MINISTRIES and government departments will have to prepare their budgets based on the “zero-based budgeting” methodology starting this year, said Finance Ministry special officer Tony Pua. 

The “zero-based budgeting” method will cut unnecessary wastage and reduce government spending, he said. 

Zero-based budgeting is a method in which all functions of an organisation and its expenses must be analysed and justified for each new period, and a budget developed based on what is needed.

“The current methodology of budgeting which adopts the previous budget has caused a lot of unnecessary spending and wastages,” said Pua at the launch of the Centre to Combat Corruption and Cronyism report “Procurement as part of good governance in New Malaysia” today.

In the past, the ministries employed the outcome-budgeting method, where the new budget was increased using the previous year’s budget as a base, whether or not the spending was necessary, said Pua.

He cited as example the Customs Department spending of RM6.86 million on shoes for the 2009-2013 period.

The outlay was included in the Auditor-General’s Report 2012, which showed the balance of shoes bought in 2009 had not been distributed, while 7,659 pairs of shoes worth RM602,089 were damaged and had to be disposed of.

Yet Customs continued to put in a budget for new shoes every year,” said Pua.

While the government’s procurement processes were generally good and needed only some adjustments, there were inherent weaknesses in the system, the Damansara MP said.

The C4 report on procurement released today highlighs the fact that Putrajaya spends more than RM150 billion, or 20% of the GDP, on goods and services every year.

The report, presented by Bersih 2.0’s Yap Swee Seng, concluded that the government’s problem  lay in its implementation of policies and not in the policies themselves.

“Non-compliance with stipulated requirements, such as monitoring the quality of production, compliance with specifications of final product before making payments, and taking disciplinary action against non-complying vendors, is glaring and rampant in public procurement,” said Yap.

The report has 12 recommendations for internal control mechanisms and five external oversight systems.

Among its proposals are improving the inspection of final products, regularly rotating members of the procurement committees, making assets declaration mandatory for public procurement officers, and strengthening audit mechanisms.

Strengthening the Auditor-General’s Office and appointing an ombudsman as a public complaint channel are also recommended.

Other speakers at the event were Governance, Integrity and Anti Corruption Centre’s (GIACC) Dr Anis Yusal Yusoff and C4 executive director Cynthia Gabriel. – August 28, 2018.