HOW TO INCREASE ‘PUBLIC SERVICE’ WAGE BILL DOWN TO 9%OF GDP

The Auditor General’s (AuGD) recent report of “deficiencies” at the Port Authority of Jamaica (PtAJ) created the usual nine days of flap.

Parading its expertise in lazily publishing the obvious, especially where it’s also sensational, local media hustled directly to the Executive Summary and copied/pasted the salacious findings regarding millions of dollars (J$ and US$) paid to individuals as “gratuity”; “retirement benefits”; and “pension” thoroughly ignoring readers’ need for analysis.  We’ll take another look at the “key findings” then take a deeper look at the real issues:

1.     employment contracts for 14 senior officers provided for the payment of a retirement benefit at the discretion of the Board. However, requisite approval was not sought from Ministry of Finance and Planning, in breach of MoFPS guidelines. In particular, one of the…officers benefitted from three pensions valued at $120,000 (Lump sum payment of $120,000…thereafter monthly payments of $34,834), $56.2 million and US$554,164 respectively, while in receipt of gratuity totaling $31.33 million covering contract period November 2004 to October 2013..

I’ve always considered “contractual gratuity” to be an oxymoron but, during my time at the head of a Statutory Authority, I was assured by the resident bureaucrats that, when a public servant went “on contract” he/she lost his/her pension and so the “gratuity” was compensation for the lost pension.

So a public servant paid THREE pensions and a gratuity appears, on the face of it, slightly over-compensated.

This could expose a peculiar public service anomaly to which government has applied see-and-blind tactics for decades but surely now must be addressed. Ever since the creation of Statutory Bodies, the area enclosing
(a)     employees’ status as civil servants properly-so-called; and
(b)     the “authority” of “MPS” (formerly Ministry of the Public Service; now a
department of the Finance Ministry) over these Statutory Bodies
has become very grey indeed.

As a matter of practice, Statutory Bodies seek MPS permission (either through their portfolio Ministers or directly from MPS especially if its portfolio Minister is Finance) for the establishment of posts, salary scales and increments. Generally, MPS “directives” are followed by these Bodies. However, in two recent cases, where employees of Statutory Bodies were dismissed without reference to procedures set out in the Public Service Regulations, the Appeal Court produced, in my opinion, some odd findings of law including that “public service” refers to persons employed to central government only and not to statutory bodies (see Eugennie Ebanks v BGLC; Nov 10, 2003; and Charles Ganga-Singh v BGLC, January 11, 2005).  In Ebanks’ case, the court specifically stated that, because she hadn’t been appointed by the Governor General, her appointment was “based on an ordinary contract of service” and not subject to Public Service Regulations.

One of the many conundrums (conundra?) these decisions have raised has to do with the AuGD’s right to audit Statutory Bodies. Her authority comes from section 122 of the Constitution:

122. (1) The accounts of the Court of Appeal, ….Supreme Court, ….the Clerks to the Senate and the House of Representatives and…..departments and offices of the Government of Jamaica (including the offices of the Cabinet, the Judicial Service Commission, the Public Service Commission and the Police Service Commission but excluding the department of the Auditor-General) shall, at least once in every year, be audited and reported on by the Auditor-General…...”

“Government of Jamaica” isn’t constitutionally defined but “Cabinet” is created (sections 68/69) as follows:

Cabinet shall be the principal instrument of policy and shall be charged with the general DIRECTION AND CONTROL [my emphasis] of the Government of Jamaica….”

Since these Statutory Bodies are all assigned to Cabinet Ministers, you’d think they would be under cabinet control and employees would be government employees/public servants. Not so, according to the Appeal Court, not unless G-G appoints them.  The Appeal Court isn’t necessarily wrong because, although assigned to portfolio Ministers, these Bodies’ Statutes provide that Ministers have no “control” over operations but only set “policy”.  The intriguing issue raised by all this is whether AuGD has any jurisdiction whatsoever over the PtAJ (or any other Statutory Body).

Furthermore, if the Appeal Court is correct, these “senior officers” would be entitled to those outrageous payments once they were based on their “ordinary contracts of service”.  Accordingly, the AuGD’s reliance on MOFPS Circulars would be totally misconceived.

