Subsidy – the Axe Man cometh!
The government has just owned up to the gravity of our deficits, we going bankrupt and all that yet at the same, we hear this shrill voice from Johor, insisting the crooked bridge must be built. What is so special about building this crooked bridge and must it be crooked? Also, didn’t we hear just last week how everyone was singing praises at Malaysia being in the most competitive list? How do you reconcile this and the doomsday warning given by this Nostradamus from the land of the Hornbill?
By Sakmongkol AK47
Government, by definition, is that organization which has a monopoly on the legitimate initiation of force within a geographic area. Inherently, it must use force and the threat of force to impose its rules on others, no matter how these rules were derived.
Why would I begin this essay with the above foreboding paragraph? Simply because I think, this whole lab about subsidy rationalisation as a means to lower our perennial deficits is a veiled threat of force to impose new rules on us.
Who among us in particular? On the most vulnerable group- the poor and needy is the answer.
PM Najib has to take a serious look on this subsidy issue. What is the most important legacy of his father, the 2nd PM? Championing the cause of the poor is the likeliest answer. He was minister in charge of rural development. It wasn’t a glamorous ministry, but development for the poor was close to his heart. He formed FELDA in the year Sakmongkol was born in 1956. To give land (wealth creating asset to the poor and disenfranchised.
Where is Idris Jala leading us? Cutting the ‘real subsidies’ going to the poor. Not exactly respecting the legacy of Tun Razak is it? But then, what does Idris “Al Dunlap’ Jala knows? We shall be coming out with what he did at MAS. Coming soon. Khawp khun, Danke, Nandri , Repoman!
Does he know Tun Razak at all? Don’t bother what the experts say. Ignore what Ramon Navaratnam says. Cut the government projects going to Sunway group and let’s see whether he can sing Jangli Jangli Kahay still. Is cutting subsidies on the top of the priority list of cutting government deficits? Reduce by half the bloated and quality challenged civil service would be a better option.
Let’s be clear who the recipients of government subsidies are. Government financial aid going to ordinary people is often really transfer payment, which is non compensatory. Meaning, the government gives them money without being compensated with anything from the recipients. Government financial aids going to businesses and industries, soft loans, etc- these are the real subsidies which should be compensatory.
The businesses and industries assisted by all sorts of subsidies ought to give us back in the form of better goods and services at a cheaper rate. IPPs get lots of subsidies, tax incentives and all that, including that kitchen sink, why aren’t we getting cheaper electricity tariffs? Why do I get that I– owe -them -a -living service from the under qualified civil servant?
Now, which one is the government going to take away?
Somebody must be bonkers if they believed that selling off assets and booking them in and accordingly showing profits, is ONE brilliant move to bring MAS into the black once again. And fuel hedging? Not exactly rocket science. The executive in charge of budget airline Air Asia knows fuel hedging is one of the ways to reduce cost and therefore increase operational profitability. So doing fuel hedging is not a NOVELTY nor a big deal. If Jala who comes from Shell doesn’t dabble in something he is familiar with, then maybe he should return to Sarawak to plant Bario rice.
The record at MAS by this minister- achieved by the above methods cannot be taken to impute extraordinary prowess at turning around things. We think he can do the same with our deficits by way of attacking subsidies which he fancies as the jugular? Nah- I don’t think so.
So, the government has incurred deficits all the time. Is going after subsidies or more correctly, going after transfer payments (welfare, subsidies on food, diesel, sugar, and education) is the better line of attack to reduce our deficits?
What about wasteful spending?
The government has just owned up to the gravity of our deficits, we going bankrupt and all that yet at the same, we hear this shrill voice from Johor, insisting the crooked bridge must be built. What is so special about building this crooked bridge and must it be crooked? Also, didn’t we hear just last week how everyone was singing praises at Malaysia being in the most competitive list? How do you reconcile this and the doomsday warning given by this Nostradamus from the land of the Hornbill?
We must be careful when we talk about subsidy? How much are pure subsidies and how much is transfer income? By treating it as one homogenous economic element, Jala is going to punish those who receive transfer incomes with those who receive subsidies. Differentiate the two. I am sure; this ability to differentiate these two wasn’t taught at Shell.
