La'o Hamutuk Submission to RDTL Parliament Committee C, 15 Nov. 2012 Thank you for inviting La’o Hamutuk to participate in the Public Hearing today regarding the Court of Appeal’s Opinion on the General State Accounts for 2011. La’o Hamutuk is grateful for the opportunity to share our thoughts with Timor-Leste’s new Parliament, and we remain ready to help however we can in your challenging task of monitoring and authorizing the State Budget. We also appreciate the hard work the Court of Appeals has done on a task which is the Constitutional responsibility of the High Administrative, Tax and Audit Court. The Court of Appeals has significantly increased its capacity since last year, producing a more comprehensive and insightful Opinion. As the Court points out, the Government should have provided more information, and provided it on a timely basis. Fortunately, this Opinion is in time to inform Parliament’s deliberations on the 2013 State Budget, which will be later than usual because of the formation of a new Government. We hope that next year’s information on the 2012 State Accounts, including the Court’s Opinion, will be available for Parliamentary discussion prior to the submission of the 2014 State Budget on 15 October 2013. La’o Hamutuk has written several submissions and letters related to the 2011 State Budget and General State Accounts (GSA).[1] Last year, we suggested that the Court and Parliament should use more sources than the Treasurer’s reports to help analyze the GSA, and we appreciate that the Court has also used the Deloitte reviews of procurement in 13 state agencies, although we share the court’s disappointment with the Government’s failure to provide come documents. We encourage both Parliament and the Court to utilize additional information, such from the Transparency Portals on budget execution and procurement, awarded contracts, ASYCUDA Customs reports, and other reports and analyses from state and independent experts. We suggest that the Court of Appeals be supported by an external auditor (other than Deloitte) in preparing its opinion, at least until the High Administrative, Tax and Audit Court is fully functioning. During Committee C’s review of the 2010 GSA last year, La’o Hamutuk suggested that rapid budget growth is a symptom of the resource curse, and that repeatedly spending more than the Estimated Sustainable Income (ESI) from the Petroleum Fund for short-term convenience violates both the Petroleum Fund Law and good policy. These points are even more important now. In summary, we appreciate that the Court has made several reservations to its concluding Opinion that the state accounts are valid. Their recommendations, as well as others which Parliament may develop, should be made obligatory. Unfortunately, as Deloitte’s reviews of procurement practice show, enacting regulations without sanctions for breaking them is often ineffective. We encourage the Court and Parliament to report suspected legal violations to the Prosecutor-General and the Anti-Corruption Commission. When Parliament redrafts the proposed Anti-Corruption Law, we hope that you will include articles which compel compliance with procurement and other laws.We would like to underline and expand on a few issues in the Court’s Opinion: We support all the Court’s recommendations about accountability, timeliness, procurement practices and more comprehensive and disaggregated information. These will not only facilitate the Court’s review of next year’s GSA, but will improve transparency and accountability to Parliament and the public. Last year, the Court recommended that donor assistance be included in this review and in the State’s budget execution reports. This year, the Government and the Court have partially complied but information is lacking, due to incomplete data and mis-categorizing or repeating certain donors.[2] Last year, La’o Hamutuk suggested that accounting for Timor-Leste’s own funds is enough of a challenge, and we still believe that the Treasury and the Court should not try to include development partners in accounting of state finances. As the Court pointed out, predictions of non-oil revenues in the state budget are often wrong. A more detailed look, at each line of budgeted domestic revenues, shows larger discrepancies than the categorized totals. We suggest that the Ministry of Finance become more accurate at forecasting and efficient at collecting non-oil revenues, which will become increasingly important as petroleum wealth declines. In terms of petroleum revenues, the State Accounts and the Court’s Opinion consider only the transfer of money from the Petroleum Fund (also a state entity) to the State Budget. We suggest that they should also include petroleum revenues (taxes, fees and royalties) received from the oil companies, as well as income and expenditures from investing the Petroleum Fund. Existing transparency rules and practices for the Fund should make this easy to implement. In 2011, petroleum dominated State finances, with oil and gas income comprising 97% of all State revenues.