Inclusive Federal-state relations are not seditious

I was going to focus my second piece on poverty and income inequality. However that has to wait as Awang Selamat’s declaration that it is seditious to discuss greater power-sharing between the Federal and state governments got my attention (Utusan Malaysia, January 4).

This was in response to Zairil Khir Johari’s thought-provoking piece (Malaysian Insider, December 24, 2014) on reviewing the current Federal-state institutional arrangements that led to Awang not only accusing him of sedition but ludicrously questioning his parentage and ethnic identity. As an aside, I admire this young leader (whom I have not met) for being an excellent advocate and champion of inclusive Malaysia.

For Awang's benefit, let me quote from the Malaysia Human Development Report 2013 (which presumably is not seditious!): “Inclusive outcomes undoubtedly require inclusiveness in policymaking and implementation. Inclusive growth corresponds with the balanced participation of the government, the private sector and civil society; higher quality government services; and adequate and efficient delivery of public goods.”

From that perspective, what Zairil was calling for was to review the concept of fiscal federalism which is the optimal allocation of fiscal or public service delivery responsibilities (such as health, housing, education, public transport and sanitation) to the different layers of Government (local, state and federal) and how best to effectively fund these services in a sustainable and equitable manner through public revenue sources (again local, state and federal). Clearly not a call to burn the Federal Constitution as Awang alleges.

In an ideal world, each level of government would raise its own revenue to meet its allocated functions; or get voted out by the electorate if they do not fulfill these functions satisfactorily. State governments in Malaysia are completely at the mercy of the Federal government for the transfer of grants as well as loans and the model of resource allocation is inequitable.  For example, total Federal allocation per capita for the period 1976-2010, for Sabah and Sarawak is about a quarter that for their fellow Malaysians across the South China Sea (MHDR, Fig 11.1, page 239). This is clearly inequitable given the size of Sabah and Sarawak and their development needs. Zairil indicates that the state of Penang contributes 10% of Malaysia’s GDP but gets to spend less than 0.5% of the national budget.

The Malaysian Constitution does provide for state governments to have jurisdiction in areas including public health, drainage and irrigation, fire safety, culture and sports, and housing. The Federal government has usurped many of these functions over the years.  For example, public transport is clearly a candidate for decentralized planning, regulation and service provision which state and local governments can currently only carry out with hands tied behind their backs as they do not have the power to issue licenses and determine service delivery standards.

After 55 years, it is time for Malaysians to demand a more inclusive Federal-State-local relationship in policy making and implementation that cuts across political lines and supports effective, efficient and equitable delivery of public services.