The purported news of the government withdrawing the scholarships and bursaries makes me ponder over our personal finance and how we can draw some parallels on government financial management.

I am not a finance wizard, a great entrepreneur or a prominent politician in charge of national finance.

But the reality is most of us are likely to be ordinary guys earning a normal income and living an ordinary life. The reality is most politicians and bureaucrats governing us and managing our economy are also ordinary people with an average intelligence or even lesser than that.

I think we have to be realistic; what we ordinary guys can’t do at personal level, we shouldn’t expect the government will be able to do.

If at personal level we shouldn’t squander our income, borrow thoughtlessly and take risks excessively, the national government too shouldn’t have done likewise. The government can’t do wonders for things that we can’t do ourselves.

If we are not gifted with making lots of money or showered with boundless inheritance, we should always live within our means. We may borrow to buy some big ticket items like homes and cars, but certainly we can’t borrow or run credit card debts on current expenditures like buying groceries, paying house rents, eating in fanciful restaurants or going for holidays.

If we do that, it means two things - either our income is too low or our lifestyle is not in consonance with our income. The solution is to increase our income or change our lifestyle. Taking more loans is not a solution. In fact, it will only add more woes.

I think this is the situation many Malaysians are now faced with. We borrow because easy loans are available and the process is really to help the banks making more money than helping us solving our problems. We live beyond our means because we want to keep up with the Joneses.

We treat loans like incomes, thinking that our income growth will be sufficient to take care of loan repayments in the future. Most of us know there is no free lunch and yet many of us are taking it.

Then we look at the government, which to me is worse than individuals. The government will deliberately grow their expenditures to match with revenues availability. Not only that, the government will continue to borrow because government spending must be maintained to keep certain people/sectors happy.

Do you think the government would have solved its fiscal problems with the Goods and Services Tax (GST) now in place if oil prices have not dropped precipitously? I don’t think so. A profligate government will incur new expenditures to match with additional revenues provided by GST and whatever borrowings it could lay its hand on.

This is a habitual issue - big spending must continue to keep the politicians and vested interest groups happy, not so much to benefit the economy in terms of capacity building or productivity enhancement.

Same problems like individuals

Soon, the government will face the same problems like individuals who do not know how to manage their finances. Wasteful spending can’t build human/social capital and infrastructure. Excessive borrowings increase debt servicing burden and increase the cost of borrowing which further reduce the government’s ability to spend.

Depending on sources of financing, excessive borrowings by the government are inflationary which erode the value of the currency.

So when the crunch comes, the government is at a loss on what to do. It cuts the allocations for education and scholarship not because these are the least important things to have, but because they affect the vested interests least. If we look at it at individual level, it is like a person cutting expenditure on his children education so that the family can go for holidays instead.

I think here lies the big irony. Many Malaysians actually look to government for help - Bantuan Rakyat 1Malaysia (BR1M), scholarships, health cares and other welfare payments. On the contrary, the government is increasingly looking to the people for bailouts - more taxes, more borrowings and higher inflation.

Certain mantras are worth repeating. We can’t solve fundamental problems by skirting around the peripheries. Fiscal reforms must include reprioritisation and prudent spending. I agree all of us must shoulder the burdens with budget cut, but it is only fair those enjoying the most thus far take a deeper cut. Politicians and bureaucrats ought to know what to cut and where to prioritise. If they don’t, then they are engaging in bunkum polemics.

If we think education and scholarships are important, then something must give. Taking the path of least resistance, to me, is not recalibrating a budget. It is a great charade.