By DNR Samaranayaka –
The new coalition government formed on January 9, 2015 has just completed its first month, and this leaves only a little more than two months before the parliament is dissolved. During the election campaign, a number of issues were highlighted against Mr Rajapaksa, and they were extensively used as key weapons to challenge the former regime. The propaganda against the former president helped Mr Sirisena to obtain a majority of 2,043,977 in 2015 compared with the vote received by Mr Sarath Fonseka in 2010.This majority reflects the reality that the vote for Mr Sirisena is essentially a vote against Mr Rajapaksa.
Since the formation of the new government, a number of positive developments have taken place and the interim budget has provided some degree of relief to the people. However, a lot more will have to be done to ensure that its commitment to the people is not undermined. If the new government fails to deliver the promises that its leaders made during the election, the confidence in the new government will be affected, and its popularity too will experience a significant fall. The Rajapaksa administration was thrown out of office because of corruption, nepotism, and authoritarian rule, but the leaders in that administration are not responsible for the failure of the new government as they are no longer in power. The new government promised the people that it would eradicate political corruption, address the ethnic problem with a view to achieve a lasting solution, and practice good governance. The following is a brief review of the performance so far.
The 100-Day Program
A document consisting of a list of priorities of the coalition was released two weeks after the nomination, and this document is referred to as the 100-day program. It consisted of two unrelated parts. The first part included the priorities of the new government that will be implemented during the first 100 days, and the second included another 100 tasks without any explanations of their relevance to the 100-day program or to any other activity. Most of the tasks in the100-day program are about establishing various commissions or passing bills. These tasks will not have any direct relevance to the people unless they can see some positive changes from them.
An Ethical Code of conduct for parliamentarians, one of the tasks of the 100-day program, should have been introduced on January 22. But, it has not been released so far. Usually, a code of conduct in other democracies is what lawmakers practice as servants of the people. If any parliamentarian or minister found to be involved in an unethical practice, he or she is immediately dismissed or forced to resign. In these democracies, with fully independent judiciary and police, the rule of law is applied to every one irrespective of the person’s social standing or his or her political connections.. Apparently, the coalition’s intention is to apply the norms that are practiced in other democracies. However, the question is how the government is to enforce such values on parliamentarians who do not respect even the basic human rights. For example, a former minister of Rajapaksa administration tied a Samurdhi employee to a tree, but no action was taken against him. He is presently aligning himself with the new government.
(ii) Re-establishment of democracy and good governance
Another tasks listed in the 100-day program refers to the re-establishment of Democracy and Good Governance. According to the program, this task too should have been implemented on February 3. Even before the coalition was formed, the opposition parties were highly critical about the the lack of independence in the application of law and order under Rajapaksa administration. The sacking of former CJ, Ms Shirani Bandaranayke, further aggravated the problem as it attracted international condemnation and criticisms. With the departure of the Rajapaksa regime, the impartiality of the police has been largely re-established. However, the speedy removal of the incumbent CJ Mr Mohan Pieris by the new administration on the basis of his appointment was “null and void” has created some doubts about the Sirisena government’s sincerity and commitment to practice what it preaches. Unfortunately, every government that comes to power usually believes what it does is within the prevailing law in the country and that any unlawful act can be justified by simply giving few reasons. This is far from excepted norms of good governance.
Concessions offered in the budget
The interim budget released on January 29, has offered various concessions to the public in keeping with the promises made by the coalition before the election. Public sector employees have been offered Rs 5,000 salary increase during the interim period. Employees in the public sector, especially those in lower grades, certainly need a raise due to rising prices associated with rising inflation. Although the official inflation is low, the rate of inflation perceived by the people is quite high. However, targeting only a particular group of employees to receive immediate benefits clearly shows the lack of far-sightedness; it implies only the public sector employee’s need financial support from the government. Unfortunately, the government has ignored the first time voters comprising 919,841 young men and women, farmers, village folks, small business operators, fishermen, traders, and various other similar groups. The budget has not provided any direct benefits to the estate sector employees, who are the lowest paid in the private sector. Although the government has suggested a salary increase of Rs 2,500 to private sector employees, it is unlikely that employers will agree to this increase because they will have to either absorb the cost or pass it on to the consumer. Either way they will lose. If they absorb the additional cost, the cost of production will go up; if it is passed on to the consumer, the price of products will go up.
