In Parliament on Saturday
Budget for the rich and burdens for the poor - D. M. Jayaratne
By Sumadhu Weerawarne and Kesara Abeywardena
"This budget gives boon to the rich class"
Opening the debate for the Opposition D. M. Jayaratne (PA - National List) said that it was one that gave him great pain. "It will destroy the country," he asserted adding that the Finance Minister who was a true and fair gentleman would be scapegoated for whatever follows.
Pointing out that it was intended as Rs. 588 million locally and Rs. 70 billion from foreign sources, he said that local financing would lead to inflation and high interest rates. This he said would curb investment.
On provisions enabling foreigners to purchase land without taxes or restrictions, he said that it amounted to no less than a sellout. "We will have a situation where the rich of other countries who buy land will stake a claim to it as their homeland," he said.
Overall he said that the budget was one that gave many benefits to the capitalist class and no concessions to the working class. He pointed out that the government had allocated just Rs. 2 billion for the entire agriculture sector, where 80 percent of the population found employment. "We allocated Rs. 3 billion for fertiliser subsidy alone," he said.
He also pointed out that all avenues for employment had been closed, with no identified means of employment for the unemployed.
"This budget gives boon to the rich class and casts burdens on the shoulders of the poor classes. This is not a budget for the ordinary man," he said.
The recently concluded local government elections too came in for comment. "This election was the worst in our political history," he claimed.
He ended his speech with a verse opening the fate of the people and the curse that would befall the UNF.
Bandula Gunawardene (Minister of Rural Economy and Deputy Minister of Finance) said that the country at the moment is undergoing three crises which are an inheritance of the previous PA regime.
He noted that there is an economic crisis, financial crisis and debt crisis faced by the government at present.
Tracing the history of the crises he said that economic growth reached an all time - 1.3 percent this year due to the mismanagement of the previous regime. "The per capita income dropped from US$ 884 to US$ 829."
In this bleak scenario he said that the country saw factory after factory closing down, farmland after farmland getting barren and the number of ships arriving at the port dropping.
He pointed out that with the economy shrinking, the previous government did not get the expected income in the last budget.
He said that the government resorted to short term borrowing to bridge the budget deficit.
He charged that although the country was moving towards crisis, those who governed during the PA administration did not stop their lavish and unnecessary spending. "When factory after factory was closing and the youth were losing jobs the President was dumping money to build a palatial residence."
He said that the government has taken a large number of measures to reform the tax regime and the tariff structures to boost investment and accelerate growth.
He added that special measures have been taken to bring the money in the informal money market into the mainstream. He said that various governments at different points in time have tried to do this without success. He was of the view that the measures taken by the present government would be successful.
Assessing the budget as a great betrayal of the country to racketeers Wimal Weerawansa (JVP) said that it was different from traditional budget in that it was vague about what the government intended to do.
Illustrating the point he said that which it was stated that those government services running at a loss would not continue to be run by the government, there was nothing to say that in terms of this, the postal, railways, hospitals and even education sectors too would be privatised. "There is a certain vagueness about what the government intends to do.
He added that the party had betrayed the trust that a certain class of voters had placed in it. "The voters hoped for concessions. But today it is only the racketeers who supported and funded the UNF that have received benefit," he said.
Nothing from the UNF election manifesto he said that the party had promised employment opportunities for unemployed graduates and a Rs. 2,000 dole to youth. "All this the party has failed to fulfill," he said adding promises of no power cuts too had been another of the pledges that had been broken.
He also observed that the introduction of the contributory pension scheme was nothing more than what had been recommended by the International Monetary Fund. "The real Finance Minister was in the gallery. It was the international lending organisations that drew up the budget.
The member also took time to explain that violence had been unleashed against its members, in the aftermath of the local government election. He said that Friday a JVP polling agents shop and house had been burnt down in Nivithigala while in other incidents one of its members had been assaulted and another residence had come under a grenade attack.
Athauda Seneviratna (PA Kegalle District) said that power crisis cannot be blamed on the PA regime. He said that certain measures taken by the present government were planned during the PA government.
He noted that the Matara power station and the Anuradhapura station to be commissioned shortly were begun during the last government. "The Kukule Ganga project was started during our time. These things cannot be done within hundred days."
He charged that the UNP prevented the Norochcholai Coal Power Plant for petty political purposes.
He added that all concessions granted in this budget are for the capitalist class with no benefit to the common man. "To whom are all these tax concessions. They are for the capitalist class. There are no salary increases for the public sector workers."
Speaking generally on the performance of the government to date and the Prime Ministers vision, John Amaratunge (Minister of Interior) offering comment on the budget hailed it as a pragmatic one conched in simple language.
He added that the 100-day programme of the government was intended to revitalise the public sector.
Moving onto the ethnic conflict he said the PM as pledged had taken the first steps towards a negotiated peace. He clarified that complaint of check-points being removed were without ground as the governments emphasis was on a strengthened intelligence service.
He called on the Opposition to assist with peace efforts without misleading the people.
He also commended the budget observing that it was unfortunate that the Opposition was unable to understand the many benefits that had accrued to the people.
