Optional austerity measures can’t work

State House’s rejection of eight luxury vehicles and the dismissal of a financial officer a day later raise more questions than are answered.

President Kibaki and First Lady Lucy Kibaki, citing the austerity measures announced in June by Finance Minister Uhuru Kenyatta, sent four limousines, three SUVs and a pick-up truck back to two dealerships. In a statement from the Presidential Press Services, the Kibakis said they were "not aware of the purchase".

We applaud the move in so far as it echoes efforts to cut waste in Government spending. We, however, must express dismay at the fact that the State’s official transportation policy appears to rely entirely on the whims of accounting officers or of political heads to whom they report.

Where these people are disinclined to support the policy, like has been seen with some Cabinet ministers since 2006, nothing is achieved. And where the individuals are preoccupied with other matters, room is left for the officials working for them to take decisions that defy that policy. That is what might have happened in this instance, with officials purchasing vehicles as part of a last-minute spending spree ahead of the end of the last financial year, meant to avoid returning unused funds to Treasury.

Austerity measures don’t work if people have a choice on whether to implement them.

Voluntary austerity

In 2006, former Finance Minister Amos Kimunya proposed to switch to ‘transport allowances’ and cut the number of expensive official cars run by the State. The plan, communicated to all ministries formally in a circular from the Office of the President, seems to have achieved little. His predecessor’s attempt to limit vehicles used by ministers, assistant ministers and permanent secretaries and others to 1,800cc is proof of this failure. The fact that it is voluntary and that there is no compulsion or penalty involved, suggests it will meet the same fate.

There are a few things this fiasco makes clear: First, the Government’s fleet, specifically those not considered utility vehicles, needs closer watch. The absence of Schedule Five, a list of vehicles that is traditionally part of the Budget Estimates, is a step in the wrong direction. Not only must the list return, but enough detail must be provided to show taxpayers what types of vehicles various ministries own.

State House has about 150 vehicles: The motor vehicle establishment for 2007/08, the last year the Finance Ministry published the register along with the Budget, was 149 cars. Sources say the number has gone down to about 146 vehicles. This might suggest a freeze in fleet size or a motor policy of replacing rather than augmenting fleet vehicles. There’s no telling without detail.

Secondly, the scaling down to one official car of not more than 1,800cc and other austerity measures proposed by Government should not be ‘suggestions’ to be implemented or rejected by individual ministers at will. They can only work if backed by the threat of punitive action, like the denial of transport or fuel allowances.

Leading by example is great, but there are ministers who see no percentage in being populist. In a crowd of 40, their defiance is costly to the taxpayer.

Third, the use of departmental ceilings for spending on goods and services can limit spending to the previous year’s levels, barring any one-off purchases. But as last-minute spending sprees to avoid lower allocations in future years shows, the ceilings can lead to wasteful expenditure.

External Debt

Lastly, there is still too much emphasis on largely cosmetic actions when it comes to dealing with budgetary waste. The cuts in transport and remuneration, the two centres of waste most visible to taxpayers, must be backed by substantive measures to limit or end waste where it matters. Take the cost of external debt: Uhuru is off to Washington this month to talk about borrowing Sh80 billion a year from 2010. Ill-structured, such debts could end up costing more than the Sh4-9 billion that goes into transport.

Reducing bad spending must not be cosmetic: It must free serious money to go into the development of this country.