The salary increase has also created an issue that will affect the salary structure of the public sector. Since the increase is part of the salary, the overall salary structure has been thrown into disarray causing the need to revise the entire salary structure. Normally an increase to public sector is given as an allowance, which does not affect other allowances associated with the salary or the public sector pension scheme.
A reduction in price of around 20% of all types of fuel was announced on January 22 , and this is another promise made by the Sirisena government. Unfortunately, the beneficial impact of the price fall is much greater on upper income groups than the impact on low-income groups. For example, if a person regularly drives a vehicle 30 kilometres per day or 1,200 kilometres per month, he has the potential to save Rs 4,500 per month or Rs 54,000 per year because of the reduction of the price of petrol by Rs 30 per litre. This figure is derived by assuming that the petrol consumption of the vehicle is around 8 kilometres per litre. If a person drives 1,500 kilometres per month, his benefit goes up further to Rs 5,625 per month or Rs 67,500 per year. This reduction may bring down the monthly petrol bill by 20% or more in the 20% to 30% of households who are in the upper income group and about 0% to 5% in the bottom 30% of the households. Clearly, the benefits of the price reduction is dis-proportionately distributed with much larger benefits accrued to upper income groups while the benefits are very limited or insignificant in the case of lower income groups. Some income groups may not receive any benefit because they do not own vehicles or even motor cycles. The impact on lower middle class is also very limited because their consumption is also far less than the consumption in higher income groups.
The price of kerosene has also been reduced by Rs 6 per litre. The reduction in kerosene prices is targeted towards the lowest income group in the country who use kerosene mainly for lighting, but some households also use it for cooking. This price reduction is extremely beneficial to the least income groups, who are numbering about 20% of households in the country. These households do not spend a lot of money on lighting. Most households manage with a single lamp used only for few hours. However, the benefit that results from this price reduction is likely to be minimal and could be less than Rs 100 per month per household using kerosene. In addition to these two policies, the interim government has introduced tax reductions in a number of other items, including several commodities. The price reduction in pulses and condiments are unlikely to make any significant impact on the monthly household expenditure due to the consumption of relatively smaller quantities.
The savings on household expenditure arising from price reductions on various commodities could be around Rs 400 per family of five and about Rs 700 per family when the price reduction of Rs 300 on gas is taken into account. These benefits are available to all income groups irrespective of whether a person is rich or poor. However, as explained earlier, the benefit of the price reduction on petrol is essentially limited to upper and upper middle-income groups. Unfortunately, the distribution of benefits offered in the budget appears not progressive, but rather regressive.
The price of petrol after the price reduction came down to Rs 128 per litre in current market price. It is now less than the price paid by consumers in 2007, which was Rs 130 per litre in current market price. In real terms, after adjusting for inflation, what consumers pay now is about Rs 84 per litre, which is Rs 36 lower than the price in 2007. Furthermore, petrol consumption in the upper income groups is likely to increase by the same amount of the price reduction or more, leading to higher imports and other issues related to increased use of vehicles.
Mismanagement of public resources
Perhaps the most widely criticised issue during the election campaign was the massive scale corruption that had taken place under Mr Rajapaksa. They referred to projects such as Colombo Port City project, Hambantota harbour, Mattala airport, Hambantota sports stadium, Mihin Lanka airline and few others as examples of failed projects undertaken by the Rajapaksa government since 2010. The coalition claimed that these were undertaken to derive direct financial benefits by Rajapaksa family and others who were close to Mr Rajapaksa.
