Pakatan Rakyat Budget 2012 (Part 7 of 10)

6 Thrust 2: Sustainability

6.1 Inclusive growth One of the most important ways for Malaysians to contribute to our country’s progress is by being productive, working citizens.

However it is evident that the vast majority of Malaysians have not reaped the benefits of their work. Under the Barisan Nasional Federal Government, overall income levels remain low, inequality has leveled out at comparatively high levels and deep pockets of poverty continue to exist, as discussed earlier.

The current policies of centralising powers and funding with the federal government will, if continued, foster even more geographical concentration and further amplify rural-urban differences. Pakatan Rakyat will focus on developing income-earning opportunities across the economy and the nation. Also, inclusive growth rests on a vibrant economy that generates plenty of opportunities for all. Thrust 1 of Pakatan Rakyat’s Budget 2012 focuses on investment climate improvements such as labour market and economic reforms to reduce costs and barriers to new investments. Thrust 2 focuses on ensuring the growth is enjoyed by the rakyat spread across the nation, and sustained with investments in education, public transport, housing and crime-free secure neighbourhood while safeguarding the environment.

The focus of Pakatan Rakyat’s immediate and longer-term policies encompassing sustainability will revolve around the twin objectives of promoting public finance sustainability in combination with more urgent stewardship of Malaysia’s natural resources and environmental well being:

6.2 The Environment – Keystone to Quality of Life The Pakatan Rakyat government will give prominence to crafting policies to actualize a green economy to underpin an environment for the rakyat to live with unpolluted air, clean potable water, affordable housing, efficient transportation and life-prolonging healthy outdoor recreational facilities. An ecosystem will be created that values nonsquandering of energy use; waste disposal encompassing recycling and conservation of depleteable resources.

The array of environment friendly policies would encompass:

6.3 Security – let’s have more active policemen, not more policemen Half of Malaysians fear becoming victims of crime. Our serious crime rate is generally higher than our neighbours Thailand, Singapore and Hong Kong. We are outstripped in murder cases only by Thailand, and we have more reported rape incidents than Thailand, Singapore and Hong Kong.

Chart 6: We are outstripped in murder cases only by Thailand Sources: Laporan Tahunan PDRM 2009; Singapore Police Force’s Annual Statistical Report on Crime 2009; Thailand’s The Nation, “Crime rate up 10%, incidence of rape rises,” July 5th, 2009; Australian Crime: Facts and Figures 2010; UK Home Office, Homicides, Firearm Offences and Intimate Violence 2009/10; Hong Kong, Police in Figures 2010. These charts are reproduced with permission from independent, not-for-profit research institute REFSA (Research for Social Advancement)

Chart 7: More reported rapes than Hong Kong, Singapore and Thailand Note: Australia is excluded as its 67:100,000 ratio includes sexual threats, unwanted touching and indecent exposure Sources: LaporanTahunan PDRM 2009; Singapore Police Force’s Annual Statistical Report on Crime 2009; Thailand’s The Nation, “Crime rate up 10%, incidence of rape rises,” July 5th, 2009; Australian Crime: Facts and Figures 2010; UK Home Office, Crime in England and Wales 2009/10; Hong Kong, Police in Figures 2010.

These unenviable crime statistics are all the more exasperating when considering that we have more than enough policemen and a horde of auxiliary security personnel such as RELA as well as a thriving private security guards business.

The 106,079 policemen we had in 2010 is equivalent to one policeman for every 270 Malaysians. This 1:270 ratio is close to the 1:250 recommended for Malaysia, and better than our neighbours Thailand (1:321) and Singapore (1:396) and developed Commonwealth countries Australia (1:342) and the UK (1:380).

Chart 8: Malaysia has more policemen per citizen than many other countries (chart below shows number of citizens per policeman)

Sources: UNODC/HEUNI, International Statistics on Crime and Justice, 2010; Oral reply by Deputy Home Minister Datuk Wira Abu Seman to YB Wee Choo Keong (Independent – Wangsa Maju) in Parliament on 16 Mar 2011; Hong Kong Police Force, Police in Figures 2010; UK Home Office, Police Service Strength England and Wales, 30 September 2010; Australian Productivity Commission, Report on Government Services 2011. Reproduced with permission from REFSA.

