Dr M’s ‘veiled’ warning to Najib?

The former premier says that a government under threat may make an expensive mistake with regard to financial management.

KUALA LUMPUR: Dr Mahathir Mohamad has warned that in order to secure votes, an incumbent government sometimes overlooks prudent financial management to the detriment of the nation.

Was this a veiled warning from the former premier to Prime Minister and Finance Minister Najib Tun Razak?

The latter had been digging deep into government coffers to shower the public with financial gifts such as the Bantuan Rakyat 1Malaysia (BR1M) which saw some 4.2 million households receiving the RM500 aid.

Now there was talk of a second BR1M in the making.

Najib would also be tabling the Budget 2013 in September, which was touted as an election budget promising an assortment of feel-good measures.

The premier was under pressure from the opposition, which had promised to abolish tolls as well as provide free education, among others, should it seize federal power.

While Barisan Nasional leaders warned that such moves would bankrupt the nation, the opposition however claimed that it was workable, especially by plugging the financial leakages due to graft.

Opposition doesn’t care

Sharing his views on the matter, Mahathir warned that a government under threat could make an expensive miscalculation.

“We are a democratic country whatever our detractors may say. The people have the power to choose their government,” he said in his blog.

“Power corrupts and the right to choose who should govern the country is also a potent kind of power. That power can be used to threaten the parties wishing to contest in elections.

“The incumbent government is most exposed to this threat. Under threat it may forget prudence in the management of our finances. It can lead to the Grecian problem,” he added.

Mahathir said that the opposition was not concerned about the risks involved since winning the election was its primary objective.

“Besides, when they form the government, they can forget promises,” he added.

Noting that European nations were grappling with economic problems, Mahathir said it would be wise to learn from their mistakes since Malaysia was fond of emulating them.

“I am not an economist of course. Neither am I a financial expert. But as a layman I noticed certain things which may have a bearing on the decline of Western nations and the US.

“Simply put the decline is due largely to living beyond their means. In other words, they are spending more money than they actually have or earn,” he said.

Government is not a ‘sugar daddy’

As for the “like to live well” Malaysians, the former premier said the people believed that the government had unlimited funds to foot the bill for everything.

“At the same time we want tax rates to be reduced. As for the tolls, they should be abolished [as well]. We seem unaware that when we reduce or abolish tolls, the government has to compensate the operators.

“What this means is that government expenditure would increase just when revenue decreases. Abolishing tolls does not mean we don’t pay.

“Through the government, we would be paying indirectly. The sad thing is that people who do not use the expressways would also pay. With tolls, only the users pay,” he said.

On the opposition’s stand with regard to free education and the abolishment of the PTPTN (higher education loan funds), Mahathir said Malaysia spent almost 25% of its budget on education.

“No other country in the world developed and developing, allocates this much. Of this, a very substantial portion has always been for scholarships. But such is the demand for education in Malaysia that there are not enough scholarships for the deserving,” he added.

Due to this, Mahathir said the government had to launch a new scheme involving loans to cater for those who were qualified but could not afford.

“The terms are very generous as the interest rate and repayment scheme permit repayment after they begin to earn an income. The loans are greatly subsidised by the government,” he added.

Mahathir said the opposition could promise to remove all payments by the people but someone needed to fork out the money for these things.

“We think of the government as some sugar daddy with unlimited funds. It is not. Government money is our money acquired through taxes.

“Reducing tax will mean the government has less money and forcing the government to pay for all our needs will lead us to bankruptcy. That is what happened to Greece and other European countries,” he added.