MCP’S PRESIDENT RESPONDS TO THE 2014/2015 BUDGET STATEMENT

Preamble

Mr. Speaker, Sir, the Malawi Congress Party (MCP) would like to extend profound thanks to you for giving us an opportunity to respond to the Budget Statement tabled in this august House by the Minister of Finance on 2^nd September 2014.

The budget session comes 50 years after independence and indeed the Minister of Finance, Economic Planning and Development highlighted several achievements we have made during this period as a nation. These include tarmac roads, university education and hospitals just to mention a few.

Mr Speaker Sir, I am proud to note that most of these happened during the first thirty years of independence when MCP was governing this country. The Honourable Minister of Finance, Economic Planning & Development also pointed out that we had a professional civil service, free of corruption, nepotism and that promoted fiscal discipline. Mr Speaker Sir, I believe this was possible because people working in civil service at that time were given equal opportunities regardless of region or tribe. This I believe promoted patriotism, discipline and the spirit of hard work. More importantly leaders of that time were leading by example, because, corrupt leaders breed a corrupt culture and this is what we have witnessed in the last 20 years

Mr Speaker, Sir, despite the achievements witnessed thus far, this country still lags behind in many aspects. For instance more than 50 percent of our population are still below poverty line of one dollar a day. Per capita GDP is one of the lowest in the world at US$ 340. About half the population of under-five children are stunted and our hospitals still lack essential drugs, preventable diseases are still prevalent in our country and we still have too many unnecessary deaths. This, Mr Speaker Sir is unacceptable.

Mr Speaker Sir, the Honourable Minister of Finance Economic Planning & Development has carefully chosen as a   theme for this Budget “Restoration of Fiscal Discipline as a Foundation for Poverty Reduction”. This is a very timely theme but also an acknowledgement that there is too much fiscal indiscipline in our midst. Mr Speaker Sir it appears the Minister of Finance has good intentions but unfortunately intentions are intentions and not the real thing. Without serious political will these otherwise good intentions will remain intentions. Mr Speaker Sir to achieve fiscal discipline will require sacrifice and a total shift in our mind set towards government resources. “Izi ndi zaboma” is a phrase often used as people plunder government resources.  It cannot be business as usual. If what we have seen recently is anything to go by, I have my doubts. Mr Speaker Sir Government must be ready and serious to walk the talk and not just bombard us with rhetoric which we have heard before. We want real action on the ground

Mr Speaker Sir, As MCP we support the position of prioritizing strengthening Public Financial Management Systems. However, we demand more action to bring to book all suspects involved corruption and “cashgate”. While we applaud government in increasing allocation to the law enforcing and accountability institutions, getting to the bottom of the “cashgate” mainly requires strong political will and commitment. Provide the names as you promised. “Cashgate” must be seen in the context of a progressive deterioration of fiscal discipline.  Therefore, we must demand accountability beyond just the past two years.  The architects of corruption, theft of public resources and general fiscal indiscipline are corrupt political leaders and this started in 1994. Corrupt leaders breed a corrupt nation and a corrupt civil service.

Mr Speaker Sir, if we have leaders that demand transparency and accountability, we are likely to have a disciplined civil service.

Mr Speaker, public service reforms have not been effective in Malawi partly because in the last 20 years, we have bred a culture of cronyism and politicised the civil service to the extent that there exists a parallel section that services the ruling political parties for shady deals to help political party financing.  The firing and hiring of top civil servants without properly laid down guidelines only helps to demotivate and demobilize others.

The 2014/2015 Proposed Budget

Mr Speaker Sir, turning to the 2014/15 proposed budget, the MCP is fully aware that this budget has been made under very challenging circumstances. Our development partners have justifiably withheld direct budget support due to the “cashgate” scandal. “Cashgate” is a clear demonstration of selfishness and lack of patriotism by some of our leaders and yet the whole nation is paying the price.

Mr Speaker Sir, the 2014/15 budget is MK 742.8 billion, representing a 16% increase from last year’s approved budget. This increase is just the same as the projected inflation which means it is a very tight budget. What this means, Mr Speaker Sir is that the nation should not expect any increase in services provided by Government. To implement this budget, there is no room for laxity; government needs to be prudent to avoid wastage of resources. In other words, Mr Speaker Sir, government will need to stick to the budget that this august house will approve. Mr Speaker Sir, I should also point out that allocation of resources is one thing but applying resources where they are intended is another matter. Sometimes we get hoodwinked by the amounts that are allocated forcing us to think that perhaps adequate resources have been allocated to a particular ministry. Resources will never be adequate, it’s the effective utilization of those resources that will make the difference. We come here approve the budget and the next thing you hear, there are no drugs in hospitals, schools are not adequately equipped and stocked, roads are not in good condition.  At the same time all you see are endless conferences and workshops within and outside the country and money is always available. Our penchant for luxurious life styles in the midst of abject poverty is not only absurd it is wicked.  We cannot continue this way.

