In 3 years, 13,261 billion yuan was invested in fiscal water conservancy, with government investment leveraging a little to accomplish a lot

Report of the State Council on the Investment and Use of National Fiscal Water Conservancy Funds

——Delivered at the 12th Session of the Standing Committee of the 12th National People's Congress on December 23, 2014

Minister of Finance Lou Jiwei

Standing Committee of the National People's Congress:

Entrusted by the State Council, I hereby report to the Standing Committee of the National People's Congress on the investment and use of national fiscal water conservancy funds for deliberation.

I. Basic Information on the Investment of National Fiscal Water Conservancy Funds

Water is the source of life, the essence of production, and the foundation of ecology. Promoting water conservancy and eliminating water hazards are major matters of state governance. The Party Central Committee and the State Council have always attached great importance to water conservancy work. In 2011, the Central Committee of the Communist Party of China and the State Council issued the "Decision on Accelerating the Reform and Development of Water Conservancy" (Zhongfa [2011] No. 1), further clarifying the strategic positioning, guiding ideology, and policy objectives for water conservancy reform and development in the new period. All regions and relevant departments have earnestly implemented the central government's decisions and arrangements, treating water conservancy as a key area of support, increasing funding, and strengthening the management of fund use, which has effectively promoted water conservancy reform and development.

(1) Fiscal investment in water conservancy in recent years. Since 2011, a mechanism for the steady growth of fiscal water conservancy investment has been gradually established. From 2011 to 2013, the national fiscal investment in water conservancy totaled 13,261 billion yuan, with an average annual growth rate of 19%. This mainly includes two channels: the general public budget and the government fund budget.

1. Water conservancy investment from the general public budget. From 2011 to 2013, the national general public budget allocated 9,423 billion yuan for water conservancy investment, accounting for 71% of the total fiscal water conservancy investment.

2. Water conservancy investment from the government fund budget. From 2011 to 2013, the national government fund budget allocated 3,838 billion yuan for water conservancy investment, accounting for 29% of the total fiscal water conservancy investment.

(2) Current status of fund allocation and management. Fiscal water conservancy funds are divided into two major parts: central and local, with the central government accounting for approximately 46% and local governments accounting for approximately 54%. The allocation and management of central fiscal water conservancy funds are closely related to the current management system, mainly involving the Ministry of Finance, the National Development and Reform Commission, the Ministry of Water Resources, the South-to-North Water Diversion Office, and the Three Gorges Office. The Ministry of Finance is mainly responsible for the budget preparation, execution, and final accounts of central fiscal water conservancy funds, and works with relevant departments to formulate management systems. Other departments, according to their responsibilities and the direction of fund use, work with the Ministry of Finance to allocate, use, and manage funds.

II. Main Practices and Achievements in Strengthening the Management of National Fiscal Water Conservancy Funds

In recent years, while substantially increasing fiscal investment in water conservancy, relevant departments and local governments have continuously improved the management systems for the use of water conservancy funds and strengthened supervision and inspection, playing an important role in promoting policy implementation and improving the national water security guarantee capacity.

