The budget tabled by Prime Minister Najib Abdul Razak has failed to address fiscal prudence, economic sustainability and rising cost of living, said Penang Chief Minister Lim Guan Eng.

Lim, who is also Bagan MP, said while Najib's budget dished out many goodies, it failed to address the three vital factors necessary to improve the country and the people's well being.  

Questioning the projected budget deficit, which the government claims would come down from 4.5 per cent in 2012 to a projected four percent next year, Lim said last in year's budget 2012, it was announced a projected total expenditure of RM232.8 billion.

This year's Economic Report 2012/2013 the total expenditure projection is RM252.4 billion, which is almost RM20 billion more.

Lim said Malaysia is fortunate that the projected revenue for this year is RM207 billion which is more than the RM186.9 billion initially projected, otherwise the deficit may balloon up to 6.7 percent of the GDP rather than the projected 4.5 percent.

However, Lim warned that the global economy is showing signs of slowing, while oil related revenue is expected to decline, so actual revenue may not meet the projections.

The Bagan MP also said while Pakatan Rakyat does not object to the government giving the people financial assistance, it questioned efforts to plug leakages in the BR1M program such as when a MCA datuk in Pahang was said to have received the aid meant for poor families.

Initially RM1.8 billion was allocated for BR1M for 3.4 million households but soon it increased to in excess of RM2 billion for four million. Lim said BR1M is expected to accommodate an additional 2.7 million people who earn less than RM2,000 a month.

Breaking the bank?

Lim said following BN’s dismal record for financial prudence, especially in light of an upcoming election, he believes the ruling government in funnelling out taxpayers’ money to buy votes, giving handouts irresponsibly, risks breaking the bank.

“I would not be surprised if our total expenditure will be RM30 billion over budget and our budget deficit for 2013 would end up well in excess of five percent!”

He noted that Najib's budget provides incentives and handouts, favouring certain projects and parties, rather than for longer term objective of sustainable economic growth that will benefit everyone.

“These incentives will skew the system against hardworking Malaysian entrepreneurs who are not in the position to receive and benefit from these incentives.

For example, he said Budget 2013 give preferred incentives and tax treatments for companies who want to locate to and developers who want to build in the Tun Razak Exchange formerly known as the Kuala Lumpur International Financial District.

 

Lim expects there will be an increasing glut of commercial office space in Kuala Lumpur.

While the government had announced the setting up of 57 new Kedai Rakyat 1Malaysia stores in Sabah and Sarawak at a cost of RM386 million, Lim said the funds would be better spent to improve roads in the two states which will help reduce prices.

“Like in Peninsular Malaysia, this move will hurt the owners of the kedai runcit (sundry) stores who cannot compete against the government subsidized KR1M stores,” he said, adding the PM is going back on his word of a major thrust of the New Economic Model (NEM) and also the impetus behind the Economic Transformation Program (ETP) where mainly one entrepreneur benefit.

No solution to rising costs

He said Najib's budget, the last before elections is called, also failed to bring about long term solutions for the problem of rising cost of living, especially in urban areas.

Crime, Lim said is one of the main drivers of high cost of living, where businesses will have to spend

more on security, where they will expect to pass the costs to consumers.

“Residents who have to pay for private security have less disposable income. Sadly, the measures which are in Budget 2013 to reduce crime is much to be desired as there are no recommendations to reorganise the police force which among others sees Special Branch officers which numbering twice as many than the investigating officers as the Criminal Investigation Department (CID).

The Penang chief minister said the ambitious program to build more than 100,000 affordable and low cost houses will come to naught if these projects are not integrated with public transportation and with  car prices still at very unaffordable levels for the lower middle income, the issue of affordable and low cost housing cannot be seen in isolation from public transportation.

‘Pakatan budget fairer to all’

He said Pakatan Rakyat's budget is more fiscally prudent as its projected a deficit at 3.5 percent which is lower than the Najib's tabled budget.

“A more conservative budget would give us more room to manoeuver, if Pakatan does take over power at the federal level and puts its budget in place.

“Pakatan's budget is also more economically sustainable in that we do not attempt to favour one sector or project over another.

“Instead, we will abolish monopolies, abolish unfair practices and increase competition in all sectors of the economy.

“Pakatan's budget also gives more focus on long term solutions to address cost of living issues,” he said, that include a proper redeployment and reallocation of police personnel, increasing involvement of  local authorities in reducing crime and providing public transportation alternatives.

“We also propose to reduce and abolish toll rates to put money back into the pockets of the people and find new ways of providing affordable public housing,” he said, adding that Pakatan has already demonstrated it can govern with fiscal responsibility, as shown by the Pakatan state governments in Penang and Selangor.