In response to the revised Budget 2016 which was announced by Prime Minister Najib Abdul Razak last week, I would like to issue the following comments: None of his 11 measures announced actually induces the government to spend less or cut spending. Very far from it.

Instead of cutting spending, the government approach advocates increasing spending and pumping up economic demands. So, the Keynesian economic story goes - is this really working?

Take for example, the reduction of Employees Provident Fund (EPF) contributions for employees by 3 percent from March 2016 to December 2017.

Why cut mandatory retirement savings plans for employees? Imagine a father who is working as a security guard for so many years - who also saves and invests nothing more besides the EPF - now hit by a 3 percent reduction of it than he has money to sustain his family.

Of course, the government will say that this is a temporary measure to boost economic demands. So the father may be happy, but at what cost?

His retirement savings will shrink even further after the compounding effect of inflation and artificial low interest rates!

So, will you regard this action as sustainable?

The EPF officials might wonder how the father could save enough in his working years to provide a decent retirement with such a reduction, when it contradicts with the goal of the institution itself to make sure that enough money is saved for future retirements?

If the government wants the people to have more money to spend, why not cut taxes for personal incomes and companies? Or even cut regulations? What about effectively cutting government spending across the board, so that real resources would be available for the private sector that had formerly been absorbed by the government?

If the 3 percent reduction of EPF can increase private consumption by RM8 billion a year, imagine how much money people can save and spend if the government cuts taxes for personal incomes, companies, the goods and services tax (GST) and cost of regulations? People come first, right?

On the other hand, let’s assume that the government closes Percetakan Nasional Malaysia Berhad (PNMB) and the Civil Defence Department and sells the services and buildings on the market.

Civil servants 'winners'?

In the end who will provide these services, and how?

Is the government using the saved money from the closures of PNMB and the Civil Defence Department for other prospective spending - i.e. increasing the 1Malaysia People’s Aid (BR1M) allocation, or letting entrepreneurs use the buildings for new businesses - to satisfy consumer wants?

If I give one ringgit to the government, I would spend one ringgit less at a restaurant. Bad idea.

Retaining the services of 1.6 million of civil servants, politicians and ministers, is the dumbest decision - especially during tough economic times - that will definitely worsen our economic problems.

In The Borneo Post for example, Sarawak deputy state secretary Ose Murang said that civil servants ought to be part of the solution during this economic downturn, and emerge as winners by overcoming any difficulties.

He believed they could offer new hope and opportunities to the state, instead of ending up becoming problems to the entire situation.

Are civil servants really part of the solution when they have been expropriating resources from the market in the first place? Winners, hope and opportunities, seriously?

It does not make any economic sense to accept the fact that civil servants are not even given cuts in wages, benefits and retirement benefits or retrenchments while many private companies from various key sectors - including oil and gas, banking, retail and manufacturing - are taking bold steps to cut down their workforce to cope with the economic downturn.

If the service of thousands of Malaysia Airlines (a government-owned company) staffs can be terminated in order to revive the company, and being retrained for upskilling purposes as preparation for them to look for new jobs, why can’t the government treat civil servants in the same way?

If the civil servants oppose, then this will only reveal their true natures, attitudes and intents on working in the government.

As French economist Jean-Baptiste Say once noted: “The encouragement of mere consumption is no benefit to commerce, for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone furnishing those means. Thus, it is the aim of good governments to stimulate production, and of bad governments to encourage consumption.”

MEDECCI LINEIL is a member of the Institute for Leadership and Development Studies (Lead).