Thu, Jan 10, 2013 - Page 8 News List

Clarity on spending only way forward

By Chang Ruay-shiung 張瑞雄

Due to losses accrued by state-owned companies, lawmakers have capped their employees’ annual bonuses at 1.2 times their monthly salaries, instead of the 2.6 to 4.6 times proposed by the Cabinet.

It has been a bad year for many sectors of the economy, but is it right to expect these employees to suffer because of changes in government policy that are beyond their control?

Why has the state-run petroleum company CPC Corp, Taiwan, or electricity provider Taiwan Power Co (Taipower) been unable to make a profit? Taipower, for example, is the sole player in the field, so how could its turnover be so low? People want an explanation.

Transparency is the key. If it existed for these state-run companies’ budgets, operating costs and financial statements, outside observers could perhaps understand why such losses have occurred.

CPC, for example, posted its 2011 budget and financial statement online, revealing that the cost of goods sold was over budget by NT$168.3 billion (US$5.79 billion), non-operating expenses reached almost NT$3.5 billion and exchange losses were just under NT$2.5 billion. The public will only know if government policy is at fault if CPC clarifies what happened.

While government department financial statements are already available online, the devil is in the details: The most important thing is how and where budgets are actually spent.

Government budgets are often used to pay contractors who secure work though public tender. Although legislation — specifically the Government Procurement Act (政府採購法) — has been in place for more than 10 years to prevent corruption, recent scandals involving former National Fire Agency director-general Huang Chi-min (黃季敏) and the National Youth Commission show that legislation alone is not enough.

The most important thing is complete transparency for the entire process: from preliminary budgeting to the version passed by the legislature and how the budget is actually implemented. Information for the entire process should be publicly available.

What the state lacks more than anything else at present is transparency in how the government’s annual budget is used. Even if everything is above board and every last dollar is being well spent, transparency would enable people to see this.

After the devastation caused in the US by Hurricane Katrina, Alaska selfishly asked for US$233 million to build a bridge connecting a town with a population of 8,000 to Gravina Island, with its airport and smattering of 50 residents. The bridge was never built; instead, it became something of a national joke and a testament to the irresponsible way in which federal government budgets are sometimes allocated. The proposed bridge became known as “the bridge to nowhere.”

Since the government has limited funds, it is important that taxpayers’ money is spent only where it is truly needed. Any proposals must first get through the initial legislative review. After this it is crucial that there continues to be adequate monitoring and transparency as to how the money allocated is being used.

Had people been able to see online how academics were using their research grants, the recent scandal over professors using false receipts to claim reimbursements would never have happened.

Government departments spend vast amounts every year on contractors. If we introduced adequate transparency it would be easier to clamp down on corruption and ensure that money is being spent where it is really needed. Then we could prevent any future “bridges to nowhere” being built.

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