Thursday July 13, 2017
12:05 AM GMT+8

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JULY 12 — The Secretary General of the Ministry of Finance is confident that the budget objective of bringing down the Federal deficit to three per cent of GDP can be achieved.

That is good news. However, let us also note that this achievement will not only be the result of the steady GDP growth and the commendable revenue collection, but also because of the austerity measures that have been introduced on the operating expenditures of almost all ministries. Since the expenditures on civil service salaries and pensions cannot be cut and payments on interest charges and statutory grants to state governments must be honoured, the entire cuts have had to fall on discretionary budget items like travelling, entertainment, purchases of office supplies, maintenance of public buildings and other expenditures of a recurrent nature. The Treasury has pruned down a lot of the unnecessary expenditures in its prudent management of the Federal government budget. The officers have done a good job of spring cleaning.

On the other hand, we are hearing a lot of complaints from the sectors that have to take the heaviest cuts. I have been told by friends that university budgets have been slashed quite heavily to the extent that their research projects, especially those involving partnerships with foreign universities and research institutions have to be aborted as they do not have enough allocations to pay their share of the costs like hiring of contract research staff or paying the air fare of the foreign professors involved in the project.

University medical schools and teaching hospitals complain of inadequate funds to buy the equipment and consumables used in laboratories and science experiments. All departments are told that a vacancy in staff positions has to get JPA clearance before it can be filled. Often, the application is turned down. Austerity is a good virtue but if it is applied across the board and carried too far without considering the priorities, there is a big risk that the expenditure cuts will be counterproductive, especially if they cripple our educational institutions and research capabilities and demoralise the university staff and professors.

As education is an investment for national growth and prosperity, cutting its budget is like cutting our fingers. Similarly, health is also a crucial investment for our future. If the government feels that the heavy expenditures on these two sectors are not sustainable, then it should come out with alternatives of funding these two sectors. May be some universities or some courses have to raise their fees.

Perhaps also, university entrance should be strictly based on merit to limit the unrealistic size of the student population. Likewise, some hospitals and some specialist treatment may have to be charged full costs. Or introduce a national health insurance scheme, like in the developed countries, where the people contribute for their insurance benefits.

Until these plans are ready for implementation, the government has no choice but to provide adequate funding for the universities and hospitals to maintain the high standards that the public expects.

The biggest item in the operating expenditure budget is for salaries and pensions of government employees. Until something is done to control the size of the government and it’s over grown civil service, the budget will always have limited room for other expenditures.

We can no longer depend on the oil price. The lucky days are over. We have to pick ourselves up by the bootstraps and deal with the hard truths with political courage.

* Tan Sri Mohd Sheriff Mohd Kassim is a former Treasury Secretary-General.

** This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail Online.

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