The government is big in spending. The Financial Estimates for 2011 show that next year it plans to spend €2,547,222,000 on recurrent expenditure (including €208,496,000 in interest on the public debt, which is expected to increase by €181,633,000). The Minister of Finance allocated another €440,024,000 for capital expenditure. If things go according to plan, therefore, the government intends to pay out €2,987,246,000 in the coming year.
Most of that will go on wages and salaries and on social security payments. Allowing for the interest on the public debt that will leave substantial euro millions for on-contract spending. The contracts department, part of the Finance portfolio, has its work cut out, preparing, issuing and adjudicating calls for public contracts, in accordance with the financial regulations and the applicable European Union terms and conditions.
All that spending will, in the first instance, be regulated internally by the respective departments. At the political level it will be scrutinised by the House of Representative. That task is carried out mostly by the opposition of the day. Backbenchers on the government side too have the right and responsibility to make their critical or appreciative voice heard, as happened during the recent debate on the budgetary votes.
The MPs’ function of scrutinising government expenditure and its revenue collecting activities is complemented and assisted by the Director of Audit, who reports to the House of Representatives. The House delegates part of its supervisory powers to the Standing Committee on the Public Accounts, the PAC.
The Director of Audit has his work cut out to carry out all that is expected of him. In addition to government spending he also keeps an eye on the rest of the public sector, which accounts for a chunk of outlays not included in the Financial Estimates. He may also be requested to carry out specific reports, by the House, a Minister or the PAC. The Director of Audit publishes the appraisals he makes on his own steam, one of which – commenting on government revenue and expenditure – never fails to attract close attention from the media, since it goes into the knitty gritty of public spending. He also has a very close link with the PAC, being both its right and left hand.
To carry it out the office needs to have adequate human resources. These have been rising steadily over the years, in the context of stiff competition from the accountancy and audit firms and Brussels. One doubts that the office is staffed up to the level that the Director would like it to be.
Despite limitations, it does an excellent job. Part of it catches the public eye, as in the case of the controversial contract to extend the Delimara power station. A substantial part of it is generally unobserved. If I were still in politics I would add to the current burden of work shouldered by the Director of Audit.
I would ask him to delve into and report on how the financing of the Piano projects is being carried out. The Minister of Finance gave an estimate of €80million for the three projects, which has gone up with the inclusion of the bus terminus outside Valletta. How much the projects will cost in the end remains to be seen. The omens are not good given the government’s record to overshoot in the execution of public projects.
The more intriguing aspect and the one I would like to see examined by the Director of Audit is not that, however, but how the government proposes to finance the projects.
The Prime Minister announced the projects and gave the initial €80million estimate, but the Finance Minister did not vote a single euro in either of the two budgets he presented since the Piano deal was announced.
It is to be financed outside the official votes, from revenue to be generated through the disposal or renting of public land. That is a strange approach. Such revenue would have flown into the Consolidated Fund, so I find it odd that the Prime Minister should suggest that the financing of the Piano projects is somehow not going to come out of public funds. Meanwhile, no revenue seems to have been raised in the suggested manner. So where has the financing of the work already being carried out come from?
It did not come out of nowhere. The Grand Harbour Regeneration Corporation has put up the necessary funding so far, point out unrevealed sources.
I would not call all this creative accounting. Yet it is certainly unorthodox. The government is intent on being innovative, perhaps to keep the spending from percolating into the public deficit, since it will not be offset by discernible revenue.
Whatever the reason, the financing of the Piano projects should be made much, much clearer. It is not because I suspect that hanky panky is going or will go on. I am not about to see corruption round every corner. But all this is and will be public spending.
The public has a right to know what is going on and to be assured that it is all being done according to the regulations, which is where the Director of Audit comes in.