Thursday, February 04, 2010

Budget Cuts Eats In

In my "political life", one of my key themes is the fact that the Government is out of cash, and is desperately trying to raise funds via various forms of taxes, as well as sales of assets. However, the clearest indication of the shortfall of funds has to be the ridiculous nature of some of the budget tightening process at our Ministries.

It raises the question as to whether the Government knows what it is doing and whether it is just being penny wise and pound foolish. Officials appear to be concentrating on minor cost cuts eating into essential expenditure, instead of the big ticket items which are often wasteful, and are the real culprits to wasteful expenditure.

The opinion by former chief news editor of NTV7 and 8TV with regards to the cuts in our local boarding schools highlights the ridiculousness of the situation. Excerpts of his article are as follows.

Of schools, hostels and tight budget

...After the few early callers, a lady who was put on air. But instead of commenting on the topic she went on to say that her children who were studying in a boarding school have been told to go home every weekend. Reason being, the school (which she did not name) could no longer provide meals for the students during weekends.

Apparently, the days of giving hostel students meals seven days a week are gone. Why? Well the lady claimed she was told that the school’s annual budget had been slashed. Meaning the school is running on less money.


But it did not stop there. Several calls later, another listener called in to say that at the hostel his son was staying, students now had to do group study sessions in the canteen. They used to study in classrooms but not anymore. The lights in the classrooms are now switched off. Reason? Apparently to save on electricity bills, i.e., cut costs, i.e., austerity drive.


Over the weekend I bumped into an acquaintance who happened to be a hostel warden. He is a school teacher but, as warden, he is additionally tasked with looking after the well-being and security of students staying in his school’s hostel.

I asked him if it was true that students are now required to go home on weekends.

“Yes,” he said. Initially, all students were instructed to leave for home on weekends, he added, but the ministry then decided the go-home move could not be made mandatory. So students are “advised’ to go home on weekends. Most students do so, he said. Wonder why?

“Why this ‘nasihat’?” I asked. Why has it come to this?

“No money” was his reply. Well, not exactly “no money” but, rather, limited funds. Put simply schools are operating on tight budget.


Parents, coaches, teachers, students – many people are angry. Rightly so. The consequences of the budget cut are dire and many. We all know it, all too well. There’s no need to repeat ourselves. Suffice for me to ask again: “How come?” Why no money?

Then, there’s the 2008 Auditor General’s report highlighted by The Malay Mail recently. The AG report said the Education Ministry paid RM250 for each of six peacock flowers for a school. The market price for the plant is RM30.

The report went on to reveal the ministry had spent RM57,493 for the supply, sowing, gardening and maintenance of flowers and trees for the same school – 880 per cent higher than the most expensive quote available from local nurseries.

And it was reported also that the ministry had replaced doors in two schools at prices 56 per cent to 64 per cent higher than figures quoted by the Works Ministry.

Then there was the RM480 paid for a door when the Works Ministry quoted RM272.70.

There are more examples, of course. But enough said, lest our hearts ache further.

But I ask – why the big spending? How come there’s money to spend?



Dewi said...

good information, thanks..

Anonymous said...

I think that you are looking at it from the wrong side. If the meals are free for these students then there is a twist. Let us assume that the minisrty pays RM35.00 per student per day for meals. Let us say the the Rediential School has 500 students . Daily cost will be 500X 35.00= rm 17,500 X 2 = RM35,000 for two days Saturday and Sunday. That is good money. We must st up a Commission of Inquiry to look into this. Ramalx

1Msia said...

Rm35 per day per student is a bit too high. Let us put it at Rm15. One more thing, They also save the electricity and whatnot for the weekend don't they?

Concerned Anonymous said...

No, if you notice, the difference of "peacock flower" and "weekend no meal" is a big one.

The peacock flower is not something necessary,yet expenses are made.

Not every student can go weekend, and when they get into a government boarding school, they should expect government to at least cover their basic necessities.

It's now giving up necessities in favor of luxury.

What more wrong it can be?

Anonymous said...

OMG. What happen to investing in our children future tag-line? I hope this news is not true. Strangely our Minister of Education has not release a statement but alway quick to respond on political issues.

Pro Education

wasichgesagt said...

sounds like underground money laundering if you ask me. actual $ for the items cost substantially more than the quotes.

what with all the fine tuning done by the government, i'm not surprised things are going to pots.