Responding to Opposition allegations that there had been no concessions to the people through the budget, S. B. Dissanayake (Minister of Agriculture, Livestock & Samurdhi) said that unlike the PA government which had inherited an economy with a 5.8 percent growth rate, the UNF government had inherited an economy that had contracted.
He commended the budget noting that the necessary elements were in place to revitalise a broken-down economy, increase production, control the cost of living to the level possible, instill investor confidence and lay the foundation necessary for speedy social and economic development.
He welcomed the introduction of the VAT even he said as he had welcomed the introduction of the GST. "But we in the PA failed in the proper administration and management of the tax, which the UNF government must ensure is in place," he said.
Responding to allegations that racketeers would benefit from the amnesty granted for the investment of black money, he said that was a means of bringing in money that was not part of the formal economy and indeed posed a threat to it. "Once the money is in the system it will be liable for tax," he said.
Speaking on the problems of the Muslims living in the East M. L. M. Hizbullah (PA Batticaloa District) said that the MoU had ignored their existence.
He said that after the MoU the Muslims in the East are being harassed in the way of extortions and abductions. "In the MoU the Muslims have just been identified as a group."
He added that the SLMC was formed by the late M. H. M. Ashraff to champion cause of the Eastern Muslims. "Today they have been let down by the leaders who do not live in the East."
He said that the PA government proposed to grant a Muslim regional council for the East but with the MoU the present government has not granted them anything.
Milinda Moragoda (Minister for Economic Reforms, Science & Technology, Deputy Minister for Policy Development and Implementation) said that the present government is faced with no mean task. "The economic situation is not a happy one. The repayment alone on the interest for the money we borrow accounts for 31 cents in every rupee we spend. This interest accounts for the largest part of our budgeted expenditure and exceeds all other expenditures including welfare and even defence."
He applauded the Ministers openness and his speech which was devoid of jargon. He has set a new standard for all of us in the transparency of government.
"Ultimately, budgets should not be about figures bandied here and there, they are about the household finances of a nation. They operate on similar principles to the everyday household budget. They reflect expected income into the nations purse and an indication of how the money will be spent.
Perhaps the one difference is that one can reasonably accurately forecast the amount of money coming into ones own household. Whereas the nations budget is subject to the vagaries of a wider variety of outside influences".
Commenting on the negotiations he said whilst we are still in the early days in the peace process, there is a viable and unified strategy which is showing itself both to the international community and to the people of Sri Lanka. The local government election results demonstrate this and they show that we have the support of the vast majority of the people. Through the leadership, honesty and sincerity of our Prime Minister I believe we can keep the peace momentum going.
Equally, the government has shown in this first budget of a new UNF government that we have started the road to restructuring the economy.
"We are a country overburdened with outdated and outmoded regulations. There is no compelling reason to work hard. We survive on doing the minimum whilst expecting others to owe us a living. Our people have a low level of contentment and our social cohesion has broken down."
He said that Sri Lanka is a country that employs 850,000 public servants including the armed forces, one of the highest government servants to population ratios in this region. Add to that the dependants and nearly one in five of the people in this country owe their living directly to government service in one form or another.
That is simply unsustainable.
"We have to change to an ethos where people are more self-reliant. Where the work that they do is productive and useful. And where they gain their rewards through hard work and a desire to better themselves and their families. This is not a western value imposed on a country entering a global economy, rather the true values of an Asian nation seeking to return to its roots.
Second, we have to change our attitude. Our attitude is one of doing the minimum required whilst expecting the maximum benefit. Our attitude is one of self-interest rather than looking to the betterment of the whole community.
In the months ahead we are going to face a very difficult time. As the Minister for Economic Reform I know how difficult it will be. In striving to change our attitude we will have to accept that going to work is not enough. When we are at work we shall need to be productive and efficient. If we are not then our jobs will disappear. We cannot afford the luxury of supporting those industries that do not meet this criterion. State enterprises will have to change or disappear.
He noted that the country will have to face the reality of privatisation or make changes that ensure that our state enterprises can compete with the best in the world. "We cannot afford to subsidise our state enterprises any more. There is no money to do so".
"Privatisation provides us with an even greater challenge. Few people believe we achieve this and most feel that it is a bad thing. However, no one has come up with a better solution to privatisation. It may be an imperfect solution but it is recognised as the lesser of all evils."
We shall need to look closely at power, the financial sector and petroleum distribution to see how we can provide a better, cheaper and more efficient service for the consumer.
Asserting that the economy was in ruins because of the war, N Raviraj (TNA Jaffna District) said that it was necessary to take steps to revive the economy in the North. "The cement factory and the chemical factory in Pulmudai are lying idle. This situation must be remedied", he said.
He also noted that if there is permanent peace, there would be plenty of resources available for industrial progress.
He pointed out that there was still large sums allocated for defence in the budget.
Commenting on the governments economic reforms, he said that the economy should not be entirely turned over to the private sector. "This must be done in a controlled manner", he said.
Clarifying what he termed a misperception on the ongoing Pongu Tamil festivals he said that no declarations were made about a separate state for Tamils. "In fact, there is no mention of a separate state at all", he claimed asserting that the TNA was committed to peace at any cost.
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