Pakatan’s ‘prosperity for all’ budget

The opposition unveiled its 2012 budget which emphasises on cleaning up the economy of corruption.

UPDATED

KUALA LUMPUR: Pakatan Rakyat unveiled its shadow budget for 2012 today aimed at overhauling the country’s “flawed” macro and micro economic management to cut costs while adding value.

The budget, themed “Prosperity For All”, was announced by Opposition Leader Anwar Ibrahim at Parliament here.

Much of the pact’s alternative fiscal management plans were similar to its past budget where the emphasis was on cleaning the economy of corruption, the “typical characteristics of the Barisan Nasional government”, which Anwar said cost the country dearly.

The underlying principles of Pakatan’s budget would be to:

• Assist the majority poor; ensuring long-term fiscal survival focusing on deficit trim;

• Adding value to government spending by combating graft so money will reach voters;

• Empowering the people’s economy through training programmes and strengthening;

• Strengthening political reformation which is essential in protecting voters from “elements that will monopolise wealth for them and their cronies.”

As much as RM220 billion would be allocated for the said purposes.

Although the amount was RM14 billion lesser than the ruling coalition’s 2011 Budget, Anwar said this would be consistent with the aim to cut deficit to 4.4% of the GDP or 1.1% less than BN’s annual target.
Trimming public debt, which stood close to 7% of the GDP in 2009 forced the government to push the panic button and compelled Prime Minister Najib Tun Razak to resort to a much needed but unpopular measure – dismantling the hefty subsidy regime amid soaring inflation.

Pakatan, however, argued that slashing subsidies on basic goods was not the only solution and said that ethical and transparent governance would help stop fiscal “leakages” and unnecessary waste of public funds.

This meant Pakatan would maintain subsidies and offsets by disciplined fiscal spending. As much as RM22 billion would be allocated for subsidies on basic goods under the pact’s budget.

Anwar, a former finance minister, said with ethical, transparent and responsible fiscal management, the lesser figures allocated for the 2012 budget could add 20% more value than what the BN government could achieve.

Slash PM’s Dept spending

Among the measures introduced to cut public fund wastage was the slashing of the RM10 billion allocation for the Prime Minister’s Department.
Currently, the PM’s office had the discretionary powers to set allocation at any amount. There had been a constant increase in allocations since 2004 despite having to cope with the rising deficit.
Other measures, Anwar said, included ending monopolies by “crony companies” in key industries like power and rice.
Najib would table his third budget as prime minister this Friday and is expected to announce measures to tackle the rising cost of living as the country copes with sluggish growth.

From 7.2% last year, growth stood only at 4.4% in the first half of this year.

The prime minister’s announcement would likely “break the bank” by including announcements such as a new civil service pay scheme that would see salary rise by as much as 40%.

Civil servants were considered an important vote bank for the ruling coalition and winning them over would be key to realising Pakatan’s Putrajaya ambition.

In an apparent bid to woo them, Anwar announced his coalition’s intention to implement a minimum wage policy of RM1,100 which would immediately benefit 300,000 civil servants earning below that base.

Other salient points of the pact’s budget were based on policies outlined in its “Orange Book” where much of the spending would be in the form of cash aides and incentives targeted at the lower income group.

Highlights of the shadow budget

• An additional RM1.2 billion of revenue will be raised by auctioning Open APs, presently issued at RM10,000 each by the BN government. An auction price of RM30,000 each will bring the additional RM1.2 billion revenue.

• 10,000 teachers will be trained and RM200 million will be allocated to address the shortage of Chinese, English, Tamil and religious teachers, as well as an additional RM200 million to be immediately disbursed to improve excisting buildings of vernacular and religious schools.

• An open tender for government procurement to reward know-how instead of know-who.

• Affirmative measures for bumiputera and other disadvantaged groups will focus on strengthening the capability of such groups to compete through education, training and financial support.

• A Unfair Public Contracts Act will be enacted to empower a review into lop-sided concessions and agreements that are deemed to be against the public interest.

• GLCs will be freed from political interference and allowed to operate based on comercial priorities. Ultimately only GLCs in strategic sectors will be retained.

• The Competition Act will be extended to all sectors of the economy, including telecommunication companies, pay-tv services and the power sector.

• Press and media cartels will be dismantled, Astro’s monopoly will be broken up and taxi licences to be given directly to individual taxi drivers.

• A senior Malaysian bonus of RM1,000 for the elderly, payment of RM1,000 for qualified homemakers and supplemanting hardcore poor households income. A childcare allowance of RM1,000 a year for children below 12-years-old from households earning less than RM1,000 a month.

• These immediate measures to help Malaysians will cost: RM1.7 billion for senior Malaysian bonus for the elderly; RM2 billion for support of homemakers; RM200 million for top-up payments for the hardcore poor.

• Will not implement Good and Services Tax until and unless Malaysia departs from the middle income trap.

• The police force will be refocussed on crime prevention and enhancing public security.

• A National Transport Policy to prioritize public transport following the principle of “moving people, not cars”.

• To reform political landscape by revoking existing emergency proclamations, to restructure Public Complaints Bureau into an Ombudsman institution, revoking media licensing requirements by repealing the Printing Presses and Publications Act, to restore academy freedom and autonomy of local universities, and to abolish the Official Secrets Act and enact a Freedom of Information Act.

• Improving the road networks in Sabah and Sarawak, strengthening the electrical grid network in Sabah and revamping the flying doctors services in Sarawak by giving an additional allocation of RM100 million.

• No increase in sin taxes on cigarettes and alcohol as it is ineffective in curbing unhealthy habits. Public awareness and education would be a better alternative.

• Pakatan will reintroduce the import tax for 200 luxury items that were exempted by Prime Minister Najib Tun Razak in the last budget.

• RM2.2 billion for teachers from special teaching allowance and minimum wage.

• RM1 billion for public housing.