Saturday, August 30, 2008

Budget 2009: Initial Thoughts

I wrote an immediate short column for Malaysian Insider yesterday after my budget forum on my thoughts with regards to the Budget for 2009 announced yesterday.

Not surprisingly, the media is full of praise of the RM35 billion allocated towards building a better public transportation system between 2009 to 2014. However, big numbers and big headlines aside, the actual allocation may not be that impressive.
Despite an impressive headline figure of RM35 billion allocated for public transportation, it actually only works out to RM5.8 billion a year over the next six years. In fact, if one looks carefully at the budget for the transportation sector, it has declined by RM1 billion to RM11.5 billion.
But what is of greatest concern will be the reckless spending spree the government seems to be undertaking. Barisan Nasional Pulai MP, Datuk Nur Jazlan wrote in his piece in Malaysian Insider that we should "Grow the Economy, Not Give it Away". Although he meant it in a different way, but I thought the title was apt in describing how we are just spending literally all our windfall (as opposed to hard-earned) tax revenues, particularly from the oil and gas sector, without a thought about saving for a rainy day.
Next year, the budgeted operational expenditure is another record RM154.2 billion. This figure is both shocking and scary as operational expenditure for the government when Abdullah Badawi first became prime minister in 2004 was only RM80.5 billion.

In just a short period of four to five years, government operational expenditure has increased by 91.5% or RM73.7 billion. This raises the question as to what the government is spending its money on which requires such substantial increase in operational expenses?

Even more worrying is the fact that most of the government's revenue is sourced from the petroleum sector. Last year, the estimated contribution of the sector to our government's coffers was 37%, but for 2009, this is estimated to increase to 46.4%.
There are a few separate tracks of criticisms that are worth further developing. And as I flesh them out over the next few days, I'll blog them here. So watch this space. ;-)
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