Mr Speaker Sir, with the resource envelope of MK636 billion, there is a deficit of MK107 billion which the Honourable Minister has indicated will be financed through external borrowing (MK92 billion) and domestic borrowing (MK15 billion). This should be a cause of concern when Government is accumulating unsustainable public debt. Mr Speaker Sir, what this means that instead of investing our scarce resources in key sectors to grow the economy, we will be busy servicing the debt.

Mr. Speaker Sir, the fiscal performance of the 2013/14 budget leaves a lot to be desired mainly because the Government accumulated unsustainable debt and arrears. The debt stock of K340 billion by 31^st May 2014 is unimaginable. Mr Speaker Sir, this is a clear reflection of irresponsible management of government resources that puts unnecessary burden on tax payers.

Mr Speaker Sir, let me also remind the house this over borrowing crowds out the private sector which we all agree is the engine for growth. This insatiable appetite for borrowing mainly for consumption by government is what makes it difficult to tame inflation and bring down interest rates in this country.

For example, Mr Speaker, Sir, the Honourable Minister of Finance, Economic Planning & Development  has informed this House that government owes the private sector arrears amounting to K158 billion and yet Mr. Speaker, Sir, government has just provided for K50 billion to be repaid to the private sector in the 2014/15 budget. By not clearing these arrears, what the government is saying is that it is not concerned that these arrears are financially suffocating operations of the private sector. Mr Speaker, we urge the government to clear these arrears in full to enable them continue with their contribution to economic productivity and growth.  That will reduce poverty by creating wealth.

We commend the Honourable Minister of Finance, Economic Planning and Development for continuing with the IMF programme and ensuring commitment to the floatation of the Malawi Kwacha and automatic fuel price adjustment policies. This Mr Speaker Sir will ensure that Malawi will not return to the fuel and foreign exchange shortages experienced in 2012 under the DPP government.

Mr Speaker Sir, we also want to applaud the Government for opting not to rush to new taxes before carrying out a study to understand the impact of any proposed taxes. However, I would like to emphasize the need to ensure that the results from the study on how to broaden the tax base are prioritised. There is urgent need that the tax burden is shared by many not only a few.

Mr Speaker Sir, the cost of living in this country is very high. The proposal to increase salaries for civil servants is commendable. The party in government today lamented that civil servants were getting peanuts and that it would remunerate civil servants adequately if voted into government. Government should fulfil its promise to civil servants and not change tune now. Delivering what you promised is what is called hitting the ground running!. Mr Speaker Sir as MCP we are concerned that the Executive is not entirely leading by example in sharing the burden and sacrifice.  .  Mr Speaker Sir, for example to have a lean cabinet is a welcome development and as MCP we still insist that the size of cabinet should be provided for in our constitution. However when you hire a crowd of advisors it goes against the grain of fiscal prudence which you wanted to achieve by having a lean cabinet and makes a lean cabinet a mockery of the whole concept.

Mr. Speaker, I would like to say something about the state of insecurity and robberies in this country. It is increasingly worrisome.  People are being hacked to death in their own homes, we have heard of a case of a High Court Judge being abducted and banks being robbed in broad day light.  Mr. Speaker, government must be serious in restoring security in this country. We need action against robbers who are busy terrorising neighbourhoods and hitting hard on businesses and hardworking citizens. We hope the funds allocated to Police will help to bring about this difference. And I commend the Minister of Finance for a substantial increase on the budget to the Police.

Mr Speaker Sir, I want to indicate that to completely call this budget a zero aid budget is being economical with the truth. Many of our cooperating partners are channelling a lot of resources to support many of government programmes such in health and education and they should be commended. The fact that they have decided to channel their resources through other ways and means, instead of writing us a cheque does not mean they have completely stopped helping us. To restore fiscal discipline in this country will require a lot of selflessness and sacrifice. This is yet to show on the part of government. This is a poor country because the majority of our people are poor and therefore our actions and priorities must reflect this fact. When we approve this budget we don’t want to go to our constituencies and be told that there are no drugs in hospitals, that there are no learning materials in schools, we don’t want to drive on roads full of potholes that there is still insecurity in the country, that corruption, theft is still rife and there is still break down in the rule of law. The proof of the pudding is in the eating.   It is one thing to tell this house that you want to restore fiscal discipline and quite another matter to have fiscal discipline.

Mr. Speaker Sir, one of the easiest ways to mislead the Malawian people is to call something by a name that sounds good when the substance of it is far from good. In the past, this house was misled by something called a “zero-deficit budget”, when in reality what was being presented was in fact a “total-borrowing budget”, with government at the forefront of breaking the law by borrowing money from commercial banks, and now we have created a debt for our children to the tune of 340 billion kwacha. Now this house is being misled by something called a “zero-aid budget”, when in reality what has been presented is a “zero-paid budget”, with government making no commitment that the extra 107 billion needed for this budget will be paid for. You cannot create a budget that needs 14 percent of outside help, grants, and loans and still describe it as zero-aid. We the people long for the day when we will see a government that believes that a budget is a tool for controlling its spending, not an excuse for uncontrolled borrowing, but sadly, today is not that day.

