Shadow Of Doubt

Two days ago, Opposition Leader Anwar Ibrahim announced PKR’s RM220 billion shadow budget, with its Chinese New Year sounding theme of  “Prosperity for All”. He says it is aimed at overhauling the country’s flawed macro and micro economic management.

Anwar said that, among others, the Pakatan budget would look into assisting the poor by allocating RM22 billion in subsidies for basic goods and ensuring long-term fiscal survival which would focus on trimming the nation’s deficit.

The Spanker lauds Pakatan Rakyat for its initiative in announcing its shadow budget for 2012, but has to highlight what several analysts have said - their budget failed to address many fundamental issues plaguing the nation’s economy.

Let’s start with analyst Khoo Kay Peng, who calls it a populist budget and says the budget is too focused on pleasing the civil servants at the expense of the nation’s coffers.

While other countries such as Greece and Japan are trimming down their civil service, Khoo said PKR’s budget was more focused on increasing the civil servants’ perks to fish for votes.

“I have no issue with increasing their salaries but we must remember that our civil service is over-bloated,” said Khoo.

He added that to solve the problem, a massive structural reform was needed to reduce the dependence on foreign labour. Khoo said the problem arose when the private sector, in a bid to reduce costs, hired foreigners to fill its vacancies at the expense of locals. As a result, local skilled and unskilled workforce were deprived of jobs.

Centre for Strategic Development chief executive officer Fui K Soong said Pakatan’s budget should find ways of increasing the nation’s revenue base instead of being too focused on expenditure.

She said one way was for Pakatan to formulate policies that would promote growth in the private sector to increase the tax base that would eventually generate more income for the country.

Fui reminded the opposition pact that their policies must be linked to an increase in productivity.

“We must remember that a minimum wage policy is a tool to prevent abuses by employers and to look after the workers’ welfare; it is not a way to eradicate poverty,” she said.

Soong also said that the shadow budget, while explaining expenditure, did not elaborate much on how much income is to be collected to foot the bill and the sources of revenue.

“It didn’t address on how to expand our revenue base as well,” she said.

What's interesting is that when contacted, Fui confirmed that she did not "praise Pakatan for introducing a minimum wage for civil servants". Her words were purposely misquoted for mischievious intent to deceive. What she had actually said was that PR's shadowy budget needed to focus on an increase in revenue source, and was lacking in explanation for its mechanics.

Spank this monkey to see for yourself how Fui's words were twisted. 

 

Bursa Malaysia director Mohd Tap Salleh said the RM220 billion figure seemed to have been plucked out of thin air.

“We can always say we can give this and that but where is the money coming from?” asked Mohd Tap.

On the RM22 billion subsidy bill, Mohd Tap said Pakatan’s budget should address the need to reduce subsidy instead of increasing it as the government would be unable to sustain the subsidies due to escalating prices in the global market.

“Our subsidy level is one of the highest in the region. If you don’t reduce it, our deficit will soar to an alarming level,” he said.

As of 2009, Malaysia’s deficit stood at 7% of the Gross Domestic Product.

On the proposed pay hike for civil servants, Mohd Tap said it would be best if the funds were channelled to development projects.

“It’s best we use the funds to improve our public transport system and other development projects,” he said.

The opposition’s shadow budget is a gimmick to fish for votes, said MCA president Datuk Seri Dr Chua Soi Lek.

He added that some of Datuk Seri Anwar Ibrahim’s plans were impractical, especially with regards to the RM1,100 minimum wage across all sectors; RM500 for each civil servant, reducing the Prime Minister’s Department budget by RM10bil and also to bring down the deficit to 4.4%.

“We advocate minimum wage but it should not be down to all sectors, as some will not be able to pay that much while others may be able to pay more. The wages should be based on the level of productivity and skills,” he said.

The RM500 plan for 1.2 million civil servants would cost the government RM6bil.

Dr Chua added that while the rakyat felt that the civil servants needed to be paid more, they also wanted the public delivery system to be more efficient. The raise should be pegged to the nation’s growth of GDP.

As for the slashing of the Prime Minister’s department budget, Anwar did not mention how they plan to do that,” he said, adding that the PM’s department made funds available for emergencies including for disasters.

On the proposed 4.4% deficit, he said with the present global economic slowdown, the government should actually come up with plans to stimulate it rather than cutting it.

The Spanker’s take? We’re headed for a train wreck with PKR’s shadow budget. It’s not well thought out, hasn’t taken into consideration all the factors that need addressing and seems designed to deviously lull the voter into PKR’s camp for the next elections.