Tomorrow will be another budget day. What can we expect from this?
I do not think anything drastic will be introduced, since this is really the last budget before the next General election.
I expect another round of goodies to be dispensed to the poorer sections of the people, which may not be a bad thing except that this act will be like pouring a small bucket of water into a house on fire–there might be a temporary relief of hardship for a month or two, but it will not have any long-term effect in solving the poverty issues of the poor. Even The old Horse has labelled this as ‘vote-buying’, but of course, as a seasoned politician, whatever thing said by him is not by chance, but may have a certain agenda to it. Is he finally drawing the line and throw his full support to someone else, instead of trying to play one against another? Whatever it is, he did play a part in ensuring BN did not get a good result in 2008.
The money from these goodies, be rest assured,will come from the pocket of your and me, the tax payers. But I do not think that there will be any new taxes this time around. To introduce GST now will be a big political risk.
SO how to fund the development projects, as well as operational costs(including giving goodies to the people and the civil servants)? Future money of course. Borrow and spend, that is. This is what deficit budget is about. Use the borrowing to fund spending.
Deficit budget is not necessarily a bad thing. But persistent deficit budget, or a deficit which is too high, is not healthy. Part of the operational budget goes to fund repayment of loans taken to cover the annual deficits, and this means that less money will in fact be available for proper development spending.
As I look at the whole economic situation, the main thing that is affecting a big segment of people is that they do not have enough disposable income, especially money that can be saved to buy a roof over their heads.
As early as 2003, when house prices were still within affordable range, I have voiced out about the need for government to build medium cost house. In a memorandum submitted to DBKL on KL 2020Structural plan, I wrote this:
While the Plan recognizes that there is a shortfall of 20600 units of houses in 2000, we noted that there is an oversupply of high costs housing (51% of total). There is inadequate supply of low cost housing (24.5%) and medium cost housing (24.9%). There should be a more equitable distribution of low, medium and high cost housing.
One of the most important indicators of a world-class city is the ratio of house price/annual income. Kuala Lumpur has one of the highest ratio 3.27. This means that most of the population is paying beyond their means and about 30% of their annual income is used to pay for housing when it should be less than 5%. We urge the government to provide more affordable medium cost housing to cater for the working population in the inner city in order to attract these people to stay in the inner city.
(the whole memorandum can be viewed here . I submitted this as I was then the State Secretary for a political party, and I wish to inform those whoare new to this blog that I am no longer political)
That was in 2003 . Now in 2012, the ratio of house price/annual income is even higher and most wage earners has no hope of buying a house in urban areas. This will have a long-term adverse social effects.
Something must be done , and though the government has of late realised the shortfall of medium cost housing, not enough has been done to build affordable houses for the middle-income group, which can only afford medium cost houses.
In 2003, when we talked about medium cost houses, we meant houses around 100,000 to 150,000. It is of course no longer feasible to build houses within that range that can be classified as medium cost. A more reasonable classification perhaps would be houses around 250,000 to 300,000.
Interestingly, PR has come out with an alternate budget, which is also election orientated. The main feature is of course cutting of certain taxes to boost disposable income, and the whole scheme is based on the assumption that huge saving can be obtained by having a cleaner and more efficient government. In other words, better management of leakages and wastage.
Whether they are capable of achieving that is of course up to your own judgement, but if more people believe in its achievability, then more votes will be going PR’s way.