Inter Expo Caribbean

Speech by Board member Ewout Irrgang at Inter Expo Caribbean, 7 December 2023

Ewout Irrgang in Nieuwspoort

Good morning, bon dia,

Last February I was a guest of the Court of Audit and curiously enough was also on my way to the Court of Audit. My host was the Court of Audit of Curaçao and my destination was the Court of Audit of Aruba. You may well have taken the same flight yourselves; you don’t fly in a very big Boeing. At the airport in Willemstad, my colleagues and I noticed that the young man who had just checked in our luggage was standing at the gate. That wouldn’t happen at Schiphol. One of my colleagues joked, ‘I think he’s going to be our pilot, too’. Not much later, we were sitting in a small twin-engined aircraft. And who was our co-pilot? Yes, that same young man!

I like to tell this little anecdote because our Kingdom is organised as though the other countries in the Kingdom were institutional copies of the European country of the Netherlands: with a Council of State, a Court of Audit, an Ombudsman and so on. Yet the scale is completely different. This difference in scale is true of the Caribbean countries of the Kingdom and especially true of the Caribbean Netherlands. At the 2021 edition of this congress, I spoke about these differences and the way in which the European Netherlands, the Caribbean Netherlands and the 3 countries within the Kingdom were trying to come to terms with it.

Take the Court of Audit in The Hague: What is its role in the Kingdom? In brief, it’s our job to find out exactly what the people of the Kingdom get for their money, roughly 400 billion euros. Our aim is to improve government performance and operation. We investigate whether the government spends its money economically, efficiently and effectively.

We are a High Council of State. Thanks to this special status, our independence is embedded in the constitution and laid down in the Government Accounts Act. We have a statutory duty to audit government revenue and expenditure. We report directly to the Dutch parliament. We decide what we audit and what conclusions we draw. We regularly carry out audits on request, usually for the House of Representatives and now and then for the government. But we decide whether we honour their requests or not. And sometimes we say no.
Government expenditure includes expenditure in the Caribbean Netherlands. Exactly how much money is involved? Which island gets what? And does the government pursue coherent policies to ensure that public money is spent economically, efficiently and effectively in the Caribbean Netherlands?

I want to talk a little more about this. In recent years, we have carried out several audits of financial policy in the Caribbean Netherlands and we are currently carrying out another one.
Let me begin with what I always think of as the most Dutch of questions: how much does it cost?

Another way of saying this, and one that is often heard in the European Netherlands, is, How much are those islands costing us?

At first sight, it’s a simple question. But if you think you have a simple, watertight answer, you’ll quickly be disillusioned. We don’t know, for instance, precisely how much money goes to each island or how it is spent.

An obvious starting point to answer this question is the Minister of the Interior and Kingdom Relations’ budget. Under section 211, subsection 1 of the Public Bodies (Bonaire, St Eustatius and Saba) Act, which is concerned with administrative relations within the Caribbean Netherlands, the Minister of BZK is, and I quote, ‘responsible for the coordination of government policy affecting the public bodies’. In an interesting addition to this provision, and I quote again, ‘he further promotes the policy freedom of the island councils.

In practice, this provision is inconsistent with the division of tasks and responsibilities between central government on the one hand and the public bodies on the other. I will return to this later.

The Minister of BZK is therefore responsible for coordinating central government policy on the Caribbean Netherlands. Does this mean that the Minister of BZK or the State Secretary for Kingdom Relations can be held accountable for policy in the Caribbean Netherlands? No, not a single person is accountable. In the Netherlands, ministers have primary responsibility for their own policies. This makes it difficult to hold the Minister of BZK to account if other ministers implement their own policies.

Nevertheless, the Minister of BZK must ensure that government policy for the public bodies is coherent. He coordinates government policy to promote unity and coherence. But how does he actually achieve this?

