The Minister for Finance will gain new powers over the management and spending of public funds in terms of a new law to regulate public finance management, currently being considered by the House of Representatives.
The new law will distinguish between the powers of the finance minister, those of other ministers, and those of delegated officials.
Although permanent secretaries will be responsible for the proper management of finances within ministries, the finance mister will be given the power to prevent entities from making use of public funds in cases where these funds were not being used in accordance with legislation, Finance Minister Edward Scicluna told parliament.
This would ensure that public funds were used properly and towards their intended end.
Prof. Scicluna explained that each ministry’s permanent secretary will be required by law to start an internal investigation as soon as he or she suspects that any provision of the law is being breached. He would then be bound to prepare a report in order to identify the culprit and to proceed with efforts to recover any misappropriated funds, without prejudice to the government’s rights at law.
Three levels of oversight
The bill will introduce three levels of oversight with respect to the misuse of public funds, by attempting to prevent the misuse of these funds in the first place, identifying the misuse of these funds when it occurred, and taking steps to correct this misuse after the fact.
The bill would also make clearer the duties and responsibilities of officers with a role relating to the management of public funds.
Prof Scicluna said the bill will also identify what should be considered mismanagement of public funds, and the steps to be taken in each case. It includes guidelines to limit the use of “below-the-line accounting,” since such accounting does not appear in the government Budget.
Furthermore, it will pave the way for the public sector’s move from what was known as the Departmental Accounting System (DAS) to an accruals system based on International Public Service Accounting Standards (IPSAS).
Prof. Scicluna insisted that access to correct and updated information was essential for correct decisions to be taken. The necessary training was being provided, with a period of parallel accounting to be undertaken prior to a complete shift to the new accrual-based system of accounts.
In the interest of having access to up-to-date information concerning the government’s financial situation, the legislation would also give the Accountant General the power to request information concerning the bank balances of every government entity from the banks where these entities held accounts.
Although Opposition Whip Robert Cutajar said that the Opposition would be voting in favour of the Bill, he and the shadow minister of finance, Mario de Marco, criticised the government’s track record on good governance.
Poor track record of good governance
Dr de Marco said that the proper management of the country’s finances had an impact on the future of the country and of coming generations. Financial discipline and proper accountability made a difference in everyday life. The way a country managed its finances was fundamental to investor confidence and to positive reports from credit rating agencies, and no government could sustain public spending if this spending were not managed well.
Dr de Marco and Mr Cutajar both made reference to “underhanded deals” which had been attributed to Tourism Minister Konrad Mizzi, to the various land transfers carried out by the government which had attracted controversy, and to doubts raised by the Auditor General in various reports concerning government expenditure.
The two MPs took the government to task for resorting to direct orders and “accelerated procedures,” when direct orders were intended to be the exception, not the rule. They questioned who would be bearing the responsibility for this abusive use of procurement regulations.
Dr de Marco also pointed out that it had been three months since the Moneyval report on Malta was leaked. He asked Prof. Scicluna to elaborate on any measures undertaken by the government in order to improve Malta’s position in the eyes of Moneyval, considering that a Moneyval plenary session would be held in the coming month in order to determine whether the negative report which had been drafted should be published in its original form or amended to take positive developments into account.
He questioned whether the government had indeed engaged experts to draw up recommendations for Malta’s position to be improved, and whether the government intended to adopt these recommendations or had an alternative plan to avoid the blacklisting of Malta.
Dr de Marco requested details concerning when the shift to accruals-based accounting would begin. The best financial management systems were futile if there was no political will to do things properly, he said, and it was useless to pass legislation if the respective institutions were toothless or partial to the Government.