Analysts pour cold water on shadow budget
The budget is too focused on pleasing the civil servants instead of finding ways to expand the revenue base, they say.
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.
G. Vinod, Free Malaysia Today
While lauding Pakatan Rakyat for announcing its shadow budget for 2012, several analysts said the budget failed to address many fundamental issues plaguing the nation’s economy.
Yesterday, Opposition Leader Anwar Ibrahim announced its RM220 billion shadow budget, themed “Prosperity for All”, which he said was aimed at overhauling the country’s “flawed” macro and micro economic management.
Anwar also 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.
Calling it a populist budget, analyst Khoo Kay Peng said the budget was too focused on pleasing the civil servants at the expense of the nation’s coffers.
While other countries such as Greece and Japan were trimming down their civil service, Khoo said Malaysia’s political parties were 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.
‘Strong political will needed’
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, he said, the local skilled and unskilled workforce was deprived of jobs.
“And fearing a political backlash, the government absorbs these unemployed locals into the civil service,” he said.
Khoo added that to solve the problem, both the government and private sector must come together to create jobs and ensure only locals are hired.
“But a strong political will is needed,” he said.
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.
‘Plucked out of thin air’
Praising Pakatan for introducing a minimum wage for civil servants, Fui reminded the opposition pact that the policy 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.