While we have enough policemen, deployment is an issue:

There are plans to add another 50,000 officers by 2015, a huge 47% increase from last year’s total. This would take our police to population ratio to 1:209, far higher than the 1:250 recommended for Malaysia and that of many countries perceived as “safe” as shown in Chart 8 above.

Rather than unnecessarily increasing the numbers, Pakatan Rakyat will retrain, redeploy and upgrade existing police officers:

It is envisaged that such changes will result in enhanced security as well as greater public confidence in the Royal Malaysian Police. Pakatan Rakyat will strive to help the force to reverse the rakyat’s negative perception of the police. This change will restore community support and contribute to lowering crime rates. Stronger public confidence can then justify remuneration increases and help develop an even more professional police force.

6.4 Boosting regional and rural development through administrative decentralisation Economic activity and growth has been increasingly concentrated in the Klang Valley. In order that economic activity and growth opportunities are enjoyed throughoutthe nation, it is proposed that the states be given greater control and accountability over their finances.

The Pakatan Rakyat will strengthen the principle and practice of federalism enshrined in the Federal Constitution in which states will be accorded with a more equitable formula of power sharing and resource distribution.

For a start, Pakatan Rakyat will review the Capitation Grant. The present practice of giving RM72 per capita for the first 100,000 population, RM10.20 for the next 100,000 then RM10.80 and RM11.40 for the next 100,000 and remainder of the population respectively is archaic and does not taken into account changes in the level of development and economic needs of each state in our federation of Malaysia. Pakatan Rakyat will introduce a more dynamic formula encompassing various factors such as the amount of each state’s economic contribution to the federation, income disparity andlevel of development and economic needs. More generally, disbursement of federal funds to States will be standardised and consistent based on agreed standard rules.

Over the medium-term, Pakatan Rakyat will reinforce State and Local Government capabilities in expenditure management:

Together with growing state government capabilities, Pakatan Rakyat will review the allocation of federal funds to States and widen the allocation criteria and indicators to be utilised for this purpose. In principle Pakatan Rakyat will put the following policy measures in place over the medium-term:

6.5 Meeting our most fundamental need – affordable food Malaysia suffers a shortage of food production in Malaysia. In 2010:

The Barisan Nasional approach has been to become more involved in the food value chain by setting up more grocery shops, wet markets and eateries “for the rakyat” such as “Kedai/Pasar Rakyat” or “Restoran Rakyat”.

While providing much-needed relief to the lower income group, these ventures which offer products at below-market prices will eventually ‘crowd-out’ private enterprises. A negative cycle is then created as the remaining successful private businesses are forced out of business by government competition, putting Malaysians out of employment and further increasing the demand for even more “for the rakyat” ventures.

While maintaining these ventures in the near-term, Pakatan Rakyat will put in place longer-term, sustainable solutions. All aspects of the food supply chain from planting, breeding, wholesaling, distribution, transportation to marketing and retailing will be streamlined. Greater competition and efficiency will help ensure adequate supply of food at affordable prices:

6.6 Homes – The foundation of communities and nationhood Housing is one the three basic needs, besides food and clothing. Pakatan Rakyat considers adequate housing as a fundamental building block of communities which form the bedrock of the nation.

However, the development of communities is hampered by two major issues:

6.6.1 Build, then Sell Abandonment is a serious problem. As of 2009, 79,000 Malaysians have fallen victim to stalled or abandoned housing projects. The worst part is that this affliction is particularly rife in the low-medium cost markets. It is not enough that the victims are already poor, they are now being robbed at the same time.

This problem is a direct result of the current ‘sell, then build’ model that exposes Malaysian house buyers to great risk. In simple language, developers are allowed to sell as-yet non-existent units to finance their developments. The units will be built with the down-payments and progress payments from the buyers. Should the developer abandon the project, house-buyers are still burdened with the repayment of bank loans.

