Letter to the Editor, New Straits Times (for publication)
Alternative Budget Strategy Misrepresented

I am concerned by the poor command of the national language demonstrated by the NST.  The Barisan Alternatif’s ‘The People’s Budget for 2000: For Economic Recovery, Development and Justice’ was translated in its report into a garbled mouthful of meaningless words (NST, 28 Oct. 99).

More importantly, what was clearly described as the BA’s budget strategy was misrepresented as budgetary estimates, which only the government of the day is in a position to present, especially with the limited transparency the BN government practices.

To justify its budget strategy, the BA strategy analysed the extraordinary economic situation in our economy, especially since 1997. In doing so, we had to correct many misconceptions promoted since September 1998, including those falsely depicting Anwar as an agent of foreign interests responsible for the 1998 recession, and those claiming that subsequent NEAC policies have been responsible for the economic turnaround since.  Anyone reading the document would also know that I did not hide my own policy disagreements with Anwar, which the NST has previously highlighted.

For example, in August 1998, it was the NST which published my letter criticising Anwar’s speech mocking economists with outdated ideas.  My colleagues - including those with the NEAC - will be the first to testify that I have remained unfashionably Keynesian through the 1980s and 1990s, when many others were taken up with newer fashions associated with the rise of Thatcherism and Reaganism.

Also extraordinary was the complete misrepresentation of the basic counter-cyclical thrust of the BA’s expansionary budget strategy. Presuming editorial writer Chow Kum Hor (NST, 29 Oct. 99) is not stupid and did read the document, I can only attribute his gross misunderstanding to not understanding the national language and not having followed the English summary.

Datuk Kadir Jasin (NST, 31 Oct 99) would have done well to have actually read the BA strategy document, rather than rely on his colleague’s erroneous depiction of an expansionary Keynesian budget strategy as precisely the opposite. Chow and Kadir also quote unnamed sources who obviously have not read the document, and attribute to them denunciations of an imagined deflationary straw-man of their own making.

If Tun Daim’s Budget 2000 had been presented by the BA on Wednesday, it would surely have been denounced by the NST as irresponsible for ‘taxing less, spending more’.  If the BA had offered estimates other than those in the public domain, it would have been denounced for making up numbers, or for every little difference with the official estimates, no matter how insignificant.

Devoid of such ammunition, the NST and other mainstream press instead denounced the BA Budget Strategy as being devoid of numbers, while refusing to report the (admittedly limited) data it did contain. Yet, the NST seems curiously blind to the gross discrepancies in the government’s recent budgetary estimates; while this may be due to problems in presentation, a vigilant media should seek to clarify the situation.

Tun Daim’s Budget 2000 and the BA Budget Strategy are in agreement over the need for an expansionary budget to reflate the economy in light of the weak recovery thus far.  The main areas of disagreement are in terms of spending priorities, how to spread the tax burden and the appropriate budget strategy to stimulate a sustainable recovery.  Everyone should recognise Tun Daim’s different (expansionary) approach this time  compared to his first (Oct. 1984) deflationary budget for 1985, which many argue led to the recession in that year.

The BA would also have to support Tun Daim’s inclusion of our suggestion to scrap TV licence fees despite not having the time to incorporate this last minute addition into the detailed tax estimates.  Likewise, we welcome his adoption of our idea of a central clearing house for information and approvals for construction, which could help avoid yet another construction industry and property market collapse.  If we are serious about building a united nation as we enter the next millenium, it is important to recognise and stress such areas of bipartisan consensus.

Most government employees will also recognise Tun Daim’s generous response to the BA’s strong commitment to raising their morale by improving their remuneration and other employment conditions, though they would be disappointed by his omission of other BA proposals such as the proposed 5 day work week.

Malaysians will also welcome his raising the personal income tax exemption level from RM5,000 to RM8,000, though it remains well short of the BA’s proposed level of RM12,000.  They will also miss the proposed doubling of the allowance for children’s educational expenses as well as a host of other tax benefits proposed by the BA.

