Time to banish outdated budget model

Writer says country will be in a dilemma if government distributes candies to please voters instead of allocating resources for creation of a better tomorrow .

COMMENT

By Lim Sue Goan

Year after year, the annual budget has been working on the model of government allocating a whole year’s resources as per its revenue.

The Budget 2018 to be tabled in the Dewan Rakyat tomorrow will be the last budget before the general election, and it is therefore anticipated that the government will carry on with the same old modus operandi this year and may even allocate a bigger chunk of resources to specific target groups.

The government’s tax revenue is expected to increase by 4% to RM228.5 billion next year while total expenditures are expected to top RM270 billion for a 21st consecutive year of budgetary deficit.

How will this RM270 billion be distributed?

Operating expenditure will have the lion’s share at RM223.6 billion. Total remunerations for the country’s 1.6 million-strong army of civil servants stand at RM77.4 billion this year, while 775,000 retired civil servants will get RM23.2 billion, taking the total spent on civil servants to at least RM100 billion, with the remaining sum going to department operating expenses.

Development expenditure is expected to stay at RM46 billion next year.

Health Minister S Subramaniam has complained that the RM23 billion allocated to his ministry has not been enough, while other government departments are making the same requests for higher allocations.

For example, Defence Minister Hishammuddin Hussein has said he would arrange for military chiefs to meet Prime Minister Najib Razak to propose higher defence allocation.

Meanwhile, Cuepacs has been rather unhappy with the RM500 annual handouts for civil servants over the past several years, and has been asking the government for at least one and a half months of bonuses and additional allowances for urban civil servants.

The government has forked out RM1.19 billion on RM500 financial assistance for civil servants, and if it were to offer 1.5 months of bonuses to each of them, the expenditure will instantly shoot up by billions of ringgit.

Indeed the country’s resources are limited while demands for more allocations continue to be heard.

If the government allocates more for civil servants, government departments and the Bottom 40% group (B40), it will mean less is available for those in the M40 group.

It would also not be surprising if many departments see their wishlists unfulfilled.

It is anticipated that the government will continue to offer tax rebates to please the M40 in a bid to relieve their financial burden.

But such assistance will not significantly reduce the financial pressure of the people in view of the skyrocketing goods prices.

The CPI rose 4.3% in September, squeezing the people’s buying power and further dampening market sentiment. As a result, vehicle sales plummeted 21% month-on-month in September.

Going further, this will depress the overall market in the long run, and what the national economy needs most at this moment are some real solutions that will take the country out of the current doldrums.

Unfortunately, our leaders have hardly seen this problem and are continuously basking in the feel-good atmosphere of sustained economic expansion and salary growth.

The PM has quoted EPU data in saying that the monthly household income of B40 jumped by a robust 76% from 2009 to 2014, and almost 60% for the M40.

The government’s economic development strategy has been established upon the multiplier effects from mega projects such as Klang Valley MRT, Greater Kuala Lumpur, ECRL, KL-Singapore HSR, Pan-Borneo Highway and Digital Free Trade Zone projects. But, we cannot solely depend on these infrastructural projects.

The country’s development needs to be more all-rounded.

Indeed, we need a clear and targeted economic blueprint around which the government’s fiscal budgets must be evolved so that our resources will be more effectively utilised to achieve our long-term goals and aspirations.

However, all that we have seen in past budgets are chaotic and clueless pluses and minuses. For instance, allocations for the Prime Minister’s Department have been increased at the expense of the higher education ministry.

Education is a key factor that will thrust the nation forward and by right more resources should be channeled here and other initiatives that will lift the country’s overall competitiveness, such as Industry 4.0 and artificial intelligence.

We will be plunged into another dilemma very soon if the government distributes candies just to please some voters instead of allocating the resources, including GST collection, for the creation of a better tomorrow.

The antiquated model built upon political considerations has long been outdated. We must have brand new policies and mentality or we will remain stagnant always.

Lim Sue Goan is deputy executive chief editor of Sin Chew Daily. -FMT