Ineffective Budget Scrutiny

National budget presentation is a premier parliamentary occasion held during the third sitting of parliament each year. Although Malaysia’s state-run television broadcasts half an hour of the morning’s Question Time in the Parliament, it is selective broadcast wherein the live broadcasting would be intercepted whenever the cabinet member is confronted or questioned by an opposition member of Parliament (MP). Nevertheless, during the first Friday of the third meeting of the Parliament each year, state-run television would then broadcast any information and issue related to national budget since afternoon while awaiting the budget presentation by Prime Minister cum Finance Minister, Najib Razak at 4pm on that particular Friday.

For this year, 10th October 2014 will be the “Budget Day” of Malaysian Parliament. People from all walks of life are, more or less, expecting for the announcement of new measures that are beneficial to their own interest.

According to the proceedings set this year, three days before the Budget Day, there will be First reading of the budget in the Parliament. A First reading is the first stage of a Bill’s passage through the Parliament, where only the short title of the Bill is read out and it takes place without debate. The important proceedings kickstart only during the Second reading of the budget. On the first day i.e. during Budget Day, a Second reading is wherein the key principles and main purpose of a bill is introduced, and thereafter the MPs are given their first opportunity to debate the main principles and to flag up any concerns or specific issues.

Parliamentary term for Budget is known as Supply Bill. During the First reading, only the title “2015 Supply Bill” is read out and the budget reports and estimates are not presented yet. Therefore, MPs especially those from the opposition have no access to the detailed report beforehand. For those MPs who are from the ruling party, if any of them got the opportunity to access to the report prior to the actual budget presentation and moreover leak it out, it is in fact a violation of the Official Secrets Act 1972, and such violation is not protected under the parliamentary privilege enjoyed by MPs.

This is the difference between a “Supply Bill” and an ordinary bill. On the first reading of an ordinary bill, all MPs can already access to the bill to prepare for their “participating in the legislation process” on the second reading. As for the “Supply Bill”, MPs can only access to the budget contents on the first day of second reading (which is on the day of Budget Presentation itself, i.e. the Budget Day) and thereafer participating in the legislation process not less than two days as set by the Standing Orders of the Parliament.

On the first day of the Second reading, all MPs will get at least five important official budget documents. The first document is the text of budget content which will be presented and enunciated by the Finance Minister, introducing the government’s plans concerning fiscal, economic and social policy (the budget) for the forthcoming year — this is also commonly known as the “Budget Speech”.

However, the “Budget Speech” does not comprise all the policies and measures that will soon be introduced and implemented for the next fiscal year. For instance, the previous Budget Speech did not even mention about the cutting sugar subsidies but it was “hidden” in another official documents.

The second document is the thickest among all the budget documents, it is the estimates and details of the allocations and projects of every ministry. The third one is regarding the national macroeconomics, which is a report of national economy of the past, current trends and future prospects. The fourth is the details of federal government’s income sources and forecast. Last but not least, the fifth document is the actual financial expenditures of the federal government, containing information on government finances and related matters in the previous year.

Generally, the last two documents will be ignored by the media, as well as the MPs due to time constraint. After the Budget Day, MPs, especially the Leader of the Opposition can only grasp the weekends (Saturday and Sunday) to go through all these five documents quickly, to research, analyze and study the related data and issue, and finally come out with his/her budget speech for the debate session on the very Monday.

The policy debate session will be held from 13th to 30th October, and after that from 3rd to 6th November, every cabinet member will answer the questions and doubts raised by the MPs, as well as to response to their criticisms and suggestions. In short, this is the deliberation sessions of policy stage. The conclusion of policy stage does not lead to the Third reading of “Supply Bill” directly. This is because before the Third reading, the bill has to be deliberated in detail at the committee stage, and this will be carried out from 10th to 25th November.

This article aims to introduce the proceedings of the “Supply Bill”, and whenever a national budget is tabled in the Parliament, the focus is neither merely on the Budget Day itself, nor the Budget Speech, not even the highlights of the media coverage. This article attempts to articulate that the advantages and disadvantages of the entire proceedings within the institutional design will undeniably affect the role of MPs in their participation in the legislation process.

