Institut Rakyat has debunked the wisdom of the government’s move to hike petrol prices by 20 sen now in order to help increase the allocation of Bantuan Rakyat 1Malaysia (BR1M) recipients.

The institute said BR1M will only be given out between one to three months after the tabling of the budget.

“How will the poor deal in the interim?” the institute asked in a statement issued today.

NONE Furthermore, the institute, which is linked to Pakatan Rakyat, described BR1Ms as occasional ad hoc affairs.

“This is in comparison to fuel consumption which is an on-going daily expenditure for the rakyat. BR1M is not a solution for those experiencing an uncomfortably high cost of living from increased fuel prices.

“If we take the generous assumption that ad hoc cash handouts are a sustainable remedy for chronically low incomes, the gentlest approach for the people would be to only reduce fuel subsidy after the cash handout is applied. But this would still leave people deprived until the next round of handouts is approved,” it reasoned.

najib pc on petrol price hike 020913 Prime Minister Najib Abdul Razak announced the 20 sen price hike in RON 95 petrol and diesel prices on Monday and effective midnight on that day.

Najib said the hike was part of the government’s subsidy rationalisation programme, adding that higher payment of BR1Ms would help cushion the effect.

The price of RON 97 petrol also was raised effective midnight last night by 15 sen.

Domestic Trade, Cooperatives and Consumerism Minister Hasan Malek was also quoted as saying that the price of food was expected to rise by 0.1 percent following the petrol hike.

‘Promises evaporated’

Institut Rakyat pointed out that the BN government under Najib’s stewardship had made various pledges including last February when he was quoted as saying the price of RON95 would be sustained in spite of a rise in global petrol prices.

Former domestic trade, cooperatives and consumerism minister Ismail Sabri Yaakob had said last April that petrol is a major essential item and if the government increases the price, it will result in traders resorting to hiking their prices as well, and this will burden the people.

Najib had assured that same month that Malaysians subsidies would continue under his administration.

“Then BN won the general election in May. Four months later their promises have evaporated,” the statement said.

The institute warned that perennial dependency on cash handouts will not reduce the subsidy bill.

“Najib spent RM2.9 billion of public money on BR1M 2.0. With the promised increases the BR1M bill will increase to RM6.96 billion. This RM4 billion increase in BR1M will more than cancel out the estimated RM1.1 billion the government expects to save from rolling back fuel subsidies.

“Thus, the net result of the BN’s actions will be to increase both inflation and the subsidy bill,” it said, adding that the middle class would also feel the pinch as this group had to deal with fairly stagnant wages for over a decade.

Wastage and corruption main agenda

It added that in reducing subsidies, the government should first cut wastage and corruption .

azlan “A good part of our budget deficits incurred the past few years is attributed to covert and overt election spending by Najib. BR1M and advertising spending by the Prime Minister’s Department alone account for over 21 percent of our 2013 fiscal deficit of RM14.9 billion.

“Now that Najib has won his first elected term, why should these expenditures be maintained,” it asked.

A better approach, it said, is to correct the principles of sequencing financial reforms. These include improving the standard of living of the people which should be give priority; public spending must be cost-effective and development effective; practise give before you take away.

“If the rakyat feels the dividends of such policies, any rollback in subsidies will hurt less. Yet, with the lack of economic innovation coming from the Najib, the rakyat may have to wait until after the next elections for the tide that will float all boats.”

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