Saturday, 8 October 2011

Three Concerns The Budget Doesn't Address

By Dr Jeyakumar

Every year, once the Budget is read by the Finance Minister, the BN sycophants will fall over each other in trying to give a positive spin to it. Tomorrow we will see the same tired phrases repeated in the mainstream papers – “a peoples’ budget”, “a caring budget”, “budget from the heart”, “with goodies for everyone”, and other sugary phrases which are meant to make everyone believe in the benevolence of the BN government.

Sure there are some points that are positive – the abolishment of all school fees for example which though is only about RM 200 per student, will give real relief to the 40% of families whose total monthly income is less than RM2300. The allocation of RM 100 million each for Tamil Primary Schools, Chinese Primary Schools and Religious Schools will be of great help to these partly aided schools. And there are several other examples like these.

However an objective assessment of a national budget has to go deeper than this. You just can’t juxtapose a few goodies for disparate sectors and use that to argue that it’s a great budget! A National Budget is a blueprint detailing how the Government of the day plans to tackle the main economic problems facing the nation.

So, what are the main economic problems facing the nation? I think that there are 3 main ones:–

1. There is a real possibility of a serious recession in the next 12 months. The sovereign debt crisis in Europe and the USA may precipitate this. How would this affect us, a nation that exports almost 60% of what we produce? How should we prepare ourselves for such an eventuality?

2. Liberalization of the economy and the reliance on the free market to supply basic necessities such as health care, water, education and housing has led to financial hardships of the 80% of families earning less than RM 5300 per month. How do we address this problem?

3. The leakages are enormous. Many government procurements are at prices that are up to 3 times their actual market value. The development budget is about RM 45 billion, and the allocation for supplies and services is another RM 30 billion. At a conservative guesstimate that half of this money will go to the pocket of cronies through over-priced contracts and quotations, the country will be losing RM 37.5 billion in the course of 2012. (To put this amount in proper perspective – the total budget for the Selangor State Government for 2010 was less than RM 1.5 billion!)

Sad to say, none of these crucial issues are addressed in this budget.

The Government planners seem oblivious to the possibility of a recession. They talk glibly sound fundamentals, of robust growth in India and China without taking into account that a 8% growth of a GDP of US 1.5 trillion (India) and US 3.3 trillion (China) is not enough to counter a drop of 4% in the US GDP (US 12 trillion) and the combined GDP of the EU which is of a similar magnitude! And in any case, China’s and India’s growth also depends to a certain extent on exports to the US and the EU, so their growth rates will also be brought down by a recession in the West!

There are several things we can do to cushion the effect of a serious recession – one would be to quickly implement the Retrenchment Fund that the MTUC, PSM, JERIT and other labour groups have been asking for. Another would be to put off expensive infrastructure works and keep those funds aside to ensure that the basic need of the rakyat are met perhaps through issuing food stamps in event there are people who cannot find re employment for some months.

As for the issue of liberalization – it appears that Najib and his planners have no doubts in their mind, although ordinary people the world over are coming out to protest neo-liberal policies. The liberalization of another 17 service subsectors was announced in the budget, including private hospitals. Now a foreign company can set up a private hospital in Malaysia. The fact that this will accelerate brain drain and weaken the government sector on which 75% of our population depend on seems to have been deemed unimportant by our Finance Minister!

And as for the issue of plugging leakages there is nothing but lip service and a whole set of acronyms such as “SRI”, “GTP” and “ETP” among others, which do not seem to have reduced the pilfering of public funds significantly. There do not seem to be any new believable initiatives in the 2012 Budget to stem the hemorrhage of public funds.

The 2012 Budget fails to address the crucial economic issues facing the nation. This can only mean one thing – those entrusted with the stewardship of this country and its economy, are certainly not up to mark! Its high time they are replaced!

1 comment:

zewt said...

i was a bit excited hearing about the KLIFD... only to find out it was to be developed by 1MBD. I reckon the so called tax incentives would favour that jho lo dude.