PARLIAMENT'S PUBLIC Accounts Committee (PAC) has condemned as "a moral hazard", the continued failure of several Government Ministries, departments and agencies to hand over employees' statutory deductions when they become due.
Despite constant warnings that they are breaking the law and last year's damning report from Auditor-General Adrian Strachan, the most recent report from the PAC shows that Government organisations continue to put the entitlements of their employees at risk by not handing over National Housing Trust (NHT), National Insurance Scheme (NIS), and income tax deductions, in some instances, for several years.
The deductions are taken from employees' salaries each month but are often used by the cash-strapped departments as working capital.
The PAC's report, tabled in Parliament last Tuesday, covers the period October 2001 to February 2002.
It lists the Jamaica Fire Brigade (JFB), Social Development Commission (SDC), Directorate of Electrical and Mechanical Services, the Civil Aviation Authority, the Jamaica Agricultural Society and former solid waste entities, Metropolitan Parks and Markets and Central Parks and Markets as among those owing outstanding amounts.
Figures released last year showed that the Fire Brigade had $122.72 million in statutory deductions outstanding for the period January 1999 to June 2000; that the SDC failed to hand over $24.50 million for most of 2001, and that MPM owed $20.1 million dating back to 1994.
Mr. Strachan, in his annual report for the period ending March 31, 2002, noted that the South East Regional Health Authority alone had failed to hand over $686.2 million in education tax and income tax, which represent salary deductions for the period October 2000 to March 2002.
"By not handing over statutory deductions to the relevant agencies, these organisations are not only breaching financial regulations but they may be endangering employees' entitlements," the PAC report said.
But for their part, delinquent agencies still maintain that they are strapped for cash and have no choice but to hold onto the deductions.
According to the PAC report, some of the delinquent agencies complained that despite the efforts of the Ministry of Finance and Planning to provide resources to meet personal emoluments, the funding does not allow them to meet their inescapable obligations.
Citing a sever cash flow problem at his department, Major H. George Benson, head of the Fire Brigade, told the PAC in January last year: "The money is not enough to pay salaries. Salaries are sometimes paid in the parts. The money is not enough to pay over the statutory deductions and do the other things."
Pointing to the inescapables, Major Benson said: "Trucks have to run, gas has to be to be in the engines, tyres have to be bought."
But, the PAC has expressed concern that if the trend continues, employees may find themselves unable to collect benefits they are entitled to through their statutory deductions, through no fault of their own.
The committee felt this was a "moral hazard" as the practice is thought to be detrimental to employees as it would have an impact on the benefits that employees should enjoy.
In January 2002, the PAC was told that despite the efforts of the Finance and Planning Ministry to enforce compliance, several Government-run institutions continue to use statutory deductions for their own purposes instead of handing them over to the relevant agencies.
The PAC has urged Government Ministries, departments and agencies to tighten their belts and make do with the sums they are given.
"(They) were encouraged to use their discretion and management skills to administer the funds allocated to them efficiently and effectively to create a discipline to meet statutory obligations and to act in compliance with the different Acts," the PAC said.