The answer to this question lies in Kingdom Relations’ budget. Under a motion adopted by the House of Representatives, since 2014 BZK has prepared an annual overview of all government spending in the Caribbean Netherlands. It shows that €530 million was budgeted for the 3 islands in both 2023 and 2024. If we place all the overviews of government spending in the BES islands next to each other, we can see that total spending has more than doubled since 2014.

What’s remarkable is that there is no explanation of how much money goes to which island. It cannot be seen how much of the €530 million benefits the people of Bonaire, Statia or Saba.
The information simply does not exist! Every ministry that implements policy in one or more of the BES islands recognises the expenditure on individual projects in its own budget articles. Even within a ministry it’s a tortuous journey to unravel just how much money is spent in the BES islands. This is because the ministries do not have departments dedicated to the Caribbean Netherlands. The Ministry of Infrastructure and Water Management, for instance, contributes to drinking water connections in the Caribbean Netherlands via its Directorate-General for Water and Soil Affairs.

This is understandable if you look at it from a European perspective. The European Netherlands does not break down expenditure by municipality. Logically so, because the government implements policies nationwide. But it’s open to question whether this is a fair comparison There are no fewer than 342 municipalities in the European Netherlands but just 3 public bodies in the Caribbean Netherlands, which apart from lying on the other side of the ocean have their own international seaports and airports.

I would now like to turn to policy implementation in the BES islands. Rijkswaterstaat, for instance, is a key player, building and maintaining infrastructure throughout the Kingdom. Its work doesn’t stop at tunnels, viaducts, motorways and waterways in the European Netherlands; it also stretches to the hairpin bends in Smoke Alley, the new roundabout on Statia, maintenance of The Road on Saba and re-asphalting the small but important international airports. In practice, this is a source of tension between central government civil servants and civil engineers with a Hague perspective on the one hand and the interests of the people of the Caribbean public bodies on the other. The discovery of ancestral graves during work on the new road to Statia’s airport is perhaps the best example of this. We understand from our talks that the Dutch set to work at full speed until they literally bumped into the hypersensitive history of slavery.

To return for a moment to the 530 million in the appendix to Kingdom Relations’ budget. Those 530 million euros were spent by ministries in the European Netherlands that are a direct or indirect responsibility of central government.

I say direct or indirect because the islands implement a lot of policy subject to central government conditions, deadlines and relatively high accounting burdens that is funded by special purpose grants. This earmarked money is awarded for specific projects and is basically the same as the special purpose grants awarded to municipalities in the European Netherlands.
We audited special purpose grants at the request of the House of Representatives in 2020 and 2021. You can read all about our audit in the report we published in 2021: Special purpose grants awarded to the Caribbean Netherlands. At the time, we were struck by several eye-catching developments, not least by the very steep rise in the number of special purpose grants. In our opinion, this is at odds with the goal of promoting local autonomy. The WOLBES states that the Minister of BZK ‘promotes the policy freedom of the island councils’. If the number of special purpose grants (i.e. ear-marked funds) increases, the proportion of freely-disposable general grants automatically declines. And with it, the Caribbean Netherlands’ local autonomy to make independent decisions.

We also found difficulties with the coherence of policy. The responsible ministers, BZK and Finance, and the other ministers do not coordinate their proposals to award special purpose grants effectively. As a result, ministries are funding more and more projects without the Ministries of Finance or BZK knowing anything about them. It’s difficult to promote coherence in such circumstances.

Our audit of last year’s intervention in St Eustatius showed quite clearly what the consequences can be: the relatively small island council had failed to spend more than €70 million of the special purpose grants awarded to it. Furthermore, it spent a lot of time on accounting for ear-marked funds at a time when financial management was not in order.

Our audit of special purpose grants also revealed that central government’s project funding rarely allowed for long-term project costs. In 2014, for instance, Saba was awarded $1.5 million to invest in a waste separation facility. But the Ministry of I&W did not foresee the investment’s financial consequences. The audit report we published in 2021 revealed that the long-term cost of waste management had risen since 2014 to about $1.3 million a year. Saba had to bear these costs from its own budget. In other words, costs and benefits were not properly thought through in advance and maintenance arrears were possible again.

