Addressing the health insurance, petroleum Commission and other thorny issues that deplete the Public Budget and the citizens’ pockets
Ramallah-The Civil Society Team for Public Budget Transparency held on Wednesday its Eighth Conference for 2018 at the Palestine RED Crescent Society premises in Bireh. Four research papers were presented with the aim of enhancing transparency in the Public Budget and improving the citizens’ rights to access public financial information and to participate, monitor and hold to account management of public finances and affairs. They also addressed the challenges that undermine development, particularly those that deplete and exhaust the Public Budget, such as the current health insurance system, in addition to several other aspects that may increase the Budget’s revenues, such as the General Petroleum Commission. The conference included a presentation on the findings of the international survey on “transparency and participation in managing the Palestinian Public Budget”, which also included the Civil Society Team’s analysis of 2018 semi-annual Budget.
Majdi Abu Zeid, the Executive Officer of the Coalition for Accountability and Integrity AMAN, opened the conference on behalf of the Chair of AMAN Board Abdul Qader Husseini, expressing his dissatisfaction for the absence of any representative of the Ministry of Finance (MOF) despite many letters to invite them. He considered this absence deliberate and unacceptable disregard for the civil society and the citizens’ right to access information from its original sources, and their right to hold officials accountable for managing public finance and affairs.
Abu Zeid commended the Civil Society Team, which has become a reliable oversight body over the Public Budget implementation, as it succeeded through its relentless efforts and specialized reports to develop clear and specific recommendations to rationalize expenditures and increase revenues. The government had adopted several recommendations, such as publishing the citizens’ budget, published for the first time in 2011, in Arabic, in close cooperation with MOF.
Abu Zeid demanded that the government publishes its written public expenditures rationalization plan, with all its elements, including goals, mechanisms, responsibilities, and responsible parties. This plan has not been released despite the government’s call for its adoption over two years ago. He asserted AMAN’s position that this plan must not touch on the programs that support the poor and marginalized groups.
Abu Zeid explained that the work of the Civil Society Team is not an alternative to the roles of the Legislative Council (PLC) in legislation, control and representing the citizens’ priorities, but rather a partner in making decisions and developing recommendations that serve the citizens’ interests and are closer to achieving social justice. He called upon the governmental institutions and the Council of Ministers (COM), in particular MOF, to intensify their efforts to adopt a participatory approach, and put in place policies that confront financial crises, and are more open to the civil society institutions, the Civil Society Team and the media.
Regarding the shocking findings of the opinion poll that AMAN held in the social media about engaging the citizens in identifying the priorities in the Palestinian Budget, Abu Zeid indicated that 88% of the respondents said they were not engaged in prioritization, which requires revisiting the principle of participation.
Dr. Nasr Abdul Karim, the economist and researcher, presented the findings of the international survey on “transparency and participatory practices in managing the Palestinian Public Budget”. He pointed out that for the first time, the Civil Society Team has evaluated the level of transparency, partnership and accountability in the Budget, using the standards and indicators of the manual of the Open Budget Survey (OBS) of the International Budget Partnership (IBP). These conduct comparative studies between countries to examine the level of transparency and accountability of governments during the budget cycle, with its four stages, preparation, and adoption by the legislative, implementation and monitoring implementation.
Abdul Karim indicated that the Budget survey consisted of 142 indicators that examined the transparency in the budget system, focusing on the actual rather than on the legal provisions. The reviews and comparisons have revealed that the Palestinian Budget does not comply with most international standards and indicators of the open budget.
It is worth noting that the dysfunction of PLC, because of the internal division, was the major and direct reason that the Palestinian National Authority (PNA) Budget did not fulfil most OBS standards and criteria. The Budget proposal was not submitted to PLC, as 2018 budget proposal was barely presented to some parliamentary blocs.
Regarding the availability of the main documents of the Public Budget, the government mostly did not comply with the legal deadlines for adopting the budget. The law allows the government to delay adopting the budget until 31 March, i.e. three months after the beginning of the fiscal year. Moreover, several documents were not made public, except for the “Citizens’ Budget”, released after lobbying of the Civil Society Team and only on the website. However, the monthly and quarterly reports that MOF published on the website consist of mere figures, with no explanation or charts; hence, they did not meet OBS requirements. The paper indicated that the government asserted that it would enhance transparency, openness with the citizens and access to information in the National Policies Agenda 2017-2022, but the survey findings revealed that such openness was a mere formality, rare and selective towards some NGOs only.
