Deficit budget shows improvement

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  • Tuesday, 13 Oct 2015

THE recently unveiled Petaling Jaya City Council (MBPJ) budget for 2016 deserves applause and I laud it for being a deficit budget.

Preparing a deficit budget of RM39mil for 2016 is wise considering that in the past three years, MBPJ had been under-spending and accumulating reserves of nearly RM300mil. The release of these unspent funds is wise and it is only moral to ensure that ratepayers get immediate benefits for the rates that they have to pay.

This also suggests that there is a step away from the hoarding mentality of previous MBPJ administrations.

In a commercial entity, a big reserve in the balance sheet reflects a number of past profitable years, which investors would love. However, in a government or local authority, a big reserve in the balance sheet reflects bad stewardship and inefficiency and, of course, residents hate that.

Applause should also be given to the new mayor Mohd Azizi Mohd Zain for his listening ear and attentiveness, which is a big departure from the “know-it-all” attitude of previous administrations. This 2016 budget is the first time that I witnessed participatory budgeting, albeit on a limited scale.

During the drafting of the 2016 Budget, Kampung Medan assemblyman Haniza Talha spent many evenings going through her constituency to get feedback on the issues that affect them.

It was no surprise that the input on the ground reflected the actual needs of her constituency, which were then compiled and submitted to MBPJ.

At the special budget meeting for assemblyman, Haniza and Bukit Gasing assemblyman Rajiv Rishyakaran were both armed with specific details of the needs of their constituencies. I was impressed that a majority of their documented community needs were included in budget 2016 and that the mayor found it justifiable to dig into the reserves to fund it.

These were the highlights of the 2016 budget but we should also examine the deficiencies of the budgeting process that should be avoided in future.

• Public Participation: The stakeholders’ budget dialogue was a fruitless exercise as relevant information was not provided to participants beforehand.

The notice of less than a week was too short. The dialogue was not structured to elicit feedback but to create an impression of feedback.

Getting residents to sit around tables to discuss how they want to green the city and how to improve transportation is not the most effective method of getting issues into the budget. This is why residents can never find out how last year’s suggestions at these round tables found itself into the budget.

• Actual Expenditure: Discussion on budgets without comparing the actual expenditure is not complete. Even the best budget possible would be a waste if not spent effectively is a waste. When discussing the 2016 budget, we will also need to compare actual spending against the 2015 budget. At the last budget meeting in 2014, MBPJ promised there would be a mid-year public review of the actual spending against the budget 2015 figures. However, this meeting never materialised. Of further concern was that no annual reports from MBPJ were available on its website. The audited accounts for the past three years were also not provided. This is not in line with the integrity pact signed by MBPJ.

• Standard Operating Procedure (SOP): The budget process is inherently flawed. A formal process of participatory budgeting should oblige all councillors to go to their wards to create a list of their residents’ needs.

This should be evidenced by proper minutes as well as checked for inclusiveness. Unfortunately, most of the councillors are clueless on the budgeting process and tolerated short notices to review and adopt draft budget figures. The need for SOPs should not just be an MBPJ affair and proper budgeting policies and SOPs should come as a directive from the Selangor state local government committee.

• RM10 for PPR Flats: The allocation of RM10 to oversee the maintenance of PPR flats is unreasonable.

The main reason for this paltry amount is that MBPJ has outsourced the maintenance to a state-owned subsidiary, Perumahan dan Hartanah Selangor Sdn Bhd (PHSSB).

In effect, this is akin to saying that PPR flats are like condominiums and the collection of the rental will be sufficient to run the flats. This is impossible as RM250 per month is insufficient to maintain the four blocks of flats and there is no sinking fund to prepare for replacement of lifts when their useful life is over.

The RM10 budget figure also reflects that MBPJ views physical infrastructure as its only priority and that capacity building of people is not within its scope.

This means there will be no more social safety net for marginalised communities and the city council will only be responsible for the rich sectors of the city while the poor sectors are outsourced to independent companies that have the right to raise rentals to market levels, thus driving out the poor people and bringing in richer people who can afford the higher rates. This defeats the purpose of public housing projects.

Perhaps we should revert the term PPR to the original PPRT (Projek Perumahan Rakyat Termiskin) so as to remind MBPJ that they are a council for all sectors of society.

While the recent announcement of the increased budget sounds encouraging, the effectiveness and the impact will be compromised if some of the initial limitations of the budgeting process are not addressed. MBPJ needs to continue the public dialogue through focus group discussions to address many unanswered questions.

  • Jeffrey FK Phang is an assistant professor at Universiti Tunku Abdul Rahman and serves as a cluster research head for “Sustainable Township” in the Centre for Sustainable Development and Corporate Social Responsibility.
  • The views expressed are entirely the writer's own.

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Metro , Central Region , Jeffrey Phang , MBPJ , budget , 2016


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