The Legislative Yuan has passed an amendment to the Act Governing the Allocation of Government Revenues and Expenditures (財政收支劃分法) to allocate more funding for local governments than the central government.
The problem is that local government corruption scandals are hardly few and far between, and there are often reports of wanton excess that are rarely for the public good.
The financial mess that the Miaoli County Government has got itself into is well known, and there is no solution to the problem on the horizon. The local government is hard pressed to pay salaries to its workers and has been forced to go cap-in-hand to the central government to cover its costs. Unfortunately, throwing money at the problem is not going to do any good. There are also reports of the head of Hualien County appropriating public funds for private benefit.
One classic example from the past is Su Nan-cheng (蘇南成), who served as Tainan mayor from 1977 to 1985, and as Kaohsiung mayor from 1985 to 1990.
He started off by launching ambitious construction projects in Tainan that he borrowed money to finance, without due caution or consideration. The projects were of limited use and earned him little but public criticism. On top of this, the contract tendering process was plagued with corruption scandals. Su took his profligate ways with him when he relocated to Kaohsiung, where the controversies he kicked off went well beyond construction projects.
Local governments have always had a complicated relationship with debt. This problem is only going to get worse now that the amendments have been passed. The burden would ultimately be placed on the shoulders of the taxpayer.
Politicians love to think big. Mayors often have grandiose plans to transform their constituency into an international city, even when they cannot provide for their residents’ basic needs, such as fixing leaks or broken doors in public housing.
It took the Taipei City Government much time to build the leaky Taipei Dome — the “huge egg,” (臺北大巨蛋) as it is called in Chinese. Inspired by this vanity project, many local governments are hatching their own plans, hoping to shell out millions of dollars to lay their own egg.
If local governments cannot handle their finances wisely, showering them with more cash would not only be in vain, but would also give rise to even more corruption.
Yang Der-yuan is a professor in National Kaohsiung University of Science and Technology’s Department of Money and Banking, and director of the Taiwan Association of University Professors.
Translated by Paul Cooper
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