The DAP Alternative National Budget 2010 marks the progress the Party has made in the field of economic policy making, and our readiness to assume the role of a governing party in the Federal Government as and when such opportunities arise in the near future.
Our first Alternative National Budget was launch on the 5th September 2007 for the year 2008, before the last historic general elections where Pakatan Rakyat denied the Barisan Nasional two-third majority in the parliament, and winning government in 5 Malaysian states. This new Alternative National Budget 2010 picks up from where we left off in 2007, enhancing our proposed economic policies with stronger strategies and proposals based on further in depth research and analysis.
As Malaysia face one of the most challenging economic period in times of uncertain global demand, it is critical that the Malaysian government takes decisive actions to spur the economy and ensure that we will not only recover from this recession, but also emerge stronger and more competitive than we were before the onset of the recession. However, a review of the Barisan Nasional (BN) government’s actions to date coupled with its track record over the past 12 years paints a less than optimistic picture.
At a time when the economy is faltering globally, is exactly the time for the government to be pump-priming to boost domestic demand and competitiveness. However, despite the urgent need to boost government expenditure, the BN government is now finding out the hard way that they have in essence, run out of money to spend and are struggling to contain and maintain the high and escalating cost of government.
Malaysia had it so good for the 10 years of positive economic growth, was crucially aided in the last 5 years by lucrative windfall returns from the oil and gas sector due to skyrocketing oil prices. Sudden and belatedly the Government has realised that they have not had a single cent of savings all these “good” years. What made matters worse is the fact that oil prices have fallen far below the expected price of US$125 per barrel in 2009, which means there will be no windfall earnings in the coming year to “boost” Government expenditure for 2010.
Oil and gas revenue contributions to the Government had increased from RM19 billion in 2004 to more than RM70 billion in 2009 and despite that, every single cent of our oil and gas windfall earnings has been spent. Not only did we not save a single cent for the rainy day, the Government borrowed extensively on top of these windfall earnings, resulting in 12 consecutive years of budget deficits, and rapidly increasing our national debt regardless of whether the economy is performing or underperforming.
It may have been a different story had these windfall earnings been invested or spent on development projects. However, the overwhelming portion of the record earnings went to the Government’s operational expenditure to further enlarge the civil service, payment of supplies and maintenance services as well as extraordinary items such as compensation to already highly profitable highway toll concessionaires. This does not include of course all the money “burnt” via scandalous investments such as the RM12.5 billion Port Klang Free Zone, tens of millions of irrecoverable losses by the Ministry of Tourism subsidiary, Pempena and of course, the high prices the Malaysian government pays for the daily goods and services such as pens, paper, screwdrivers, digital cameras and carjacks.
Between 2003 to 2009, the Government’s operating expenditure has increased by leaps and bounds, from RM53.4 billion in the year 2000, to RM80.5 billion when Datuk Seri Abdullah Ahmad Badawi took over as the Prime Minister in 2004, to RM154.2 billion in 2009. However, development expenditure, which has the highest economic multiplier effects, has only increased disproportionately lower from RM29 billion in 2004 to RM50.5 billion in 2009.
Barisan Nasional’s reckless management of the country’s wealth and windfall blessings have resulted in a structurally weaker Malaysian economy compared to many of our regional peers. This recklessness must be checked immediately to ensure that the mistakes are not repeated. If the Government continues to accumulate debt on a unsustainable basis over the longer term, then it is our children and grandchildren who will be paying for their mismanagement today.
In addition, our experience in state governments over the past 18 months has also provided us with a better understanding of practical issues affecting economic develompent in Malaysia, and which requires major shifts in the way our public policy and economy is managed. Economic planning and management has become increasingly centralised in Malaysia over the past 2 decades to the extent that it has become bureaucratic and inefficient in carrying out economic initiatives.
For example, in Penang and Selangor where DAP plays a major role in the state government, we find our efforts hampered by the total lack of control over funding for projects and development, and are subjected to the whims and fancies of the Federal Government. While Selangor and Penang contribute RM16 billion and RM2.5 billion respectively in income taxes to the Federal Government, in return they receive federal grants amounting to only RM247 million and RM127 million respectively.
Hence contained in this Alternative Budget proposal are policies and programmes which seek to reverse the reckless and gross mismanagement of the rakyat’s money by the BN Government, and at the same time reduce the bureaucracy of central planning and devolve monetary and decision- making to state levels to increase efficiency and effectiveness of Government.
The theme for this year’s Alternative Budget is “Democratising Malaysia’s Economy” for not only is the Malaysian political scene in need of greater democracy, the economy as well is in a serious need for a dose of democratisation to ensure that Government expenditure works in the interest of the people who pay the taxes, that Government policies does not favour the wealthy and politically connected over ordinary citizens and Malaysian states receive their fair share of fiscal freedom proportionate to their economic contributions and financial needs.
We strongly believe that by “Democratising Malaysia’s Economy”, we will be able to not only unleash the next wave of high economic growth for Malaysia, but also put in place a set of economic policies and institutions which will ensure the economic rights of Malaysians are perpetually protected, regardless of the Government which is in power. By “Democratising Malaysia’s Economy”, we will promote our objective of creating a Competent, Accountable and Transparent (CAT) government.
This Alternative Budget 2010 will form DAP’s core economic policy and manifesto in the next few years and we will submit our proposals to the Pakatan Rakyat Leadership Council for consideration, and with further input from our partners in PKR and PAS, its adoption.
Finally, we’d like to thank the immeasurable contributions of the core budget team led by DAP National Publicity Secretary and MP for Petaling Jaya Utara, Tony Pua and my former Economic Advisor, Teh Chi Chang who has since returned to full employment, comprising of Lee Kok Yew, Cheah Yi Peng, Lew Yin How and Sugashini Kandiah. Special mention is also be extended to John Lee Ming Keong and Ho Horng Yih for providing their views and input. And finally, on behalf of the team, we’d like to thank Dr Woo Wing Thye of University of California at Davis, who to took time to review our early drafts of the Alternative Budget and provided us with invaluable insights of “fiscal federalism”.