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UPDATED: September 12, 2014 NO. 32 AUGUST 7, 2014
Putting the Brakes on Government Vehicles
Central authorities release regulations to further reform the public-funded provision of cars for officials
By Yin Pumin

Over the years, many officials have been found using government vehicles for private use, leading to widespread complaints about abuse of power. The media have often reported stories of drivers employed by government departments taking officials' children to and from school or driving officials' families on vacations.

According to the July 16 directives, the reform will cover Party organizations, government agencies, legislatures, political advisory bodies and judicial and procuratorial departments at all levels, as well as state-owned enterprises and public-service institutions.

The directives stipulate the cancellation of the provision of vehicles for officials at the bureau chief level and below. Meanwhile, subsidies will be allocated to cover transportation spending by affected officials. Those working in local governments will be subsidized according to their rank and transportation situation.

Under the reform plan, drivers and other staff who may be affected will be transferred to other positions within the government or be granted early retirement with an improved pension plan.

It is expected that 5,000 cars will be retired after central government bodies complete the reform at the end of this year. Leftover vehicles will be sold in open auctions and the income will be returned to the state treasury.

Local governments, however, are scheduled to finish implementing the reform by the end of 2015, with full implementation in other public-sector bodies expected in two to three years.

"These subsidies save a lot of money. It is also a move to guarantee that the government vehicle reform can proceed during the transition," Tong said, adding that local authorities should make full use of car rental services.

Lian Weiliang, Vice Minister of the National Development and Reform Commission, said that the main point of the reform is to save money, and the total subsidized amount should be lower than the amount previously spent on government vehicles.

"In the long run, the effect of the reform on finances will gradually appear," said Wang Yongjun, Director of the Institute for Finance and Economics Research under the Central University of Finance and Economics.

According to Jia Kang, Director of the Research Institute for Fiscal Science under the Ministry of Finance, the reforms of this round will affect 800,000 local government vehicles and about 6,400 belonging to central government departments.

"The reform will reduce the administrative costs incurred through using government vehicles," Jia said. For example, the costs for the central government vehicles will be lowered by 7-27 percent, he estimated. Furthermore, if other costs can be saved after the reform, such as the cost of purchasing and maintenance, fuel bills, parking fees, as well as the salaries for drivers and staff needed for the vehicles' upkeep, the overall savings rate will reach 50 percent.

"If we take the rumored 300 billion yuan ($48.45 billion) as the real costs of government vehicles annually, more than 150 billion yuan ($24.23 billion) of public money will be saved each year," Jia said.

Challenges ahead

The reforms for government vehicles this time have received wide support, but difficulties and challenges must be clearly anticipated during the reform process, according to many observers.

"Direct challenges will come from affected officials," said Wang with the Central University of Finance and Economics. "The reform will be against their interests, so they may try to find ways to circumvent the changes."

Wang warned to heed some officials' intention of continuing to use government cars while accepting the subsidy.

Ye with the Hubei Provincial Bureau of Statistics suggests making the punishments for using government vehicles for private purposes as clear as possible. "We can regard the practice as receiving bribes. For example, rental companies normally price full-day use of a Passat car at 300-400 yuan ($49-65). If an official takes a Passat belonging to the government for private use, this is equivalent to embezzling 300-400 yuan per day," he said. He also called for measures to prevent powerful officials from using their power to force lower-level units or enterprises to lend cars to them.

Vice Minister Lian said that the directives this time have strengthened the supervision measures, including six specific bans to prevent the private use of government vehicles.

"Supervision from the whole society is also needed," Lian said.

Another concern comes from the proposed auction process. In recent years, several under-the-table deals have been exposed that took place during auctions of local government vehicles. Many government cars fell back into officials' or their drivers' hands at a low price, causing the loss of state-owned assets.

"The fairness and transparency of the auctions of government vehicles are important in determining the success of the reform," said Gao Bo, Vice Secretary General of the Research Center for Honest Politics under the Chinese Academy of Social Sciences.

Gao suggested strengthening public supervision to guarantee the full fairness of the process. "Sunlight is always the best antiseptic. Aside from the detailed procedures and careful arrangement, the most important thing is to leave the auctioning process fully open and let the public clearly know the final results of the auctions," Gao said.

Email us at: yinpumin@bjreview.com

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