The previous Penang government has accepted responsibility for the financial problems of the Seberang Perai Municipal Council (MPSP).

The Barisan Nasional (BN) administration had been mapping out plans to address the issue and arrest the depletion of funds when the coalition was voted out of power in the March 8 general election.

"We did not and will not shirk our responsibility for the issue," explained former executive councillor Dr Teng Hock Nan.

teng hock nan koh tsu koon not smiling Teng (left) , the Penang Gerakan chairperson, was in charge of local government matters between 2000 and March 2008, in the administration of former chief minister Koh Tsu Koon (right) .

He said the BN government had commissioned an internal audit late by the state financial officer last year to find out whether there were irregularities in relation to MPSP reserves.

Based on the findings, solutions were being worked out to achieve a balanced budget and to prevent the MPSP reserves from being drained.

"The report was ready early this year but before we could undertake follow-up measures, we were voted out," he told a press conference at the Penang Gerakan office in George Town today.

Teng was responding to a question as to whether the previous administration has shirked responsibility over the depletion of MPSP reserves over the past decade.

Next year, MPSP will operate on a RM10 accumulated fund, since its reserves have dropped from RM225 million in 2000 to RM6.45 million this year.

The council has run on eight consecutive deficit budgets, which the current Pakatan Rakyat state government attributed to the previous government's incompetence in carrying out cost-cutting measures and generation of revenue.

The deficit has also grown from RM5.06 million in 2000 to RM19.54 million in 2008.

The MPSP has had some success in increasing its income from about RM108.18 million eight years ago to RM148 million this year. However in that same period, expenditure has leapt from RM113.25 million to RM167.55 million.

‘It’s not unusal’

Gerakan national delegates' conference chairperson Chin Fook Weng, who was at the press conference, justified the deficit budgets, saying these resulted from the MPSP’s eagerness to carry out people-orientated projects.

Claiming that many governments in the world, including the current Penang government, work on deficit budgets, he said such authorities would be criticised if they were to emphasise savings over expenditure.

"It's not unusual to spend more than estimated revenue for the people's benefit. It's a phenomenon across the world," he said, citing the recently-tabled Penang's RM39.4 million deficit budget for 2009 as an example.

lim guan eng and penang Teng chided Chief Minister Lim Guan Eng for likening the 'disappearance' of RM225 million from MPSP reserves as that of David Copperfield magic show, "as if the funds were siphoned away through improper means".

"We admit there was imbalance in the income and expenditure of MPSP for years but the money was channeled for major and minor projects on the mainland for the people's benefit."

Teng said the reserves were used to build new markets and modern sports complexes in Kepala Batas and Bukit Mertajam, a multi-purpose hall in Butterworth, a sanitary landfill in Pulau Burung and to acquire land for infrastructure projects.

The increase in rubbish collection from three times to four times a week also contributed to reserves being used up.

Minor projects included constituency infrastructure projects identified by state assemblypersons and community programmes such as health, cleanliness, an anti-mosquito campaign, environmental education and landscaping.

Teng said the projects were carried out to stimulate socio-economic development on the mainland, which has been reeling from the effects of the 1997-98 financial crisis.

The council’s annual expenditure was based on estimated revenue. Between 2000 and this year, the council worked on deficit budgets due to dwindling income due in part to a re-zoning exercise, land transfers and development projects.

Teng called on Lim to vet MPSP records and accounts and engage an independent private auditor to inspect these, even if this incurs additional expense.

He said this audit report should be made public to clear the air so that "Penangites know how the money was spent".

Gerakan, he added, will cooperate and coordinate with Pakatan to secure federal allocations to overcome MPSP’s financial problems.