I’m frankly suffering from budget fatigue. There’s a lot of analysis in the news, and many conflicting opinions based on very different perspectives. For my part, this is more a commentary of the commentary, rather than talking about the budget directly. That analysis I’m planning to look at tomorrow.
One thing in the commentary that’s struck me, is the rather strange expectation that the budget is some kind of policy and strategy platform. You hear people expressing disappointment that industrial and SME development isn’t being touched on, or the absence of strategies to combat corruption, or the lack of info on how we are going to improve education.
This betrays a fundamental misunderstanding of what the budget is and supposed to do: allocate government expenditure for the year ahead.
It is NOT:
- A policy platform
- A strategic plan
- A statement of principles
If those are the expectations, then we’re doomed to disappointment every year.
A second thing I find really odd is that people are looking at the development portion of the budget as if it’s discretionary. The truth is, the development budget is set years in advance via the 5-year Malaysia plans. The only discretionary part is how much of the Malaysia Plan allocation is to be spent every year.
A third issue that bugs me is that people seem to be missing the forest for the trees. I hear lots of commentary about the cash handouts – understandable with the general election around the corner – as if those are the only major things that the government is doing . But here the amounts being disbursed are more than matched, if not dwarfed, by allocations for promoting investment, for green technology, for R&D, for education and technical training. For some strange reason, these allocations simply passed many people by, despite being a part of the budget speech.
Fourth on my list of annoyances – there’s this perception that the “middle-class” who are the “bulk of tax-payers” aren’t getting anything out of the budget. I’m sorry – if you’re one of the unlucky few who have to actually pay income tax, you’re NOT middle-class. You’re in fact in the top tier of income earners in Malaysia, and benefit the most from subsidies on food and petrol. Personal income taxes also only account for about 11% of government revenue (sales and service taxes add about another 7%-8%), so the idea that individual taxpayers are paying for everything is a little ludicrous. So forgive my utter lack of sympathy.
Fifth is the perception that this is an over-spending budget, an image no doubt boosted by the plethora of income assistance given, and the looming spectre of the general election. The truth is that total expenditure is being held almost flat between 2012 and 2013, with the plan being to actually slightly reduce government spending next year. I’m not fool enough to believe that this will actually come true, as I don’t see oil prices coming down as the government is assuming.
But if the budget is busted, it’s going to come from higher outlay on subsidies and not from social welfare assistance.