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POLITICS

Sheriff : The Budget.

The budget is essentially a short-term plan dealing with next year’s financial allocations to the various ministries of govt. The longer-term outlook and strategies will be presented when the five-year plan for 2021-25 is tabled next year in parliament around April.

It will discuss the medium and long-term prospects and problems and the policies for achieving the development objectives . This will include the development projects that the govt will spend on thru the annual budget . .

Then in the middle of the 2021-25 period, the govt will undertake a mid-term review of the five-yr plan to take into account the latest changes in the economic environment and the adjustments that need to be made. E.g if in three years’ time, the projections need to be revised downwards, the govt will make the necessary changes to cut down on its expenditure programme.

As shown in Treasury annual report, the federal development expenditure has not increased very much over the years. But operating expenses have shot up a lot due to the rapid increase in payments for salaries and pensions of govt employees – teachers, doctors, nurses the civil service, police, military..

Much of the development expenditure on projects like highways, airports, electricity, telecom, MRT are done off-budget thru the GLCs and special purpose vehicles like PLUS, PRASARANA, MRT Corp and many more. Their expenditures are not shown under the Federal budget.

Since the introduction of the PPP and PFI models of financing govt projects, after the 1998 financial crisis, even some hospital and education projects may not appear in the Federal budget. These PPP and PFI mechanisms were introduced about twenty years ago to tap into the private sector financial and management resources so that the constraints on federal govt financing will not hold back the country’s progress.

Our highway development would not have progressed so fast if we had relied entirely on the traditional method of federal spending. PLUS and other privatized highway companies spend more on highway road construction and maintenance than what JKR spends with federal budget allocation. All this expenditure is paid for by the public thru the tolls, thus saving the JKR hundreds of millions of ringgit annually.

Thus although the federal dev budget is smaller than the operating budget, the expenditure on public sector projects remains high because of the off- budget expenditures under GLCs , SPVs , PPP and PFI.

The govt needs to ensure more transparency and accountability among all these off-budget agencies in view of the important role they are playing in the country’s development, more important than the govt itself. Their tender procedures etc need to be monitored to ensure no cronyism, favouritism and corruption. The boards of these GLCs must be free from political interference.

Sheriff

 

 

 

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