Brimming with ideas of wealth redistribution

Bernama pic

The current conflicting views by the Pakatan Harapan (PH) government regarding the BR1M handouts warrant responsible and just resolution.

While the prime minister and his economic affairs minister claim that the BR1M handouts are akin to corruption by the Najib Razak government, the fact remains that the previous Barisan Nasional (BN) government’s BR1M cash handouts were actually a copy of similar cash handouts made by the Pakatan-led Penang state government after 2008.

After the 2008 general election, the Penang state government prided itself on a plan to give cash handouts of RM100 annually to every senior citizen aged above 60. It also introduced a scheme to wipe out hard-core poverty by ensuring that every family receives at least RM500 a month. Furthermore, BR1M was said to have been the brain-child of the former governor of Bank Negara and present adviser to the PH government, Zeti Akhtar Aziz. Surely she has something to say on the subject?

Now the new PH government has blamed the tight fiscal situation for stopping BR1M handouts. If that is so, let us ensure that this principle is consistently applied to all wasteful and populist splurges such as the open houses during each festival. All the same, it behoves us to construct a system that can alleviate the conditions that afflict our poverty-stricken Malaysians and, if possible, bring these marginalised communities into the mainstream of the national economic life.

At least BR1M is colour-blind

If there is one thing to be said for BR1M, it is the fact that it is at least a rare example of an affirmative action that is not race-based but based on need. In fact, soon after the 2013 general election, Dr Mahathir Mohamad blamed Najib not so much for this alleged corrupt practice of free cash handouts but for pandering too much to the Chinese and not giving enough attention to the Malays, who form the backbone of Umno’s support.

BR1M recipients must declare their assets

Nevertheless, the current system of BR1M handouts is susceptible to abuse. I know because I could qualify for BR1M based on my pension but I do not claim BR1M because I have savings which would place me outside the RM3,000 threshold that entitles me to the free handout. Now, how many BR1M recipients have similar savings or other assets but still claim these handouts?

BR1M recipients, like public officials, must be made to declare all their assets and those of their spouses and children. Malaysian public officials are only obliged to declare their income and assets, not those of their spouses and children to whom they bequeathed their properties and other assets when they decided to enter the political life. Likewise, BR1M recipients must sign a declaration that they have declared all their assets and those of their wives and children. They should suffer penalties for any false declarations.

A basic living wage that empowers the recipients

While some economists claim that these cash handouts will lead to higher domestic demand and consumption to stimulate the economy, others are concerned about rising fiscal deficits and inflationary pressures. They fail to consider the most important factor in all this: the long-term dignity and empowerment of the people in the process of a sustainable national development.

Now, a basic living wage would have positive effects on the lives of the poorest stratum of society as well as impact the general well-being of the economy. Without a social security system in place, cash transfers can ensure that the elderly are more financially secure and allow them to access health services. Low-income women receive baby benefits; the poor receive proper dental care; death rates related to addiction are reduced. Examples in other countries show that receiving an assured regular amount of money allows people to plan for the first time and this affects their lives in significant ways.

Ideally, the homeless and the unemployed could be given further incentives by engaging with them in opportunities to perform work that is essential for the community such as cleaning the streets and parks, recycling work or painting council houses. They could also be retrained for other work needed by society. Even if the market does not provide these opportunities, the state can create such jobs for the unemployed.

Improved social services through progressive taxation

For a sustainable economy and society, the lower income earning Malaysians require improved social and public welfare services and other reforms too.

First, we need fiscal reforms to ensure fair income redistribution by imposing a higher marginal tax rate on high income earners, an incremental capital gains tax on property and other progressive taxes on wealth and luxury goods. Other measures include plugging tax loopholes, reviewing capital allowances and tax holidays for foreign firms, and regulating and imposing a tax on all international financial transactions and hedge funds.

Secondly, we need to defend workers’ rights and interests by promoting their right to unionise; legislating a progressive living wage for all workers; ensuring full employment, retrenchment and pension fund for all workers; abolishing the contractor system for employment of workers; allowing workers and their trade unions to be part of economic influence and decision-making of enterprises, especially control of their pension funds; and promoting self-governing workers’ cooperatives to produce goods that are useful for society.

Thirdly, we need an improved free public health care system for all Malaysians which can be done by allocating at least 10% of the GDP in the annual budget to healthcare; implementing better conditions for doctors, nurses and hospital workers in the public sector; freezing the expansion of private hospitals and preventing leakage in the public sector to private contractors; and providing homes and daycare centres for the elderly and disabled through benefits and support services, including access to mobile healthcare.

Fourthly, we need a people-centred and caring social policy through the institution of a housing development board, managed by elected local councils to implement an effective low-cost public housing programme for rental or ownership throughout the country for the poor and marginalised communities, with adequate space for community activities, recreation and green areas; respecting the rights of urban settlers in any development plan to upgrade their area or to re-house them; prioritising the public transport system in the country while regulating highway construction and car traffic in city and town centres; providing child-care and crèche facilities in all public and private sectors; and providing rehabilitation facilities for those suffering from substance abuse.

A race-free basic living wage for the poorest stratum of our society can positively impact the lives of these Malaysians as well as the general economy. Recipients of this state assistance would have to be properly means tested based on the declaration of their assets.

For sure, this would allow people to plan for the first time and help the elderly to be more financially secure. Low-income women can receive baby benefits and death rates related to substance abuse can be reduced. Ideally, the homeless and the unemployed could be given further incentives through opportunities to perform work that is essential for the community. Finally, for a sustainable economy and society, the lower-income earning Malaysians require improved social and public welfare services and other reforms funded through progressive taxation of the rich and super rich.

Kua Kia Soong is the adviser to Suaram.

The views expressed are those of the author and do not necessarily reflect those of FMT.