COVID-19 pandemic putting democratic scrutiny under pressure
Regularity at issue
The COVID-19 pandemic has left its mark on both society and public finances. The government spent €29 billion in 2020 to combat the virus outbreak and contain the economic consequences. The Netherlands Court of Audit warns in its report on the audit of central government accounts for 2020 that this substantial additional expenditure has compromised both parliament’s information position and the management of public finances.
On the other hand, many things went well. Ministries and implementing organisations took support measures at short notice to limit the consequences of the COVID-19 pandemic. Central government ICT departments not only supported the measures but overnight also enabled 175,000 civil servants to work from home. Quite an achievement.
Most corona-related expenditure incurred at Ministry of Social Affairs and Employment and the Ministry of Health, Welfare and Sport. Highest expenditure in relative terms at Caribbean Netherlands (78%)
Moreover, the regularity of 1.52% of expenditure, equal to €4.3 billion, was uncertain. More than half of this amount was spent on combatting the virus. The Court of Audit described these findings as a matter of concern and accordingly made critical comments in its approval of the 2020 central government accounts, as it had also done in its approval of the 2019 accounts.
Parliament often faced with faits accomplis
An important cause of the irregularities is that parliament was not properly informed in advance. In the corona year of 2020, in which ministers had to take urgent measures to combat the pandemic, the House of Representatives and the Senate were often faced with faits accomplis. The Minister of VWS, for instance, did not inform parliament that agreements had been signed, the Minister of Economic Affairs and Climate Policy (EZK) and the Minister of Agriculture, Nature and Food Quality (LNV) that business support measures had been introduced, and the Minister of the Interior and Kingdom Relations (BZK) that loans had been awarded to overcome the economic crisis following the collapse of tourism on Aruba, Curaçao and St Maarten due to the pandemic. And, separately from the COVID-19 crisis, parliament was not informed of the government’s decision to provide victims of the childcare benefit scandal with €30,000 in compensation
Violation of parliament’s right to approve the budget
Under the Government Accounts Act, new policy may not be implemented until it has been approved by the House of Representatives and the Senate. This rule can be ignored only if intervention cannot be delayed and the minister concerned gives the House and Senate advance notification of the government’s intentions. Parliament then has an opportunity to debate the matter. If ministers do not provide this opportunity, they violate parliament’s right to approve the budget. In the Court of Audit’s opinion, this undermines the foundations of democracy. Expenditures and obligations that contravene these legal provisions are, in the Court’s opinion, irregular. The Court of Audit accordingly calls on the government and parliament to address this matter.
Ministry of VWS’s financial management
The COVID-19 pandemic prompted high expenditure chiefly at the Ministries of SZW, VWS and EZK. With ministers and civil servants preoccupied with the consequences of the pandemic, structural weaknesses were exposed in the Ministry of VWS’s operational management and serious shortcomings in its financial management of the additional expenditure and obligations. At issue was €5.1 billion of public money, most of which was spent on test kits (nearly €1 billion), protective equipment and respirators (more than €1.2 billion) and the bonus for health workers (€2 billion).
The problems were already known in September 2020 but the Minister of VWS did not take action to control the expenditure incurred in 2020 and include it in the annual accounts until the beginning of 2021. He could not prevent serious errors and uncertainties regarding the regularity and reliability of expenditure entering the accounts. For example, there are no invoices for respirators and other goods supplied directly to care institutions. It is equally uncertain whether the number of COVID tests declared on invoices paid by the Minister of VWS was correct.
Objection procedure against the Ministry of VWS
The Court of Audit lodged an objection against this state of affairs on 2 April 2021. Objection is an exceptional instrument that the Court rarely uses. The minister has since drawn up the improvement plan required in the objection procedure. It provides for a strengthening of financial management in both the short and longer term that must eventually lead to structural improvements. The Court therefore decided on 6 May 2021 to withdraw its objection. It nevertheless still regards the shortcomings in financial management as serious.
Real estate problems at the Ministry of Defence
The Minister of Defence has had a poor understanding of the state of its real estate since 2018. No progress was made in 2020 and maintenance arrears actually increased. The Court of Audit considers this to be a matter of concern because a safe working and living environment is essential for the proper functioning of the armed forces. The Court therefore qualifies the shortcomings in real estate management as serious.
In total, the Court found 50 shortcomings at the ministries and High Councils of State, including the Court of Audit itself. This is slightly higher than in 2018 and 2019, when 49 shortcomings were found. Most of the shortcomings relate to information security (12), followed by IT management (10) and financial records (7).