[3] The Government is considering creating another sovereign wealth fund for mineral revenues, which underscores the need to regularize accounting for such funds. We agree with the Court’s suggestion to include revenues collected by all state agencies in the GSA, including the National Petroleum Authority. In addition to those listed on page 11, the State Accounts should include finances of the Central Bank of Timor-Leste. The CGA and Opinion should also discuss transfers from Ministries to other state entities, such as money appropriated to the State Secretariat for Natural Resources and then transferred to ANP and TimorGAP. If legal alterations are required to implement this accountability, Parliament should make the appropriate revisions to the law. We share the court’s view that Timor-Leste’s infrastructure spending is overwhelmingly for electricity, to the detriment of other sectors. We are also concerned that it is difficult to assess the value-for-money or good administration of state monies without information on the total costs of capital projects. The capital expenditures for the multi-year electricity project, which at over $1 billion are more than triple what Parliament originally appropriated, should be a lesson which doesn’t have to be learned again. EDTL’s revenues will cover less than one-fourth of its operating costs (let alone the capital investment), which should be considered by Parliament and the Court. [4] 2011 was the first year of operation for Timor-Leste’s new Special Funds – the Infrastructure Fund and the Human Capital Development Fund – and they pose serious challenges to reporting and reviewing State Accounts. It is especially important for the Court and Committee C to look closely at these mechanisms to identify problems that need to be fixed, as with any new creation. We hope that this review will stimulate some revision of legislation and practices to make the Funds better serve the people of Timor-Leste, as significant weaknesses and gaps have become evident.
In particular, the problems around specifying and implementing the MDG-Suco public housing program should be addressed. The program was contracted for more than double the cost appropriated in the 2011 State Budget, [5] but has not yet been paid. Prefabricated imports were justified on the basis of urgency, but very few of the houses have been built more than a year later. Questions have arisen about the social engineering motivations and value of the project, as well as its sustainability and whether the announced targets will be met. Another disturbing item in the Infrastructure Fund spending, not mentioned in the 2011 State Budget, is the $1,258,192 contract signed with Nevan Construction on 13 October 2011 to construct the official residence of the Minister of Finance, on top of $283,515 signed in December 2010 with the same vendor for construction materials for the same home. [6] When Parliament delegated budgetary reallocation power for the Infrastructure Fund to the Minister of Finance in Article 32.2 of Law No. 13/2009 of 21 October, you probably didn’t intend it to be used in this way. In addition, we reiterate our caution on the Tasi Mane project, which has already consumed nearly $20 million of Timor-Leste’s people’s money for feasibility studies and preliminary designs. The total cost of this project will be many billions of dollars, and the return on investment is dubious. It would be better for Parliament to thoroughly examine this now, before a Final Investment Decision is made, rather than lamenting the lack of value-for-money ten years from now, after our petroleum wealth has been squandered.
Unfortunately, some important issues were not discussed in the Court’s Opinion: Contingency Fund – Although the Appeals Court Opinion says that the GSA 2011 complies with the Budget and Financial Management Law, we have a different opinion. Article 37 of this Law states that contingency funds can be used for “urgent and unforeseen expenses,” and in 2011 Timor-Leste spent $29.5 million from contingency money, just below the 5% legal maximum.
The $176,322 in contingency funds spent to pay the salary of Finance Ministry advisor Olgário de Castro during 2011 could have been anticipated before the budget was approved. At the same time, Olgário de Castro was President of the Investment Advisory Board for the Petroleum Fund. We wonder why he should receive a special urgent salary, rather than being paid out of the Ministry’s appropriation for consultants. In addition, the Ministry of Defense and Security spent $1.6 million in contingency funds to continue construction of the Hera naval port and $2.8 million for roads and drainage for the integrated border posts. The Ministry of Education spent $4 million from contingency funds for nearly a hundred items, including international travel and salaries for consultants and UNTL professors (both national and international). Timor-Leste spent $174,300 for scholarships to APTECH-India (where our students were unable to study), $170,000 for an advertisement in Foreign Policy magazine, and nearly $10 million on fuel. We believe that these and many other contingency fund expenditures were predictable or unwise and should have come from normal ministerial budget allocations or not have been done. This pattern undermined Parliamentary authority, encourages poor planning, and weakens state transparency and accountability.