Pakatan Rakyat will implement a modified ‘build, then sell’ policy for all low-medium cost housing developments costing RM300,000 and below:

This ‘build, then sell’ model will also help reduce common problems such as poor workmanship and Certificate of Fitness (CF)and strata title issues. Developers will focus on building quality homes as promised in their marketing brochures as buyers will have the opportunity to inspect the homes before committing the final 90%.

This will not result in substantially higher house prices, as claimed by some developers. Already, the property market has seen the innovative 10/90 or 5/95 schemes where only a downpayment of 10% or 5% is required, with the rest to be ‘paid’ after construction is completed:

6.6.2 Affordable housing will be built House prices are rising beyond the reach of ordinary Malaysians.

Recognising this, the Barisan Nasional federal government introduced the “My First Home Scheme’ in February. Young adults earning less than RM3,000 per month will be granted 100% financing for houses costing between RM100,000 and RM220,000, with the repayment period spread over 30 years.

The drawbacks:

“My First Home’ addresses the symptoms rather than the cause. Income growth has not kept pace with house prices. Earlier in this Budget, Pakatan Rakyat outlines policies and measures to grow incomes. Concurrent with this, Pakatan Rakyat will also put in place policies designed to rein in house price inflation.

6.6.3 Affordable housing is a joint-responsibility of federal and state governments Affordable housing in the low and medium cost rangeis greatly needed but this market segment is of diminishing appeal to developers. It is clear that a government-led approach must be considered.

Hence, the federal government recently announced that the 1Malaysia Housing Programme Corporation will be set up to spearhead Projek Perumahan Rakyat 1Malaysia (PR1MA) affordable housing scheme. While the concept and intentions may be noble, this organisation suffers from some serious shortcomings, such as the fact that most land belong to the States and should necessarily be state-managed.

We believe that the solutions to housing problems faced by Malaysians must necessarily be solved via a State-led approach that combines legislation and financing at the federal level with development and enforcement at the State level.

The responsibilities of the federal government will be to:

Each state government will:

While federal grants will help to subsidise the developments, the balance of the cost will be funded through sale of units as well as through rezoning fees and development charges levied on developers.

6.6.4 Existing legislation will be fully-utilised to protect home-buyers There is legislation in placeproviding for protection of house-buyers and action against errant housing developers.

For example, if a project is abandoned or in danger of abandonment, Section 7 of the Housing Development (Control and Licensing) Act, 1966 (Act 118) allows the freezing of the errant developer’s bank accounts while Section 11 of the same Act accords the Minister powers to direct another company to assume control and carry on the business of the housing developer in question. Furthermore, Section 10A allows powers of entry, search and seizure on the premises of the errant developer.

These laws and numerous others have been provided for to protect the rights of house buyers. Pakatan Rakyat will enforce these laws as they were intended, sending the message to housing developers that Pakatan Rakyat considers housing of crucial importance to the people and the stability of the nation.

6.7 Public transport – moving people, not cars The share of public transport has dropped from 35% in 1985 to 16% in 2005 and has not significantly changed since then. This is very low compared to other Asian cities. In Bangkok, the corresponding level is 30%. Public transport usage is well over 50% in Manila (54%), Singapore (56%) and Seoul (60%).

Car-ownership is growing very quickly. 1 million vehicles are added to our roads every year. In 2005, there were less than 15 million registered vehicles. 5 years later, in 2010, the number of registered vehicles is over 20 million.At this rate, there will be over 30 million vehicles by 2020.

30 million vehicles will not be a symbol of wealth or progress. They will be embroiled in grid-lock. Urban roads are already extremely congested. Some are choked. Motorists pay tolls and yet are stuck in jams. It is clear that we will never be able to build sufficient roads to accommodate all these vehicles.

This increase in private vehicle use has been driven by the absence of efficient public transport alternatives and ambiguous policies. The Barisan Nasional government has a National Automotive Policy. There is no National Transport Policy. Furthermore, the cost of private driving has been made distortedly cheap by heavily-subsidised fuel.

A paradigm shift is urgently needed in our national transport priorities. Besides lost productivity, traffic congestion and excessive use of motor vehicles leads to unnecessary fuel consumption, noise and atmospheric pollution, accidents and environmental degradation.

