Of Subsidies And Corruption

Of Subsidies And Corruption

Subsidies are on everyone’s minds these days. Even as the rakyat is faced with the bleak prospect of a more difficult future as the reduction of subsidies impacts on their lives, the government has to figure out how to go about unraveling subsidy frameworks that though attractive when introduced are now threatening not only the competitiveness of the nation but also its sustainability. There are risks – social, political, economic – that need to be confronted in an environment not necessarily conducive to objective and rational consideration of the very crucial issues involved.

Though complaining, and vehemently at that, is tempting, it will not get us very far. The fact that to a large extent the subsidy problems we face today are the result of poor economic management in the past does not help address the situation. Political consequences will follow, we have to deal with the issue. As in other countries, change is necessary. The question for us really is what changes should be made and how they are going to be managed.

We pay taxes in various forms, they are the principle source of revenue of the nation. It is mainly these funds that are used to pay for the operating costs of a given year. In the social democratic framework that we are supposed to have, some of this money is to be used to provide for basic needs such as healthcare, schooling and essential infrastructure such as a reliable police force, efficient and effective regulatory frameworks, electricity, clean water and roads. This is not just about building the hospitals and schools, it is also about maintaining them and ensuring that the services provided are a sufficiently high standard. The same goes for roads, water and so on.

This is how it is meant to be in theory. If implemented, many of the basic needs of an average household would be taken care of, without the need for additional expenditure. A significant amount of the monthly earnings of the average householder would be freed up, making it easier to face the prospect of increased prices from the reduction or even elimination of subsidies.

The reality is however very different. Those who can choose private schools and private hospitals, use toll roads, and employ private security guards or live in gated communities. Do not just take my word for it, ask the average Minister what his or her lifestyle choices are.

These choices are not necessarily prompted by elitism. It comes down to confidence, or the lack of it. The truth is that the public services are worryingly deficient, if not in levels of competence then in resources, to an extent that for many they are no longer a viable choice. This is especially true where children are concerned. Parents want to give their children the best, often at great personal sacrifice.

In some cases, there is no question of choice. The privatization of water, electricity and energy production and the steady increase in their pricing have had a domino effect that have left many having to manage increasing expenditure on shrinking earnings. Too slowly, Malaysians have woken up to the painful realization of how everything happening on the macro level around them has a direct bearing on their lives. The widening poverty gap is leaving us poorer by the day.

Which is why being able to depend on public services is so crucial. As we have however seen, that is not something we can do. What we are paying taxes for then?

It is indisputable that corruption has to a large extent pushed us into the corner we are. We are paying the hidden costs. Things are that much more expensive or that much more inefficient because somewhere, at our expense, someone is making a gain or someone who was not good enough is being given a contract. And the reality is that when someone makes a corrupt gain in the millions of ringgit, that is our money being handed over. That is our right to development that is being denied.

It is a sad truth that many of us will suffer the impact of a removal of subsidies, and suffer badly for it, because we have been robbed of the means to face these challenges by endemic corruption. We stand alone purely because the money we invested over the years to weave our safety nets has been stolen from us. There are not nets.

Managing change as such must involve increasing integrity, accountability and transparency. Corruption cannot be a part of the equation. Improving public service, regulating effectively and efficiently where it is needed and ensuring that things are priced based on their value rather than the private needs of a fat-cat official, will make it easier for Malaysians to deal with increased prices where those are really needed.

That is the least this government can do for us. It will save a staggering amount of money from cutting back on subsidies, money that can be deployed more effectively and equitably. Money that leaves no room for excuse.

(Malay Mail, 3rd June 2006)

MIS