A closer look at the 2011 Budget.

Yes, I know the hot topic at the moment is the UMNO General Assembly. I will write on that later. Have no fear.

But at the moment, I am not quite finished talking about our recent budget. It's an important financial road-map for our country. We can't trivialize it and so, laborious as it is, we have to discuss about it. It's about the use and application of our money.

Let us begin by telling something about spending taxpayers money. Let's start by analyzing the Pemandu outfit. Yes sir, the unit headed by Mr. Scrooge, cut subsidies Idris Jala.

It is distressing. Here is why.

Idris Jala who warned the government can go bankrupt if subsidies are not reduced gets over RM 12 billion to run his outfit. Most of it will go to paying consultants like Mckinsey who were the people who actually prepared the ETP and the various KPIs and other acronymitis infected outfits. NKRAs, NKEAs, GTP, PPP, so on and so forth.

Contrary to widespread belief- writing of Idris Jala is not my favorite subject. Writing of the myth about his extraordinary talent is. for example, I thought his presentation of the ETP was just pyrotechnics accompanying the entrance of professional wrestlers.

The one who says lets curb spending is spending like a wild man out of the jungles of Sarawak. When I wrote that the ETP was possibly crafted by McKinsey quite a number of people said that I underestimated Idris Jala.

Well, actually he wasn't the one who prepared the whole show. He was just a presenter of the show and if you have people who pronounced tertiary as ter-tia-ri, then we wouldn't be surprised they will ogle at him showing off the PowerPoint slides.

Unfortunate description, but I have to say it. So the next time, a minister comes to you and say lets conserve and be prudent, you tell him to FO!.

And I say this for reasons I am backing up. Idris Jala failed to curb the continuous rise in government expenditure. Idris' various outfits are themselves now big spenders,. Its all there in Budget 2011.

This makes people angry. You preach to us about curtailing spending but you don't bat an eyelid asking for the sky is the limit allocation of taxpayers' money on yourself. Officially, PEMANDU is given an allocation of RM 20.67 million in 2011 An additional item of RM 897,800 under "Dasar Baru" or new policy is also given to PEMANDU. There is also a "one-off payment" of RM18.43 million for PEMANDU. On top of that , the PM has allocated RM136.87 million for contract worker's emoluments is utilised by Idris' outfits.

Idris Jala seems to have a free hand to spend our money.

Only in Malaysia, under NTR-Najib Tun Razak, are alphabets pricey items. NKRA for crime fighting was allocated RM9.1 million, education, RM 22 million, and 1Malaysia, RM 38.42 million.

In addition to that, the delivery task force of NKRA for Low Income Household costs RM 265 million how will this scheme work? Najib's style is to go around to Kampungs , identify some houses to be repaired and then allocate RM 8000 per house to rectify.

Consider next , the operation cost of NKEA. It is even costlier than NKRA. It's going to get RM355.9 million.
That is the cost of operating it. Under the development budget, NKEA will be allocated a total of RM 11.86 billion in 2011-2012 in which the estimate for 2011 is RM5.4 billion – more than 10 percent of the entire development budget for 2011.

The man who sent shivers to many by claiming that we can go bankrupt is now spending like nobody's business. Where is the essence of frugality usually associated with a budget?

A budget means you accept that your financial outlay is limited and you therefore allocate your limited resources judiciously.

Most of the time, I suspect people in power fail to appreciate the gravity of having deficit budgets. It's never an excuse to justify you failure to contain spending. The usual suspects for justifying spending includes such banalities like having to spend to help the poor and the aged, we need to spend ir order to develop and so forth. Most of the time, I thinks these excuses are overworked. Deficit budget may actually mean financial indiscipline and profligate ways.

It is a fallacy to assume that OUR money will be rightly applied by other people. They won't. They will spend it in the name of the will of the people. Most of the times its nonsensical.

I remembered reading what Milton Friedman once wrote: (1) wasting public money is not as painful as wasting one's own, thus why there is little incentive to learn from past mistakes, (2) that government policy may be plagued with vested interest and hence not represent people's will.

What do we get from surrendering our assets? For the Sungai Buloh project, what's in for the government? The Sungai Besi project. Yes, that one wheeled by our Jho Low with people from Malton chipping in.

One time in New York, Najib was huddled with his team of advisors. Enter young Jho which had Najib's mostly mentally-challenged advisers taken aback. later Najib walked out of the room talking privately with Jho Low. That's how close the PM is with Jho Low.

Everyone MUST interest themselves on the nation's budget. It's our money. And remember those people spending it are doing whatever they want to do with our money. Like appropriating over 100 million for a program to nurture exceptionally intelligent children. How many of them? Did the Malaysian Chinese who got to become top student at Cantab go to a permata-like school in Ipoh? Compare that amount with that allocated to Sekolah Agama Rakyat.

Spending our resources on unproven hunch about exceptional clever children. Hello brother, some children are more precocious at younger ages. That money is better spent on upgrading students accommodations so they they can study in better environs.

Let's take a look at sources of revenue.

The main sources of our revenue are:-

• Income tax            38%
• Non tax income        26%
• Indirect taxes            13%
• Import duty            1%
• Export duty            1%
  

  Now you may point out rightly, that's only about 79%. Not quite enough. For the shortfall, the government borrows from the public. They issue bonds for example. Institutional IOUs. To make them more palatable, issue Islamic bonds- sukuk( plural), sakk(singular). That way, god fearing Malays and non Malays are keen to buy some equity in preparation for after life.

This is hardly glossed over. Instead we are taken on a road trip to an imagined glory days- an MRT which is super-fast landing in Singapore on a Singapore-owned facilities since we have given up over 400 acres of KTM owned land of 999 year tenure. We exchanged that for some pieces of land belonging to Singapore of 99 year tenure. On top of that, we are going to pay 60% of the SD1.8 billion development charges.

We gave up a property of 999 years for that of 99 years. If that happens in another country, the government of day would have fallen. Instead we called it a success. No wonder Singapore leaders are looking at our leaders as all form, but no substance variety.

By the way, where will get the money to pay the development charges? Will it come from government coffers? Now, that will be part of the budget probably hidden as debt servicing charges?

Debt servicing charges. These are costs for money borrowed by the government. The keen eye will notice that charges on borrowings( caj perkhidmaan hutanf) is 8.7% of 212 billion. That's about RM 18 billion.

Has the government performance in this aspect been prudent? It is, if we can show, the amount of borrowing from the public has gone down. How can measure that? We measure the portion as part of the GDP for example. If the debt servicing portion is becoming an increasingly larger part of the GDP, then we can infer faulty financial management. How come? Because it implies that we , the present generation is careless in bequeathing increasingly larger amounts of debt on future generation. Not the permata generation. The sekolah atap or the Chung Hwa Type or Batu Talam Tamil school types. They will suffer and be angry. They are not going to support BN.

The fact of the matter is, the charges on debt servicing is increasing signaling the government is borrowing more. This will in turn mean, the charges on debt servicing and the burden of shouldering larger debts will be borne by the next generation. Our children will inherit a debt ridden economy caused possibly by our government's profligate ways.

What is the portion of public debt as of GDP for example? In 2009, public debt as a portion of GDP was almost 55%.

Debt is good just as Gordon Gekko proclaimed Greed is good.