PSM: 2012 Budget a great letdown

By A.Sivarajan, PSM Honorable National Treasurer, PSM

Once again, the Prime Minister has completed his task of handing out sweets through his budget speech, hoping that the electorate will reward him in the next much anticipated General Election.

The budget reflects that the government is not brave enough to make significant changes on how the nation’s wealth should be spent. The names of programmes such as Economic Transformation Programme (ETP) gives the impression that the Najib’s administration genuinely creates transformation but unfortunately the current budget is no where near transformation, not even towards reform .

As always, Najib has played safe by not making key structural changes to the economy and development concept, but has concentrated on short term gains by giving out  hand outs in an attempt to woe support for BN. One off hand outs , such as one-off RM500 cash assistance for households earning 3,000 per month and below (costing RM1.8 billion) supposedly to benefit 3.4 million households, one-off RM100 schooling assistance for primary and secondary school students from age 6 to 16, up to Form 5. (costing RM530 million), one-off RM200 book vouchers for students of private and public tertiary institution, and Form 6.(costing RM260 million) are all clear election giveaway. The same can be said about the civil service pay hikes and payments to Jasa and Kemas employees.

Najib’s budget has maintained his pillars of development which are Foreign Direct Investment, liberalisation of service sectors, further tax cuts for investments and perks for property developers. Najib’s people first slogan does not seem to be portrayed in the budget as key cuts and perks are still enhanced for the investors and corporations while the rakyat are threatened with subsidy cutbacks. As mentioned, the handouts to rakyat are short term, just enough for the government to crawl through the elections. If re-elected to power, withdrawal of subsidies, implementation of GST and fuel price hikes are sure to follow.

As mentioned by Idris Jala, the nations debts are still rising and in 2012 debt servicing alone will be 20.5 billion. The 2012 Budget does not addresses this critical issue as how it’s going to remain afloat as world economies like United States and Europe are preparing for the worst.

The budget too fails to address the spiraling cost of daily consumable goods for the rakyat. Although at the moment, subsidies for rice, sugar, oil and petrol remain, but the rakyat are still struggling to manage the price hike which took place in the last two years due to the withdrawal of government subsidy then. The price of sugar , rice , oil and milk all saw an increase, but seems like the government has no plans to return the subsidies as before and ease the people’s burden.

Another rural vote buying move is the proposed listing of Felda (Felda Global Ventures Holdings Sdn Bhd) in Bursa Malaysia by mid-2012 to raise funds for the company to become a global conglomerate. Settlers are promised to receive a windfall by this move. Felda schemes are also promised RM 400 million to upgrade water supply  in their settlements.

The abolishment of school fees is certainly welcomed, but it has to be truly reflected in reality. As many parents complained about the burden of additional payments besides the school fees, such as co curricular fees, workbook fees, lab fees and so on.  Thus how much it will really make a difference on parent’s pockets is to be seen in January, 2012.

It is important to note that for the last two years the Education Ministry has cutback on food and text book assistance schemes for the poor students. The number of students that were eligible for this schemes were reduced to cut cost, thus many although coming from struggling households were denied this assistance. This 2012 budget remains silent on this matter.

On the issue of housing, the government has terribly failed to address the rocketing price of houses in Klang Valley and other major cities. But rather it has played to the market forces and increased the ceiling price for first time house buyers from RM 200,000 to RM 400,000.  Even though this eases the eligibility for loan, but wage earners will not be able to complete their loan term in their lifetime and will have to hand it down to their children.

Developers and speculative market forces are left completely unregulated to hike house prices beyond the rakyat’s means.

On low cost housing, it proposed to build 8,000 units for sale, while 7,000 will be built for rent. This is still far below the actual demand.

Those are whom are currently renting in PPR homes continue to rent for more than 10 years, due to non availability of affordable homes. The rent and hire purchase scheme introduced to the PPR residents too was a complete failure as the government failed to facilitate the buyers to own the units.

Furthermore, an allocation of RM 40 million for restoration and maintenance of public and private low-cost housing is at an unacceptable amount. Majority of the public low cost apartments are in a deplorable state due to problems of maintenance fees and JMB . Thus RM40 million is clearly insufficient.

The governments priority on public healthcare is in no way reflecting the supposedly ‘people first’ vision as the budget only allocates in total 16.8 billion , which is only 7% of the total budget .

As a nation aspiring to be a developed nation, its commitment to healthcare is disappointing. Although the budget allocates 300 million to upgrade the Kuala Lumpur General Hospital ,but PSM fears that it will just be for hardware expenditure with no emphasis on the quality of medical personnel and healthcare.

Finally the budget is a great letdown, as the majority of the rakyat are still waiting for the implementation of minimum wage. As government servants receive wage hikes, the majority of the working masses still take home poverty level income. The budget speech 2012 completely avoids this topic, presumably leaving it to the newly appointed Wage Consultative Council to study the issue further even though the Human Resources Ministry did the same thing through a series of consultative labs months ago.