Putrajaya’s spending glut still evident in Budget 2014, Guan Eng says

OCTOBER 27, 2013

Penang Chief Minister Lim Guan Eng said that the budget reflected
Putrajaya's lack of seriousness in curbing wastage. — Picture by K.E. Ooi

KUALA LUMPUR, Oct 27 — Lim Guan Eng scoffed today at Putrajaya’s pledge of fiscal prudence in its budget for 2014, insisting the government had not adequately embarked on moves to trim its deficit or rein in expenditure by fighting corruption.

Instead, the Penang Chief Minister accused the Najib administration of digging an even deeper hole in the pocket of Malaysians by introducing the new Goods and Services Tax (GST) for 2015, effectively forcing consumers to pay more while Putrajaya continues its spending spree.

“The increase in the federal government debt to nearly 55 per cent of Gross Domestic Product(GDP) at RM541 billion by end of this year from RM502 billion last year shows that the federal government is neither serious about reining in expenditure nor in fighting corruption,” he said in a statement here.

“Promises of managing spending prudently is meaningless when no action or punishment is meted out against those responsible for the excesses, wastage and financial wrongdoings amounting to RM6.5 billion that were highlighted in the 2012 Auditor-General Report with a negative impact on the economy,” he added.

The DAP secretary-general went on to accuse the government of being “deceitful” in claiming that replacing the Sales and Services Tax (SST) with the GST would only reduce taxes paid by the ordinary Malaysian.

He cited figures given recently by Minister in the Prime Minister’s Department Datuk Seri Idris Jala, who had estimated that a GST rate of 7 per cent would increase the government’s tax revenue by some RM27 billion a year, or an additional RM1,000 yearly each for every one of Malaysia’s 27-million population.

At the announced rate of 6 per cent, Lim said, each Malaysian would have to fork out an estimated RM850 every year.

But in Putrajaya’s new cash handout under the Bantuan Rakyat 1 Malaysia (BR1M) programme, only RM650 had been announced, instead of the previous RM1,200 figure that the government had suggested.

“How can an extra cost for each Malaysian of RM850 yearly help Malaysians from the lower income group who only receives RM650 per family per year?

“On average, a family of 10 would get RM650 but has to pay RM 8,500 from the 6 per cent GST,” he pointed out.

Most disappointing of all, Lim said, is that the government had also failed to announce more foolproof measures to combat corruption to plug leakages in the administration.

“Has the Prime Minister given up on fighting corruption?” he asked.

He echoed DAP MP Tony Pua’s remarks on Friday regarding to increase in revenue collection for 2013 to RM14.4 billion, agreeing that the money should have resulted in lowering the projected budget deficit of 4 per cent to 2.6 per cent of the GDP.

“The budget deficit for 2013 should have shrunk from RM39.9 billion to only RM 25.6 billion or 2.6 per cent, but yet remains stubbornly at RM37 billion or 3.5 per cent of GDP.

“Clearly, the government is not serious about reducing the budget deficit when it wastes extra money received on white elephant projects like the RM5 billion 100 storey Menara Warisan,” he said, referring to the mega project.

“What is the savings of RM 400 million from abolishing the 34 cents sugar subsidy as compared to the RM 5billion spent on building Menara Warisan?” he asked.

During the tabling of Budget 2014 on Friday, Prime Minister Datuk Seri Najib Razak had confirmed speculation of the unpopular consumption tax when he announced its implementation at 6 per cent starting in 2015.

But with expenditure in Budget 2014 weighing in at RM264 billion, Putrajaya showed no signs that it was letting up on its excess spending - a point that several lawmakers have raised since Friday.

The government came under pressure to address its chronic deficit when ratings firm Fitch downgraded the country’s sovereign debt outlook from “Stable” to “Negative” in July, citing weaker appetite for reforms following Barisan Nasional’s reduced mandate in Election 2013 and poor public finances.

Among the key changes demanded by the ratings firms was for a broadening of the country’s tax base such as via the introduction of the GST.

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