Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Government Spending Good Money on Silly Projects

Written by johnleemk on 5:57:54 pm Mar 19, 2009.

Economic stimulus is all the rage it seems, both here in the US and back home in Malaysia. While I am skeptical of stimulus in general, our government's spending plans are increasingly ridiculous and insensible day by day. Instead of leaving the era of white elephant megaprojects behind, we seem to be pursuing less obscenely grandiose but equally impractical infrastructure projects.

The basic idea in the minds of stimulus and economic pump-priming proponents is that it is cheaper to borrow money in a recession. People and firms are not confident in the economy, and so they are reluctant to lend money out to any random person. Fortunately, the government can soak up these surplus funds and invest them in something useful for a low cost.

That is the theory anyway; the reality is that the government rarely seems to do much useful investing with our money. Yes, granted, they have brought a lot of "development" to our shores. The North-South Expressway, our various ports, our schools, our universities, so on and so forth—all good stuff. But for almost every good project, you can name an equal number which are just downright bad ideas.

To take one egregious example, the federal government is presently proposing to spend RM9 billion on the "Pahang-Selangor Raw Water Transfer Project." The crux of the project is that they want to build a gigantic pipeline to funnel water from Pahang to Selangor. Why? Because the federal government believes that by next year we will be facing severe water shortages in Selangor unless this pipeline is built.

The problem is that they've made similar projections before and been severely wide of the mark. Their original projections indicated a shortage would arise by 2005; no such shortage came about. The government is assuming we'll be consuming 600 litres of water per person per day in Selangor, when the typical Singaporean consumes a bit over 300 litres per day, and the typical urban denizen in a developed country even less! At the moment the consumption in Selangor is 300 litres per person per day, but for no good reason whatsoever, the federal government insists we will somehow run short of water unless we build this RM9 billion white elephant.

And we can go on to name all sorts of similar projects. What about that harebrained idea of transporting electricity across the South China Sea from the Bakun Dam in East Malaysia? Or the white elephant of a customs outpost for the unused crooked bridge development? These are all projects that have been in the works for years and years—yes, even that ridiculous scheme to build a useless giant water pipe from Pahang to Selangor.

Now, if the government takes its own bloody sweet time and still comes up with these inane wastes of money, can we really expect anything better from the stimulus package? The government is going to be rushing itself like crazy to get the package out the door as soon as possible, and that means there will be hardly any checks on the projects that go into this package. Honestly, I would be shocked and happy if the ridiculous projects in the stimulus package we finally see are only equally pointless as the others I just listed.

Really, the biggest problem with our economy as far as government spending goes isn't that the government does not spend enough. The problem is the government spends money on very silly and very pointless projects which don't yield any real benefits for us. There are a lot of good things the government could be spending its money on.

Here's an idea for a stimulus: raise the salaries of teachers and provide more and better training for them. Honestly, even if the government can't really train teachers properly, RM9 billion would be much better off being spent on paying teachers better wages or training them better, as opposed to being spent on a stupid pipeline or building even more schools. Or another actual good idea: upgrading and expanding public transport in all major urban areas. We can argue about whether these are the best ways to spend our taxes, but there is no question that education and public transport deserve priority over harebrained schemes like building a dam to produce electricity which will just be lost in transit across the South China Sea.

As sympathetic as I am to some of the ideas behind economic stimulus, I honestly believe the government's stimulus package is going to be a bad thing for our economy. Most of the spending will be just as redundant and as pointless as the government's past track record on infrastructure-building and other such spending projects, if not much worse. The government has been unable to get its priorities right for years and years, and there is no sign at all that this will change.

If Pakatan Rakyat is smart, they will capitalise on their plans and manifestos to point the right way. Both the DAP and PKR especially have well-developed plans which will provide for the poorest income groups while removing severe restrictions on private enterprise. Pakatan's plans, though far from perfect, are very much in line with basic economic principles, and could prove a deadly weapon against Barisan Nasional's ridiculously poor track record of throwing money at whatever constituencies have by-elections, and building white elephant after white elephant. The upcoming stimulus package could very well be Barisan's undoing, if Pakatan plays its cards right.

First published in The Malaysian Insider.

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