The “Unity” Budget 2021

Bridget Welsh, Malaysiakini

Over the weekend, Malaysian politics adopted a different pattern -away from division towards cooperation. For the first time, there were publicised (but closed-door) discussions with opposition/non-dominant parties over the national budget before the measures are to be announced in Parliament.

Informally, the budget process has long been a narrow consultative one, with “approved” organisations from consumer groups to business organisations offering ideas and registering objections.

The meetings this weekend between Finance Minister Tengku Zafrul Abdul Aziz, his officers and non-dominant government political parties – Pakatan Harapan members DAP, PKR and Amanah, as well as Muda and Umno – are markedly different. They brought in alternative voices and were based on mutual respect and openness.

Zafrul’s technocratic background contributed to receptive and constructive dialogues. The meetings reflect the reality that Prime Minister Muhyiddin Yassin’s minority government needs these parties to vote to pass the budget. As such, multi-partisan consultation and buy-in from other political parties for their support is necessary. Muhyiddin’s political weakness has become an opportunity for the country.

I argue, out of this weakness, there is strength: broader party engagement will improve the budget process. Not only will this engagement – if sustained and not sabotaged – assure the budget’s passage and allow the government to go about its business without being held hostage to political divisions and include all MPs in the confidence-and-supply agreement. It will also move the budget process towards a needed focus on policy as opposed to its predominant use as a political tool.

Policy push: Greater inclusion and spending

While the dialogues are still in the early stages, we see two important features in these discussions so far. Foremost, is a breakdown in the resistance to spending. Malaysia has been caught by pressures from the market rating agencies and external concerns about fiscal prudence to minimise spending. Debt concerns and limited revenue have predominated thinking.

While budget measures do need to recognise Malaysia’s strained financial realities, the engagement across party lines has shown wider acceptance of more spending in this crisis period. This broader political engagement across political parties provides for greater legitimacy for additional public spending.

Most of Malaysia’s budget – over 80 percent – is allocated to existing expenditures for salaries and running government departments. There are actually limited areas for alternative crisis-relief measures.

Multi-partisan support to go beyond the “normal” spending limits will allow policy-makers to adopt a broader set of measures during this crisis period. In particular, this will allow for a possible extension of the needed loan moratorium that is saving current businesses and individuals as well as open up more relief and social protection measures for the different communities facing hard times.

A second effect is the greater inclusive policies these talks can bring. So far, while Malaysia has adopted as a series of relief measures, the bottom third, those outside of the tax system, in the informal economy or lacking economic opportunities – disproportionately young and outside of Peninsular Malaysia – have been left out.

Calls to widen the safety net and to expand the Malaysia@Work scheme to address growing unemployment, for example, are especially needed. Further consultations will hopefully include more attention to Sabah and other regional/vulnerable areas especially hard hit by the Covid-19 virus, beyond the call for much-needed health care resources.

In particular, smaller businesses also need more support, access to capital to survive this crisis period. New ideas ultimately need to be brought to the policy process.

Opposition and non-dominant parties represent more than half of Malaysians, and their policy inputs can draw attention to the needs of different communities, often excluded voices and help shape policies to address ignored areas.

The merits of having opposition voices in policy initiatives during a crisis are significant. Constituencies starved of funds are being unfairly hurt by petty-minded partisanship, for example. Policy approaches that exclusively focus on a particular party’s core political supporters rather than the whole country will ultimately foster further divisions and anger in a time of a contracting economy. The gains from inclusion will strengthen Malaysia’s capacity to get through this difficult period.

Multi-partisan engagement can also “offer” a greater opportunity for the scrutiny of spending to reduce graft and potential abuses of spending. Whether this can be done without attacks in public, through quietly flagging unnecessary spending remains to be seen. The dialogue opportunity provides a venue to allow issues to be raised respectfully. The political attacks on each other are not helping move the country at this time when anger and frustrations are real.

People not politician’s budget

The multi-partisan talks also will help reduce the partisanship of the budget itself. The budget has long been seen as a means to shore up political support for the government of the day.

Taxpayer money and relief programmes have been couched as “gifts” from those in power. This thinking and practice have contributed to the polarisation and division in national politics. A multi-partisan approach can help transform the budget to putting people first, not politicians and their respective political fortunes.

Politics in Malaysia has long been about the personalities and their power, not the interests of the Malaysian people as a whole. There has been inadequate attention to and debate about the policies that are needed. While the rushed timing of these talks will likely push the trend toward more populist, people-pleasing measures, this trend is arguably necessary at this crisis period. It is a good start away from patterns of the past.

Much of the policy responses, however, remain reactive, driven by a desire to score political points with the people, as opposed to a genuine consideration of what makes good policy. The Perikatan Nasional government, in particular, has been especially reactive in its policy responses.

Moving forward, there is a need to move the conversation toward more proactive measures. The budget is, after all, only one tool and step among many that will be needed, including substantive reforms, that can help Malaysia survive and emerge stronger from this crisis.

Ideally, what is needed is more inclusive multi-partisan planning with technocratic and societal inputs. Economic and socio-economic policy making has long been too narrow, too top-down. The process itself needs to change – the multi-partisan talks are an important step in this direction.

Out of political conflict and contention, the country’s political elites have been given yet another opportunity. Let’s hope it is maximised in the days and weeks ahead.

BRIDGET WELSH is a Senior Research Associate at the Hu Fu Centre for East Asia Democratic Studies and a Senior Associate Fellow of The Habibie Centre. She currently is an Honorary Research Associate of the University of Nottingham, Malaysia’s Asia Research Institute (Unari) based in Kuala Lumpur.