With this in mind, Pakatan Rakyat will put in place a National Transport Policy that prioritises public transport. The principle must be “Move people, not cars”.This policy will include the following elements:

Public transport improves mobility – not just physically, but also socially:

In addition, good efficient public transport:

In Penang, the Pakatan Rakyat state government in Mar 2011 initiated the Bridge Express Shuttle Transit (BEST) scheme to reduce congestion on the Penang Bridge. Costing RM1.9 million ringgit per year, commuters are offered free bus services between the Penang Island and the mainland during peak hours from 6am to 9am and 4.30pm to 7pm. Even on this limited schedule, BEST is now carrying an average 500 commuters per day in each direction. This is equivalent to about 5% of the estimated 10,000 vehicles crossing the Bridge during peak periods.

Also, free public transport for all OKU will be given to enhance their mobility. This will be done with an allocation of RM20 million.

6.8 Education – empowering all regardless of background 6.8.1 Strengthening our religious and vernacular schools Education is crucial in building a progressive nation. And with a multiethnic and multireligious background, it is imperative that no one gets left behind. Pakatan Rakyat has found that in religious, vernacular and missions schools, there are certain shortages and lack of funding in various areas of which this coalition hopes to overcome with numerous initiatives in the budget.

Firstly, a shortage of Chinese, English, Tamil and religious teachers was found to be a substantial issue. Priority will be given to train English teachers as well to meet current needs. To resolve this, an additional 10 000 teachers will be trained and RM 200 million will be allocated for this purpose.

Furthermore, Pakatan Rakyat also recognises that a large number of SRJK (C), Sekolah Agama Rakyat (SAR) and SRJK (T) in particular have inadequate and deteriorating infrastructure and facilities due to insubstantial support. Pakatan Rakyat will allocate RM 200 million immediately to improve existing buildings and facilities of schools. Also, new pre-schools will be set up where needed. New schools will also be built particularly in urban areas where schools are becoming increasingly overcrowded and not conducive for learning.

6.8.2 Skils-based careers will be made desirable The Malaysian education system is academic-oriented. There has been a focus on paper qualifications, as evidenced by the proliferation of universities and the constant focus on the number of distinctions scored in public examinations.

However, not all youths are academically inclined – 70% of students do not pursue tertiary education. Also, as pointed out earlier, more than a third of household heads are informally employed.

Recognising this, Pakatan Rakyat educational policies will emphasise the importance of skills, and bring dignity to jobs in these areas. Pakatan Rakyat will bring lustre to skillsbased careers. Skilled workers will be recognised for their technical skills and expertise, and not looked down on as drop-outs forced to do menial tasks.

To this end, Pakatan Rakyat will increase resources to vocational and skills training including the incentives for apprenticeships.

The number of public universities has increased from 7 in 1990 to 15 in 2000 and currently number at 20.The number of private higher education institutions with full university status currently stands at over 70. In addition, there are another 400 or so private higher education institutions with university college or college status. The number of places available at tertiary institutions is clearly not a limiting factor for the 70% of students who do not pursue the path of a tertiary education post SPM and STPM. The availability of PTPTN loans also means that the financing a tertiary education is not a major obstacle.

Instead of increasing the amount of resources towards raising the percentage of the population who enter into tertiary education, a more sustainable and effective policy would be to increase the skill level of non-tertiary education inclined students through the improvement and upgrading of technical and vocational education and training (TVET). The development of human capital in this area is crucial as Pemandu estimates that approximately 40% of the 3.3 million jobs which will be created under the Economic Transformation Program (ETP) will require TVET related skills and expertise at a high level.

Currently, TVET suffers from poor public perception and is seen as the path taken for the less academically inclined and school drop outs. Resources are not adequately allocated at the secondary and post-secondary level towards developing TVET as a legitimate career pathway capable of delivering increasing wages as one’s skills in this area are developed. In addition, the multiple entry points towards TVET in various occupational areas increases the perception that it is a fall back option for students who cannot do anything else. The various government initiated training and re-training programs cannot helped but be seen as ‘redemptive’ projects for school drop outs. These training programs, which are run by the various ministries, also encourage duplication and waste valuable resources.

