Harapan pushes for increase in federal grants to states in budget document

This is taking into account Malaysia’s demographic changes.

Ahead of Budget 2022’s tabling in Parliament on Friday, Pakatan Harapan in its strategy document tabled today (Oct 27) proposed recommendations that include a fundamental change under the federal constitution on how the federal government funds the states, including increased allocations for Sabah and Sarawak.

This year, the opposition bloc had moved away from presenting a shadow budget to the government’s proposal as the strategy document was a result of multiple discussions and prior agreements reached with Finance Minister Tengku Zafrul Abdul Aziz, according to DAP’s Tony Pua, who was involved in the drafting process.

As part of its fiscal reform proposals, Harapan proposed an increase in the “capitation grant” currently listed under the 10th Schedule of the Federal Constitution, taking into account Malaysia’s demographic changes.

“Birth and immigration are putting pressure on public infrastructure and services, particularly those provided by the state and the local government.

“To improve services at this level and encourage decentralisation of power and responsibilities, we propose for the government to increase the average capitation grant to RM20 per person (from the current average of RM13.61 per person) for states that are currently below that level,” said Harapan.

The increase to involve approximately RM200 million in additional allocation will impact all states with exception of Perlis that recorded a capitation grant per capita of RM34.40, with a population of 255,400.

On the other hand, Selangor, with the highest population at 6,555,400, has the lowest estimated capitation grant per capita at RM12.19 per person.

On special measures for East Malaysia, Upko president Wilfred Madius Tangau, who was present during the document’s launch in Parliament, noted a proposed increase in a Special Grant under Section 112D of the Federal Constitution.

“While Harapan (as the then federal government) had doubled the rate in Budget 2020, the rate has been reverted by the previous Perikatan Nasional government.

“Harapan has proposed to quadruple the current rate as initially planned to RM106.8 million to Sabah and RM64 million for Sarawak,” said Wilfred.

Other proposals for East Malaysia include RM100 million as incentives to boost labour-intensive industries, providing both job opportunities and generating income.

‘Funding for Parliament reforms’

Referring to agreements reached under the Memorandum of Understanding on Transformation and Political Stability, Pua said Harapan has proposed the government channel fundings towards new Parliamentary Special Select Committees (PSSC) as a bilateral platform comprising backbenchers and opposition MPs.

“If the new committees are set up without adequate funding, all the reforms requested under the MOU will fail,” he added.

According to the strategy document, there are currently 10 PSSCs covering 20 ministries and the funding proposal covers additional new committees, extra allocations for more staff, capacity to engage experts, as well as facilities for a hybrid sitting.

Opposition leader Anwar Ibrahim in his opening remarks highlighted the government’s commitment to Harapan’s proposal for an immediate injection of RM45 billion Covid-19 fund.

Aside from new spending, the PKR president said Harapan through its Budget Steering Committee made recommendations on plugging leakages and cautioning the government to monitor large scale off-budget expenditures.

Harapan’s document themed “Recover and Build Back Better”, also involved consultations with non-government stakeholders, including the Social Security Organisation (Socso), Employees Provident Fund (EPF), and chief executive officers from the local banking industry.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s