Govt move was warranted by the situation: judges

The government came out victorious yesterday after the Constitution Court approved its two executive decrees designed to prevent a repeat of last year's flood crisis.

The nine-member court unanimously ruled that the decree earmarking Bt350 billion to finance flood-control projects was constitutional, though the decree on the Bt1.14-trillion debt management won seven votes. In order to approve or veto a decree, at least six votes are needed.

The two decrees were put under judicial review at the request of the Democrat Party and senators, who argued that the government had no justification to bypass the normal legislative process by enacting a decree instead of through Parliament.

In reaching the verdict, the court outlined the Constitution in terms of sanctioning the legislative process as per Articles 142 to 153 as well as the exception as per Article 184. Although democratic rule prescribes parliamentary scrutiny on the enactment of laws, the government is allowed to issue decrees in order to avert public calamity, the verdict said.

Paragraphs one and two of Article 184 warrants the issuing of a decree if it ensures public safety, economic security and mitigates disaster. The court pinpointed these conditions as the basis for its decision on whether the two decrees were constitutional.

Factual circumstances were also used to determine if the decrees in question met the requirements of Article 184. The two decrees had been passed in the backdrop of last year's flood crisis, when some 2.6 million people were affected and the damage was worth about Bt1.4 trillion.

Economic growth dropped from the forecast rate of 4 per cent to 1 per cent and flood-relief operations cost about Bt130 billion. Furthermore, the country is in no position to suffer a repeat of the crisis because the authorities neglected to implement two flood-prevention plans for the Chao Phraya River basin in 2000.

As for the decree on financing flood-control projects, the government needs to complete its loan arrangements before June 2013. As part of the arrangements, the Finance Ministry needs to present its spending plans justifying the loans to Parliament for scrutiny within 60 days.

The Bt350-billion loans will comprise Bt17 billion for short-term control measures in the Chao Phraya River basin, Bt300 billion for long-term projects and Bt40 billion for flood control in other river basins.

The court ruled that the decree was designed to tackle the crisis and ensure economic security, which met the requirements of Article 184, paragraph one.

Last year's floods affected 841 factories in key industrial estates, inflicting untold damage to the economy and the world supply chain. Without necessary funding for flood-control projects, the manufacturing sector might end up moving overseas.

Besides, the flood-control projects could not be financed under the 2011 national budget, because it went into effect on February 5. Even though the budget has Bt120 billion in unallocated funds, the amount is far less than the Bt350 billion needed. Besides, if the government was to sponsor a supplementary budget bill, it may not be vetted in time for this year's seasonal floods.

As for the decree transferring the Bt1.14-trillion debt incurred by the Financial Institutions Development Fund (FIDF) during the 1997 financial crisis, the court concurred with the government's argument that the debt was a burden and took focus away from flood control.

Over the past 15 years, the FIDF debt cost the country about Bt67 billion in annual interest and successive governments have only been able to pay 15 per cent of the loan. Under the debt-management plan, the Bank of Thailand would assume responsibility and complete repayment within 26 years. This would make at least Bt60 billion available for the government to improve its water management and ensure a stronger economic future.

At present, servicing the FIDF loan amounts to about 60 per cent of the government's investment outlay.

The high court ruled that the debt-management decree linked to the flood-control projects was in line with ensuring economic security, hence it met the requirement of Article 184, paragraph one.

It further decided that there was enough of an urgency to warrant the decree, because the government needed to free up funds to finance flood control starting with the 2013 budget. The decree allows the government to stop servicing the FIDF loans in time for the next fiscal year.