The federal government had "misled" the public when the Performance, Management and Delivery Unit (Pemandu) stated it had footed a subsidy bill of RM74 billion in 2010, an economist said today.

NONESpeaking at the Selangor 2012 budget talks in Subang Jaya today, Nottingham University visiting associate professor Subramaniam Pillay said 54 percent of that bill was for education and healthcare, which is in fact government responsibility.

"All governments in the world subsidise different items for different people. But education and health are what economists call ‘public goods’ and are the responsibility of the government,” said Subramaniam who retired as Nottingham University Business School head last year.

"All developed countries around the world subsidise healthcare heavily, except the US, but (President Barack) Obama recently tabled a Healthcare Bill."

Take the two big-ticket items away and the bill was only RM31.1 billion, of which only food subsidies (RM3 billion or about 2 percent of the federal budget) went directly to the rakyat.

Most subsidies goes to IPPs

He said much of the RM23.7 billion fuel and energy subsidies paid in 2010 had gone to gas subsidies to independent power producers.

"For infrastructure, all the subsidies go to (highway concessionaires) not because they need it but because they signed an agreement (with the government), which was stupid. It's not a subsidy for the rakyat," he said.

Subramaniam reminded the audience of about 50 stakeholders in the workshop that the government has been less than honest on its fuel subsidy bill.

"When petrol price is USD 40 and under the government does not subsidise but earns from petrol. This happened in 2009 but (the government) never said anything," he said.

The Pemandu figure of RM74 billion has been cited by the government to justify its subsidy cuts on petrol, natural gas, diesel and food items.

The proposal for the subsidy cuts included mitigating measures to alleviate the impact on the low income.

Kedai 1Malaysia not enough

While the cuts, albeit less steep, were implemented the cushioning measures such as providing cash supplements, have yet to take place.

"The government is putting the cart before the horse, they shouldn't have cut the subsidies only to think of how to compensate.

"By the time the think about it the poor would be dead," he said.

He told Malaysiakini that the Kedai 1Malaysia discount store aimed at urban poor does little to solve the issue as there is still no way to stop those who are not poor from buying these products.

"How also did (store operator) Mydin manage to source these cheap products? If it's subsidised by the government why is Mydin getting the subsidy?

“If Mydin can stock these cheap products in (Kedai 1Malaysia) why not in their other stores?" he asked.

S'gor to focus on urban poor

Advising the Selangor government, Subramaniam said that migration has led to a larger proportion of urban poor, so greater focus should be placed on programmes on them.

Responding to this, Selangor exco member Xavier Jeyakumar said that the the state is discussing greater allocation for support programmes for this group in 2012.

"We have microcredit programmes for rural and urban and I propose that the subsidised school buses programme for rural areas be extended for the urban poor.

"But the fact is our budget is limited at only RM1.5 billion and half of that goes to emoluments,” he said.

Xavier said that even though we contribute about RM30 billion to the federal budget, Selangor only receives about RM400,000 back.

The Selangor government engages in dialogue with stakeholders in June and July each year to discuss the following year's budget, which will be tabled in November.

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