Economists call for big cuts in spending to meet challenges brought on by pandemic

PETALING JAYA: Reduce the size of the government. Stop all non-essential activities. Retrain civil servants for new tasks.

These are among several proposals from economists to help the economy get back on its feet.

To support the call to reduce spending, a petition to get the government to halve the salaries of MPs and state assemblymen has also been launched. More than 11,000 people have signed the petition as of 7pm yesterday.

Sunway University Business School economist Dr Yeah Kim Leng said measures should be taken to reduce the size of the government.

“Steps should also be taken to stop non-essential activities to reduce spending. The money saved can then go to where it is needed most.”

He agreed with former Bank Negara Malaysia deputy governor Tan Sri Dr Lin See Yan that the government goes back to “zero base” in its total expenditure to see what it can afford to cut.

In line with the proposal, Yeah said the country should ignore the current Budget and come up with a new one to deal with the current economic situation.

“It has to be based on today’s requirements to help rebuild the economy, which has been hit hard by Covid-19. We need to look at each economic sector to find out their actual needs. This means we have to start on a clean slate.”

He said a shift to digitalisation will reduce staff requirement and shrink the civil service.

“By right-sizing the government, the country will be able to reduce the size of the operating budget,” Yeah added.

“Some civil servants can be retrained to deal with the digitalisation of government services while others can be trained to go to the field to carry out enforcement activities.

“It is important for the government to accelerate the shift to digitalisation to meet the coming challenges.”

Yeah said it is also a good idea to tax the rich as “they won’t mind it as long as it helps improve the livelihood of the poor and help develop the economy”.

“The rich will be supportive of higher taxes as long as they can see some long-term benefit from it, such as an economic recovery,” he said.

However, Yeah added that this must be done carefully so that it creates confidence rather than lead to a flight of capital.

Universiti Utara Malaysia professor of economics Dr K. Kuperan Viswanathan said a zero sum Budget makes a lot of sense in this time of crisis.

“This has never been done before and will (result in) government savings.”

He said the country cannot go back to the level of spending seen in the past as there has been a drastic change in the economic situation.

“We must return to the drawing board and create a Budget that can meet the challenges of today’s economic reality.

“Today, we are facing an emergency-like situation and we need changes that will enable us to use the Budget in a more effective manner,” he told theSun.

Kuperan said money should be put into sectors that are badly hit by the crisis to help the economy recover and develop.

He added that unnecessary infrastructure projects should be put aside for now.

“Taxing the rich is also a good idea as it can be one way forward to raise funds.”

Kuperan pointed out that a number of companies which have made windfall profits during this period should be taxed.

“We have a bloated civil service and ways have to be found to reduce its size, which will help reduce government expenditure,” he added.