MercoPress. South Atlantic News Agency

Falklands: Public Accounts Committee reviews commodity prices

PAC has an independent Chair and community members, though two Members of the Legislative Assembly also sit on the Committee at any point in time.

During its last constitutional review, which concluded in 2008, the Falkland Islands established a Public Accounts Committee (PAC). This was based on such committees elsewhere in the world and has now been in operation for a number of years. It has an independent Chair and community members, though two Members of the Legislative Assembly also sit on the Committee at any point in time.

 The PAC reviews local government finance reports, projects and operations to review and advice on matters of value-for-money. It is fundamentally an external and independent check on the governments use of public funds.

The PAC most recently concluded a review of quarry pricing in the Islands. This commodity, made up of aggregate and other quarry products, is a key component of economic development and growth. The Government has traditionally been the main, and often, only supplier of such products both to the private and public sector within the Islands. The PAC has a remit to review the process of policies and expenditure, but cannot comment on the substance of government policies themselves, as they are deemed to be a subject for the Legislative Assembly.

Pricing by the government of such a key commodity has long been questioned and challenged by the local private sector, stating that the prices charged for products used in construction are not competitive when compared to elsewhere in the world. The counter argument has often been that the Islands lack traditional economies of scale, are very remote, and thus are never likely to compare favourably with prices in larger markets.

The PAC undertake a review throughout 2017 of the governments pricing of quarry products. This review concluded in August 2017, with a report subsequently making its way to the Islands Executive Council in January 2018. It was subsequently and publicly discussed in the Legislative Assembly in late February 2018.

 The PAC had made four substantive recommendations to the Government. The first two recommendations argued that the Government should look to take a longer-term view on prices and therefore amend prices based on prior years surpluses or deficits. In effect returning surpluses to customers where they occurred. The Government did not accept this recommendation, suggesting that it already takes a long-term view on pricing and actively looks to avoid larger price swings (either up or down). It also argued that, after adjusting for overhead costs, surpluses were significantly less than the PAC thought.

Recommendations three and four from the PAC were fundamentally about transparency of pricing and the underlying mechanisms driving these. The Government accepted these recommendations in principle and are looking to ensure that they operate in line with the spirit of the PAC.

The work of the PAC is important not only in terms of advising on issues of value-for-money, but also in terms of placing items on the political agenda in the Falkland Islands. This has also been seen to be the case elsewhere in the world, and members of the Islands PAC have over the past few years visited other nations (the UK, Channel Islands and the Caribbean) to learn from their experiences.