Guangdong pushes for fiscal transparency
By Li Wenfang (China Daily)
Updated: 2004-04-15 00:01

Guangdong Province is taking the lead not only in economic development, but also in constructing a sound financial system.

Delegates to this year's session of the Guangdong People's Congress had a tough task dealing with this year's government budget proposal, a book swelling to 540 pages.

A delegate to Guangdong People's Congress sits beside a computer monitor, which shows online the budgetary details of province-level departments. [newsphoto/file]

A total of 114 government departments at provincial level -- 12 more than last year -- submitted the budgets that make up the book.

During the February session officials from the province's Finance Department also had a hard time answering delegates' questions about what they considered unjustifiably-funded items.

Delegates found, for example, that four kindergartens affiliated with government agencies, which were reserved for children of government employees, were allocated more than 20 million yuan (US$2.41 million). They demanded an explanation as to why taxpayers' money should be used to raise civil servants' children as well.

Delegates from Guangdong to this year's session of the 10th National People's Congress last month became newsmakers again in proposing allowing general public access to all but sensitive content of the Ministry of Finance's budget proposal.

"I think the government should let us know, should let the public know, how taxpayers' money is spent, where the money goes and what amounts are spent,'' said Li Bingji, chairman of a privately-held enterprise in Guangdong, who led the team making the proposal.

Li's team pointed out the transparency and efficiency of the government's budget, which emphasizes the issue of "(government's) finance under sunshine'' in China. Greater transparency helps fend off corruption, they said.

The Chinese Government said in 1999 it was committed to building a public finance system and taking subsequent measures to implement the policy.

South China's Guangdong Province has made significant progress towards the goal.

"I would not say we were the earliest to start but we have made big strides,'' said Huang Ping, the director of the Budget Supervision Office of the Financial and Economic Committee of the Provincial People's Congress.

The achievements of Guangdong in this area are attributable to its robust economic development and increasing awareness of the government's role as well as the experience and knowledge of the people's delegates, Wang Chaocai, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance, told China Daily.

Guangdong, from 2001 onwards, has been pushing a detailed budget proposal as an important part of a public finance system. It is intended to present the proposal to the People's Congress. Seven provincial departments also presented budget proposals to the congress in that year.

"Just as you cannot give a document you have no idea of to your superior for approval, you should not bring a budget proposal without any details to the People's Congress. That's why a detailed proposal is necessary,'' Huang said.

Budget proposals for the 114 departments -- involving a total of 22.5 billion yuan (US$2.71 billion) -- were examined by people's delegates this year.

For example, an item involving expenditure of only 43,000 yuan (US$5,181) appears in this year's provincial proposal. It would not previously have been listed because it is a small amount. And previous proposals covered only a few pages that listed expenditures in only general terms.

Cities at the prefectural level in the province have also included department budgets in the proposal to their respective local people's congresses, said Xie Xianxing, a professor with the Finance and Tax Department of the Sun Yat-sen University in Guangzhou, capital of Guangdong.

"More details mean transparency. That in turn indicates the willingness of the government to be supervised by the people's congress,'' Huang said.

A relatively developed province, Guangdong recorded government budgetary revenue of 131.33 billion yuan (US$15.82 billion) and budgetary expenditure of 169.49 billion yuan (US$20.42 billion) last year, increases of 14.8 per cent and 11.5 per cent year-on-year respectively.

Government's budgetary revenues and expenditures at the provincial level stood at 41.17 billion yuan (US$4.96 billion) and 41.12 billion yuan (US$4.95 billion) respectively last year.

Planned budgetary revenues and expenditures at the provincial level this year are 42.38 billion yuan (US$5.11 billion) and 42.32 billion yuan (US$5.1 billion) respectively.

To appraise the efficiency of the budget, Shenzhen is auditing four selected projects funded by the government last year.

Problems detected by auditing include the lack of a feasibility study before commencing a a project, a lack of bidding process, inadequate management,, poor accounting,, inefficiency and legal violations.

The Planning and Budget Committee of Shenzhen People's Congress also presented suggestions for improvement in project management.

The Standing Committee of the Guangdong People's Congress plans to link with the computer system of the Provincial Finance Department this year so it can obtain information on revenues and expenditures to enable better supervision.

The Provincial Finance Department plans to set up a specialized division for budget efficiency assessment, a plan reportedly likely to be approved this year. It will select government-funded projects as targets for assessment.

The government is presently working on standards for assessment.

Government at lower levels has also been required to set up budget efficiency assessment systems.

Guangdong People's Congress will also push for more detailed budget proposals by government departments.

However, Guangdong, like other provinces, still has a long way to go in building a public finance system, Xie said.

Off-budget revenues and expenditures, which total considerable amounts, should be included in the budget, he said.

Details of the budget proposal, excluding sensitive ones, should be accessible to the general public, he said.

Some delegates to this year's Guangdong People's Congress session actually frowned over the secrecy warning on the cover of the proposal.

Delegates also complained about a lack of time to go through the details in the proposal before they voted on it. They had only two days to finish the book, which also requires financial and accounting know-how to understand.

Some experts suggested the establishment of an experts' consultation committee for assessing the budget proposal.

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