Monday, March 1

The alternative budget: Pros and Cons

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Although the alternative budget tablet by the Pakatan Rakyat is currently impossible to be implemented, it could be adopted if the Pakatan Rakyat wins the next general election and thus, it is worthy of analysis and study. It can also serve as a reference for the BN, reports SinChew Daily.

It can be seen that the Pakatan Rakyat has worked very hard in preparing the budget that covers a wide range, including housing, public transportation, education, health, youth development and political reform. The budget has its strength, as well as deficiencies.

It is a right move to promote responsible spending, particularly when the government is currently bearing an increasing debt. Trimming the expenditure of the Prime Minister’s Department by RM10 billion allows resources to be distributed to more important areas like education. However, the Pakatan Rakyat did not point out which projects have caused a waste and how should they save money.

It is also a timing move to vow political reform, including repealing the Internal Security Act (ISA), media and printing-related laws, the Officials Secrets Act (OSA) and Universities and University Colleges Act (AUKU) while developing the “Restoring Democracy Act”, restructuring the Prime Minister’s Department, upgrading the Election Commission (EC), Malaysian Anti-Corruption Commission (MACC), and Public Complaints Bureau (PCB), as well as amending the Competition Act 2011 to stop monopoly.

However, Pakatan Rakyat does not have many ways to strike a balance between revenue and expenditure. The alternative coalition suggested a RM220 billion-shadow budget, which is RM14 billion less than the expenditure of the BN. However, the deficit falls only from 6% to 4.4%.

Why does the Pakatan Rakyat still fail to achieve a balance between revenue and expenditure even it has stressed on cautious spending? The reasons are the increase of money distribution and the failure to substantially open sources.

To increase the Treasury’s revenue, the Pakatan Rakyat suggested that Approved Permits (APs) should be auctioned to get RM1.2 billion, public tender measures should be implemented, the Defence Ministry’s procurement contracts should be reviewed; debts and arrears should be collected; and luxury tax should be restored.

The Pakatan Rakyat has no confidence to increase income through attracting foreign investment, corporate profits and promoting the production of high value-added products. It is a plight of the country. However, we should never forget that when the world economy comes to a recession, the national crude oil prices would be affected and how are we going to get RM26 billion of dividend from Petronas?

At the same time, the Pakatan Rakyat’s burden would be worsened, including the commitment to set the minimum wage at RM1,100 to benefit 300,000 civil servants. The Pakatan Rakyat admitted that the executive team is huge but has shown no will to streamline it.

The salaries, pensions and wang ehsan (compassionate payment) have accounted for 35.6% of the operating expenses and the spending will be increased after the increment of salary.

The Pakatan Rakyat promised benefits and assistance for teachers, senior citizens, housewives and destitute families. It is estimated to cost RM4.4 billion a year and once it is started, it could hardly be stopped.

Many people thought that the sum of money saved from the eradication of corruption and wastage would be more than enough to assist the people in need. In fact, the money saved might be a one-off “income” but money distribution has to be done annually. We can only distribute money when we are having a fiscal surplus or it might further burden the country.

Both the Pakatan Rakyat and the BN must be aware of the current deteriorating external environment and it is a responsible approach only if they spend accordingly.