The Budget Speech is NOT the Budget (Part Two)
A deterioration in the federal government’s budgetary practices has become increasingly obvious in recent years. Serious reform is needed, and here’s why.
Many parties, including my parliamentary colleagues and myself, have pointed out the shortcomings of our budgetary process in the past, such as Budget documents not giving us the whole picture of government spending.
Other than the kind of budgetary discrepancies described in the first part of this article published last month, there are also a multitude of off-budget items – such as government expenses, debts and liabilities that hide the actual financial situation of the government, the now infamous multi-billion ringgit slush funds at the sole disposal of the Prime Minister, and many others.
In fact, Malaysia was ranked 49 out of 102 countries in the 2015 Open Budget Index produced by the International Budget Partnership, scoring only 46 points out of 100. For comparison, Indonesia scored 59/100, and the Philippines 64/100. The report concluded that “the Government of Malaysia provides the public with limited budget information.”
And in their April 2016 report, How can Malaysia’s Budget Documents be Improved?, the Institute for Democracy and Economic Affairs (IDEAS) notes that the Executive Budget Proposal – which includes the Budget Speech, Supply Bill, Finance Bill, Estimated Federal Expenditure, Estimates of Federal Revenue and the Economic Report – are of “inferior quality.”
The federal government’s incoherent and non-transparent budgeting practices have serious consequences. I will list just six of these here.
Why Najib’s 2017 Budget Speech is Problematic
1. Members of Parliament will not be able to properly scrutinise the Budget
Members of Parliament, and Malaysians in general, refer to the Budget Speech to scrutinise the Budget. Highlights by the government, usually in the form of “budget goodies,” are announced in the Budget Speech, so MPs will have to compare them and analyse them thoroughly. But if an item announced in the Budget Speech is missing from the actual documents, how are MPs and others to scrutinise and analyse the Budget effectively?
2. Parliament will not be able to debate items that are not detailed in the Estimates
According to the regulations of the Dewan Rakyat, known popularly as the Standing Order, a Bill (including budget bills) that is at the committee stage after its second reading shall not be debated in terms of “the principle of the Bill but only of its details” (Standing Order 55(2)).
I was once stopped from a committee stage debate because I was accused of not debating the itemised details in the Estimates. Thus, if the “goodies” announced in the Budget Speech are not found in the Estimates, then they cannot be debated at the committee stage – a discrepancy that greatly obstructs parliament business.
3. Amendments and re-allotment to an allocation cannot be made in Parliament
Standing Order 66(8) & (13) and their related clauses allow amendments to be made to the Budget, while Standing Order 66A allows for re-allotment of the expenditure from one item to another. However, without knowing where items are located in the Estimates – because they are either missing or have their amounts recorded incorrectly – it is impossible for MPs to propose any amendments to these expenditures if necessary.
4. The real expenditure of the government cannot be properly determined, allowing the government to circumvent Article 101 of the Federal Constitution
According to the Estimates, the 2017 development expenditure for the Ministry of Communication and Multimedia, for example, is expected to be about RM495mil. This, however, excludes: (a) RM1bil for upgrading broadband infrastructure, and (b) RM340mil for providing tablets to 430,000 teachers as announced in the Budget Speech. If they are included, the whole development expenditure will balloon to RM1.8bil – an increase of 260%!
In other words, invisible expenditure can sometimes greatly exceed the visible. Article 101 of the Federal Constitution states that in cases of excess government spending, a Supplementary Supply Bill (supplementary budget) must be tabled. But with hidden, unseen and invisible expenditure, there is no way to know if the government has spent beyond its limit – allowing the government to avoid the Supplementary Supply Bill, and circumvent the constitution.
With hidden, unseen and invisible expenditure, there is no way to know if the government has spent beyond its limit.
5. Financial management will be confused because it is unclear who is responsible for the items not stated in the Estimates
More concretely, it is not clear at all which ministry or department are responsible for managing the multi-billion ringgit Budget Speech announcements not found in the Estimates. As such, there will be no accountability and transparency, nor check and balance, as we do not know who to refer to regarding this spending in the future.
6. Malaysians will have no guarantee that announcements in the Budget Speech will be executed as the government is not bound by the Budget Speech
Malaysians who eagerly awaited and listened to the Budget Speech last October will have no guarantee that goodies announced by the government will come to fruition if they are not found in Budget documents.
Should someone take the government to court for failing to deliver on the announcement, will the case be subject to the Indian Supreme Court decision re Amin Merchant, where the appellant sued the government because of discrepancies in the Budget Speech and the Budget passed by the Parliament?
Business as usual should not be acceptable. When I raised the motion to refer the Finance Minister to the parliamentary privileges committee for his misleading Budget Speech, the Speaker said that this had not happened before. Perhaps this is the reason why the prime minister imagines he can get away with a substandard Budget Speech containing misleading or wrong information.
There are many things that need reform, both in our parliament and also in our budgetary process. But the very least the Finance Minister can do now is to deliver a proper Budget Speech – one that befits a proposal requesting the permit of parliament to spend hundreds of billions in taxpayer money.