The Civil Society Team recommended matching the names of the documents of the Palestinian Public Budget with those of the OBS manual, that MOF submits the Budget documents on time and in accordance with the Basic Law, and provides the opportunity for wider public debate about it. The Team also recommended improving the classifications of revenues, expenditures and public debt estimates through detailing and presenting them according to their individual sources. The recommendations included disclosing the funds outside the Budget, and the financial and non-financial assets the governments owns; updating the information regularly within the context of the budget processes, to improve the comprehensiveness of the budget content and its supporting documents; moving forward with the implementation of the program or performance-based budget, which MOF had announced in 2010. They also included releasing a citizens’ budget for each stage of the four budget stages, which informs the citizens of all aspects of the public financial management and the budget cycle, and avoiding delay in releasing and publishing the closing accounts, as 2012 closing accounts have not been issued yet. The Team’s recommendations included guaranteeing the independence of the State Audit and Administrative Control Bureau (SAACB), as it is inadmissible to appoint or remove the chair of the supreme audit bureau except through the legislative or the judicial authority; the Bureau should publish its reports annually.
The Social Audit coordinator at AMAN, Lamis Farraj, presented the semi-annual report on 2018 Budget performance, with an analysis of the government’s compliance with the adopted fiscal policies. The report revealed that the Budget process lacked transparency and did not engage the civil society and citizens in identifying priorities. It also pointed out that the information was not disclosed in due time, and an evident gap existed between declared policies and practice. Another issue was the broad fiscal policies that have neither clear timeframes nor tools for implementing them, which led to poor achievement. Farraj indicated that the government did not comply with the regular and binding timeframe provided in the Budget Law for preparation, adoption and approval, publishing and monitoring. The published data on direct or transferred revenues and expenditures did not show the collections or expenditures of Gaza Strip, thus giving PNA and Hamas government the opportunity to use those figures without showing the results of the published revenues and expenditures. The report also pointed out structural deficiencies in budget distribution, whereby the internal and public security continue to receive the largest share. The report indicated that despite the reduction in the wage bill actually resulted from referring 24,000 employees to early retirement during the past and the current years. Furthermore, the accumulated debt problem persisted, whereby the public debt amounted to 8.6 billion Israeli Shekels (ILS), the Pension Fund debt amounted to 7 billion ILS and the arrears to 1.2 billion ILS, amid a chronic deficit and failure to seriously reduce net lending. This reveals no progress in the health insurance and electricity issues. This requires adopting a transparent fiscal policy for repaying the Pension Fund debt, paying the private sector arrears regularly, expanding the tax base and improving collection, ending tax avoidance and evasion and taking stricter measures against smuggling tobacco. Moreover, the report said that the government must adjust to the new situation, develop an austerity plan to face the current financial crisis and deficit without resorting to random methods that are detrimental to the developmental and social sectors and public services.
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Dr. Fathi Abumoghli, the former health minister, presented a research paper that diagnosed the current situation of health insurance, its burdens, and its impact on the right to health. He identified the existing gaps, since it is not mandatory for all the groups of the society, but restricted to public employees and some semi-governmental institutions, and optional to other citizens. Uninsured citizens can join the health insurance only when they need the service, in contravention with the principle of fair and equal risk sharing. Abumoghli pointed out that the existing health insurance is a failing and decaying system and that current reform attempts are ineffective and aim at reducing the financial burdens of the Ministry of Health (MOH). MOH developmental budgets are small, and do not reflect serious ambition for profound development of the level and quality of services. Furthermore, MOH income from the health insurance system and the contributions of patients under treatment and any other fees do not exceed 10% of its budget. Developing the health services and infrastructure, buildings, equipment and human resources requires allocating large budgets that reflect the vision incorporated in the Health Strategic Plan 2017-2022.
The Civil Society Team demanded developing a new competent health system, capable of providing comprehensive, good quality and affordable health services to all citizens without impoverishing limited income households, in a manner that achieves justice, equality and uninterrupted access to services for all the people.
Dr. Yasser Abu Safieh, the Chair of the Association of Non-Governmental and Private Hospitals, described the current health insurance system as disordered and unfair, and wondered who pays the bill for insured Jerusalemites, who pay insurance at the Israeli funds too, for those who hold UNRWA cards, around 40%, and for the insured from Gaza who enjoy full coverage? Dr. Abu Safieh pointed out that UNRWA covers 70% of treatment, while MOH covers 90%, and moving in between different insurance systems enables the insured to avoid paying their contributions. Moreover, Abu Safieh pointed out the expenditures on a group of incommunicable diseases that deplete the health budget, wondering about the role of insurance funds in primary care and prevention.
Dr. Basem Rimawi, an expert in health insurance and a former director-general of health insurance indicated that the MOH has taken tens of decisions on the current health insurance system, but with no regulations. He pointed out 14 kinds of insurance, most of which are free. He mentioned the insurance for persons with special needs, adding that many groups enjoy this insurance although they are not persons with special needs, which has burdened the insurance. Furthermore, all the prisoners who spent over five years in prison have insurance, although they do not pay any contributions from their salaries, and no specific party covers their contributions. The unemployed benefit from health insurance too, and this is a fluctuating group. Rimawi pointed out that the health insurance income amounts to around 245 million ILS.