Nor Izzatina Abdul Aziz said...

While some middle class parents might complain, may I add that 'skim makanan bantuan' or tuition for primary schools have been cut. Mind you this is much more important than weekend meal budget.

Anonymous said...

According to my friend in Ministry of Finance, government just want to stop wrong used of budget. Many of ministry high ranking official had their meeting in 5 star hotel, when government building already equipt with meeting facilities. Launching ceremony of ministry programs can take 100+ thousand ringgit unnecessarilly. This are the budget cut for.

Anonymous said...

Who cares...this is a good way to spread wealth around.

One may call it wasteful spending but as long this bumi Malaysia has oil and timber, sand and stones, timber and palm oil, agriculture products like rubber, pineapples, etc..

One must be cunning enough to plunder and pillage these natural resources for themselves.

Anonymous said...

We Malaysians are sometimes like a big frog that looks like a well, feels like a well, smells like a weel and yet we do not want to call it a well. We call it the world and claim that we have wide understanding of issues.

We do not have to go too far. Just study what is happening in Greece. The government has been living beyond its means for over two decades. They thought that once the joined the EU their problems are over. Not so fast my friend when you are in the EU you must observe financial disciple. Why do you think that we rubbished the World bank and IMF and why do you think that many countries are doing the same. The IMF and World Bank's principle is that we must all live within our means if we want to break even and beneath our means if we want to double our GDP every 15 years.

The government has introduced all kinds of schemes that cost money. The unfortunate part is that the bottom line was blurred and there was no financial ovesight. That authority was removed from the Treasury when Off- Budget Agencies were created to side -step those so-called myopic financial staff who treated the government funds like their grandfather's money. How we wish now that they were allowed to rule the day.

It is inevitable. When you live beyond your means like the so-called rich football clubs in UK a time will come when vulture capitalism will take over.This does not happen to states or nations. What happens is what happened to so many Third World Countries in the over the last three decdes. One by they had to devalue their currency to meet the growing volume of cash in circulation.

We are now crying over spilt milk. We must stop that and make a reassessment of our situation and cut the coat according to cloth we have. That is what Greece has to do and that is what we have to do before some outside lender forces us to later when we become too weak to stand on our own feet.Ramalx

Anonymous said...

Thu Apr 1, 11:39 am ET
BOSTON (Reuters) – Seven of the world's top hedge fund managers earned 10-figure paychecks and one set a record for the highest-ever payout last year due to a stock market rally that pushed returns to their highest levels in a decade.

Together, the industry's 25 best-paid managers collected a record $25.33 billion, more than double the amount they took home in 2008 when the financial crisis left many prominent funds nursing heavy losses.

In 2007, the top 25 set a record by taking home $22.3 billion.

The annual ranking, featuring the heads of the some of the industry's oldest and biggest hedge funds, was released by Institutional Investor's AR: Absolute Return + Alpha on Thursday.

Analysts had expected the overall increase after the average hedge fund gained 20 percent and investors began putting new money into the loosely regulated $1.5 trillion industry in 2009.

Hedge fund managers typically earn management fees plus performance fees that can be has high as 50 percent, helping cement conventional wisdom that it can be extremely lucrative to run a hedge fund.

Some funds delivered dramatically better returns than the average which helped their managers take home billions, again.

David Tepper's Appaloosa Management gained more than 130 percent on his bet that certain bank shares would recover. Tepper earned a $4 billion payout that toppled John Paulson as the industry's record payout holder. Paulson's bet that housing prices would fall earned him $3.7 billion in 2007.

Paulson, however, still made the list of top earners, ranking in fourth position with a $2.3 billion paycheck.

He followed philanthropist George Soros whose $3.3 billion put him into the No. 2 spot and James Simons who earned $2.5 billion to rank as No. 3. Simons, a former mathematics professor announced his retirement from Renaissance Technologies last year.

SAC Capital Advisors' Steven Cohen ranked as the fifth- highest earner with $1.4 billion. He was followed by Icahn Capital's Carl Icahn, ESL Investment's Edward Lampert, Citadel Investment Group's Kenneth Griffin, Centaurus Advisors' John Arnold and Harbinger Capital Partners' Philip Falcone.

Another excellent reason why Malaysian parents should encourage their children to take up business,economics,accounting,finance,etc studies!!