The Budget: Don’t be distracted by the ‘goodies’ talk
Once we have decided how big the total Budget should be, how should the money be spent? Did you know we spend the same amount on defence — RM13.7 billion — as we do on healthcare? Do you think that is the right choice?
By Teh Chi-Chang, The Malaysian Insider
Every year near this time around September or October, public attention focuses on the “goodies” we can expect from the government. Will our income taxes be cut? Will the subsidies continue? Will the road-tax rebate be extended? And every year, after the Budget is announced, there are the usual proclamations of “it’s a people’s budget”, “it’s people-friendly”, “it’s a growth budget”.
Really, those “goodies” are a mirage. Whatever “goodies” we get, we pay for in other ways. Those “goodies” are not free money handed out by the government. Those “goodies” are paid for with our tax money!
It’s called a Budget because the government, like us, has a fixed sum of money to work with every year.
The government gets its money from taxes such as income and corporate taxes and various excise and tariff duties, and yes, petroleum royalties. That fills the government wallet. And out of the wallet comes expenditure on paying civil servants, funding healthcare and education and national development and yes, our “goodies”.
Every ringgit of “goodies” that we “get” is a ringgit less for other important things, like healthcare or education, for example. The mainstream media and government are happy to keep the focus on “goodies” because it avoids discussion and debate on the really important issues, which are:
Accountability. Was last year’s Budget adhered to? In fact, the government has been consistently spending more than planned. How effectively was the money spent? For example, RM47.8 billion is being spent on education and training this year. That’s equivalent to RM8,000 for each student in public education. And yet, so many parents feel compelled to send their children to private schools or for private tuition. So, what happened to all that money?
How big should the next Budget be? Bigger is not necessarily better. Because bigger means higher taxes or higher government borrowings.
Once we have decided how big the total Budget should be, how should the money be spent? Did you know we spend the same amount on defence — RM13.7 billion — as we do on healthcare? Do you think that is the right choice?
Over the six years between its financial years ended March 2004 to 2009, Petronas paid the federal government RM265 billion. Oil is a finite resource. One would have expected a prudent government to utilise the windfall gains wisely on projects that would deliver long-term value to the nation, to help compensate for the day when the oil runs out.
However, even as oil revenues grew, government spending on net development expenditure was actually curtailed.
Our use of the oil windfall is in stark contrast with other resource-rich countries such as Norway and Australia. While we use the money to fund current operating expenses, these countries are putting savings aside for future generations.
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