(1) Highlighting support for key areas and weak links in water conservancy. First, supporting the construction of rural drinking water safety projects. In the first three years of the "12th Five-Year Plan," the drinking water safety problem was solved for 188 million rural residents and more than 26 million rural school teachers and students. It is expected that in 2014, the drinking water safety problem for more than 60 million rural people can be further solved, laying the foundation for completing the "12th Five-Year Plan" tasks for the national rural drinking water safety project by the end of 2015. Second, supporting the construction of major backbone projects. The governance of major rivers and large lakes has been steadily advanced, and the governance of the middle and lower reaches of the Yangtze River and the lower reaches of the Yellow River has been carried out in an orderly manner. River control hub projects such as Tingzikou in Sichuan have been completed and are producing benefits. Projects such as the first phase of the Gansu Yintao project have been basically completed. A number of major water conservancy projects have been accelerated, and important water conservancy hubs such as Datengxia on the Xijiang River have started construction. Third, supporting the construction of weak links such as farmland water conservancy. More than 370 large-scale irrigation districts have undergone continued supporting and renovation, and 251 large-scale irrigation and drainage pumping stations have been renovated. Twenty-six new irrigation districts, including the Sanjiang Plain in Heilongjiang, have been built. Water-saving supporting renovation projects have been implemented in 406 medium-sized irrigation districts, and key small-scale farmland water conservancy counties have been developed in 2,450 county-times. At present, nearly 8,000 irrigation districts of more than 10,000 mu each have been built nationwide. The effective utilization coefficient of farmland irrigation water has increased from 0.43 to 0.52, and the effective irrigation area has increased by 127 million mu, reaching 952 million mu. Fourth, supporting the improvement of the flood control and drought relief disaster reduction system. Governance of major tributaries of large rivers has been further strengthened, and the safety construction of flood storage and detention areas and sea dike construction have continued. More than 40,000 small reservoirs and more than 300 large and medium-sized reservoirs have been reinforced, 147 important tributaries and more than 4,000 medium and small rivers have been governed, the first phase of the national flood control and drought relief command system has been fully completed, the flash flood disaster forecasting and early warning system has been initially built in 2,058 counties, and the emergency drought relief guarantee capacity of 2,144 county-level drought relief service organizations has been strengthened. As of now, the flood control and disaster reduction system for the main streams of China's major rivers has basically taken shape, 410,000 km of dikes have been built nationwide, the important sections of major rivers basically have the capacity to defend against the largest floods since the founding of New China, and the flood control standards of important cities have reached a 100-200 year return period. Fifth, supporting the construction of the South-to-North Water Diversion Project. The eastern route project was officially put into operation at the end of 2013, and the middle route project was officially put into operation on December 12, 2014. The water quality of the eastern route has remained stable at Class II-III, and the water quality of the Danjiangkou Reservoir and the Taocha intake on the middle route is generally better than Class II, meeting the water diversion needs. Sixth, supporting the construction of water ecological civilization. A total of 65,200 sq km of soil and water loss area has been governed, 5.3714 million mu of slope-to-terrace conversion has been implemented, and more than 70% of the soil and water loss area in the project areas has been effectively governed. Ecological governance of key river basins has achieved results, the key governance tasks of the Shiyang River have been completed, and the rational utilization of water resources and ecological protection of Dunhuang have been implemented. Strong support has been given to the national water resources monitoring capacity and the construction of a water-saving society, and the most stringent water resources management system has been initially established. Seventh, supporting the later-stage support for migrants from large and medium-sized reservoirs. In 2006, the State Council issued the "Opinions on Improving the Later-Stage Support Policies for Migrants from Large and Medium-Sized Reservoirs" (Guofa [2006] No. 17), implementing later-stage support policies for migrants from large and medium-sized reservoirs. At present, the food and clothing problem of rural migrants from large and medium-sized reservoirs nationwide included in the later-stage support policies has been basically solved, production conditions have been significantly improved, and living standards have been continuously raised. Eighth, supporting the implementation of the follow-up work plan for the Three Gorges Project. In 2011, the State Council approved the implementation of the follow-up work plan for the Three Gorges Project. Over the past 3 years, work on the stable prosperity of reservoir migrants, ecological environmental protection, and geological disaster prevention and control has been further strengthened.

(2) Innovating the institutional mechanisms for fiscal support of water conservancy construction. First, innovating the fund allocation mechanism. Fund allocation methods such as the formula method, factor method, and performance linkage have been gradually established to promote scientific and standardized fund allocation. Second, delegating project approval authority. For projects with large tasks and widely distributed points, funds are allocated to provinces in block form, and local governments coordinate their use, making project construction more consistent with local realities. Third, innovating the project entity selection mechanism. Various regions generally adopt methods such as competitive project initiation, factor-based scoring, and differential recommendation to select key small-scale farmland water conservancy counties, innovating the farmland water conservancy construction model and the fiscal support mechanism for agriculture. Fourth, innovating the organization and mobilization mechanism. Giving play to the main role of farmers, through methods such as building first and subsidizing later, substituting awards for subsidies, and public-run with private assistance, farmers, specialized farmer cooperative organizations, village collective groups, and new agricultural business entities are taken as support targets for small-scale farmland water conservancy projects, allowed to establish project legal persons to implement construction, and guide and encourage farmers to contribute labor, turning "I am told to do it" into "I want to do it." Fifth, innovating the operation and maintenance mechanism. Supporting the deepening of the reform of the management system of state-owned water conservancy projects, actively promoting the separation of management and maintenance of water conservancy projects, distinguishing the categories and nature of water management units, adopting different fiscal support policies, and implementing maintenance and repair funds. Pilot reforms of the property rights system of small-scale farmland water conservancy facilities and innovative operation and maintenance mechanisms have been carried out, and pilot comprehensive reforms of agricultural water prices have been deepened. The personnel expenses and public welfare business expenses of grassroots water conservancy service institutions have been included in county-level fiscal budgets, and the grassroots water conservancy service system has been strengthened. Sixth, establishing a system for the paid use of water resources. The reform of water resource fees has been actively promoted, collection standards for water resource fees have been formulated by category for surface water and groundwater, and guiding targets for water resource fee collection standards in various regions by the end of the "12th Five-Year Plan" have been proposed.

