STREET WISE

Govt gifts: A vicious cycle of patronage and dependence

By Achara Deboonme

The Nation

In its later years, the Thaksin government was criticised for intoxicating people with a cocktail of "free gifts". It was not the first such attempt; give-aways were also a feature of the late Kukrit Pramoj's administration.

In the Thaksin years, however, populist initiatives were more extensive and required more than just one lump-sum payment. Thus we have the universal health package, which is eating up much of the public budget and has hospitals constantly complaining at the delayed payment of government subsidies.

But this was not the last "freebie". The Abhisit government has just unveiled a new set of populist policies, following the announcement of schemes last year that won the hearts of many voters - particularly the programme for free education up to age 15. Some parents might complain that it is not totally free, but it's always nice to have someone, all taxpayers in this case, share some of the cost.

The new set of populist policies approved by the Cabinet yesterday should also win the government more support, as they cover the millions of people who are old enough to get ID cards and to vote.

A taxi driver once told me of the insurmountable difficulty he faced in getting a bank loan, given that he was not earning on a regular basis. He was building a house, and forcing himself to keep to an incredibly tight budget over a long period so as to save the huge sum needed month by month. He noted that he worked a double shift and saved over Bt30,000 per month after expenses, a figure higher than many salaried workers can boast.

Indeed, I don't see why the government should not give these "free gifts" to the people. For many years the middle class have enjoyed tax deductions, particularly in the form of long-term equity funds and retirement mutual funds. Last year, the deduction on down-payments for homes was only available to some taxpayers.

But the difference here is that these tax deductions were offered for a limited period. The LTF package will last for the next few years while the down-payment deduction was valid for just a year.

In contrast, the free electricity bill to households with a monthly consumption of no more than 90 units is a permanent gift. The cost of the scheme is estimated at Bt1.2 billion per month - but that figure is based on the current price of electricity. This is important, given that from January to April the electricity price dropped in comparison with the previous four months. A renewed spike in fuel prices could see a hike in the cost of electricity in the next four-month round.

Montri Sokatiyanurak, the director of the National Institute of Development Administration's Master Public Administration Programme, had a point when he suggested that the government, which receives tax revenue on just 17 per cent of gross domestic product, should be clear about how to finance the cost of the give-away.

Prawase Wasi, chairman of the Reform Thailand Committee, said at a seminar on Monday that populist policies are like addictive drugs. People become dependent on them quickly, and the government can do nothing but pump out more to prevent them from dying.

The government is serious about catching drug dealers. But Prawase's words suggest it should include itself on the list of dealers.

-- The Nation 2011-01-12

So many opinions...so little change...