The state spent more money on fuel than the total value of fuel imported. The 2011 State Accounts show that State agencies spent $67.7 million on fuel for vehicles and generators, but the DNE’s 2011 External Trade Statistics report shows that the total value of diesel and gasoline fuel imported was only $38.6 million for all state, commercial and private users. We wonder if something is wrong with this process, and we suggest that Parliament could ask Government to explain this discrepancy to ensure that money is being spent as it should be. We are also concerned that state expenditures during 2011 gave low priority to human resources and social development, local economy and rural infrastructure. 90% of the money spent from the Infrastructure Fund went to the electricity mega-project – while hardly anything was allocated to rural roads, water and sanitation. Timor-Leste spent about one-third as much of its state budget on health and education as other developing countries, which betrays our families and our future.
Thank you very much for your attention, and we look forward to continuing this collaboration. Sincerely, | Sumisaun husi La'o Hamutuk ba Komisaun C, Parlamentu Nasionál RDTL, 15 Nov. 2012 Obrigado barak ba ita-boot nia konvite ba ami atu partisipa iha Audiénsia Públiku ohin loron kona-ba Opiniaun Tribunal Rekursu nian ba Konta Jerál Estadu 2011. La’o Hamutuk apresia oportunidade ne’e atu fahe hanoin ho Parlamentu foun Timor-Leste, no nafatin prontu atu fahe ajuda tuir ami nia bele ba ita-boot sira nia servisu boot ba monitor no autoriza Orsamentu Estadu. Ami mós apresia ba servisu maka’as Tribunal Rekursu ne’ebé halo knar ne’ebé kabe ba Responsabilidade Konstitusionál Tribunál Superiór Administrativu, Fiskál no Konta nian. Tribunal Rekursu halo ona mudansa signifikante ba sira nia kapasidade dezde tinan kotuk, hodi prodús relatóriu ida ne’ebé komprensivu no kle’an liu. Hanesan Tribunal foka sai, Governu tenke inklui informasaun tan no fó Konta Jerál Estadu ne’e tuir oráriu. Felizmente, Opiniaun ida ne’e seidauk tarde liu atu informa ba Parlamentu atu ba sira nia deliberasaun ba Orsamentu Jerál Estadu 2013, ne’ebé sei mai ikus duke bai-bain tanba formasaun Governu foun. Ami espera katak informasaun iha tinan oin mai kona-ba Konta Jerál Estadu 2012, inklui Opiniaun Tribunal nian, bele iha ona ba diskusaun Parlamentu nian molok submisaun Orsamentu Jerál Estadu 2014 iha 15 Outubru 2013. La’o Hamutuk hakerek ona submisaun no karta lubuk relasiona ho Orsamentu Jerál Estadu 2011 no Konta Jerál Estadu (KJE).[1] Tinan kotuk, ami sujere katak Tribunal no Parlamentu tenke uza fonte barak liu tan duke relatóriu Tesoro hodi bele uza atu analiza KJE, no ami apresia katak Tribunal mós uza Deloitte nia revista ba aprovizionamentu iha ajénsia estadu na’in 13, maske ami partilla tristeza Tribunal nian ba falla Governu nian atu fó dokumentu sira ne’e mai ami. Ami enkoraja Parlamentu no Tribunal atu buka informasaun sira seluk, hanesan hosi Portal Transparénsia kona-ba ezekusaun orsamentál no aprovizionamentu nian, kontratu sira, relatóriu ASYCUDA Alfándega nian, no relatóriu no analiza seluk hosi peritu estadu no independente sira. Ami sujere katak Tribunal Rekursu atu hetan tulun hosi auditor external ida (la’ós Deloitte) ka peritu seluk sira atu prepara Tribunal nia opiniaun, to Tribunál Superiór Administrativu, Fiskál no Konta totálmente funsiona. Durante revista tinan kotuk nian ba KJE 2010, La’o Hamutuk sujere