(3) Increasing the coordination and integration of water conservancy funds. First, implementing the construction of key small-scale farmland water conservancy counties. The Ministry of Finance, together with the Ministry of Water Resources, in accordance with the principles of "unified planning, step-by-step implementation" and "build one area, complete one area, and bring benefits in one area," integrated funds, concentrated investment, and focused support. The project areas have basically solved the past problems of low standards, poor quality, and repeated repairs of farmland water conservancy facilities, exploring an effective way to open up the "last kilometer" of farmland water conservancy. Second, supporting Inner Mongolia, Liaoning, Jilin, Heilongjiang and other 4 provinces (regions) in implementing the "water-saving and grain-increasing action." From 2012 to 2015, funds for small-scale farmland water conservancy, comprehensive agricultural development, modern agricultural production development, and agricultural science and technology promotion were coordinated and integrated to support the development of large-scale efficient water-saving irrigation on 38 million mu. Third, supporting the pilot comprehensive governance of groundwater overexploitation in Hebei Province. In accordance with the work deployment for the coordinated development of Beijing-Tianjin-Hebei, funds were coordinated and integrated to support pilot areas in Hebei Province in adjusting planting structure, strengthening water conservancy project construction, vigorously developing efficient water-saving irrigation, strictly managing groundwater, and carrying out institutional and mechanism innovation focusing on comprehensive reform of agricultural water prices. From the current situation, the pilot progress is better than expected, and many governance measures have already begun to be implemented.

(4) Effectively strengthening the management of water conservancy funds. First, establishing and improving the management system for water conservancy funds. In accordance with the requirements of "administering according to law, managing finances according to law" and "power search, standardized processes," the Ministry of Finance, together with relevant departments, has focused on establishing and improving the management system for water conservancy funds, and all localities have also formulated implementation rules in light of actual conditions, achieving full coverage of fund projects and operational processes. Second, establishing a diversified supervision system. The Ministry of Finance, together with relevant departments, has included water conservancy funds arranged by fiscal authorities at all levels in the scope of supervision and management from the aspects of system construction, budget management, supervision and inspection, information disclosure, and integrity risk prevention and control. Audit supervision, fiscal supervision, and water conservancy inspection have been intensified, and the supervisory role of society, the media, and farmers has been brought into play.

(5) Actively promoting performance management. First, advancing departmental budget performance management. Departmental budgets have been scientifically prepared to guarantee the funding needs for departments to perform their functions and key expenditures. Efforts have been made to promote the disclosure of departmental budgets and "three public" expenses to improve budget transparency. To strengthen budget execution management, the Ministry of Water Resources has established the "three mechanisms" of budget project reserve, budget execution assessment, and dynamic monitoring of budget execution, and has worked with the National Audit Office to establish a "water conservancy audit immune system," monitoring in real time online every sum of treasury centralized payment funds and the financial accounting of directly affiliated units, ensuring that budget execution is timely and balanced, and that fund payments are safe and effective. Second, gradually expanding the scope of performance management of special funds. Performance evaluation systems have been established for funds for medium and small river governance, reinforcement of small dangerous reservoirs, and small-scale farmland water conservancy construction. Assessment of the implementation of the central water conservancy investment plan and post-evaluation of construction projects have been carried out. The results of performance evaluation have been linked to the arrangement of relevant projects and funds, strengthening the supervision and management of projects by local governments and project units.