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The finance minister’s Budget speech is NOT the budget

Steven Sim  |  Published:  |  Modified:

MP SPEAKS I have pointed out on social media last Friday that Prime Minister-cum-Finance Minister Najib Abdul Razak’s 2017 Budget excluded two critical women’s health programmes, i.e. mammogram screenings and HPV vaccinations.

In the 2016 Budget, these items were already set to zero, but were still reflected in the Estimated Federal Expenditure under the Women, Family and Community Development Ministry. After my colleagues and I protested, the federal government reinstated the programmes during the Committee Stage debate.

This year, both items are nowhere to be found in the Estimated Federal Expenditure, whether under the Women, Family and Community Development Ministry, the Health Ministry nor the PM’s Department.

However, a few people pointed out to me that in Line 291 of his Budget Speech, the finance minister actually mentioned allocating RM30 million for these items.

What is happening here?

In-speech-but-not-in-budget discrepancies

This “in-speech-but-not-in-budget” discrepancy is not limited to the women’s health programmes.

In Line 207 of the Budget Speech, Najib said that the Malaysian Communication and Multimedia Commission (MCMC) will spend RM1 billion to improve the coverage and quality of broadband in the whole country. In the Estimated Federal Expenditure for the Communication and Multimedia Ministry, the parent ministry of MCMC, only RM57.5 million is being allocated under “development expenditure” for “Broadband Project”.

In Line 224, Najib announced “another good news”, where MCMC will be allocating RM340 million to provide free tablets for 430,000 teachers nationwide as teaching aid. This “another good news” is actually “another missing item”, nowhere to be found in the Estimated Federal Expenditure. In fact, allocations for services and supplies to primary schools and secondary schools are cut by 82 percent and 64 percent respectively, compared with the 2016 Budget!

My colleague, Ong Kian Ming, had also pointed out other “in-speech-but-not-in-budget” discrepancies.

Should we be concerned? After all, the Budget Speech already mentioned all these “goodies”.

Budget Speech does not bind the government to act

In the Supreme Court of India’s judgment in the matter of Amin Merchant vs Chairman, Central Board of Excise & Revenue & Ors, the court decided that “The speech of the Finance Minister and the financial/budget proposals duly passed by Parliament are two separate and distinct documents; the law as enacted is what is contained in the Finance Act after it is legislated upon by the Parliament.”

The Indian Supreme Court went on to assert that, “The Finance Minister’s speech only highlights the more important proposals of the budget. Those are not the enactments by Parliament. The law as enacted is what is contained in the Finance Act.”

To put it plainly, our finance minister’s Budget Speech is NOT the budget.

Najib’s Budget Speech outlines government budgetary policy for the coming year. The speech is supposed to highlight economic climate of the country as well as key items from the Budget. Understandably, it will usually contain “good news”. This in itself is not a major problem.

However, the Budget Speech is NOT the budget. There are no details on expenditure and revenue, and it does not mention every single budgetary item, only highlights. This in itself is also not a problem.

Details of the budget are found in the accompanying documents tabled in the Parliament, i.e. the Estimated Federal Expenditure, Estimates of Federal Government Revenue, and, the Economic Report.

These will eventually be enacted into Supply Act and Finance Act, etc. Government spending and revenue-raising activities for the next financial year will be bound within the limits set by these legislations. Technically, this is the Budget.

So what happens when the Budget Speech announces a “good news” that is not found in the Estimated Federal Expenditure nor the Estimates of the Federal Government Revenue?

In such case, there is no guarantee that the “good news” will be executed; simply because the Budget Speech is NOT the budget. Hence, the Budget Speech is not binding on the government.

Najib’s speech lacked professionalism and quality

As such, Najib’s 2017 Budget Speech was not only highly political, taking cheap potshots at the opposition and dissidents, but it was also highly unprofessional and lacked quality.

Yes, there were a lot of entertaining sideshows with powerpoint presentation and comical antics by the finance minister, but instead of highlighting key points of the (real) Budget, he chose to deliver an entertaining political ceramah with dubious budgetary announcements where “good news” mentioned were not found in the actual Budget.

Even if these missing items are actually in the Budget, but are either hidden and re-categorised under other descriptions, it only goes on to show how confusing our budget documents are. This will make the scrutiny of the budget very difficult, even for experts.

Many parties, including my honourable colleagues and I, had pointed out the shortcomings of our budgetary process in the past. For example, the budget documents themselves do not give us the whole picture of government spending.

Other than the “in-speech-but-not-in-budget” discrepancies described above, there are also off-budget items, including government expenses, debts and liabilities, thus hiding the actual financial situation of the government, the infamous unapportioned multi-billion ringgit slush funds at the sole disposal of the prime minister and many others.

In fact, Malaysia was ranked 49 out of 102 countries in the 2015 Open Budget Index (OBI) produced by International Budget Partnership, scoring only 46 out of 100 (Indonesia 59/100, Philippines 64/100). The report concluded that “the government of Malaysia provides the public with limited budget information”.

A Malaysian think-tank, the Institute for Democracy and Economic Affairs (Ideas), in its April 2016 report titled “How can Malaysia’s Budget Documents be Improved?” commented that the “Executive Budget Proposal”, which includes the Budget Speech, Supply Bill, Finance Bill, Estimated Federal Expenditure, Estimates of Federal Revenue and the Economic Report, are considered to be of “inferior quality”.

Such unprofessional and low quality Budget Speech does not deserve the attention of Members of Parliament, who chose to protest on Oct 21 by staging a walkout during the finance minister’s delivery, rather to sit there silently.

Rest be assured, we are ready to debate the actual Budget at every stage in the coming weeks, despite knowing fully how flawed the whole system is.


STEVEN SIM CHEE KEONG is the MP for Bukit Mertajam.

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