Lim Mah Hui looks at budgeting in the Penang Island Municipal Council and suggests several steps for improving the process.
I wish to discuss the MPPP Budgeting Process and suggest that we adopt a new approach to looking at budgeting and several steps for improving this process.
First, our budget must be objective driven not department driven. A budget is not simply a routine financial document. It is a financial statement of the objectives of our local government. In other words, the objectives must drive the budget and the budgeting process. It cannot be simply an exercise in filling in expenditures by the various departments. Hence, in our next budget, we should first identify what are MPPP’s objectives and priorities for the coming year; our expenditure should follow these objectives and priorities.
Second, in striving towards an objective driven budget, we should adopt a participative budgeting process, i.e., we must identify what are the needs and priorities of the ratepayers we serve. To do this we must consult with the target groups early in the budgeting cycle. For example, if one of our objectives is to have a cleaner and greener Penang and one of the target group is the wet market or the hawker centers, then we must do a proper survey and consultation with them. I understand the MPPJ has started to consult their wards on their budget.
Third, the budget must be performance based. Using input from local communities and target groups, we then set up measureable objectives, methods to achieve them, and ways to monitor the performance and achievement of these objectives through KPIs. In fact, we should set up committees that include not only MPPP staff and councilors but also the stakeholders and civil society groups or from resident associations that will monitor the performance and implementation of these objectives.
Fourth, we should be always be guided by big picture and not be lost in details. We begin with an overview, start from the top and drill down to the bottom. We must be able to discern the forest from the trees. We cannot be pinching pennies here and there and then ignore the big-ticket items; as the saying goes being penny wise and pound-foolish.
Fifth, we should focus both on revenue and expenditure. Our present practice is focused on expenditure and not on raising revenue. Also the focus has been to increase and not to decrease expenditure; it is a one-way street. Going forward every department should be forced to suggest some new ideas and ways to raise revenue and to reduce expenditure, and how to improve efficiency.
Finally, 65 per cent of our 2012 budget is allocated to make Penang cleaner, or to make the Pearl of the Orient shine. On the one hand this seems good; on the other hand, it means something is wrong somewhere because we have to spend so much to keep our city clean. Perhaps we are focusing on the wrong thing, i.e., to pay for more cleaners to sweep the streets, to pick up and dispose garbage. It means Penangites are not doing their duty in keeping their own city clean.
I suggest that instead of simply hiring more cleaners to pick up garbage, we should tackle the problem at the SOURCE, not at the end. This means reducing solid waste at the source through segregation, reduction, composting etc. Our priority should be to come up with a credible waste disposal system, not just hiring more garbage collectors. Money should be spent on the former.
It also means we must sternly go after people who throw garbage indiscriminately, who put up posters illegally, park illegally etc. We should raise fines and penalties and enforce our laws more strictly. This will not only make our city cleaner but also bring in more revenue. Again, there must be ways to monitor the implementation of these policies.
YDP and fellow councilors, we project a deficit of RM77m in our 2012 budget. This is one quarter of our total budget. We cannot do business as usual.
Our sister PBT, the MPSP, has turned things around from years of budget deficits to budget surplus, while we are moving in the opposite direction from surplus to deficit. I also understand that they have started to adopt a transformative budgeting process.
I am sure we can do the same, if not better, under the wise leadership of our YDP and councilors. If we have to engage outside people to help us in this process, we should do that. I urge you to adopt this new approach and start the process now.
Full text of address by Dr Lim Mah Hui to the Full Council Meeting of MPPP on 28 October 2011.