WAGE reform and getting rid of the goods and services tax (GST) are among the highlights in an alternative budget by Pakatan Harapan that is set to rival Putrajaya’s Budget 2018.

The PH budget is also expected to tweak some of the ruling Barisan Nasional’s current policies, such as the 1Malaysia People’s Aid Scheme (BR1M) and the Bumiputera entrepreneur development programme.

Sources told The Malaysian Insight that the PH budget is scheduled to be unveiled on Wednesday, two days before Prime Minister Najib Razak tables the budget in Parliament.

The PH budget will also reveal the coalition’s economic policy, which is part of the comprehensive manifesto it wants to present to the public ahead of the 14th general election.

This will be PH’s second alternative budget after the new coalition was formed in 2016. It is made up of the opposition parties Bersatu, Amanah, DAP and PKR.

“A third part of the budget will also include projections of how PH’s policies will play out in real life in 2030 if they are implemented over the course of its term and how they will transform the country,” said a PH official with knowledge of the budget.

One of the ways that PH plans to distinguish itself from how BN manages the country’s purse is by putting more money in the hands of workers and consumers by increasing wages.

This strategy has a three-pronged approach, said another PH official in drafting the budget.

First, the minimum wage will increase to RM1,500 from the present RM1,000.

Second, PH will introduce a co-pay system to help companies meet this requirement. Firms who qualify will get aid from the government to pay half of the increase for all its employees for the next three years.

“Since the minimum wage is already RM1,000, companies have to fork out an extra RM500 per employee. Under the co-pay system, the government will pay RM250 for each worker for three years to help the company adjust.”

PH will then make labour laws meet International Labour Organisation (ILO) standards so that unions will be stronger and have more bargaining power. This is expected to increase gradually workers’ pay, said the PH official.

“We want to create a virtuous cycle. If workers earn more, they have more choices. They spend more and this boosts business and company earnings,” said the PH official.

“They can opt to not take public housing or they can take their children to private clinics. This reduces the federal government’s expenses in the long run.”

This policy would also go hand-in-hand with reducing the estimated six million foreign workers in the country so that firms will prioritise hiring locals.

Cutting wastage

PH is also expected to explain how it will make up for the shortfall in revenue after it abolishes the GST.

The BN administration has said the GST has contributed RM42 billion to the national coffers. It has argued that getting rid of it will put a dent in the government’s ability to fund programmes, especially after the fall in oil and gas revenue.

Part of PH’s solution involves going back to the pre-GST consumption system, which was called the sales and services tax levied on certain items and services.

“We will also expect to save RM20 billion from the budget through cutting out waste and corruption. For instance, the budget of the Prime Minister’s Office can be cut from RM20 billion to RM8 billion.”

The exact formula will be revealed at PH budget’s launch.

BR1M payments will be maintained but the cash aid will be handed out with conditions, said the official

“At this juncture we are still maintaining it but for certain recipients, they will have to do something positive.”

The official said the budget will also include incentives to spur tech companies involved in sectors that are supposed to drive what is popularly called the “fourth industrial revolution”.

PH is expected to offer a flat tax rate to companies involved in developing artificial intelligence, robotics, nanotechnology and biotechnology.

A Bumiputera entrepreneur empowerment programme will also be included in the PH budget at the request of Bersatu, the official said.

“But we believe that ours will be superior to the BN’s,” said the official. – October 23, 2017.