ba Komisaun C katak kreximentu orsamentál ne’ebé lalais nudár sintoma ida hosi malisan rekursu, no gasta fila-fila liu Rendimentu Sustentável Estimadu (RSE) hosi Fundu Petrolíferu ba interese tempu badak nian viola Lei Fundu Petrolíferu no polítika di’ak. Pontu hirak ne’e relevante liu tan ba ohin loron. Iha rezumu, ami apresia katak Tribunal halo ona rezervasaun balu atu konklui nia Opiniaun katak konta estadu nian validu. Sira nia rekomendasaun, no mós rekomendasaun seluk ne’ebé dala ruma Parlamentu bele dezenvolve, tenke halo ho obrigatóriu. Infelizmente, hanesan revista Deloitte pratika aprovizionamentu nian hatudu, halo regulasaun laho sansaun ba sira ne’ebé la halo tuir dala barak la efetivu. Ami enkoraja Tribunal no Parlamentu atu fó informasaun kona-ba violasaun legal sira ba Prokuradoria Jerál no Komisaun Anti Korrupsaun. Bainhira Parlamentu halo ezbosu tan ba proposta Lei Anti Korrupsaun nian, ami espera katak ita-boot sira sei inklui artigu sira ne’ebé obriga ema atu kumpre ho regulasaun aprovizionamentu no sira seluk. Ami hakarak atu foka haluan asuntu balu iha Opiniaun Tribunal nian: Ami suporta tomak rekomendasaun Tribunal nian kona-ba kontabilidade, oráriu no pratika aprovizionamentu nian no informasaun ne’ebé komprensivu no disagregadu liu tan. Buat hirak ne’e la’ós de’it fasilita revista Tribunal nian ba Konta Jerál Estadu nian iha tinan oin, maibé sei hadi’ak liu tan transparénsia no kontabilidade ba Parlamentu no públiku. Tinan kotuk, Tribunal rekomenda katak asisténsia doadór sira nian atu inklui iha revista ida ne’e no iha relatóriu ezekusaun orsamentu estadu nian. Tinan ne’e, Governu no Tribunal kumpre parsialmente, maibé informasaun sira ne’e sei falta, tanba iha dadus ne’ebé la kompletu no kategorizasaun ne’ebé la klaru ka repete donor balu iha lista.[2] Tinan kotuk, La’o Hamutuk sujere katak kontabilidade ba Timor-Leste nia fundu rasik nudár dezafiu ida ne’ebé naton ona, no ami nafatin fiar katak Tesoro no Tribunal la presiza atu inklui parseiru dezenvolvimentu sira iha sira nia kontabilidade ba finansa estadu nian. Hanesan Tribunal foka sai, prediksaun ba reseita naun petrolíferu iha kontabilidade FCTL dala barak sala. Atu hare detallu liu, iha kada liña reseita doméstika ne’ebé orsamentál, hatudu diferensa ne’ebé luan liu duke kategorizasaun ba númeru total sira. Ami sujere katak Ministériu Finansa presiza atu hadi’ak sira nia abilidade atu halo kalkulasaun ba kolesaun reseita naun petrolíferu, ne’ebé sei sai importante liu bainhira reseita petrolíferu menus tiha. Kona ba reseita petrolíferu, Konta Estadu no Opiniaun Tribunal sira konsidera de’it osan ne’ebé transfere hosi Fundu Petrolíferu (no mós entidade estadu nian ida) ba Orsamentu Estadu. Ami sujere katak sira tenke inklui mós reseita petrolíferu nian (taxa, pagamentu no royalty) ne’ebé hetan hosi kompañia petróleu sira, no mós reseita no despeza ne’ebé iha relasaun ho investimentu Fundu Petrolíferu nian. Iha ona regulasaun no pratika transparénsia nian ba Fundu sei halo ida ne’e fasil atu implementa, no ida ne’e nesesáriu duni atu kompleta konta estadu nian. Iha 2011, reseita petrolíferu no gas nian kompostu ba 97% reseita tomak estadu nian.