Carrot and stick upon budget proposals

Following floods that damage properties, all considered themselves suitable for a share. They come up with proposals, without knowing how much others are asking for. 

Just recently, school headmasters in an education area near Bangkok just had a meeting. There, they learnt of the budgets approved for each school in the area. 

Generally, the budgets are for building reconstruction/landscape, educational equipment fixing, and purchase replacement of totally-damaged educational equipment. 

The headmaster of a school with some 300 students was pleased to know that his proposal worth Bt300,000 was approved. Half of that will go for landscape reconstruction, as the school was under 2-metre flood for two months. The other half is for educational equipment and the library. 

Still, he was surprised that a school nearby which accommodates some 150 students asked for nearly Bt2 million and about Bt1.5 million was approved. 

“I should have asked for more,” said the headmaster, who added that the actual damage is well beyond that. “But who knows, the school might experience greater damage than us.”

A teacher of school in Lop Buri which houses about 100 students revealed to The Nation’s reporter that the school asked for some Bt2.7 million.

“The sum looks huge. But normally, only 10 or 20 per cent of the proposed amount is endorsed. Yes, we’ll be pleased if the eventual sum is 10 or 20 per cent of what we asked for,” the teacher said. 

Throughout Thailand, there are about 30,000 schools which are operating under the government budget. And about 5,000 schools are devastated by floods. Imagine tonnes of paperwork going to the Education Ministry. First, they need to screen the proposals attached with photos of floods. It is not surprising that the ministry normally assumes that all headmasters know their problems best and calculate the damage accordingly. A team to inspect the actual damage? That’s rarely and is usually corruption-prone. 

The lump sum amount would then be reported to the government, which finances the needs through the central budget.

On the desk of finance minister are not just proposals from the Education Ministry. The Transport Ministry is also trying to snatch as much as possible to fix damaged roads and other infrastructure. The Agricultural Ministry, after surveying damage of agricultural areas, also wants a lot to help affected farmers. 

This is the crisis, of course. But then, the same practices are adopted when it comes to annual budget allocation, like what we are observing for the 2013 fiscal budget. Government units tend to overstate the needed sum. If there is something left, they stack it up without returning to the government. Chasing for income is then the government’s duty to finance next year’s projects. 

Would it help if a new approach is devised? How about special rewards for department chiefs who do not overstate budget proposals? How about rewards for those who return left-over fund to the government? Rewards for whistle blowers? And how about punishment for those with overstated proposals? 

At the end, the carrot and stick approach should reduce the Budget Bureau’s workload and help the government better prepare budgets. 

Private companies are now saving cash for tough times possibly induced by the eurozone crisis. It seems the right time for the public sector to change its approach. As witnessed from Greece, financial resources can be alarmingly tight when we are in desperate need.