition, was passed in Parliament on Tuesday for the Government to be issued {{more}}a $15 million loan from the National Insurance Fund in order to service outstanding contributions to the NIS by the Government.

The loan is expected to be paid back over a 10-year period, using treasury notes with an interest rate of 4.5 per cent.

“Since the December floods, the Government has been very careful in making sure that we take care of ongoing obligations and that the $1.7 million per month that it costs for the NIS contributions, that when the occasion comes that we make sure that we satisfy the purchase of essential items, like drugs at the hospital. We make sure that elderly persons get their pensions, their state pensions, which number is growing very rapidly,” Gonsalves explained.

The Prime Minister noted that instead of finding an alternative way to settle the matter, it was decided that the matter be settled at an appropriate time in the House of Assembly.

According to Gonsalves, who is also the Minister of Finance, with responsibility for the NIS, the Government owes the insurance services for the month of December 2013 and for seven months in 2014.

“Mr Speaker, I could have dealt with this matter differently, as I indicated earlier. I could have worked out with the NIS and said okay, I will give you a letter from the Cabinet that this is how we are going to deal with this matter and this is how it is going to be done sufficiently to take care of the auditors. I could have done that. I could have passed to them any extant state property. I could have done that, but I didn’t,” the Prime Minister said in his wrap up.

“We passed the law without the Opposition being present here and I have chosen to come under that very act with transparency to this honourable House and explain to the people that this Government is the guarantor of all the NIS payments and that given the challenges arising out of the disasters, we have fallen behind in payments and that I come here with treasury notes to do better than what the private sector does with the NIS; that is to say they will work out with the NIS a stream of payments, while keeping current, without having to pay any interest. But we said that we will pay interest and they said they will accept 4.5 per cent interest in the circumstances.”

Gonsalves also revealed that the NIS is satisfied in the way that the Government has chosen to deal with the matter.

We have set an example – this Government – and I insisted that we set an example as to how we deal with challenges and we have dealt with this challenge in an open and transparent manner with good sense and I believe that the working people of this country, especially the public servants, could appreciate what we have done in the particular circumstance,” he said.

The Finance Minister noted that he would have preferred to be able to pay the NIS its monthly payments, but because of the December disaster, priority had to take precedence.

However, Gonsalves has declared that the Government intends to keep up all the payments from the month of August and going forward.

In his presentation, Leader of the Opposition Arnhim Eustace expressed his disagreement with the decision taken and questioned the example being set by the Government in their decision to not pay their NIS contributions.

“I listened to a very glorified presentation by the Prime Minister here. It doesn’t fool anybody. The reality is the monies deducted were not paid over,” Eustace said.

While he acknowledged the financial difficulties being faced by the Government, the Opposition Leader stated that he has information that suggests that the government owes the NIS more than the $15 million that they are going to pay back.

“Today, I see here that the loan being proposed is about 15 million. I have some information that suggests that that is not all. It should be closer to $23 million. I also have information that suggests, with respect to statutory bodies, there are some withholding of those payments also, amounting possibly to $3 million and I believe for the general public, private sector and so forth, there is another 10 million dollars or so in contributions that have not been paid over to the NIS,” he said.

“If one looked at it in that context, Mr Speaker, we’re talking about $36 million that should have been paid over. That is the issue, Mr Speaker. It wasn’t and therefore there comes a point when, if that were to continue, we could well face the accounts of the NIS being qualified, if one didn’t deal with this issue.”

Eustace, who was the former chairman of the NIS board, opined that public servants were paying twice, as they were “having the money deducted from their salary, but Government is spending that money without giving it to the NIS and so it was also with Government contributions, so the full 10 per cent was not being paid over as it should have.

“Any effort we make now, Mr Speaker, to make that right, it’s going to require that amount to be paid by the Government and the Government gets its money from taxpayers, who are the same people you deducted the money from in the first case,” he explained.

Eustace declared that despite the Government’s financial difficulties, they must come up with mechanisms that would not make the NIS worse off.

“The reality is that those funds are needed by the NIS, so while it might be a good guise to make the presentation the way he made it, the NIS has to pay. I’m not comfortable with the proposal made by the Prime Minister, although I understand. I feel the NIS should be paid back the money that is owed to them,” he said.

“We shouldn’t even be discussing this because these things should have been paid in the beginning, anyway. Having not been paid, we find ourselves trying to find ways and mechanisms…which will not necessarily improve the viability of the National Insurance Scheme and could lead later on to further increases in the retirement age, higher contributions…We cannot afford that. We must be confident that our contributions are paid over and the NIS has the leeway to grow.”

Other contributions to the debate were made by Senator Luke Browne, Senator Julian Francis, Senator Camillo Gonsalves, Senator Linton Lewis and Representatives St Claire Leacock and Dr Godwin Friday.(BK)