Parastatal bodies to follow public service financial regulations

Parastatal entities will have to start following public service financial regulations, under a three- year action plan drawn up by the Financial Management Monitoring Unit set up recently by the Ministry of Finance.

FMMU head Rita Schembri told the House Public Accounts Committee that the unit's first to conduct a benchmarking exercise by comparing parastatal with private companies and entities had run into difficulties as the public sector operated differently from the private sector. Comparisons were now being made on the basis of costs and revenue, with comparisons on, for example, the cost for floor lease, the cost of consultancies and spending on cars.

Ms Schembri said that several government bodies had tried to hold on to their revenue even if this was collected on behalf of the government and these bodies were managing public funds, arguing they were autonomous.

The FMMU, she said, asked questions when financial indicators showed that revenue was down and expenditure was up. If no plausible answers are forthcoming, the Auditor General was asked to investigate.

It also asked for management accounts, which are analysed to identify variances. Looking at annual accounts would be futile, she said, as these were history.

PAC chairman Notary Charles Mangion said that apart from financial management monitoring, it was also important to monitor the efficiency and delivery of services offered by entities such as Mepa, which was notorious for its high costs and delays. Even the Federation of Malta Industry has been complaining.

Investments Minister Austin Gatt said that efficiency in deliverables was subjective. Quality Service Charters tried to raise efficiency but their effectiveness was questionable. A person could answer a phone call within a given time, but what mattered was the nature of the reply given to the client.

He pointed out that it was only now that bonuses due to directors and permanent secretaries were being withheld when set targets were not met. Unless such senior officials got their subordinates to perform, they would suffer the consequences.

Earlier, the committee heard that in 2002 arrears of revenue on leased government property amounted to Lm5.6 million. During 2003, Lm1.6 million were paid up, Lm1.8 million (owed by the dockyard) were written off and new arrears amounted to Lm1.4 million, thus ending 2003 with net arrears of Lm3.6 million.

Last year, the sum increased to Lm4.1 million. Another Lm1 million were owed by Malta Enterprise and Industrial Parks Limited (which collect rent on factories at industrial estates) and Lm2.9 million from commercial companies.

Albert Mamo, Director General of the Government Property Division said legal action was taken over pending payments and when this failed, the authorities resorted to eviction. However, they were careful in evicting tenants if this affected jobs.

Dr Gatt asked whether there was any policy on how the division could conclusively address the issue. It was agreed that proposals would be made to the committee within three months.

Architect John Sciberras of the Lands Department complained that the department had only two enforcement officers to monitor government properties and ensure they were being used according to the lease agreements. These officials also had to appear as witnesses in court proceedings.

He said in reply to questions that the government did not have any property which could be used to house the offices of government agencies. "If such property was available I would be the first to bring the different sections of my own department under one roof and save money on duplication, such as having two registries," he said.

At the start of the meeting, Dr Mangion said the chairman of the Cooperatives Board had informed the committee that he had still now drawn up the report on the liquidation of KIP, the Public Cleansing Cooperative, as requested by the committee. However, this would soon be ready.