Levelling out Thailand’s political seesaw
Finally, the State Financial and Fiscal Discipline Act of 2018 has taken effect, despite criticism about the controversial clause that virtually bans populist policies. It is seen as an attempt by the ruling regime under the National Council for Peace and Order (NCPO) to limit the role of elected representatives in turning campaign promises into government policies. With that, a democratic principle turns upside down.
The law, via Sections 7-9, requires ministers to strictly adhere to financial and fiscal discipline and the cabinet must carefully consider costs and benefits, including risks and damages which could occur in managing finance and fiscal policies, planning budget expenditures and debt commitments. In addition, “the cabinet shall not administer the affairs of the state with the intent of creating political popularity which could cause longterm damages to the national economic system and the people”.
A new mechanism has been set up, the State Financial and Fiscal Policy Committee, to be headed by the prime minister with the minister of finance as vice chairman. The rest of the members are economic technocrats — the permanent secretary of the Finance Ministry, the secretary-general of the National Economic and Social Development Board, the director of the Budget Bureau and the governor of the Bank of Thailand. The director of the Fiscal Policy Office is the committee’s secretary.
The committee has the power to further set additional financial and fiscal limits from those stipulated in this law, and others, for the government agencies to comply with, as long as they do not have an “impact on the independent functioning of the government agency”. A medium-term fiscal plan will be formulated and reviewed by the committee. The law gives the committee unprecedented authority to interfere in the budgetary processes on a wide-range of issues including setting the national debt ceiling.
Money talks, and those who control the purse strings talk the loudest. Interestingly, only two of the members, the prime minister and the minister of finance, are political appointees. The rest are career bureaucrats. This sub-cabinet will be more powerful than the cabinet itself. It is essentially an extension of the technocratic regime’s control over people who are elected to office.
The underlying rationale to set limitations on the power of elected people, of course, is the allegations of abuses in the past by politicians. The culprit is ex-prime minister Thaksin Shinawatra, who in 2001 and 2005 won the majority of members of parliament with a progressive platform including universal healthcare and a village development fund. These popular policies translated into a strong political base for Thaksin.
Even after the 2006 coup, Thaksin’s popularity lingered, and people were nostalgic for the programmes and projects he introduced. Subsequent governments tried to dismantle the policies but never could do away with them, except for some superficial name changes.
The newly built political base remained and continued to support Thaksin in elections. When Yingluck Shinawatra took office in 2011, she furthered the populist cause and sealed the Shinawatras’ popular support among the rice farmers with the rice-pledging scheme which became a target for dismantlement by their political enemies. The controversy it created contributed to her downfall.
But are so-called populist policies all bad? There are two sides to the coin.
On one side, if the policy is popular, implying the people benefit from the projects and programmes, what is wrong with proposing them for budget allocation and eventual implementation? And if the leader of the political party brings about practical solutions to problems and become popular to the point they reelected again and again, why should they be condemned?
On the other side are the abuses. Corruption is a major problem in Thailand. And the allegation against populist policies is that politicians use the legitimacy of public approval for certain programmes and projects to open loopholes for wrongdoing. The charge against Thaksin by his enemies, taken to a higher level, was the propaganda that Thaksin intentionally created the policies as a set up for policy-oriented corruption.
However, abuses and corruption are no less with authoritarian regimes. The recent revelations about money stolen from recipients in many welfare programmes across the nation is a testimony to the fact bureaucrats are no less a problem than their political masters, non-elected or elected. Corruption is a human trait not limited to politicians.
The difference in Thailand is that when an elected government is accused of abuse, it is thrown out in a coup d’etat, inhibiting the learning curve of voters to believe it is within their power to throw out bad governments through elections. When then happens is that those authoritarian governments refuse to go and end up facing the onslaught of mass protests.
In substance, this new law on financial and fiscal discipline is well intended. It improves tremendously the mechanisms for effective management of how the nation raises and expends public funds. Many existing loopholes will be closed since the law covers all types of government agencies, state enterprise and special funds. And it will tighten the framework of financial and fiscal accountability and responsibility for all government agencies in implementing development programmes and projects.
Both elected and non-elected administrations will be subjected to the same terms and conditions.
The drawback, however, is at the centre. The power remains concentrated in the executive branch. The new super committee is occupied mostly by technocrats. There are no checks and balances. To ensure transparency, the government and its lawmakers in the agencies involved, especially the Fiscal Policy Office of the Ministry of Finance, should explain and provide clear guidelines supporting the rules and regulations.
The annual expenditure budget is subject to approval from parliament, but how the additional process answers to parliamentary oversight is a bit murky. In many countries, for instance the United States, on the legislative side there is a counterbalance organisation like the Congressional Budget Office (CBO).
A similar agency in parliament will provide lawmakers with a mechanism to check and balance the executive power. That could be one of the agendas our political parties have to push for in the future.