When a national budget that is dominated by the executive power is brought to and tabled in the Parliament, how is it being scrutinized and questioned by the legislative power, or in other words, how MPs participate in the legislation process has become particular significant to highlight how the cabinet system can give weight to the public opinion. Hence, it is necessary for those civil organizations, which always stress on the public opinion, to recognize the operation of the Parliament, and to focus on how the public opinion being delivered and conveyed, as well as on how the legislative power to effectively scrutinize the executive power.

As a starting point, we should question the effectiveness of such a system of institutional design that only give two days to the first batch of MPs, three days to the second batch, four days to the third batch and five days to the forth batch, to get ready to participate in the legislation process, in conveying public opinion and in ensuring that executive power is being scrutinized by the legislative power.

This article further questions the deliberation session of committee stage between Second and Third reading of “Supply Bill”. By following the parliamentary tradition in Malaysia, the deliberation sessions of both policy stage and committee stage are being carried out in the Parliament hall. In other words, the committee stage at the Parliament/ House of Representative is in fact a full-house-style committee, i.e. Committee of the Whole.

Unfortunately, the national budget consists of all details and elements of government’s income and ministries’s fundings, allocations and expenditures, which further involved complicated technicalities and complex details, can hardly be studied and inspected comprehensively and thoroughly within the institutional design of a Committee of the Whole in the Parliament. That is to say, not only that the MPs can hardly play their legislative role to introduce a new law, but even at the level of “participating in the legislation process”, they fail to play their essential role effectively.

Under such circumstances, the limitations of such a system of institutional design have rendered the Parliament a mere rubber stamp of the cabinet, given that the budget approved by the Dewan Rakyat or the House of Representative is actually drafted by the Attorney-General’s Chambers and finalized by the cabinet.

Clearly, when legislative institution fails to make legislation, and does not even able to participate in legislative process effectively, it can merely act as a rubber stamp. This is the institutional drawback. How to transform it in terms of institutional design is thus a crucial part for parliamentary reform.

This article argues that in order to enable the legislative institution to throw off the shackle of being a rubber stamp, the institutional reform should be done from the committee stage. The full-house-style committee is in favor of the executive-led legislative process, but not conducive for the legislative power to play its role in participating in the legislative process.

On the contrary, it is also essential to explore on how to add to existing design a new institutional arrangement that enables cabinet members, together with the civil servants to be held accountable to the Parliament collectively, as to play their role legitimately through demonstrating the credibility of executive power, and through manifesting the public opinion and public participation of legislative mechanisms.

Thus, this article advocates that the budget deliberations session, particularly regarding the detailed estimates for each ministry, should be referred to newly established estimates committees, consisting of appropriate select committees and standing committees for extensive and in-depth consideration. Let the professionals handle it in a professional way, and let it be separated from politics. An absolute separation, nonetheless, will create other problems, and neither will be practical. There must be space remained between professional and politics for interaction, and the tension in between created by the new institutional design will be even more conducive to highlight the importance of legislative power.

Such a proposition goes beyond partisan politics and instead aiming to strengthen the role of legislative power, and adding significance to budget scrutiny. To those civil organizations vigorously talking about public opinion, are you ready to push for such reform agenda?

The provision of the Article 43(3): “The Cabinet shall be collectively responsible to Parliament” in the Federal Constitution is the basic connotation of the representative system that actually operates in Malaysian Parliament. In doing so, cabinet members, as well as ministries, can be held accountable to the people’s representative or “wakil rakyat“. In order words, in the context where legislative power is overpowered by executive power, executive power can still be held responsible to legislative power, and hence be held accountable to the people or Rakyat.

In the light of such basic connotation, the committee stage is the key. The best description of the characteristics of budget is that “the devil is always hidden in the details”. Hence, Malaysian Parliament needs estimates committees consisting of small committees wherein different groups of small number of specialised professionals appointed to deal with particular areas or issues of different ministries, in order to look at individual aspects of the budget in detail and to have independent analytical capacity at its disposal to scrutinize the budget.

Over the years, the budget had been approved in the Parliament in a rough manner and the financial legislation had then be made. Civil organizations, either of those stress on public opinion or emphasize on reform movement, should not shun away from parliamentary reform. To advocate small scale committee that is of non-full-house-style for the deliberations at the committee stage is the starting point for such parliamentary reform.

 

 

 

Released by,

Ooi Heng

Executive director for KPRU

6 October 2014

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