Budget 2017 Part 2: The bad

Continuing from Part 1, now we look at things the government obviously did not think through well enough. Perhaps it was intentional, perhaps it was an ‘oops’ moment, or perhaps there are things which are in fact politically driven.

These points are some of the things that are obviously screwed up in Budget 2017.

What on earth happened to healthcare?

This needs to be said – expect more cuts in government hospital services in the next year. Budget 2017 has in fact cut even more in almost every expenditure line in healthcare, including medical supplies dished out by their pharmacy, as seen here.

Screen Shot 2016-10-22 at 3.52.33 PM.png
From MOF Budget 2017 report, MOH Chapter

If anyone is interested in going line by line, good luck. There are a lot of cuts in store for the Ministry of Health, even with the recently highlighted inability of government hospitals to provide medicine and service this year.

Why discounts for PTPTN defaulters?

In the earlier piece, I had said that it was a good idea. Unfortunately, the government has also announced a general amnesty against defaulters – particularly this paying either half or the full amount owed to PTPTN.

Why?

This has been done before, it didn’t work. Is it due to the PTPTN now affecting credit scores that it is once again on the table, with the hope that defaulters will now pay up?

Government needs to grow a pair and just use tough love in this case. Send PTPTN out to sue them and block their EPF contributions and withdrawals.

GLC internment fund, RM50 mil for 20K

This is also highly questionable. Najib announced that there will be RM50 mil dished out to government linked companies (GLCs) to take in and train 20,000 graduates. The thing is, can GLCs actually take in 20,000 undergrads?

My expectation is that this figure is too many for merely the GLCs. Instead, the government should have halved that figure and announced RM25 mil in tax rebates for multinational conglomerates (MNCs) and small medium enterprises (SMEs) doing the same thing.

It would encourage taking more local staff here in Malaysia, and also increase employment not just relying on the GLCs.

I’m glad Klang MP Charles Santiago spoke to similar points on this.

A house without a retirement fund?

Here’s the choice now put to Malaysians by the government. Take out your Employment Providence Fund (EPF) to be able to pay for a house, but nothing else. No education, no loan payments, nothing else.

This is the dilemma placed on those wishing to purchase a house through end financing as mentioned by Najib.

Car rebate only helps urban poor

Similarly, Najib announced that there will be a RM4,000 rebate to buy a Proton Iriz for those wishing to take part in either Uber or GrabCar. This, for two points, is not feasible.

Firstly, taking up a car means incurring costs of maintenance, petrol and tolls. At the same time, those who do go for it will have to burdened once again with debt – and quite honestly, our household debt figures are not entirely encouraging.

Secondly, is the limitations of Uber and Grab. They are city centric. Thus, there is no way this plan will actually help the rural poor unless either or both of these companies venture and open up new territories. Till then, what this plan does won’t help most of those living in rural areas or even suburban areas.

Dude, where are my tax deductions?

While I myself applaud the lumping of taxes in the form of a newly categorised ‘lifestyle tax’, a RM2,500 is not meaningful enough to win over the middle class. Allow me to explain.

Personally, since I only buy books, don’t have a gym membership and don’t plan on buying a computer in the next three years or more – it’s a boon. It means I can claim RM2,500 in just books, compared to the last few years where I was only entitled to claim RM1,000.

And if you look at the price of books now, it’s not hard to breach even spending RM2,500 a year.

But that’s my case.

For all the other middle income earners, it will be a lot less. They can no longer claim their computers and gym memberships and books separately – which could have totalled RM5,000 to RM6,000 in tax deductions. Now it is a RM2,500 total cap.

So to summarise, the government is now demanding more taxes from the middle income higher income groups.

Stop the microcredits!

This needs to be said by now, the microcredit scheme does not work. It doesn’t work because the number of success stories versus the amount of those given cash shows that the success rate is 1 percent to 5 percent.

In fact, I was surprised when Najib introduced 2 people who benefited from the Tekun loans during the Budget speech. How much have been given in loans? To how many? And to what end?

The truth is – Tekun loans are yet another handout/soft loan to people to go into small businesses¬†that don’t work. It doesn’t generate enough income, it doesn’t grow into SMEs and it doesn’t even guarantee self-sustainability.

It would have been better to give that money to Teraju to invest in assisting SMEs to export services and goods, especially with the TPP looming over our heads. These SMEs will need to expand now while the deal is still not finalised in order to compete with incoming competition worldwide without any assistance.

These are just a few points I’m thinking on that could have been better addressed in the recent budget, and I’m sure we will see many come out with their own thoughts. Hopefully, we will be able to read more on what is to be expected next year as we continually read the full report found here.

As with all budgets either by opposition or government, there will always be good and bad points to promote or harp on.

But let us not forget, the main agenda of these debates are to suggest better policies, and in this case spending – not just to win brownie points by yelling and walking out with placards in hand.

If the Opposition wanted to truly strike at the chord of this budget, suggest better policies.

If the government wants to make sure that this budget is workable, then it needs to prepare for backlash should they suddenly announce any supplements or sudden amendments.

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