JANUARY 23 — Selangor State Chief Minister, Azmin Ali, earlier this week reiterated Pakatan Harapan’s (PH) refusal to hand out the Bantuan Rakyat 1 Malaysia (BR1M) cash aid should it defeat Barisan Nasional (BN) in the upcoming general election.
Chief Minister Azmin Ali was adamant in his insistence that BR1M cash handouts are electoral bribery, echoing earlier sentiments from the chairman of Parti Pribumi Bersatu Malaysia (PPBM), Dr. Mahathir Mohamad.
Opposition leader, Dr Wan Azizah Wan Ismail contributed to the dialogue by disagreeing with Dr Mahathir Mohamad. She rejected the allegations that BR1M equals corruption, supporting the notion that BR1M is monetary aid.
Earlier labels of BR1M as bribery, however, have not been shed even though Azmin Ali’s party, Parti Keadilan Rakyat (PKR), and PPBM have essentially reversed their positions on the welfare aid by saying that a variant of BR1M shall remain in their prospective alternative government. These latest statements regarding BR1M are the latest of many confusing and often contradictory positions within the opposition coalition itself.
BR1M is not bribery
Contrary to the opposition’s rhetoric and popular perception, monetary aid – and in our case, BR1M – is a form of economic stimulus. But before we go into explaining the function of BR1M as an economic “Red Bull” – a stimulant of sorts to revive a flagging economy, we should debunk the misconception that BR1M is a form of corruption and bribery.
The argument against BR1M by labeling it as graft and electoral bribery is flawed as the same standard should also apply to all government initiatives. If BR1M is posited as vote buying, other welfare measures like affordable healthcare and education funding should also be adjudged as electoral bribery. It is hypocritical to apply a double standard by classifying one government initiative as bribery while giving other government schemes a free pass. The economic welfare of low income groups is as important as their healthcare and education.
BR1M is a welfare scheme devised to increase the spending power of lower income groups in order to help alleviate poverty levels, combat rising costs of living, and also to stimulate economic activity in the consumer market. It is a legitimate government initiative, one that is comparable to the Penang state government’s scheme that provided cash handouts of RM100 annually to senior citizens aged above 60 years old and the Selangor state government’s free water program.
Additionally, an important part of the accusations against BR1M’s intentions falls apart upon further scrutiny. BR1M distribution is entirely based on individual or household income levels with no discrimination based on political affiliations or voter registration. Furthermore, BR1M registration is carried out in government premises like the Urban Transformation Centre (UTC), not political party premises. Registration can also be done online.
Moreover, BR1M distribution is done by banks. Political parties are not involved in the process. Most importantly, BR1M eligibility is not conditional to political support, not at all.
Interestingly enough, PKR lawmaker, Wong Chen, had also earlier on made a statement in support of BR1M’s success as an effective incentive scheme in helping the needy, with the aid distributed directly to target groups.
Monetary aid as economic stimulus
When governments elect to give cash handouts to a certain group of people who are usually from lower income groups, they boost the purchasing power of those individuals. In one fell swoop, cash handouts are able to alleviate poverty as well as stimulate economic activity, cum growth. The target groups for cash handouts will most probably spend their money on basic supplies and household items, boosting domestic demand and consumption. In turn, this provides a boost to local small and medium enterprises (SMEs), increasing their revenues and keeping their businesses afloat in tough times. Cash handouts are also cyclical in nature. When the government hands out monetary aid to lower income groups, they’ll collect tax revenues from the transactions, mainly from the Goods and Services Tax (GST).
There is also research to support monetary aid’s role in economic stimulus. They crux of this model rests on the assumption that the money handed out or taxes rebates are actually spent and recirculated into the economy.
In the backdrop of United States (US) government tax rebates, households spent 20 per cent to 40 per cent of their rebates on perishable goods, like food, during the period of three months in which they received their checks, according to a 2001 report by the National Bureau of Economic Research.
A common practice
Monetary aid is a common welfare policy practice by governments around the world to help the needy while providing an extra boost to a limping economy. As pointed out above, the US government carried out tax rebates in the wake of economic impotence in the years 2001 and 2008.
Additionally, the Australian government also embarked on a A$42 billion one-off cash handout scheme to combat fallout from the 2008 recession. The aid included A$950 bonus for families with school-age children and A$900 for Australian citizens earning less than A$100,000 annually.
Launched primarily to support the Australian economy, recipients were urged to spend the money on locally-owned enterprises to keep their fellow Australians in employment. By all accounts, the outcomes would suggest that the fiscal interventions were successful. The Australian economy avoided two consecutive quarters of Gross Domestic Product decline and unemployment figures were above expectations as they did not rise anywhere close to feared forecast levels.
Last year, according to a group of British economists, direct cash aid to households might prove a more effective way to prop up Britain’s flagging economy than interest-rate cuts from the Bank of England. The group conveyed their concerns via a letter to the Guardian newspaper urging that the Bank be allowed to fund tax reductions or direct cash injections to households in order to increase household disposable incomes.
Even the Singaporean government regularly execute cash handout schemes, with various cash incentives for new families, elderly, or just as a celebratory gesture – every Singaporean received 500 Singapore dollars in 2015 in celebration of the nation’s 50th birthday.
Getting priorities straight
Politicians are supposed to advance and protect policies that benefit the people. It is irresponsible for opposition politicians to ridicule and smear every single government initiative. Instead of contributing constructively, they choose to discredit initiatives and policies for political gain.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Menara.my.