Budget 2022 misses the mark on safety net programmes, reforms

by NUR HANANI AZMAN / pic by TMR FILE

MALAYSIA could risk a larger deficit in the future as safety net programmes need to be increased or be continued post-pandemic, an economist said.

The RM332.1 billion expansionary Budget 2022, according to economist Dr Nungsari Radhi, also missed the opportunity to conduct enough review of pre-Covid-19 government programmes to reallocate the funds for the pandemic recovery programme.

“I don’t see a serious review of big projects that have been costing the government a lot of money. All these mega projects that don’t really give direct benefits to recover from pandemic.

“I also don’t see a clear plan on broadening the tax or revenue base not just for 2022, but as we move beyond 2022. How to reduce the deficit in the future?

“Apart from that above RM100 million profit paying two-tier corporate tax, what are the new taxes or new sources of revenues?” he told The Malaysian Reserve (TMR).

Khazanah Research Institute (KRI) deputy director of research Hawati Abdul Hamid said improvements in the breadth and depth of coverage is welcomed, noting that the government may have considered suggestions received from the public for the Consultation Paper on Cash Assistance.

However, she stressed the overall approach remains largely unchanged — most glaring is that there is no concerted consolidation efforts as Bantuan Keluarga Malaysia (BKM) will continue to be managed by Ministry of Finance (MoF) and welfare assistance managed by the Social Welfare Department (JKM) despite both, to some extent, target similar groups (children, elderly and poor or low-income households).

“BKM still targets B40 (bottom 40%) households with more attention being given to the lower segment of the group. Depth of benefit is deepened for households with income below RM2,500, but benefit amount is reduced for those with income between RM2,501 and RM5,000 (the remaining B40s).

“Still, the programme relies on strict income thresholds for eligibility and does not account for household size beyond more than three children or dependents. As part of social protection reform advocated by KRI, redesigning BKM as Universal Child Benefit would be a good measure moving forward,” she told TMR.

BKM will channel assistance of RM2,000 to households earning less than RM2,500 per month with three or more children.

This assistance is an increase compared to the previous Bantuan Prihatin Rakyat where the highest assistance rate was RM1,800.

As for welfare assistance by JKM, while a higher income eligibility threshold has long been emphasised by many, it is unfortunate that it has only been raised to the average food poverty line income (PLI) of RM1,169 rather than the total PLI of RM2,208, Hawati said.

“This risks leaving out many vulnerable households from income security that at least can ensure basic needs. As no one is free from the risk of falling into poverty, a more universal approach that is forward looking in preventing poverty and addressing vulnerability is required.

“The existing social protection arrangements can be strengthened by adopting the inclusive life cycle approach that emphasises a universal provision of the social protection floor against major risks at each stage of an individual’s life,” she added.

While handouts for single persons were not explicitly mentioned in the speech, Budget 2022 Touchpoints published by the MoF indicated RM350 handouts for singles with income below RM2,500.

Research for Social Advancement (Refsa) economic advisor Frederik Paulus said the budgetary allocation to the Prime Minister’s Department is 80 times higher than that of Parliament and there is no mention of strengthening the parliamentary committee system, which could be a major asset in ensuring there is no leakage in the implementation of the budget measures.

“There are also some sizeable line items in the accounts with questionable descriptions, which could do with more transparency.

“The allocation to states, although it has increased slightly, still pales in comparison to the overall federal budget, even though the pandemic has demonstrated that responses finely tuned to the local situation are required,” he said in a statement.

Refsa researcher Jaideep Singh said while Budget 2022 puts Malaysia on the right track in terms of providing short-term assistance for households and businesses, he believes that it could go further in setting the stage for long-term policymaking.

“Given that the budget is the first under the tenure of the 12th Malaysia Plan, there should be clarification as to how the budget helps promote the development of emerging sectors, such as the care economy and the green economy, beyond the limited measures that have been included.”