DAP unveils 'rakyat first budget'

Seeking to set itself apart from normal government practices from the beginning, the DAP Alternative National Budget 2010 outlined key factors which contradict federal budgetary norms.

The first jab of the shadow budget is to focus on a broader needs based approach as opposed to the government's often racial or ‘special groups' based solutions to shrink the discriminatory cloth from which DAP alleges our federal budgets are cut from.

DAP national publicity secretary Tony Pua (left) said that this is to avoid incidents like in Sabah and Sarawak where the lavish allocations are perceived as being based on political leverage.

The needs approach effectively sidesteps the often thorny issue of focusing on target groups based on political pretext.

"Anyone who is in need regardless of his race or other considerations will be given priority," added Pua.


Decentralised administration and funding

"The Malaysian economy has increasingly become a bureaucratic behemoth dictated and run from the federal government," said Penang CM Lim Guan Eng ,adding that the states suffer from "a total lack of control over funding for projects and development."

Meanwhile Pua claimed that state governments are held hostage by the "Wimps and fancies of the federal government."

He stressed the need for decentralising both the funding the administration of projects and development, because local and state authorities know best about the needs of the state, said Pua.

As of now, funds have to be channeled through the federal capital which creates a lag in response time while the administration of projects by far off officers lack appreciation of the local situation.

Using Indonesia's gradual but consistent economic recovery as an example, Pua cited economists as saying that it is the decentralisation measures which has spurred Indonesia's recovery.

Lim agreed, adding that we must "Think globally but act locally."

‘Killing the goose that laid the golden egg'

But how funds are spent is perhaps not as important as where they came from. So far the government has been milking national oil company Petronas for all its worth.

But current government policies do not put much store in savings and reserves. Something that the shadow budget seeks to change.

A portion of our oil profits must be saved. This rainy-day fund should also be extended to the rakyat through reverse bonus schemes and risk-sharing initiatives from which financial assistance can be obtained during hard times.

According to the DAP, the government's bad habit of running to Petronas in times of economic crisis, is like "killing the goose that laid the golden egg".

Squeezing out higher taxes from Petronas will take away the company's ability to reinvest in future income streams; this particularly in the light of depleting local oil reserves.

Petronas, DAP argues, needs to be allowed the use of up to 50 percent of their profits to reinvest in further explorations or new technologies, as is the custom of oil giants like Exxon-Mobil and Shell.

The shadow budget also advocates a capping of oil and gas revenues to government coffers as opposed to the current increasing reliance on it. DAP said that this will curb our reliance on oil and gas which will only be around for the next 80 years, if reports are to be believed.

Opex vs Devex

But funding sources alone is of no import if good management of public funds and judicious government spending is not practised. This is another point that the shadow budget highlighted.

Referring to excessive government expenditure, Pua said, "It's like lottery money. You have so much money you don't know what to do with it. So you spend it."

Government revenues, he said, must be reinvested into building the capacity of the country, not spent largely on wasteful operational expenditure (Opex), when the same revenues can be invested in the country's development expenditure, (Devex).

The actual Opex, DAP noted, has swelled more than 130 percent from RM63.8 billion in 2001 to RM151 billion in 2008, while Devex in the same period has only grown marginally from RM34.1 billion to RM45.1 billion, or 32.6 percent.

In the shadow budget, DAP propose an Opex-Devex ratio of 70:30, with figures moving down to 60:40 further down the line.

Curing the middle economy syndrome

But even if more money is put into Devex, it would still mean nothing if the Devex itself it not properly utilised.

For example, many of our high-tech industrial parks are not really so, said Pua.

While the industrial parks are claimed as being success stories, almost all the parks while fully occupied, Pua noted, not many are actually high tech operations.

"Our industrial parks are full of shoe factories, and we cannot change this because we have already sold them the land," he said.

Instead they should perhaps be given on a lease basis with strict monitoring as to the nature of the industries the technology parks host.

So that the government has the purview to change the type of industries within each park according to needs.

Train, re-train, retain

In the field of human capital, the shadow budget also sought to differ from conventional federal practices.

Lim (left) stated that instead of focusing on just attracting Malaysians abroad to return or rope in foreign talent, we should instead focus on strengthening our local education system and look to treating our talented youth with more care.

He said that the problem of brain drain is "not a matter of race," young people are leaving our country because a lack of opportunity or unfair treatment.

Before we look abroad we should "train, re-train and retain" our local talent first, stressed the Penang CM, only when we succeed in retaining our own talent can we hope to attract those abroad.

The measures outlined by the shadow budget is crucial said DAP, because the government's current budgetary practice may see our economy ‘overheat' in the face of toughening economic conditions and our governments spendthrift behavior.