I visited Statia myself in February. I saw that an impressive roundabout had been built and that schools had been renovated during the Dutch intervention. But I had to ask myself whether proper allowance had been made for maintenance costs. The establishment of a Court of Audit on Statia was a precondition for the restoration of local administration. But the island council did not provide it with a budget. It said there was no money.

So far I have spoken about Kingdom Relations’ budget, about its appendix with all direct and indirect expenditure in the Caribbean Netherlands. But I haven’t mentioned the BES Fund yet. This fund, worth more than €71 million, awards general grants to the 3 islands. The island councils are free to spend this money as they see fit. The Minister of BZK and the State Secretary for KR can use the fund to strengthen the islands’ self-administration.

This year, the Ministry of BZK evaluated the amount of the general grants in relation to the islands’ performance of their tasks. And what did it find? In broad lines, this evaluation on behalf of the Minister of BZK came to the same conclusions that we had come to two years before. Too many structural tasks were too often seen as one-off tasks funded by special purpose grants. To quote the evaluation report, Island tasks and funds, Caribbean NL, ‘This can lead to problems recruiting long-term personnel and frustrate the budget process and the preparation of long-term projections.’ The islands’ general grants, moreover, provide very little opportunity for investments and the amounts awarded are not automatically adjusted in line with population growth.

And so we arrive at an interesting paradox. Central government implements policy by means of project funding, i.e. special purpose grants, partly because financial management in the Caribbean Netherlands is not in order. It’s difficult for the State Secretary for Kingdom Relations to determine whether an island council has enough money and what the money is spent on.

In brief, the appendix to the Kingdom Relations budget offers no more than an initial glimpse of total government expenditure in the Caribbean Netherlands. And it can only do that if it’s complete. Expenditure from the BES Fund has to be taken into account, too. In practice we see that the Minister of BZK has a great deal of difficulty working out how much money the government spends in the Caribbean Netherlands. The information simply does not exist for the 3 islands individually. This does not make it any easier for the minister to coordinate policy and promote coherence.

In recent years, the State Secretary for KR has gone to great lengths to improve coordination and allocate tasks between central government and the islands more effectively. At the heart of the matter, we need to know who is responsible for what and who is going to pay for it.

Administrative agreements have been made to improve coordination and to increase the general grants. An additional €30 million has been budgeted for to improve social services and living standards in the years ahead. In 2022, the current caretaker government also released €30 million in structural funding for the Caribbean Netherlands. We are currently auditing how that extra money is being spent on all manner of initiatives to combat poverty on Saba, Statia and Bonaire.

So a lot is happening and there are certainly some bright spots. But at the Court of Audit it’s our job to take a critical look at how public money is spent. We know that more money is not always the solution, on either side of the ocean. We also know that good financial management, with reliable accounts, helps. Not only to account for public money but also to deliver public value to citizens and businesses. This is often overlooked in the European Netherlands, but central government finances there have not been in order for the past 3 years either. This is confirmed by the Court of Audit’s audits. There is no excuse not to put or keep the Caribbean Netherlands’ financial management in order. Saba and Bonaire received positive statements of assurance for 2022. Given the scale of the Caribbean Netherlands, they have earned our compliments for this exceptional success. Achieving it has required many people throughout the Caribbean Netherlands to constantly act as figurative co-pilots, like my co-pilot between Willemstad and Oranjestad.

Good management of public money, however, is only just the beginning. Public money has to be spent not only regularly but also efficiently for the benefit of citizens and businesses on Saba, Statia and Bonaire. It’s therefore up to the minister and state secretary to make sure     there is enough coherence and policy freedom for the 3 islands and it’s up to the island councils to spend public money regularly and efficiently. There is work to be done. I wish you all the wisdom you need to get the job done.

Thank you