KUALA LUMPUR – Budget 2022 revives key Pakatan Harapan (PH) measures to improve social security and boost employment, but falls short of strategies to evade a budget crisis in three to five years, said DAP’s Damansara MP Tony Pua.
As highlighted in the Budget 2022 Fiscal Outlook, he said in a statement that the Medium-Term Fiscal Framework 2022 to 2024 estimated that the government revenue will only hit 13.9% of gross domestic product (GDP) over this period.
He added that this is a decline from the expected 14.3% in 2022, cementing a longer-term decline from 15.9% (2020) and higher in prior years.
This means, he said, the government will have less funds to spend, invest and influence the economic direction of the country in the future.
“What then becomes a double whammy on the discretionary spending by the government is the accelerating increase in fixed payments and charges as a percentage of total spend.
“These ‘fixed’ expenditures include emoluments, retirement charges (pension), debt service charges, grants and transfers to state governments
“For example, emoluments and retirement charges formed 45.5% of operating expenditure in 2018 but will increase to 49% in 2022.”
What is more alarming, Pua said, is the massive rise of debt service charges from 13.2% in 2018 to 18.5% in 2022.
In essence, the reckless off-budget expenditure for mega projects and scandals under the Datuk Seri Najib Razak’s Barisan Nasional administration is coming home to roost as the government commences payments for these debts.”
Overall, Pua said, these ‘fixed’ expenditures increased drastically from 62% of operating expenditure in 2018 to 70.9% projected in 2022.
“This effectively means a major reduction of allocation for ‘supplies and services’, ‘subsidies and social assistance’ and other miscellaneous expenses from 38% (2018) to 29.1% (2022), or an enforced 30.5% cut.
“This ‘squeeze’ arising from the rapidly expanding fixed charges will culminate in a potential fiscal crisis in the medium term, exacerbated by the declining government revenue as a percentage of the GDP.
“It is now critical for the Finance Ministry to address how they plan to avert the impending crisis as the measures must be put in place today, and not before it is too late.”
Yesterday, Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz announced the biggest national budget yet with a RM332.1 billion allocation for 2022.
Adopting PH-proposed measure a good move
Despite stressing that the government has failed to address, whether in terms of strategies or measures, an impending budget crisis, Pua commended Tengku Zafrul’s ministry for adopting a series of critical measures proposed by PH.
The government has allocated RM40 billion under Semarak Niaga Keluarga Malaysia programme to assist business recovery from the Covid-19 pandemic, covering loans, guarantees and equity injections.
Other PH proposals that were adopted include extending the Social Security Protection Scheme to self-employed and gig workers, RM120 million provision for Chinese and Tamil vernacular schools and RM140 million for registered tahfiz and religious schools.
“The minister has announced a new ‘JaminKerja’ initiative which was allocated RM4.8 billion to provide hiring incentives for the unemployed, up to 30% of the employee’s wage. The programme is also extended specifically to women who have not been working for at least a year.
“This is a revival of the Malaysians@Work programme, which was announced by PH for Budget 2020 but abandoned by the Perikatan Nasional-led government.”
He said other successful PH programmes, which have also been extended, such as i-Suri, renamed as Kasih Suri Keluarga Malaysia programme, have also been allocated an additional RM80 million.
“Even for tax measures, Putrajaya has only expanded on sugar tax introduced under the PH administration, and reiterated the excise tax on vape and e-cigarettes, which was already announced last year.”
MoU with opposition was not honoured
However, Penang Deputy Chief Minister II P. Ramasamy said he is of the view that the budget has failed to respect and honour the support given by the opposition in the form of a memorandum of understanding (MoU).
DAP’s Prai assemblyman said it appears that the MoU is seen as benefiting the government more than the opposition as transformation and political stability are not reflected in the budget.
“I would have thought given the establishment of various committees and a good working relationship between the government and the opposition, the budget should have reflected the spirit and substance of the MoU. To the utter disappointment and dismay to many in the country, this was not to be so.
“Nothing is mentioned in tabling the budget, how a number of Malaysians who have invested in offshore companies to evade tax and to engage in other nefarious activities are going to be dealt with.
“The Pandora Papers have brought to light these financial activities. It would be interesting to ascertain the amount of money that was transferred to the offshore companies and how it was done.”
He also expressed his disappointment, saying the non-Bumiputera communities have been repeatedly let down by the race and religious-centred budgets.
“Under a racist government, Budget 2022 cannot exceed the parameters set.” – The Vibes, October 30, 2021
