Is Budget 2027 too sweet?

SINCE Budget 2027 was tabled on Oct 9, the question I often get is: Is it an election sweetener?

With many Malaysians potentially saving or taking home RM400 to RM910 a month more, notice what the question concedes – nobody says Budget 2027 is empty.

Rather, they say it is sweet and therefore suspect.

Adjudicating a budget

Before we judge a budget, we should ask a prior question: what do we expect and what do we value?

For me, I believe in greater wealth distribution, more disposable income for all (maybe via a Universal Basic Income (UBI)), quality jobs and better healthcare.

I believe the M40, often said to be left out, deserves support. And a government that earns more should give back to the rakyat.

Benchmarking other countries

What do the best people-first policies look like elsewhere?

Since 1982, Alaska has paid every eligible resident an annual dividend of US$1,000 from its oil wealth. Recently US$200 was added to address high oil prices.

Since 1989, Australia has asked graduates to repay study loans only once their income crosses a threshold.

Since the 1980s, health systems across most of Europe have paid hospitals by diagnosis.

Since 2021, Singapore has given every household vouchers to spend at neighbourhood hawkers and shops – the Community Development Council (CDC) Vouchers Scheme.

And as far back as 2005, Indonesia cushioned fuel reform with direct cash transfers.

Directions matter

So is Budget 2027 moving in the right direction? The short answer, is: Yes.

Let me illustrate. A middle-income Malaysian can save or keep up to RM910 more a month – a step towards UBI. Here is how it works out:

• Fuel: up to RM762. Under Budi95, RON95 costs RM1.99 (versus approximately RM4.53 unsubsidised), saving about RM2.54 a litre on a 300-litre quota.

• Tax: about RM133. Up to RM1,600 a year from a higher RM12,000 relief (unchanged since 2010) and a one-point rate cut.

• Sara Madani: about RM17. Two payments of RM100 a year.

Thus, for the M40 family, that's RM400 to RM910 a month, depending on how much you drive (An important question: should the fuel subsidy be fully given as cash?).

STR households get up to RM150 a month in Sara on top of STR cash; most civil servants add RM125 a month from the RM1,500 special aid.

Then add in welfare for the elderly and OKU; MediAsas from January.

I'm particularly glad for the PTPTN deferment for those earning RM2,500 and below, with just RM50 a month for those earning up to RM3,000. Let us not allow the cost of a degree to burden those not yet on their feet.

Would any government have done this anyway?

RON95 was floated in 2014, re-capped in 2019 and frozen at RM2.05 in 2021; for a decade, governments of every stripe blinked and riots have ensued elsewhere for much less.

The targeted Budi95 is what freed the money for Sara. And if the next government would truly carry these policies on, the argument is already won – the direction has become the consensus.

Others say it is too little. Fair. So the budget pulls a bigger lever: the minimum wage rises to RM2,000 in June, up to RM300 more a month for over four million workers. Let's not forget that Malaysian workers receive only about 30% to 34% of national income, while the bulk goes to capital: business owners and corporate profits. In other words, some say wages have been suppressed and employers should be paying more.

'I never thought of it in that way'

When I tell my friends that this budget brings us to new levels of wealth distribution, even a step towards UBI, the replies I get are "Oh, I didn't see it that way" or "Why doesn't the government communicate it like that?"

No doubt, government communications can be better – I know the people there try hard.

The cause is multi-directional. Firstly, our education system doesn't teach us how to read budgets the way we read our payslips; secondly, political quips like "Haze Budget" feed populist instincts; and thirdly, it goes back to the question: what do we value in a budget?

Conclusion

Therefore, is Budget 2027 a good budget?

I think it is the best of the last few years. Not because earlier ones were bad, but because this one builds on a stronger ringgit, healthy investment and a deficit targeted at 3.3% of GDP.

This positive trajectory is because Malaysia has capable bureaucrats and technocrats advising our political leadership, such as Treasury secretary-general Tan Sri Johan Mahmood Merican and Nurhisham Hussein, senior director of economics and finance at the Prime Minister's Office.

Is it perfect? No. Some reforms still move too slowly and some still infuriate us (we still need a consumption tax and to increase revenue).

Nevertheless, that's why the determination to give back to the rakyat, responsibly, matters.

As we head towards an election, this lens matters. We have come to expect a great deal and we should, but change takes time and direction is what we should judge.

On prosperity and financial security, we are on track.

Sweet? Perhaps. On this path, sugar can be necessary and healthy too.