By TK Chua
I refer to a news item, “Austerity without priorities bad, says ex-finance ministry sec-gen” as reported in FMT . What Mohd Sheriff Kassim, the former secretary-general, said is true. Budgetary restraint must be prioritised. Otherwise, we are just managing numbers but ignoring consequences and outcomes.
But I think it is more than that. We have to ask how the budgetary problems we face today came about. Let me quote you two numbers as reported:
- The salary of public servants in 2003 was RM22 billion, but it increased to RM74 billion by 2016.
- In 2003, the pension of civil servants was RM5.9 billion, and in 2016 the amount soared to RM19 billion.
Over 13 years, the salary of public servants increased by 236% while the increase in pension was by 222%.
To me, Malaysia’s budgetary problems have been more than 13 years in the making. For 13 years, we allowed the salary and pension of public servants to run wild, thinking that the Malaysian economy would somehow be able to digest and outgrow these two monsters.
What has been Malaysia’s average GDP and income growth between 2003 and 2016? At most, they did not exceed 10% per annum in nominal terms. How then can we expect the salary and pension of public servants to remain sustainable?
I said it a long time ago, the Treasury and the Public Service Department (PSD), the two most vital public service agencies, have been helmed and managed by top officials who were probably too afraid or too “politically correct” to put their foot down on sustainability issues.
They created posts, expanded departments and agencies, and increased the salary scales of public servants without any qualms or due consideration.
If we think the problems we face now are insurmountable, I suggest we think harder and deeper for the coming five to 10 years. I do not need to do any study. I am of the view that the full impact of public service expansion, of indiscriminate salary increase as well as the looming pension bills, has not run its full course yet. The worst is yet to come.
It is all right if top civil servants in the Treasury and PSD want to label me an “alarmist”. We will see.
TK Chua is an FMT reader.
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