Mr. Speaker Sir, this so called “zero-aid budget” would also be better called a “zero-trade budget”, since government is asking this house to continue the 20-year old failed policy of subsidizing consumption instead of production: 50 billion Kwacha for an agricultural subsidy program focused on consumption at a time when the agricultural sector’s greatest need is a program focused on commercial production of valuable exports; 7 billion Kwacha for a construction subsidy program focused on increasing the consumption of iron-sheets and cement when the sector’s greatest need is a government that provides incentives for the production of cement and iron-sheets. The healthiest way to reduce prices is to increase production, not consumption. We the people look forward to a day when we will see a government put the country on the path towards a “zero-subsidy budget”, a day in which we will see a government turn our focus from consumption to production, but sadly, today is not that day.

Mr. Speaker Sir, what has been presented also looks like a “zero-shade budget”, since it offers the working middle-class little to no protection from the pressures of the rising cost of living that is hampering their ability to grow their wealth, start new businesses, and contribute to the economy more significantly. Instead, we are being asked to approve a budget that offers tax breaks for corporations and banks, the same banks that were previously complicit in lending money to government illegally; the same banks that were recently complicit in facilitating illegal pay-outs to Cashgate thieves; the same banks that regularly crush the working man with extravagant interest rates; the same banks that rob the working class through multiple hidden service fees. What all working Malawians know is that they now live in a country where the pricing practices by corporations and banks are predatory and out of control, where corporations and banks register unconscionable profit margins on the backs of working Malawians whose purchasing power is steadily being bled to death. What they do not know is that their government and these institutions are bed-fellows, that the government whose job it is to protect them from corporate greed actually feeds them to the lions who perpetrate it. Civil servants are not happy with their income, but what matters to the government is that the banks are happy. Who in this country really believes that banks are the ones who really need some shade from the scorching heat of this feverish economy? Who in this country would support a budget that awards the very institutions that have failed them? The people of Malawi deserve a day in which their government will provide some shade to the working class who work the longest in the heat of a bad economy and whose taxes finance the bulk of any budget, but sadly, today is not that day.

Mr. Speaker Sir, what has been presented can even be called a “zero-grade budget”, since it shows that government has no interest in scoring even the minimum grade in its budget allocation for various sectors. 26% is the recommended standard for budget allocations to education in SADC countries, but here we are deliberating a budget that allocates 17% towards education while we have over 20,000 qualified teachers with no employment and a host of other ticking time-bombs. Are we serious about developing this country? Can a country prosper without a robust and well-resourced education system that empowers its people with skills for development? Look at the health sector: not too long ago we were crying foul over rotting corpses in our mortuaries, missing drugs in our hospitals, and other issues. But while the Abuja Declaration recommends a 15% budgetary allocation to health, here we are contemplating a budget that allocates less than 10%. With such a laughable allocation to the health sector, I think the most appropriate response is to call this “a sick joke”. And what about minimum standards in the fight against corruption? There are surely commendable increased allocations to the Anti-Corruption Bureau and other law-enforcement agencies, but I hope no one here is naive enough to believe that corruption is rampant because government does not allocate enough funds to the fight against it. I hope no one here is naive enough to believe that the only period to be investigated for looting of public funds is the two-years of the PP-led government and not also the 8 years of the DPP-led government before that. I hope no one here is naive enough to believe that the solution to corruption is to throw money at Anti-Corruption agencies that still have no teeth to bite the kingpins and big fish of Cashgate and every other gate that has been opened in recent time. I hope no one here is naive enough to believe that the same individuals who created a porous financial system and allowed it to be manipulated on their watch can now be the ones to school us on fiscal integrity. Never. Corruption happens not because the Anti-corruption bureau does not have enough funds, but because the law and its enforcers do not have enough teeth to apprehend the thieves who steal our wealth because those thieves are still running the government. And what about young people? Are we meeting the minimum grade for helping them? Is there anybody in this house who does not know that half of all Malawians are under the age of 15 and nearly 70 percent are under the age of 30? So are we seriously saying that we can afford to pass a budget that allocates 1 percent to Child and Youth Development? Are we seriously saying that the young people who populate the country the most should be the ones the government invests in the least? This is a betrayal of our young people. The youth of this nation deserve to see a day in which their government is led by people who focus on youth-development, not youth-painting, but sadly, today is not that day

I therefore urge honourable members in this chamber regardless of your political affiliation to be extra vigilant in ensuring that what we have been promised here comes to pass. We owe it to the citizens of this country for they shall not forgive us if we betray them now. They have been lied to, betrayed, hoodwinked and outright oppressed for too long! Now is the time to begin genuine transformation!

I thank you Mr Speaker Sir, and thank you all for your kind attention. God Bless you, God Bless Our Nation, Malawi