2.     Fourteen senior officers were overpaid gratuity totaling $15.05 million between April 2011 and March 2015. The senior officers’ contracts provided for gratuity of 25% of gross taxable emoluments. However, MoFPS Circular stipulates gratuity should be paid on basic pay only. In April 2015, PtAJ wrote to MoFPS requesting a waiver for senior officers whose contracts were in breach of the Circular. MoFPS responded that PtAJ’s request to continue the practice couldn’t be supported. MoFPS noted and accepted that the provisions in current contracts are legally binding on the Authority, but indicated that the Ministry cannot grant approval for provisions which are contrary to those detailed in the Circular.

DWL!  MPS more confused than R.U. Shaw on highway plans.

Circular is circular BUT

  • Clause 9 of the Schedule to the Port Authority Act (“The Act”) provides “There shall be paid to the chairman and other members of the Authority such remuneration, if any (whether by way of salaries or travelling or other allowances), as the Minister may determine.
  • Clause 10 further provides “The Authority may appoint and employ at such remuneration and on such terms and conditions as it thinks fit, a secretary, and such officers, agents and servants as it deems necessary…” providing that any salary in excess of $3,000 must be approved by the Minister

So, the Minister is in full control and can approve salaries at any time whether prospectively or retroactively. No “circular” can trump legislative provisions.  In practice, the Minister may wish to rely on MPS’ advice but, legally, can only do so where MPS’ advice is consonant with the Statutory Body’s decision under The Act. It may well be that not even Minister can over-rule PtAJ on salaries/benefits unless fraud can be proven because, the Act permits PtAJ to fix remuneration “as it thinks fit”.  This would appear to bolster the Appeal Court’s opinion that Statutory Bodies are not included in “the public service”.  In that event, neither MPS nor its Circulars are relevant or binding.

It must be nonsense for MPS to accept “provisions in current contracts are legally binding on the Authority” yet try to block ministerial approval of what is presented to the Minister as a perfectly legal fait accompli.  Instead, government needs to admit the legal inconsistencies and unravel them once and for all.

3.     A senior officer was paid basic salary and motor vehicle allowance in excess of the maximum of the applicable MoFPS scale.  The senior officer’s engagement was approved at a lower level by the Portfolio Ministry. The MoFPS didn’t approve the engagement and employment benefits.

But, a combination of The Act and Appeal Court judgments probably make these decisions invulnerable. The “Portfolio Ministry” is entitled to issue this approval.  AuGD/MPS’ opinions are irrelevant.

4.     PtAJ invested US$2.7 million and J$40.1 million to acquire Navy Island and ten lots on Titchfield Hill between 2001 and 2007. PtAJ indicated that the [Navy Island] investment was undertaken to augment its existing marina development and facilities, to encompass a first class resort. The Titchfield properties were acquired to facilitate cultural tourism…. the investment decisions appeared not to be in line with the Authority’s mandate, which doesn’t include the development of properties for tourist attractions. To date, the proposed tourism developments haven’t materialized.

For me, this is a most disgraceful misdeed.  This is Outameni squared.  The PtAJ has ONE duty namely to regulate the ports [section 7(1) of the Act].  The Act specifically provides this duty is to be carried out by “making regulations or giving directions” [section 7(3)] NOT by purchasing or developing land.

Whether or not PtAJ can defend itself against AuGD’s chilling findings; whether or not AuGD’s interventions are on solid legal ground; WE have a problem.  It’s no wonder we can’t get “public service” wages down to 9% of GDP and, if we ever do, it might be by sleight-of-hand whereby these horrendously extravagant payments aren’t taken into account because they aren’t made, strictly speaking, to “public servants”.

Government must review its legal structure NOW and pass whatever legislation necessary to over-rule those Appeal Court decisions which, in my opinion, on a pragmatic level regardless of legalities:

  • sail dangerously close to breaching public servants’ constitutional rights to their jobs and exposing their families’ wellbeing to the whims and fancies of politically appointed Boards; and
  • make it possible for public servants to legally thumb their noses at the Auditor-General.

Peace and Love

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