The launch of Skills Malaysia 2011 in January this year as a strategy to change the public perception of TVET is a positive development as is the ongoing effort to develop, standardise and refine the Malaysian Skills Certificate process in various industries.

But it does not go far enough.

These concessions and other agreements will be reviewed under the Unfair Public Contracts Act that Pakatan Rakyat intends to enact.

In terms of delivery, public healthcare personnel are stretched. Although the public sector provides for up to 85% of the population, it is served by only 25-30% of specialists and 45-60% of all registered doctors.This inequitable distribution has severely affected and compromised patient care and training of future younger specialists.

In addition, clear gaps exist:

Pakatan Rakyat will strengthen the shape of Malaysian healthcare in the future. Improvements will include:

6.10 Demand Management One of the many challenges facing government when managing the demand for public goods such as water, health, education, transport, even subsidies; is that the preferences of the rakyat are varied. The needs of different segments of the population, say by income level (poor-middle-rich), by time (today versus in five years), by geographic locations (urban-rural), by ethnicity, by occupation (farmer, civil servant, factory worker, professional); can be universal and have a common thread or could be entirely conflicting or dispersed.

Thus if government tries to satisfy the average citizen’s needs it might well end up not meeting the requirements of anyone, or if lucky, just some portion of the populace. This dilemma can be quite problematical when government has to determine the price to charge and the quantity to deliver of public goods.

A corresponding issue for government, given limited resources, is to establish pricing or distribution that does not lead to wastage or excessive consumption or abuse (for example, smuggling). In this Budget paper, Pakatan Rakyat will focus on water issues, but we fully recognize that there is a broader agenda that will need to be addressed in a holistic manner by a resolute Pakatan Rakyat administration if the rakyat chooses Pakatan Rakyat to govern.

Water demand management (WDM) will be implemented to maximize efficiency of water usage and secure long term sustainability of our water supply. It will serve to reduce the need for costly new water supply infrastructure which often entails significant social and environmental costs in addition to their actual direct costs. Planning for new water supply will therefore assess economic, social and environmental impacts and incorporate ‘least-cost planning’ when comparing supply-side and demand-side options.

Demand management will check and reverse the growth in average domestic consumption and the much higher growth in non-domestic consumption which has been outpacing real GDP growth as shown in the table below. We need to increase the economic productivity of water instead. A vigorous reduction of non-revenue water which remains unacceptably high will have to be a priority. Average domestic consumption stood at 219 LPD (litres per person per day) in 2010 compared 163 LPD less in many countries or regions.

Table 2: Average domestic consumption in selected regions

Sources: The 2009 Water Report, Queensland Water Commission, 2010; Ministry of the Environment and Water Resources, Singapore; Future water: The Government’s water strategies for England, Department for Environment, Food and Rural Affairs.

Demand management has to begin with a holistic vision of safe, secure and sustainable water for prosperity, social well-being and healthy ecosystems. The vision will embrace the principles of:

The potential savings are tremendous. It is conceivable that our nation’s water demand needs up to 2020 could be fulfilled without the need for expensive and environmentallydamaging massive new infrastructure. For example, aiming for targets of 165 LPD for domestic demand, a cap of 120 LCD for non-domestic demand and 20% non-revenue water by 2020 through a comprehensive demand management program, total demand would then be 11,632 MLD, compared to 14,065 MLD in 2010.

The national water authority, Suruhanjaya Perkhidmatan Air Negara (SPAN), in consultation with stakeholders and the community, will develop policy goals for domestic and non-domestic usage and for non-revenue water that specify intermediate and long-range targets and the timeframes to achieve them. The long-range goal would be to realise levels that are comparable to best practice.

