Ramallah – The Civil Society Team for Enhancing Public Budget Transparency (“Team”) held an emergency meeting to discuss the recent situation in light of the Law by Decree No. 4 of 2020 Amending the Law on the Honoraria and Salaries of Members of the Legislative Council, Members of the Government and Governors No. 11 of 2004 and Law by Decree No. 12 of 2020 Amending the Law on Public Retirement No. 7 of 2006 as Amended. The Team recommended that the government-initiated policy of transparency be promoted. It also stressed the need for consultation with civil society when any measures, procedures or regulations in relation to public interest are enacted. As these reflect on public financial management, public consultation prevents risks arising from inaction of the Palestinian Legislative Council.
The Team demanded that, after the coronavirus (COVID-19) crisis comes to an end, the Law on the Honoraria and Salaries of Members of the Legislative Council, Members of the Government and Governors No. 11 of 2004 be revisited. The review process will take account of the recommendations made by relevant actors, including the Team. The mechanisms applied to making the aforesaid laws by decrees need to be reconsidered. The persons responsible for passing both enactments will be held to account. Issued in disregard of the government policy and state of emergency, these regulations have caused considerable damage to community safety and were detrimental to the public trust recently placed in public officials.
The Team commended the government’s rapid intervention to repeal the laws by decrees in response to civil society demands and recommendations. It was suspected that some persons had fraudulently passed these regulations with the aim of accessing special privileges during the current state of emergency. Disrupting normality within society, these officials breached the (emergency) principles laid out by government decisions as well as the controls outlined in this year’s emergency budget. The latter puts in place mechanisms for financial decision making and obliges all public officials to control and rationalise expenditures with a view to coping with, and fulfilling the purpose of, the state of emergency.
In its statement, the Team highlighted a set of principles, stressing that the said laws by decrees were in contrariety with the Emergency Law. Both regulations waste and misuse public money. In line with the priorities approved by the Council of Ministers and based on the Minister of Finance’s recommendation, the enactments run counter to the Emergency Law, which confirms the principle of cash rationing. The process by which the laws by decrees were passed reflects an attempt to seek illicit gains by a particular group of power holders at the expense of the public interest. It indicates that both regulations involved circumvention by the persons who proposed them. In addition to heightened prevention, the Emergency Law prescribes aggravated penalties against any person who abuses the state of emergency for personal interests.
The Law by Decree No. 4 of 2002 provides for exempting persons appointed in the grade of ministers and chair public institutions, as well as those alike, from paying respective subscriptions to the Pension Fund and restoring all subscriptions they already paid. According to the Team, this provision could have deprived the Pension Fund from the contributions and subscriptions paid by both the public servants and the state, amounting to 22 percent of the public wage bill. According to initial estimates, this law by decree would have exempted dozens of public officials from paying subscriptions, depriving the Pension Fund from huge amounts that could be used for investment. To ensure pension payments, pension funds collect, and capitalise on, subscriptions from public servants by means of investments.
As put by the statement, a scenario involving a retroactive recovery of subscriptions over many years would increase the deficit of the Pension Fund, which would become potentially insolvent and incapable of paying retirement benefits to public servants. Also, paying retirement benefits to entitled persons from the public treasury would increase expenditures, contributing to a further budget deficit. It is worth noting that, according to statements by the Prime Minister, the 2020 budget is already crippled by a financial deficit of over NIS 5 billion. The law by decree could have caused damage to the government stated policy on expenditure control.
The Team is also of the view that the Law by Decree No. 12 of 2020 would have raised the age of retirement by five years to 65, granting a privilege to the said group of public officials. This would have indirectly increased expenditures. Needless to say, the more the working years are, the higher the salary grows. In respect of the relevant public officials, a salary increase for an additional five-year period would have exacerbated the burden on the public treasury in terms of both salaries and retirement benefits. It also involves discrimination among public servants, favouring a particular group, namely, servants in the grade of ministers who chair non-ministerial government bodies.
Earlier, the Team had raised the issue of the Pension Fund and released reports on its financial position. The Fund is affected by a deficit and owes more than NIS 8.2 billion in debt from the public treasury. The Team submitted necessary recommendations to consolidate the Pension Fund management, address accumulating debts, and ensure sustainable operation. This requires that these recommendations to be taken into account and examined.
To read the position paper, click here (Available in arabic only)