Political corruption is not a new thing in Sri Lanka, but its characteristics changed from small-scale bribery taking by politicians before the JR Jayewardene period to large-scale corruption under him. The implementation of the Accelerated Mahaweli Development project was the first project that created opportunities to take commission when hiring brokers or giving contracts. This project was under Mr Gamini Dissanayaka and there was a saying those days that Mahaweli flows through the residence of Mr Gamini Dissanayaka. Late Mr Lakshaman Jayakody, a member of parliament at that time, raised this matter in parliament. The same thing happened under the late president Mr Premadasa. He used public funds freely to commemorate his birthday by organizing large-scale celebrations under the Gamudava program. He also wasted millions during his regime just to promote his ego.
Large-scale commercial projects are based on the user pay system. If there are fewer users, the project cannot recover its cost and it becomes a burden on the society. Funding on large scale projects come in the form of loans at commercial rates, and commission taking from these projects is quite common. Since the amount is added to the cost, it is not a matter of concern to the lender. Using public funds to pay back loans on a failed project, therefore, deprives the society of using such funds in a productive manner. According to government sources, the accumulated debt from financing of wasteful projects at present is estimated to be around US$30 to$40 billion. The opportunity cost of this wasteful expenditure is equal to the loss of economic, financial, and social benefits that would have been derived by investing in projects that bring benefits at least equal to the total investment. The country could have used this money to build hospitals, schools with modern facilities, rural roads, or various other infrastructure projects that contribute to economic and social development.
Information on political corruption is flooding in, but there is no proper mechanism to deal with it at present. There is increasing concern as to whether anything will come out from the ongoing investigations by the bribery commission. Unless it is handed over to a special investigation with powers to acquire all illegally acquired assets and legally charged all those who were involved in massive scale corruption, this government, like all others in the past, will continue to investigate these forever. In the absence of qualified personnel, funds, and facilities, the Bribery commission is not the proper authority to handle these investigations. Moreover, the impartiality of the Bribery Commission is also subject to question because of the claim that it failed to act against certain people on corruption charges during the Rajapaksa regime. Although there were allegations against a large number of politicians in the previous administration, no one was brought to justice so far.
At this stage, it is very doubtful whether any positive action will be initiated on any politician suspected of involvement in corruption. It appears that this time too, the same thing is likely to happen. This is clear from the investigation of the coup that reportedly took place on the night of the election. Although hundreds of news items have been published on this matter, the people are still waiting to find out whether this allegation was true or not. If there is sufficient evidence, it must be investigated and necessary actions must be taken against those involved. If not the government must inform the public accordingly.
Analysing the performance since the formation of the coalition government demonstrates a mixed bag. Since the change of administration, some positive developments have taken place, and, as explained earlier, most of these were largely a result of the removal of the former administration. Even the improvement that has occurred in international relations is simply because of the change in administration. The Tamil parties have cautiously welcomed the new regime as they feel the possibility of a positive response to their demands within a unitary state. Although the benefits are limited to the middle and lower income groups, the budget has also introduced a variety of benefits to help the people to mitigate the effects on price rises over the last few years.
Unfortunately, most of the policies that are now implementing do not reflect a well-coordinated development policy framework. This situation has arisen because the coalition consisted of a diverse group who came together with the objective of removing Mr Rajapaksa and achieving their own interests. Each member in the coalition had a reason to defeat Mr Rajapaksa, and his mistakes became their political platform. Anyone reading the 100-day program will realize that it is a hurriedly prepared document just to get the votes for Mr Sirisena. Before the nomination, there was no reference to the existence of such a document. The interim budget is also a collection of concessions, which were offered by simply adjusting the budget for 2015, without any analysis of their impact on different income groups. Unpreparedness of the government in formulating the interim budget is also evident from the mistakes in proposing a salary increase instead of an increase in allowance and the withdrawal of the Manson tax. Although, the coalition criticized the Colombo Port City project as a waste of a colossal sum and promised to terminate it once elected, it now appears that the government is retracting from its earlier commitment. A major promise made prior to its election was the removal of the executive presidency. The Sirisena government is now having second thoughts.
Those who voted for this administration are watching with a keen interest and will no doubt pass judgement on its performance or lack at the soon to be held general election.
*The author is an economist currently living in Brisbane, Australia