Creating an effective budget for the public

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  • Tuesday, 15 Sep 2015

YESTERDAY, the Petaling Jaya City Council (MBPJ) held its yearly public budget discussion to deliberate about financial proposals for 2016. Will it help Petaling Jaya (PJ) become a better city? Will it be safer, cleaner and more liveable for the residents?

Many Petaling Jaya residents do not know their quality of life is very much dependent on the budget and the process in which it is created. The other important factor is how the budget spending (or non-spending) is monitored.

After the public budget hearing, a briefing will be held with all the elected representatives whose constituencies fall within Petaling Jaya. Thereafter, the budget will be sent to the Selangor government before Sept 30 to be endorsed before it can be implemented.

The public hearing is nearly at the tail end of the budget creation process when, ideally, it should be at the beginning.

MBPJ personnel draft its budgets based on feedback from various heads of department. The feedback is transformed into figures which are then split into categories such as Pendapatan (Income), Dasar Sediada (Current Operating Expenses), Dasar Baru (New Operating Expenses), Dasar One-Off (One-off Expenses) and Pembangunan (Development).

In 2015, the budget for income was RM326mil while operating expenses stood at RM253mil, new operating expenses were RM25mil and one-off expenses were RM6mil. The budget for development worked out to RM56mil, making last year’s budget a deficit budget of RM15mil in total.

In previous years, MBPJ’s budget was consistently underspent, leaving the city council with reserves of about RM300mil and, in the 2015 budget, the interest income was estimated at RM15mil. Former mayor Datin Padukah Alinah Ahmad, however, refused to implement the Budget Monitoring committee proposed by former mayor Datuk Roslan Sukiman, and insisted that she would personally monitor it. However, the underspending continued.

It is hard for the councillors to monitor the underspending as they have no access to real–time figures where they can see which budget lines are not being spent. Even the most basic of accounting packages enable users to produce a report comparing budget figures with actual spending.

If such a facility existed, an alert councillor could detect under or overspending and take the necessary proactive action. The danger of unmonitored spending is that it encourages year-end spending. So low spending in the earlier months of the year will be offset with a spike in spending towards the end of the year. This will often result in spending which does not have an impact, such as large amounts spent on an international fare while drains and roads were in need of repair.

It is clear that budget monitoring should be institutionalised and transparency enforced by having residents serving on the budget monitoring committee.

The process of creating the budget is also flawed as the needs of the public are not taken and MBPJ assumes it knows the specific needs of the residents. Every councillor has been tasked to set up a Residents’ Representative Council and this should be used to meet with residents to collect a list of immediate needs to be incorporated into the budget.

When every councillor submits a list of requirements, then the budget figures will properly reflect the needs of the residents. Each figure in the MBPJ budget can then be substantiated with a detailed breakdown of costs. This is called “Zero-Based” budgeting where all the needs of the people are documented. MBPJ’s budget is currently based on “Incremental” budgeting, where a percentage is added on to reflect additional expenditure or inflation.

So far, I have not heard of any councillor who has gone to the ground to conduct participatory budgeting. Bukit Gasing assemblyman Rajiv Rishyakaran had conducted a public budget discussion with the participants voting for priority areas of spending although it fell short of identifying specific projects.

Taman Medan assemblyman Haniza Abdul Talha may probably be the first assemblyman who tried to implement participatory budgeting by visiting different sections of her constituency to compile a list of needs. It will be interesting to see whether the results of her survey will be included as a specific component of the relevant budget lines or if bureaucrats will adjudicate the priority of needs on a general budget allocation.

The failure of incremental budgeting is that not enough work is done to identify specific projects and delays set in when there is a need to arbitrate. Worse still, indecisiveness may set in and the budget remains unspent. This is a situation that participatory budgeting can help avoid.

Participatory budgeting has already been successfully implemented in South American countries and a comprehensive case study of eight municipalities in Brazil suggested that it often results in more equitable public spending, greater government transparency and accountability and increased levels of public participation.

Nearer to home, in Penang, Machang Bubuk assemblyman Lee Khai Loon and Bukit Mertajam MP Steven Sim worked together with residents’ representative committees in a project themed “Duit Hak Kita!”, which was well-publicised and based on participatory budgeting.

MBPJ had promised earlier there would be a public mid-year briefing before the public consultation stage of the 2016 budget discussion. This promise has not been kept and the city council has also taken a step backwards, as this year, no printed notes were handed out.

At last year’s budget discussion, MBPJ had responded to the Coalition of Good Governance and had made available print-outs of selected financial figures.

It would only be fair that MBPJ take out RM100mil from its reserves under a supplementary budget for 2016 and determine its spending through a participatory budgeting process. Meanwhile, there should not be any more excuses of not implementing the budget monitoring committee with residents being represented.

As former UN secretary-general Kofi Anan once said, “Residents no longer want to be passive observers of development, but rather to be an active player in the pursuit of Sustainable Development!”.

  • The views expressed are entirely the writer's own.

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Government , Central Region , MBPJ , Budget , Speaking out


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