[3] Governu konsidera ona kriasaun fundu ba rikeza soberania nian seluk ba reseita mineira nian, ne’ebé sei presiza regulariza kontabilidade fundu hirak ne’e. Ami konkorda ho sujestaun Tribunal atu inklui reseita ba ajénsia estadu nian tomak iha KJE, inklui Autoridade Nasionál Petróleu. Aleinde ne’e, ba sira ne’e lista ona iha pájina 11, Konta Estadu nian tenke inklui Banku Central. Dokumentu hirak ne’e mós tenke diskute transferénsia hosi Ministériu sira ba entidade estadu nian seluk, hanesan ida ne’ebé aloka ba SERN no transfere ba ANP no TimorGAP. Karik presiza alterasaun legal balu ne’ebé presiza atu implementa ida ne’e, Parlamentu tenke halo revizaun sira ne’ebé apropriadu ba lei. Ami konkorda ho Tribunal katak despeza infrastrutura iha Timor-Leste barak liu ba eletrisidade, hafraku setór sira seluk. Ami mós preokupa katak difisil atu avalia valor obra ho osan ne’ebé gasta ba ka boa-administrasaun osan estadu nian lahó informasaun ba total kustu hosi kapitál projetu sira nian. Kapitál despeza ba projetu multi-anuál ba infrastrutura eletrisidade nian, ne’ebé liu ona biliaun $1 ne’e barak liu dala tolu kompara dotasaun ne’ebé orijinalmente Parlamentu aprova, tenke sai lisaun ba saida mak ita lalika tan estuda tan. EDTL nia reseita menus ¼ hosi nia kustu operasaun (husik mesak kapitál investimentu nian), ne’ebé tenke hetan konsiderasaun hosi Parlamentu no Tribunal. [4] 2011 nudár tinan ida-uluk ba operasaun Timor-Leste nia Fundu Espesiál foun sira – Fundu Infrastrutura no Fundu Dezenvolvimentu Kapitál Umanu – no sira hatudu dezafiu sériu ba relatóriu no revista Konta Estadu nian. Ida ne’e espesialmente importante ba Tribunal no Komisaun C atu hare besik liu ba mekanizmu hirak ne’e atu identifika problema sira ne’ebé presiza atu hadi’ak, hanesan kriasaun foun hotu. Ami espera katak revista ne’e sei estimula revizaun balu ho lejizlasaun no pratika sira hodi halo Fundu sira ne’e atu serbí di’ak liu tan povo Timor-Leste, bainhira frakeza no diferensia sira sai klaru tiha.
Partikulármente, problema ne’ebé hale’u espesifikasaun no implementasaun MDG-Suco ba programa harii uma ba povu tenke hetan atensaun. Programa ne’e fó kontratu ne’ebé liu dala rua kompara ho kustu iha dotasaun Orsamentu Estadu 2011, [5] maibé seidauk iha pagamentu. Importasaun ba uma pre-fábrika justifika razaun ba urjensia nian, maibé iha de’it uma uitoan mak harii no ida ne’e barak liu fali uma ne’ebé harii iha tinan 2012 ne’e. Pergunta barak mak mosu kona-ba motivasaun enjineria sosiál no valor projetu nian, no mós nia sustentabilidade no oinsá bele atinje tarjeitu ne’ebé publika sai ona. Rubrika seluk ne’ebé halo ita laran la kontente iha despeza Fundu Infrastrutura nian, la lista iha Orsamentu Estadu 2011, mak kontratu ho valor $1,258,192 ne’ebé asina ho Nevan Construction iha 13 Outubru 2011 atu harii rezidensia ofisiál ba Ministra Finansa, ne’ebé aumenta $283,515 ne’ebé asina iha Dezembru 2010 ho kompañia ne’ebé hanesan atu materiál konstrusaun ba uma ne’ebé hanesan. [6] Bainhira Parlamentu delega podér realokasaun orsamentu iha Fundu Infrastrutura ba Ministra Finansa iha Artigu 32.2 Lei No.13/2009, ita-boot sira provavelmente laiha hanoin katak podér ida ne’e sei uza ba dalan hanesan ne’e. Aliende ida ne'e, ami hakarak atu repete ami nia atensaun ba projetu Tasi Mane, ne’ebé han ona povu Timor-Leste nia osan besik tokon $20 ba estudu fiabilidade no dezeñu preliminaria nian. Kustu total projetu ida ne’e sei sai dolar biliaun barak tan, no retornu investimentu nian hamosu duvida hela. Di’ak liu ba Parlamentu atu esplora ida ne’e ohin, molok aprova Desizaun Investimentu Final ida, ne’e di’ak liu duke lamenta frakeza valor obra ho osan ne’ebé aloka iha dékada ida ne’e, hafoin riku-soin petróleu povu nian gasta hotu ona.
