SATISFYING ‘NEEDS’
Budget should focus on ‘needs’ as they are items required to sustain a decent living
MALAYSIANS are awaiting the unveiling of the 2018 Budget, which Prime Minister Datuk Seri Najib Razak is scheduled to table in Parliament at 4pm tomorrow.
The budget has attracted a lot of attention not only among businessmen, investors and civil servants, but also among the public.
It will generate more interest as the country is preparing for the 14th General Election, which must be held before August next year.
Thus, observers and analysts are labelling the 2018 Budget as an “election budget”. In line with this, the expectation of the rakyat is higher, with their “wishlist” longer.
Many are looking forward to socalled “goodies” in the form of incentives, tax cuts or even outright gifts such as bonuses for civil servants and pensioners, increase in 1Malaysia People’s Aid programme (BR1M) payment, fishermen’s allowance and input subsidies for farmers.
As a leader of a responsible and caring government, Prime Minister Datuk Seri Najib Razak, who is also finance minister, would love to please and satisfy the wishes of every strata of the society.
However, everyone knows this is impossible. It must be appreciated that in drawing up the budget, the government has to take into consideration the amount of revenue projected to be collected and weigh it against the wishes of the people while, at the same time, ensuring the sustenance of the momentum of economic growth.
Although the country’s economic performance has been impressive for the last few years, with this year’s real gross domestic product (GDP) to reach 5.4 per cent compared with 4.2 per cent last year as per the recent acknowledgement by the International Monetary Fund, the government will still have to maintain its strict fiscal discipline and the promised gradual reduction of budget shortfalls to a near balance by 2020.
This year’s deficit stands at three per cent of the GDP. Coupled with that, the global geopolitical scenario remains uncertain despite the clear indication of an improving global economic condition.
Whatever the case may be, one thing that the budget is most likely to address is the issue of the rising cost of living, which of late, has been the subject of rumblings, especially among the bottom 40 per cent (B40) and middle 40 per cent (M40) of households.
This issue has always been the focus of previous budgets. This time around, the government is expected to continue with introducing measures to relieve the people’s burden. This is in line with the government’s strategy of taking care of the rakyat’s economy.
Nevertheless, no one should expect a miracle. Prices will rise with or without the introduction of new taxes. In line with the price increase, costs will go up, including the cost of living.
But what actually constitutes the cost of living? How is it defined? How does one measure it?
Economically speaking, it is closely linked with the Consumer Price Index (CPI).
Currently, items in the CPI basket are categorised as transport; food and non-alcoholic beverages; restaurants and hotels; health; furnishings, household equipment and routine household maintenance; housing, water, electricity, gas and other fuels; education; miscellaneous goods and services; recreational services and culture; alcoholic beverages and tobacco; clothing and footwear, and communication.
The items classified under these categories are generally the needs of an average person, which ought to be fulfilled to sustain a decent living. Items other than these are not considered “needs”, but rather “wants”, giving one the option of whether or not to satisfy these “wants”, depending on one’s financial ability.
The latest figures released by the Department of Statistics Malaysia show there is an overall increase in CPI at a rate of 3.7 per cent to 119.9 in August from 115.6 in the same period last year.
Among major groups that recorded an increase are the indices for transport (+11.7 per cent), food and non-alcoholic beverages (+4.3 per cent), restaurants and hotels (+2.8 per cent), health (+2.7 per cent), furnishings, household equipment and routine household maintenance (+2.7 per cent) and housing, water, electricity, gas and other fuels (+2.4 per cent).
A general increase in cost is a natural phenomenon in a freemarket economy. More often than not, it is caused by factors beyond the control of the authorities.
While going through the items, one should also ask oneself how often one travels (apart from work-related travel), dines at restaurants, stays at hotels or changes house furniture.
It may not be too far-fetched to assume that much of the current complaints over the so-called “high cost of living” is precipitated by the rising cost of food, including fish, which the government is taking measures to mitigate its impact, especially on the lower- and middle-income groups.
The increase in food prices has nothing to do with the Goods and Services Tax (GST), as claimed by some parties. This is because the affected items are either tax-exempt, zero-rated or subsidised.
The introduction of BR1M, the Kedai Rakyat 1Malaysia, the 1Malaysia Clinics and other programmes under the Social Safety Net are meant to relieve the two groups’ burden.
On transportation, the completion of the Mass Rapid Transit Sungai Buloh-Kajang Line last July should have taken care of the transport woes of the poor in the Klang Valley.
Bearing in mind the measures taken by the government so far, it is, therefore, fair to expect the people to also do their part in reducing their own burden.
They can do so by enhancing their earning capacity, either through higher productivity, increased efficiency or part-time jobs.
If possible, they should try to reduce their expenditure on “non-cost-of-living items”, or at least, postpone the desire to satisfy their “wants”.
Some may argue that the latest smart phones, celebrity tudung, WiFi subscription and an entire subscription of Astro packages are necessary and essential requirements in line with the country’s march towards a high-income status.
Well, if need be, so be it. But, bear in mind these items are not cost-of-living items. They are lifestyle requirements and the cost incurred should be referred to as “cost of lifestyle”.
In assessing the real cost of living, it is possible that there may be a tendency for some people to mix both, which can be alarming.
To avoid such confusion, perhaps it is better and wiser for the government to come up with a new formula or term to describe the nature of the current concern pertaining to costs incurred by Malaysians in their daily lives.
Perhaps, it could be called “Living Expenses”, derived by adding the cost of living and the lifestyle cost. The formulation should appear as: Cost of Living + Lifestyle Cost = Living Expenses.
The above is only a suggestion. Other terms can be thought of and popularised so long as they reflect the real situation. Bernama