Dr. Azmi Shuaibi, AMAN consultant on anti-corruption issues, made an intervention indicating that the issue of health insurance was slipping into corruption and opening the road to favoritism and nepotism. He added that the people are paying their share, financing 85% of the Public Budget, while the insured are dissatisfied with the quality of MOH services, and freezing the process of developing a new health insurance system for over ten years serves private interests in the health sector.
Dr. Mohamad Salameh, a health expert, indicated that there is full health insurance in the West Bank and Gaza, but it should cover the Palestinians in the Diaspora. He referred to the Presidential Decree on establishing the Palestinian Higher Health Council to set health policies, which reflects a political will to adopt a system that serves all Palestinians and does not exclude refugees.
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Isam Haj Hussein, AMAN Operations Director, delivered a presentation about the performance and governance of the General Directorate of Petroleum, as the oversight body over the fuel sector in Palestine. He explained the efforts of the Civil Society Team to look for available opportunities to improve and develop the operations and performance of the Commission in a manner that ensures the optimal use of public resources, and meets the Palestinian market needs of fuel that conforms to international standards at affordable prices. The paper wondered who would benefit from the lack of a regulating law for the operations of the Commission, 24 years after its establishment, which creates an enabling environment of corruption and raises several questions about the interests that underlie the obstruction of enacting such a law.
The Civil Society Team scrutinized the prices of fuel, since the taxes on the fuel sector in Palestine, (BLU and the VAT) constitute a major financial resource for the Treasury, providing around 300 million ILS monthly (US$1billion annually). These constitute around 38% of the total tax clearance revenues with Israel, which in turn constitute around 68% of the net public revenues.
The paper pointed out the ambiguous reporting channels of the Commission, as the Palestinian Basic Law outlined the functions of public institutions and provided for regulating them with primary legislations. The Commission was established with a COM Decision in 1994, as an independent moral personality, with its own budget that reported to PNA President. However, under the pretext of reform, the Council of Ministers transferred the Commission to MOF through COM Decision No. 3 for 2003. MOF plays the role of trading and oversight at the same time. Furthermore, the nature of the Commission’s operations, trade, is different from those of public institutions, which adversely affects its governance.
Obstacles that impede the work of the Commission include the absence of public policies to regulate the fuel sector in general, lack of a regulating law, defaulting debts of petrol stations, which amount to around 158 million ILS, financial and technical insolvency, inadequate accounting systems and inadequate control and financial systems used at ministries. Moreover, the report indicated that the storage capacity of the Commission’s warehouses covers only one day of local consumption. It shed the light on the monopoly of the sector by two Israeli companies, Bazan and Baz, which provide fuel to the Commission on unfair terms.
Suheil Jaber, the Chair of the Association of Petrol Station Owners, shed the light on the increasing smuggling and adulteration of fuel, which afflict around 10-15 million liters of monthly losses, i.e. around 30-40 million ILS monthly losses on the Treasury. The reason is the lack of actual plans to confront smuggling and adulteration, and the lack of deterrent measures against smugglers at the prosecution and the courts. He mentioned the accumulating debt on public institutions, as the debt of the security services in fuel since the beginning of 2018 reached around 22 million ILS.
Dr. Azmi Shuaibi pointed out the confidential nature of the agreements with the security services to combat smuggling and shut down unlicensed stations, in return for a rate. He pointed out that certain powerful persons in the government receive licenses and facilities to open petrol stations, which they later lease.
The Civil Society Team recommended enacting a law for the fuel sector that regulates the work of the General Commission of Petroleum and identifies its relations with MOF and the Energy Authority. The Team drew the attention to the important role of the state in economic policy and protecting consumer rights. It recommended reconsidering the terms of the procurement agreements with the providing companies and making them fairer, so that the Commission can fulfil them, especially those related to delay interests, deadlines for paying bills, and the fines on deviating from ordered quantities. It recommended increasing the share from the local Israeli gas, compelling the Israeli companies to disclose the adopted logistic costs and to withdraw the seized adulterated fuel and refine it again at the Israeli refineries in return for a fair agreed compensation. Moreover, the Team recommended developing a procedural manual for the staff and management of the Commission and redistributing the proximate existing petrol stations to areas that need new ones. It recommended developing an internal audit system for the Commission rather than the current financial controllers, who merely apply the existing financial system designed for ministries and public institutions; and, conducting annual external audits and approving the financial statements in a manner that suits the nature of the Commission’s operations. It recommended providing the logistic needs and a clear legal framework for the joint operations of the Commission and the security services in combatting smuggling and adulteration. These include developing plans, providing mobile laboratories, tankers to transport the seized quantities and sufficient space to keep the seized products.
It is worth noting that the Civil Society Team for the Public Budget Transparency organized this conference. The Team was established with the initiative of the Coalition for Accountability and Transparency AMAN in 2010. It includes 40 civil society organizations active in different sectors. Several experts attended the conference, which attracted wide media coverage. The Team shall convey its experience to Transparency International Chapters in the Arab World through AMAN.
