Comparing the economic agendas for GE16

 The old and the new were out in force recently as Pakatan Harapan and Bersama laid out their budget and economic agenda for the next general election — and one is streets ahead of the other.

We had a feast of economics in early October with Budget 2027 from Prime Minister Anwar Ibrahim and two days before, a shadow budget from Rafizi Ramli and Bersama.

For economists and policy analysts this laid out the economic agendas for the next general election (GE16) expected next year.

When it comes to government debt and the fiscal deficit both Rafizi and Anwar recognise the importance of proper fiscal management, cutting wastage, leakages and above all corruption and making sure that budgets are efficient and clean.

Beyond that Bersama sets out a whole new approach to economic policy and fiscal management to free income for the specific aim of improving social policy.

They target reducing the deficit and moving to a budget surplus by 2035 which is a very sound approach.

Anwar’s approach sees sound fiscal management as setting targets for debt and deficit and trying not to breach them. Often this is achieved because GDP rises faster than borrowing so the ratio falls even if the debt is stagnant or rising.

There is no statement on why this is important except that meeting targets signals fiscal conservatism, for its own sake.

On taxes, Anwar was silent on the goods and services tax (GST) in his budget speech because he opposes it and I agree with him on that.

He had also previously announced a review to adjust the sales and services tax (SST) to make it more like GST, which to me is a compromise to silence those calling for GST rather than an exercise in tax reform.

He did raise tax thresholds and cut rates, which I applaud but there were no substantive reforms.

Bersama on the other hand put reintroducing GST front and centre but fixed the rate at 5% for 10 years while evaluating new taxes such as the retail electronic payments tax (REPT) which is something I support and will work.

This is a step towards substantive reform of taxation, and it is much needed.

On incomes, both support raising the minimum wage but Bersama will also extend Rafizi’s progressive wage policy (PWP) to 2.5 million people at a cost of only RM1.8 billion. This is transformative.

Anwar on the other hand stuck to raising STR-Sara handouts with no real structural reforms to help middle-income groups raise their monthly take-home pay.

On social assistance, Bersama announced universal child assistance, universal basic pensions, universal monthly cost of living to help raise incomes irrespective of ethnicity or interest groups.

Concentrating social support into one ministry provides focus while cutting 189 separate agencies.

Anwar’s budget stuck to the same-old “Duit Raya” schemes and maintaining low petrol and diesel prices whereas Bersama wants to stop those wasteful subsidies and provide help targeted on incomes rather than keeping prices down artificially.

Anwar’s budget was administrative with normal handouts to specific interest groups, especially civil servants but no sense of universal vision or reform for everyone else. It was very similar to any budget of the past.

For business, especially MSMEs there is also a big difference. Anwar’s budget relies heavily on the state through the GLCs with private sector support in the form of soft-loans, easy finance and “you pay first, we match later” on so-called priority areas.

For Bersama, the entrepreneur in Rafizi shows through in reducing red tape and liberalising the business landscape to encourage competition, innovation and agility directly.

Overall, Anwar’s budget is last season, Bersama’s shadow budget has a vision for changing economic policy to free business and save money which is refocused on raising incomes.

Their reforms are universal, refreshing and new, unlike anything we have seen before. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.