OCT 30 — In most democracies, in a non-election year, the government’s plans on how to spend the people’s money is one of the biggest political events.  There is a certain theatre to the proceedings — showing off the bag containing the document (analysis suggests that the finance minister carried the document in what appears to be the same limited-edition black Braun Buffel bag as last year), besides the heaps of commentary afterwards.

There is the economic analysis of course: how Malaysian households will be directly and immediately affected, as well as more long-term considerations as a result of investment in infrastructure, or whether there are structural reforms or even a shift in government attitudes towards managing the economy.  

There is also the political analysis, observing whose votes are being courted and whose votes are being sacrificed, which ministries/states/component parties are being rewarded and which are being relegated. Financial friends noted the courting of ratings agencies, and there is a further political angle this time, from those who propose or otherwise comment (for reasons that are then deemed conspiratorial or treacherous) on the idea that a hypothetical defeat of the Supply Bill will result in the downfall of the government.  

In the Opposition’s alternative budget, too, there are certainly both economic and political considerations, but it has the advantage of being a statement of aspiration rather than a piece of legislation.

My colleagues at the Institute for Democracy and Economic Affairs (Ideas) have been actively responding to media queries on the budget, in particular, that care must be taken when it comes to handouts: to reduce the culture of dependency on the government, especially considering the decline in government  revenue from oil and gas (for which a sensitivity analysis of the macroeconomic assumptions would have been helpful), and the importance of addressing public confidence in political leadership and institutions that have a bearing on the economy.  

Some have characterised the budget as “robbing the rich to give to the poor” — particularly with the increased tax rates for those earning above RM600,000, contradicting the earlier pledge that income tax will be reduced with the introduction of GST — with a mistaken allusion to Robin Hood (who was actually restoring ill-gotten gains to their rightful owners).

Last year, I mentioned Ideas’s recommendations to generate better value for taxpayers’ money through improving Malaysia’s public contracting system, by incorporating new rules into the procurement cycle, improving accountability by strengthening investigation processes and punitive actions and enabling public involvement, utilising a streamlined electronic platform for information on procurement, enhancing the professionalism of procurement officers, and ensuring public private partnerships are bound by the same rules as other government contracting. This is of particular concern given that the government intends to pursue large infrastructural projects through such partnerships.  Several ministries expressed their support for such reforms but they have not yet fully come to fruition.

This year, Ideas was the local partner for the international Open Budget Survey, in which Malaysia scored 46/100 for transparency, as there is much more information that should be made publicly available, such as on potential contributions of new revenue measures, losses from tax expenditure and the extent of contingent and implicit liabilities (we have been told of the practice of using strongly-worded comfort letters that are essentially providing government guarantees to certain companies without the approval of Parliament).  Some good news is that a Fiscal Policy Committee is looking into contingent liabilities and the government is already committed to Outcome Based Budgeting, which means from next year, ministries will have to justify their budgets according to results achieved.

The Open Budget Survey scored Malaysia a measly 12/100 in terms of public participation, primarily because the executive offers little room for participation in the formulation stage, and there are no public hearings in Parliament, and there is no formal access for the public to identify programmes or agencies to be audited.  

Where Malaysia scored decently (67/100) was in oversight by a supreme audit institution, primarily because of the increased efforts by the auditor-general to engage with the public.  Indeed, many look forward to his report as it is one of the few documents that gives insights into government spending. This says much about how the Federal Constitution defines the powers of the auditor-general as well as the character and integrity of the person who currently serves in that position.

His revelations confirm the adage that it is easy to spend (or waste) other people’s money, and in these uncertain times, it is especially important that more institutions to check government spending are empowered.  If recent precedent is followed, there will be a Supplementary Supply Bill in a few months’ time; those who felt left out now will probably be eyeing that pot already.

* Tunku ’Abidin Muhriz is founding president of Institute for Democracy and Economic Affairs

** This is the personal opinion of the writer and does not necessarily reflect the views of Malay Mail Online.