I refer to the news item, “Pension, healthcare costs more pressing than RM1 trillion debt” published on Friday.
To begin with, it is not just pension, healthcare and other expenditures that contributed to debts. It is also big money thrown at projects and programmes that yielded very little results.
In fact, with higher debts resulting from uncontrolled expenditure, debt servicing and repayment too have become a pressing and protracted issue.
Whether new government or old, I have always maintained that it must do two things – effective spending and fiscal discipline. If we do not have these two, it is almost impossible to balance our books.
Effective spending means making a ringgit “worth more” than its current value. Healthcare takes up a big allocation. But do we really know how to look at cost-effectiveness in hospital administration, medical supplies and human resource deployment, et cetera?
The same goes for the education ministry and public universities – have we really used our resources effectively and frugally?
Perhaps it is good to find out by comparing the budget or cost of running a public university/hospital with that of a private university/hospital of equivalent size.
Please don’t get me wrong, this is not the same as budget cuts. Effective spending means getting more with the same allocation or getting the same with less allocation. In this regard, I support what the sports ministry is doing now – getting to the bottom of mega spending on football programmes which have yielded little result.
If I say, without any study, that most ministries and agencies today are “over budgeted” by at least 20% (say 10% due to overpricing and 10% due to wastage), is this farfetched? The “fat” in central contracts, tenders and the malfeasance highlighted in the annual auditor-general reports are known to most of us.
The issue here is: have we really pressured the top echelons of ministries and agencies to deliver more with less? Many of them were given higher grades in recent years, but have they been able to deliver more as resource managers and not as pen-pushing administrators?
On pension, I think this is more related to the number of public servants, their grades and salary levels rather than on whether the pension is based on “contribution” or “non-contribution”.
For contribution (EPF type) pension, the government, as an employer, must pay the contribution for each public servant upfront. For non-contribution pension, the government will pay later when the government servants retire. I can’t see any big savings from this unless the government cut their benefits which may be against the law and the constitution.
What we can do on pension is to control the number of civil servants, their grades and salaries as well as the pensions enjoyed by politicians. I think it is time for the government to disclose the pensions of retired politicians, some of whom can get as many as five or more pensions depending on the posts they held earlier.
If government expenditures continue to outstrip revenues, there is no way we can pay off the accumulated debts. With more debts, debt servicing will become more daunting, now hovering at around 15 sen for every ringgit spent. I am not sure this figure includes servicing of all guaranteed debts of off-budget agencies and government-linked companies (GLCs).
At some point, we must exert fiscal discipline on ourselves. It is really nonsensical that when the government runs out of budget options, it then resorts to off-budget agencies, GLCs, public-private partnerships (PPP) and private finance initiatives (PFI) to continue with its wayward ways. Now, the bubble has become bigger and there is almost nothing left really for development expenditure.
It is about time we impose fiscal discipline and instil “value for money” budgeting. Those who can’t deliver more with less should be replaced by those who can.
I hope my voice would be heard and acted on by the new government.
TK Chua is an FMT reader.
The views expressed are those of the author and do not necessarily reflect those of FMT.