Fiscal policy urged to start reform plans

Budget Law adjustments can lay basis for other changes, experts say

Fiscal reform should take the lead as the country rolls out a grand reform plan in 2014, economists said.

Finance adjustments must go ahead of other reform initiatives, as they are closely connected with different components of society and can lay the basis for other policy changes, the central bank’s former vice-governor Wu Xiaoling said at the Sanya International Forum on Saturday.

Given fiscal reform’s complexity, it should begin with a Budget Law revision to ensure subsequent steps are carried out correctly, she said at the event in Hainan’s provincial capital, Sanya.

“Past experience has shown issuing government documents and policies will not be enough to realize the reform promises proposed at the Third Plenum due to a lack of legal validity,” Wu said.

“Those measures endorsed by the plenum, such as transparency and accountability, should be included in the Budget Law’s draft amendment.”

Wu said economic development is only sustainable if based on the rule of law, and the country’s top legislative body should speed up reform work.

“The draft amendment to the Budget Law — the reading of which has been held up for a long time — must be revised as soon as possible to take in the new concepts.”

Although the National People’s Congress Standing Committee, the country’s top legislature, has not released the schedule for its latest bimonthly session in December, insiders said the reading of the budget law amendment has been taken off this month’s agenda.

The revision of the draft amendment, which has been presented for two readings in the past two years, has yet to win consensus.

It had received a record 310,000 suggestions when the NPC Standing Committee solicited public opinions on the draft in 2012. Experts and the public generally agreed the draft failed to address essential concerns of China’s budget planning.

Shanghai University of

Those measures endorsed by the plenum, such as transparency and accountability, should be included in the Budget Law’s draft amendment.” WU XIAOLING THE CENTRAL BANK’S FORMER VICE-GOVERNOR

Finance and Economics finance professor Jiang Hong said the current process of deciding the budget does not include many government income items, such as fines, despite the central government’s call for a complete report.

He said surplus revenue’s use is also arbitrary.

“The government does not need to go through local people’s congresses to get approval for its use, so it can hardly be put under supervision,” Jiang said.

The national treasury system is not well implemented, he believed. It currently holds the Ministry of Finance and the People’s Bank as two separate bodies to approve the money’s use and transfer.

Wu, the former central bank vice-governor, said budget-planning problems should be solved by enshrining the basic principles of integrity and transparency in the law.

“We must set up budget planning to oversee financial expenditures of the next year,” she said.

The law should also set specific limits on the use of special transfer payments, which are difficult to oversee and often breed corruption, she explained.

Wu urged the NPC to strengthen its budget supervision and suggested lawmakers formally inquire about specific projects to see if the budget has been used properly.

“Many of the reform initiatives from the Third Plenum have gone beyond the boundaries of standing laws,” Wu said.

“The NPC Standing Committee should double its efforts and increase the frequency of their legislative sessions to push progress forward.”