Infelizmente, Opiniaun Tribunal haluha preokupasaun sériu balu: Fundu Kontinjénsia. Maske Tribunal Rekursu fó opiniaun katak Konta Jerál Estadu 2011 ne’e kumpre duni Lei Orsamentu no Jestaun Finanseiru, maibé ami iha opiniaun diferente. Artigu 37 Lei Orsamentu no Jestaun Finanseiru hateten katak despeza ba kontinjénsia nian akontese bainhira iha despeza ne’ebé emerjénsia no labele halo prediksaun antes., no iha 2011 Timor-Leste gasta tokon $29.5 hosi osan kontijensia, menus maximu legal 5%.
Despeza Fundu Kontinjénsia ba saláriu asesor Olgário de Castro durante 2011 ho montante $176,322, loloos tenke preve ona antes iha orsamentu estadu no hetan aprovasaun. Basa, Olgário de Castro durante ne’e mós hala’o knar nudár Prezidente ba Konsellu Investimentu Fundu Petrolíferu Timor-Leste. Ami preokupa tanba sá nia tenke hetan saláriu espesiál ne’ebé emerjénsia, duke hetan pagamentu hosi alokasaun iha Ministeriu Finansa nian ba konsultan sira. Aleinde ne’e, Ministériu Defeza no Seguransa gasta tokon $1.6 ba atu orsamentu kontinuasaun portu naval Hera no tokon $2.8 ba estrada no drainaje ba postu integradu iha fronteira. Ministériu Edukasaun gasta osan tokon $4 hosi fundu kontinjénsia ba besik rubrika atus ida, inklui viajen internasionál ba konsultan, profesóres internasionál, nasionál iha UNTL. Timor-Leste gasta $174,300 ba estudante bolseiru sira iha APTECH-India ne’ebé ikus mai labele kontinua eskola, $170,000 ba halo iklan iha Foreign Policy magazine, no besik tokon $10 ba kombustivel. Ami hanoin despeza hirak ne’e no despeza seluk hosi fundu kontijensia nian ne’e preditavel ka ladun matenek no tenke mai hosi alokasaun normal iha orsamentu ministerial ka seidauk bele halo. Kontinua polítika orsamentá hanesan ne’e, ita sei hatun autoridade Parlamentar nian, enkoraja planeamentu ne’ebe fraku, no hafraku transparénsia no kontabilidade estadu nian.
Despeza ba kombustivel versus montante ne’ebé importa. KJE 2011 mensiona katak Estadu Timor-Leste gasta tokon $67.7 ba kombustivel ba veíkulu no jeradór, relatóriu ida ne’e kontradikte relatóriu Diresaun Nasionál Estatístika kona-ba Komérsiu External/External Trade Statistics ba 2011. Ne’ebé foka sai katak durante 2011, Timor-Leste importa gazoel no gazolina ho valor tokon $38.6, ba uzu estadu, komersiál no públiku. Ami deskonfia katak iha buat balu ne’ebé la’o laloos iha prosesu ida ne’e, nune’e ami sujere atu Parlamentu Nasionál bele husu resposta Governu ba diskrepansia hirak ne’e atu asegura katak osan sira ne’e gasta duni tuir nia dalan. Hanesan ami preokupa durante ne’e katak despeza estadu nian iha 2011 la prioritiza dezenvolvimentu servisu sosiál no rekursu umanus, ekonomia lokál no infrastrutura rural nian. Durante 2011, 90% despeza huwsi Fundu Infrastrutura ne’e ba projetu eletrisidade no liña tranzmisaun. Signifika katak infrastrutura rural sira hanesan estrada, bee mós no sanitasaun la hetan atensaun durante 2011. Timor-Leste gasta maizumenus 1/3 ba montante alokasaun iha nia orsamentu estadu ba saude no edukasaun kompara ho nasaun subdezenvolvidu seluk, ne’ebe halo traisaun ba ami nia familia no ami nia futuru.
Obrigadu barak ba ita-boot sira nia atensaun, no ami hein atu kontinua kolaborasaun ida ne’e. Ami be saran lia, |
