Flood of Money

More construction funds to local areas means increased sales for betel nut stands.

The Taipei Times reported yesterday that DPP and KMT legislators had a falling out over a diversion of government funds for flood control projects.

The Executive Yuan yesterday insisted on diverting part of the funds to flood prevention despite DPP lawmakers’ reservations about the legality of the budget appropriation.

The legislature last week approved the Cabinet’s budget request of NT$130 billion (US$4.3 billion) tagged for spurring economic expansion, NT$58.35 billion of which would be allocated to 25 local governments for construction projects.

Following the recent flooding in central and southern Taiwan caused by Tropical Storm Kalmaegi, Premier Liu Chao-shiuan (劉兆玄) decided in a Cabinet meeting on Monday night that NT$41.364 billion, or 70 percent of the NT$58.349 billion, would be used for projects related to flood prevention.

The plan drew criticism from the DPP caucus, which said the Executive Yuan should either refer a motion to the legislature to reconsider the passed budget or seek a declaration of a state of emergency from President Ma Ying-jeou (馬英九) before appropriating the funds.

The legislature is looking pretty bad since flooding occurred in many areas that had not been flooded before, a new pattern of events over the last few years, I've noticed. For example, I got a call the other day from a close friend who lamented that his house flooded, the first time in the two decades he's been living in it. The constant construction, legal and illegal, must make it difficult for water management authorities to handle the dynamics of local flood control.

The Executive Yuan later stated that the funding would come out of the massive flood prevention program passed in 2006:

Later yesterday, Shih tried to play down the controversy surrounding the issue, saying that money needed for flood prevention projects would first be drawn from the “eight-year, NT$116 billion flood prevention and water management plan.”

The legislature approved the NT$116 billion budget in 2006 for the government to launch an eight-year, three-stage program to help prevent flooding in high-risk areas that included 1,150km² in central and southern Taiwan.

The Water Resource Agency said the first stage of the plan would be 90 percent completed by the end of this year, the second stage — budgeted at NT$44.5 billion — was scheduled for completion between this year and 2010, and the third stage would take place between 2011 and 2013.

Several reports carried the DPP criticism that the flood control projects are nothing but pork (Taiwan News):

The move also proves the so-called domestic demand-boosting projects are nothing but pork barrel projects, he said.

Lin Shu-fen, another DPP legislator, said it is inconceivable that the ruling Kuomintang (KMT) is now blaming the former DPP administration for failing to improve the country's flood prevention facilities, when it was the KMT that delayed an eight-year flood prevention package put forth by the DPP administration.

Because the budget for the package was only passed in 2006, after being proposed by the DPP administration in mid-2005, many flood prevention projects financed by the package were still in their initial stages as of June 2008, Lin said.

Recall that the KMT had delayed or failed to pass funding for infrastructure projects during the DPP years. Since the economy at the local level ran on funding for public construction sent down from the central government, this hurt incomes all over the island, lending credence to the KMT talking point that the economy was bad and only Ma and the KMT's expertise could save it (Ma save us!). Philip Liu had a wonderful review of construction industry issues in AmCham's Topics two years ago, observing in one of its many informative paragraphs:

According to PCC figures, spending on government-invested construction projects dropped to NT$450 billion (US$13.6 billion) for the central government last year and NT$150 billion (US$4.5 billion) for local governments; the former was only half the pre-1999 level. The scale is likely to further shrink considerably in the coming several years, following the recent completion of a number of major public projects. These include the NT$300 billion (US$9.1 billion) high-speed rail and the NT$90 billion (US$2.7 billion) Taipei-Ilan freeway, which included NT$20 billion (US$606 million) spent on the 12.9-kilometer Hsuehshan (Snow Mountain) tunnel, the fifth longest highway tunnel in the world.

Like so many public policy issues everywhere, public interest is stimulated only when things go wrong, and then, only temporarily. Last year, during the runup to the arrival of Sepat, there was similar wrangling:

Chinese Nationalist Party (KMT) caucus whip Hsu Shao-ping (徐少萍) yesterday blamed the government for the serious flooding in the south, criticizing it for not making good use of the budget earmarked for a flood-control plan.

When inspecting the flooding in Kaohsiung County on Wednesday, Premier Chang Chun-hsiung (張俊雄) said the previous boycott of the NT$80 billion flood-control plan had prevented the government from dredging the Meinong River (美濃溪).

The river's flooding in the wake of torrential rain caused severe damage.

Hsu dismissed Chang's accusation, saying the budget for dredging the river had been included in the government's annual budget instead of the eight-year flood-control plan.

In response, Democratic Progressive Party caucus whip Wang Tuoh (王拓) said Hsu was trying to shirk the pan-blue camp's responsibility for delaying the plan in the legislature.

"The plan was drawn up in May 2005, but its budget didn't clear the legislature until June last year because of the pan-blue lawmakers boycott of the review," Wang said.

It's unreasonable to put all the blame on central government as it needs local governments' cooperation to carry out flood-prevention plans such as land expropriation, he said.

....and next time around, we'll see more of the same...

Many commentators have noted the obvious pork barrel aspects of the KMT government's increased expenditures on infrastructure, typically the lifeblood of the party's local networks. A by-product of increased local incomes will be the buying off of working class objections to Ma's putting Taiwan into China's arms. Observe too that the construction industry actually suffered a labor shortage even in these reduced times, according to the Liu article I cited above. The obvious conclusion of expanded public construction + tight labor markets is an increase in the need for foreign labor to hold down rising wages in the construction industry. And right there across the Strait are 100 million unemployed warm bodies....

[Taiwan]