Finance Minister Paula Cox attacked media coverage of the Auditor General's Report on Friday, saying the issues had to be put into context.

However she specified that she did not want to focus only on what the UBP Government did, but on what the PLP Government was now doing and the work that is still needed.

"It is customary for the media to seize upon the Auditor's Report and turn the spotlight on the observations, findings and recommendations of the auditor," she told MPs in the House of Assembly.

"The media reporting would be immensely assisted by doing some background research to put the findings in context.

"With regard to the highly publicised matter of pension contributions and taxes in arrears let me make it abundantly clear that this Government has placed a high priority on collecting outstanding amounts owed."

After giving details on the financial reporting accountability cycle within Government, Ms Cox noted that when the PLP Government came into office in 1998 arrears amounted to some $22 million for pension contributions and payroll taxes.

"It was under (the PLP) Government that the Tax Commissioner's office was given the resources and the green light to conduct audits of delinquent tax payers. These audits have uncovered previously unknown amounts of taxes due to Government and that is one of the reasons underlying the seemingly large increase in payroll taxes owed between the years 2002 and 2003."

The Tax Commissioner's office has also dedicated staff to "the vigorous pursuit of monies owed to Government," she said.

"In 2002, the Department established a Debt Management Section consisting of three staff (one seconded from the Accountant General's Department). To date this section has been responsible for collecting in excess of $3 million annually at a cost of $170,000 per annum.

"They have successfully instituted garnisheeing of salaries and rents in relation to land tax. They have also used the offsetting provision in the legislation that allows them to claw back any monies due to taxpayers from Government.

"They have set up instalment plans and have successfully progressed matters in the courts through the Department of Public Prosecutions. In addition, they are supported by the Departments of Immigration and Transport Control, who will withhold work permits and vehicles licenses where taxpayers are in arrears with taxes." Ms Cox added it was amazing to see how quickly people paid their arrears when faced with this prospect.

With increasing use of the new e-tax system and proposed enhancements of back-end systems, Ms Cox said there will be a gradual shift in focus and resources from that of taxpayer file maintenance to debt collection activities. "Within the next five years, they expect to have at least six of their current staff dedicated to debt collection."

The Accountant General now uses Magistrates Court to pursue debts where necessary, and plans are underway to establish a relationship with all creditors on the Island through the sharing of information. The Pension Commission has also resolved to bring employers who continue to flout their legal requirements to court.

Ms Cox said the Ministry of Finance recognised there is still much work to do. As a result of Government's on-going initiatives, the Consolidated Fund Financial Statements have been published in record time for the fifth consecutive year.

"Why is this important? Because the timely production of financial information shows that Government takes its work seriously."

Measures have been put into place allowing the Accountant General the right tools for the job, including the hiring of more staff, and Ms Cox promised that "during the current fiscal year Government will make a concerted effort to bring the financial statements of all related organisations and Funds up to date".

"Whilst I acknowledge there are still obstacles to overcome, these obstacles are being addressed and will be resolved," she said.

Ms Cox also took exception with the Auditor General's use of the term "illegal expenditure" in reference to overspent budget appropriations.

The Constitution requires an overspent budget to be approved by the House of Assembly before it is authorised, she said.

However, "the Constitution is also clear that the money may, in some circumstances such as Hurricane Fabian be spent before the approval is obtained."

In those cases the House will have to approve the money retroactively, she said, but that does not make it illegal expenditure. "It is properly and more accurately referred to as unauthorised expenditure.

"There are no questions about Government's ability to manage Bermuda's affairs," Ms Cox finished.

"Informed creditors and investors did not hesitate to support the refinancing of a $75 million debt that matured on June 14, 2004.

"The new debt issue was oversubscribed because this Government's record stood up to searching scrutiny and was not found to be wanting in any material regard."