Editorial

One of the most important public offices in the government is that of Auditor-General, a position provided for by the Constitution. The task of its holder is to audit and report on the accounts of all the departments and offices of the Government of Malta. The Auditor-General's annual report has to be laid on the Table of the House of Representatives within 30 days of its presentation to the Finance Minister.

The office of Auditor-General is an important feature of the checks and balances of our democracy; his reports call for greater transparency and accountability, and serve to learn from mistakes, make up for any shortcomings, and ensure greater efficiency in government spending and revenue collection.

The report for 2004, published last week, as expected, highlights irregularities and questionable practices committed by various departments, government bodies, authorities and local councils. The challenge now is to act on them.

To the layman, one of the most astounding features of the report is the sheer size of arrears of government revenue, totalling Lm482.1 million as at December 31, 2004, of which the Auditor-General estimates only Lm93.4 million as "collectible as at the same year-end". If this amount were indeed to be collected, it would wipe out, at one stroke, the government's deficit for the entire year.

Even so, the Auditor-General complains that no fewer than 13 ministries, authorities and other entities (including the University of Malta) failed to submit their returns of arrears in time.

Some figures are truly astonishing; for example, well over half a million liri are due in former catering board and police licences to the Ministry of Tourism (plus another Lm86,000 from local councils for beach cleaning services); another half a million is owed in hospital fees payable to St Luke's Hospital; about Lm650,000 are owed in respect of trading licences; some Lm4 million for rents of government property.

But these amounts almost pale into insignificance when compared to the almost Lm17 million due in capital transfer duty, and totally dwarfed by the Lm256 million in income tax arrears (more than half of that amount by companies anonyme) or the Lm148 million owed in VAT or CET arrears.

Although VAT and income tax collection has become more efficient, clearly there is still a long way to go. More drastic, timely and efficient measures are obviously needed to recoup at least part of the staggering amounts outstanding. These amounts, which cause such huge shortfalls in government revenue, have to be made up by taxpayers' contributions and further borrowing - at a cost.

A good 13 pages of the report are devoted to local councils' accounts. Of the 68 councils, only seven "pass muster"; indeed, the Auditor-General laments that in 2004, local councils topped the list of entities whose compliance rate with financial regulations "continued to deteriorate".

Thirteen local councils registered a financial situation which was below the five per cent benchmark set out by the local councils regulations, the worst offender being Zebbug council with liabilities totalling almost Lm200,000, or minus 89.52.

But apart from individual local councils' financial position, the Auditor-General highlighted several practices which merited "serious concern". These included the payment of air tickets to the mayor's wife, a cleric and a businessman out of Attard council funds; a change in contracted rates for the upkeep of "soft areas" from Lm1,105 to Lm5,000 a year by Vittoriosa council; overstaffing at Paola council by about six employees, besides the financing of a Lm10,000 project for a synthetic football pitch belonging to the local team; and the reimbursement of telephone costs to councillors, totalling Lm2,600, by Valletta council.

Such infringements, taken cumulatively, bode ill for the continued empowerment of local councils. Although Government does not intend to give local councils the power to raise revenue, and the Labour Party has declared itself adamantly against any such move, it is readily accepted that, compared to local councils abroad, our local councils' powers - and therefore the range of initiatives they can take - are extremely limited without autonomous revenue-raising measures.

As firm believers in decentralisation, we had long campaigned for the setting up of local councils and for their empowerment, but the growing list of financial irregularities when the councils are still funded entirely by the central government, make one think twice about advocating revenue-raising powers for local councils as yet.