The BA’s Budget Strategy speech was meant to emphasise the policy thrust it is committed to, while recognising the limits to the role of government in an open market economy, which would constrain its role to primarily compensating for market failures.

Rather than emphasise balanced annual budgets, the BA is committed to counter-cyclically balancing budgets over the duration of a business cycle, i.e. achieving budget surpluses in good times to make up for deficits in bad times.  The BA is nonetheless committed to fiscal discipline and elaborated what this would mean, including more efficient tax collection and expenditure as well as scrapping unnecessary, luxury and mega-projects already announced.

BA fiscal measures seek to promote equity, encourage investments to hasten recovery and otherwise stimulate growth through demand and supply side measures. The BA would also want to improve the budgetary process and improve public expenditure regulation to reduce waste and even out expenditure cycles (e.g. the end of year rush).

Very importantly, the BA is committed to improved off-budget transparency, to reduce the problem of ‘contingent liabilities’ and the economic burden posed by non-financial public enterprises (NFPEs).  It would legislate to require that all NFPE accounts (including Petronas and Khazanah Holdings) be presented to Parliament, and hence to the people, to ensure greater accountability. For example, over RM60 billion - equivalent to almost two-thirds the federal government’s total debt - has been disbursed thus far by Danaharta and Danamodal since last year, but this huge amount does not even appear in the Economic Report or the Budget!

Unlike Tun Daim’s election budget, which proposes no new taxes, the BA Budget Strategy would have dropped tax exemptions on certain luxury items such as personal and corporate jets, antique and F-1 racing cars. While recognising its unpopularity in a pre-election budget, the BA was bold enough to propose increased levies on tobacco, alcohol and gaming, not only for revenue purposes, but also in the public interest.

To stimulate investments, the BA seeks to: increase tax deductions for all high value-added export-oriented industries; encourage loan growth for productive investments (manufacturing, agriculture and mining); limit loans for real estate and share purchases, other than for owner-occupied and first homes; and increase public expenditure for essential infrastructure, while reducing government liability for all unessential, luxury and mega projects.

While the BA would be more prudent in other areas of public spending, it would be fair to depict the BA as more strongly committed to social spending measures than the BN. The BA would have a bigger low-cost housing program, set up a Housing Development Corporation, establish a Commission for a National Health Insurance scheme, expand social security coverage and permit higher contributor borrowings from EPF for housing, education and extraordinary medical costs.

In light of the BN leaders’ declared confidence in retaining its two-thirds majority, it would have been in the public interest to correctly represent the BA’s budget strategy, even if only to make legitimate criticisms of it, and allowing your readers to judge for themselves.  Instead, we have these misleading denunciations of a straw-man, which is not only insulting to your readers’ intelligence, but does not enhance the quality of public discourse, which is so crucial for improving the quality of governance in this country.

I must, however, thank Datuk Kadir Jasin for correctly spelling my full name after his colleagues have managed to inconsistently misspell it in the NST for several years. While I am flattered by his appointing me as “Shadow Finance Minister” of the Barisan Alternatif (BA), I must respectfully decline as he has no authority to do so.

The BA has made clear that it is committed to collective leadership, in which Anwar is primus inter pares - no more big boss, taiko, supreme leader, pharaoh, fuehrer, and certainly, no one above the law, including Anwar.  No more selective prosecutions, selective investigations, and other manifestations of cronyism.

Many other non-partisan organisations and individuals, including many government employees, contributed to the development of the BA’s economic policy. I was honoured to be invited to represent them to make the Budget Strategy presentation (despite the brief notice given), demonstrating the BA’s commitment to consult and involve the people at large in improving the quality of governance in this country by establishing an inclusive ‘government of national unity’.

The NST (28 Oct. 1999) also made me a member of Parti Rakyat Malaysia (PRM).  While I have high regard for the progressive nationalist position represented by the PRM - and now embraced by the new government of Indonesia, especially by the parties of the new President and Vice-President - I have never been a member of any political party.Regrettably, I did not even register to vote until April this year, moved - like most of the 680,000 new registrants - by the shameful events of Black September 1998.
 

Jomo K. S.

1 Nov. 1999