Get competent oversight for JUTC

TAXPAYERS WILL be glad that the Government’s Jamaica Urban Transit Company (JUTC), as is claimed by Minister Robert Montague, has begun implementing the recommendations of an audit that unearthed mismanagement on a scale bordering recklessness, or worse.

But as welcome as that news is, we continue to insist on the need for a forensic review of the finances of the business and that the corrective measures, supposedly being put in place at the company, be subject to independent oversight. We lack confidence in the competence of the management to get it right. Indeed, a remark by Mr Montague, the transport minister, about the JUTC hiring of bus drivers is a danger flag.

A reminder of the financial shambles at the JUTC, and of the ineptitude of its management, was contained in Minister Montague’s disclosure to this newspaper on Tuesday that the company is losing up to 40 per cent of its revenue because of the impact of COVID19, which will, this year, cause Jamaica’s economy to slide by nearly eight per cent. As people stay home because of lockdowns and are working from home, the transit company is losing passengers and revenue. Even when it has passengers, a substantial number do not pay because of a government policy, in the current circumstances, to give free rides to certain categories of commuters.

LOSING MONEY HAND OVER FIST

But even in normal times, the JUTC loses money hand over fist. Prior to the onset of COVID-19, the company was projected to lose J$11.1 billion, inclusive of J$5.3 billion in upfront government subsidies. In the previous financial year, its real loss was J$4.4 billion – rather than the declared profit of J$2.2 billion – given that taxpayers front-loaded J$6.6 billion.

The owners of the company, the taxpayers of Jamaica, have not as yet been provided with updated profit and loss projections. Mr Montague, however, says he is in talks with the finance ministry for “supplementary budget support”, which suggests that the company’s costs are not projected to fall in tandem with its revenue.

The JUTC is not cutting staff, although it expects to save some money by having some employees work from home and closing some offices. There are also initiatives that should, according to Mr Montague, lead to fewer oil changes per bus, as well as for the use of biodiesel. These moves, ostensibly, will save money.

These ideas, though, appear, at best, to be marginal in the context of the crisis identified by the auditor general. For instance, over a five-year period up to the 2018-19 financial year, the JUTC spent J$726 million, or 74 per cent more than was budgeted for, on overtime payment. Drivers were among the big beneficiaries of this expenditure.

In the midst of this overtime binge, JUTC’s managers, in part, blamed absenteeism among drivers for their inability to dispatch more buses – an argument the auditor general “deemed to be somewhat inconsistent with JUTC’s records, which indicated an oversupply of drivers”. Indeed, in 2018-19, the company employed 996 drivers, approximately 20 per cent more than the numbers approved by the finance ministry.

PROVIDE CLARITY

In this context, Minister Montague needs to provide clarity to his explanation suggesting that the company has dealt with its wantonness of overtime by hiring and training more drivers. Drivers and overtime, though, is only one of the issues requiring further and better particulars, as well as deep consideration, if the management crisis at the bus company is to be resolved.

For instance, the auditor general highlighted that JUTC routinely hired and promoted people unqualified for their posts; gave voluntary redundancy to almost anyone who asked; had an inventory system that often did not account for millions of dollars worth of purchases; and that the company continued to purchase its fuel through negotiated agreements, rather than by open tender, with a chance of getting the best deal.

Minister Montague’s observation that “historical management inefficiencies were institutional”, rather than the product of any specific administration, is a dangerous slipway that avoids accountability. Worse, it provides a flawed, but seemingly intellectual grounds, on which such crises are perpetuated.

There is nothing inherent in the efficiencies at the JUTC, or the corruption that may reside there. The fundamental problem is that political parties, when in government, perceive the company as a trough from which supporters may feed. That is the cycle that is to be broken; hence the need for the forensic review of the JUTC’s financial management, and a competent and transparent implementation of the auditor general’s recommendations.