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AMID all the fiscal and monetary policies and pro-growth and pro-business initiatives tabled yesterday in Budget 2023, one of the key takeaways is that the government proposes to put money in people’s pockets in anticipation of the hard road ahead.
A lot of time was spent by Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz on social safety net issues and initiatives, suggesting that the budget was more like a manifesto for the coming general election – for the people who are likely to go to the polls soon, the government knows you are hurting and it is offering some help to ease the pain.
If everyone gets something, who is to say that it is a bad budget, except of course the perennial boo boys, some of whom may have political aspirations of their own?
Yet, it is unfair to suggest it is all just that – a cynical vote-getting proposal.
Budget 2023 also follows the tried and tested formula of government spendings on largely infrastructure projects, and stimulating consumption and the economy by giving out cash via handouts, tax breaks, and incentives.
The former is to prime the pump of the economy, and the latter to get people to spend and consume and get the domestic economy going.
The RM372.3 billion proposed national budget among others tries to address the high cost of living and the post-Covid-19 recovery that has been the bane of successive governments for the past 18 months.
It is a budget that wants to grease the economy through infrastructure projects – and this time the development budget is valued at RM95 billion.
The Pan Borneo Highway, Gemas-Johor Baru Electrified Double Track project, East Coast Rail Link, the Klang Valley MRT3, RTS Link, and Central Spine Highway will offer respite to companies and F Class contractors with the jobs prospects following a sluggish construction industry post-Covid-19.
The government has to step in especially when the private sector is loath to invest and spend at uncertain economic times.
The RM15 billion flood mitigation plan for instance not only addresses the perennial concerns of flooding in the Klang Valley and monsoon-hitting states, but provides jobs and contracts that the government believes will stimulate the economy.
As an election budget, this is one that is different from previous budgets as it seems to be targeted at almost everyone – not merely the target groups of B40, or as some analysts now prefer to call the B60 due to the financial impact of the Covid-19 pandemic on businesses and certain sectors.
A 20% discount on National Higher Education Fund Corporation loans, 2% reduction in income tax for the lower income brackets, and RM2,500 special cash aid for civil servants read from the Umno playbook.
That some of these goodies will be handed out by March could also be indicative of when the general election will be held.
An increase in allocation for Sabah and Sarawak from RM9.8 billion to RM11.7 billion can also suggest that these Borneo territories not only have higher bargaining power, but are also deserving of more attention.
The Keluarga Malaysia theme continues to be emphasised through allocations of RM400 million for youth development, RM1.2 billion for persons with disabilities, and RM1 billion for senior citizen welfare – an increase of almost 50%.
That there is no income ceiling criteria for the RM150 per child back-to-school assistance, for instance, illustrates that this government is casting its net wide in ensuring all or at least most of the rakyat are addressed.
We have seen that the previous Pakatan Harapan promise of getting rid of the goods and services tax (GST), though reckless and irresponsible, was a popular vote-getter. Hence, the much-anticipated return of the GST was not in Budget 2023, which is understandable as a government heading for an election would not want a new tax to take over its feel-good narrative.
While the goodies are appreciated, however, what was silent or not apparent were steps to address recession, which is expected to unleash its full brutality in the first quarter of 2023. There are social safety nets, but the government’s high interest rates regime is likely to cost the economy in the short term.
The central bank, with an eye on inflation, would still be aggressive in its interest rates regime, raising them along with countries around the world. This will be a drag on the domestic and global economy, the tightrope that Budget 2023 has to do its balancing act on.
With the Finance Ministry getting the lion’s share of the budget with RM67.2 billion, it is hoped that more prudent and creative fiscal policies will be introduced to sustain the nation in the coming turbulent months. – The Vibes, October 8, 2022
