Low cost housing allocations have been greatly cut since the mid-1980s. The government scrapped its low cost housing programme, ostensibly because the private sector would build low cost houses more efficiently. However, the government has continued to fail to achieve its greatly reduced revised targets.

Prime Minister Dr Mahathir Mohamad himself has betrayed the late Tun Abdul Razak's promise of a 'house-owning democracy'. For Mahathir, the people could choose between house or share ownership, when most low income families can afford neither.

In Malaysia, the average ratio of house prices to annual income is around 8 to 10, compared to 4 to 5 in the US, ie the economic burden is twice as heavy for inferior housing in Malaysia.

For a long time, subsidised housing has been allocated through Barisan Nasional parties, notably Umno and the MIC, as a political bait or bribe to attract members, especially in the cities.

Some Umno and MIC leaders now own several low cost houses, while many low-income families still cannot get their own houses except in squatter areas.

Recently, the smallest ministry, the welfare ministry, was divided between two woman ministers. Thus, the government gives the impression that it is concerned about the plight of women and other less fortunate groups.

In fact, however, allocations for the two ministries remain very modest, and should be significantly increased to finance needed programs. The tax system can also be used to ensure that living allowances are paid by fathers to their children and wives or ex-wives.

Until now, the government has yet to implement the 1967 cabinet committee proposals for a more comprehensive social security system, and not just compensation for industrial accidents.

The present system serves to absolve negligent and irresponsible managements from responsibility for workers' safety and welfare. A more complete and comprehensive system should be developed to care for the unfortunate, such as those who lose their incomes due to economic downturns or the illness or death of a husband or father.

Although several types of social expenditure provide benefits to most people, on the whole, social expenditure has failed to reduce inequalities. Therefore, like taxation, public expenditure too is biased and unfair.

Increased inequality

The impact of the tax system has increased inequality, while government spending is biased to the rich, especially cronies, though there maybe some trickle down to others. As the Malay saying goes, while the cronies enjoy the meat and fat, the common folk only get bones and feathers.

Recently, there has been considerable economic analyses that clearly shows that excessive inequality inhibits economic growth. As emphasised by the late Prof Ishak Shari, economic development in Southeast Asia has been far more modest than the earlier economic success of Northeast Asia as inequality in Taiwan, South Korea and Japan has been much lower than in this region, including Malaysia.

Hence, an alternative budget strategy should have two objectives. First, fiscal strategy should counter economic cycles. During economic booms, there should be budget surpluses, as in the mid-1990s. Conversely, when the economy is in decline, fiscal means should be used to increase the growth rate and stimulate the economy with budget deficits.

However, efforts to increase spending should be targeted. Increased spending in the last four years has been mainly aimed at bailing out influential corporate interests, i.e. crony businesses. The alternative approach must instead privilege the common people's interests.