Lottery is for the public welfare

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By Shen Weiping and Qi Zhi (China Daily)
Updated: 2009-10-15 07:53

As a lucky lottery buyer in Central China's Henan province won the country's biggest ever jackpot a few days ago, it seems that lottery players nationwide have once again fallen into a fresh bout of heightened lottery fever. People also once again cast their eyes on how the country will have scientific and effective management of its ever-bulging lottery fund assigned for public services.

In 2007 alone, China's sales of lottery tickets exceeded 100 billion yuan ($14.65 billion), with a total of 35 billion yuan raised for public welfare fund. How to effectively manage and utilize this large sum of money has become a big problem that will otherwise negatively affect the long-term and healthy development of the country's mushrooming lottery sector.

The management of the lottery's public welfare fund, a fund coming from part of lottery sales income that is mandated to be used to develop the country's public welfare cause, has constituted one of the most important components of the country's regulation and management of the lottery industry. The fund's raising, allocation and utilization has also become the innermost core problem of the sector's management in other countries and regions where lottery business prevails.

Whether the fund can be properly used for public services and whether there is transparency and fairness in the process will decide whether the country's lottery cause can gain sustainable development and whether the massive number of the country's lottery players can realize their desire to contribute to society through buying lottery tickets.

A set of regulations and rules on the management of the lottery market since its introduction to China and several revisions and improvements have ever since been made. The country has also had different documents during different economic development periods to regulate that a certain portion of lottery sales be allotted for public welfare purposes. According to a State Council document in 2001, no less than 35 percent of lottery sales income should be assigned for the public welfare fund. In 2006, the Ministry of Finance issued a document stipulating that the public service-oriented fund should be shared 50:50 between the central and local governments. And out of the central portion, 60 percent and 30 percent would be used for social security and some special purpose respectively, and half of the last 10 percent will flow to the Ministry of Civil Affairs and the General Administration of Sport.

Starting from 2008, the finance authorities began to include the fund's central government portion in the unified budget and exercise special management over it for it to better serve public purposes.

Indeed, the promulgation of a series of regulations and documents has contributed a lot to the booming of the country's lottery industry and the effective utilization of its public welfare fund. However, the country's transactions on lottery business in the past years have also fully exposed some problems in the raising of the lottery's public welfare fund and its monitoring and supervision.

China's available documents and policies indicate that the Ministry of Finance is in charge of monitoring the country's lottery business. But in practice, the ministry has only exercised limited authority in this regard and the majority shares of the public welfare fund have long been in the hands of the Ministry of Civil Affairs and the General Administration of Sport. Also, the education and environmental protection departments that provide people public services have also demanded they should be allotted part of the fund. This will surely contribute to the division of the limited fund among different State departments and social groups.

Also, out of the portion of the fund handed to the central government, a large part has been used to make up for the country's insufficient input in the social security construction. That means that the lottery's public welfare fund, whose original purpose is for public service, has paid for the country's underdeveloped social security system during the country's system transformation period. Whether the diversion of part of the fund is fair has long been under doubt. It is also a big question whether the fund's proportion of distribution among different State departments is reasonable and scientific. For example, lack of preceding scientific discussion and pre-assessments when some projects are launched by the Ministry of Civil Affairs and the General Administration of Sport are not rare. And some of the fund has even been misused or illegally used, developing itself into a source of corruption. Besides, the flow of another 50 percent of the public welfare fund to local governments will also weaken its original nature of being used for public services.

The fund's public service nature decides that it should be under strict supervision of the country's legislative body to ensure its transparency and fairness. Also, the public, who pay for the government's provision of public products to society, should have access to information about the fund's utilization. However, there exists no special legislation in China on the lottery business and all existing legal documents fall short of explicit articles on increasing information transparency of the fund. All these make the country fail to effectively monitor the fund and its utilization.

In the current scenario with deepening globalization and diversifying values, people have growing demands for public services. The country should utilize its ever-growing public welfare fund for public purposes.

China should first institute a set management system dominated by the Ministry of Finance to ensure the fund's unified and effective distribution and utilization. Also, a transparent and open institution should be framed to ensure unblocked communications between the department in charge of the fund with the public and if necessary, a special supervisory body should be set up to ensure that the fund is put in the right place.

The authors are with Beijing Normal University. The article was first published in this year's No 8 issue of the Reform magazine.

(China Daily 10/15/2009 page8)