Table 3: Water usage & GDP, 2005 vs. 2010

With respect to population served. Source: Malaysia Water Industry Guide 2008, Malaysian Water Association Excludes groundwater withdrawals used in situ. Source: Water demand management potential in Selangor, Kuala Lumpur and Putrajaya, Conference Proceedings, Asia Pacific Regional Water Conference 2011. James T. Cherian, Mar 2011. LCD, litres per capita per day Litres per connection per day

Similar issues apply to the provision of reliable, efficient electricity supply. The Energy Commission will be tasked with similar goals of developing benchmarks for electricity consumption and supply and specifying the timeframes to achieve them.

________ Statement by PEMANDU on 31 July 2011. This was based on a government-commissioned survey from Apr to May 2011. 49% of the respondents feared becoming victims. Oral reply by Deputy Home Minister Datuk Wira Abu Seman to YB Wee Choo Keong (Independent – Wangsa Maju) in Parliament on 16 Mar 2011. Staffing the police – More active policemen please, not more policemen. REFSA (Research for Social Advancement), 26 Aug 2011. PDRM sasar mencapai 150,000 menjelang 2015.Bernama 24 Mar 2011. Source: Ministry of Housing & Local Government (Bahagian Pengawasan & Penguatkuasa) My First Home Scheme: Myth or reality? Malaysiakini, 19 Mar 2011. Automobile emissions and the environment: The Malaysian experience. Fatima Kari and Rajah Rasiah.Available at http://www.idrc.org/CCAA/ev-132167-201-1-DO_TOPIC.html. Most of the new universities post 2000 were public higher education institutions which were upgraded to full university status, for example Kolej Universiti Kejuruteraandan Teknologi Malaysia became University of Malaysia, Pahang. These include universities which are funded by Government-Linked Companies such as Petronas, Tenaga and Telekom. For a summary of the history of skills development in Malaysia which includes TVET, see Pang, CL, Rajamorganan, N, and Sim, Simon (2010). Background Paper for Malaysia: Skills Development in the Workplace in Malaysia presented at the ILO/SKILLS-AP/Japan Regional Technical Workshop and Study Programme on Skills Training in the Workplace Overseas Vocational training Association, Chiba, Japan on 1-5 February, 2010. RM150m was allocated under the 10th Malaysia Plan to train 20,000 school dropouts. Reported in Four Strategies To Broaden Access To Quality Technical, Vocational Training.Bernama 10 June 2010. For example, aspiring medical practitioners are encouraged to take certain science based subjects at the SPM and post STPM levels, before embarking on a medical degree. Post graduation there are different options for these medical practitioners to be specialists and to increase their research expertise in different areas. WHO National Health Account Database by country. WorlBankdata.worldbank.org/indicators Shepard Donald S, William Savadoff and Phua Kai Hong. Health Care Reform Initiatives in Malaysia – A Report of a Consultation with the Planning and Development Division, Ministry of Health, Malaysia. October 16, 2002. Chee, Heng Leng. Current Health Care financing Issues in Malaysia. Asia Research Institute, Working Paper Series, No.18, National University of Singapore, February 2004. Wee Chong Hui and Jomo KS. Equity in Malaysian Health Care – An Analysis of Public Health in Health Care in Malaysia: The Dynamics of Provision, Financing and Access, Chee, Heng Leng and Simon Barraclough (eds), Taylor and Francis, 2007. Nicholas, Colin and Adela Bear. Health Care for the Orang Asli – Consequences of paternalism and non-recognition in health care in Malaysia: The dynamics of provision, financing and access. Chee, Heng Leng and Simon Barraclough (eds), Taylor and Francis, 2007. Poi, Philip JH, Duncan Forsyth and Daniel Chan. Occasional Paper: Services for Older People in Malaysia: Issues and Challenges. Age and Ageing Vol.33, No.5, British Geriatrics Society, 2004. Wee and Jomo (2007) shows in Table 6.10 that the amount allocated per household in 1998 to Sabah and Sarawak was lower than that of Perlis and Terengganu despite the larger area of coverage in the East Malaysia states. Ong also notes that there were only four hospitals, all in the Klang Valley, which were capable of providing geriatric services.

[Pakatan Rakyat Budget 2012 released by Datuk Seri Anwar Ibrahim on behalf of PR in Kuala Lumpur on 4th October 2011. Part 7 of 10]