A few weeks ago, I made a remark about “creative accounting” practiced by Pakatan states. As a result thereof, I got brickbats thrown in my direction from Pakatan leaders.
Maybe I was not being clear, I was actually alluding to “kreatif aka-untung”, a term I coined in reference to the creative interpretation of the term “state revenue” by Pakatan leaders.
In short, it is a term to describe the act of taking money from left pocket and put it into the right pocket and subsequently trumpet it as an “increase of revenue for the state”.
Although the numbers are accurate and permissible in terms of accounting procedure, but to take credit and attribute the increase of revenue to Pakatan Rakyat government’s economic management is simply misrepresentation of facts.
Let me illustrate my point.
Take for example YAB Lim Guan Eng and the DAP Penang government.
Until now, I still could not believe his audacity in making outrageous claim that within two years of being Chief Minister, he has managed to reduce Penang government’s debt by RM600 million, when the truth remains that it was the federal government who took over the debts as part of Penang water supply rationalization plan.
Similarly, Penang state government has duped DAP supporters to believe that the increase in state revenue in 2011 was simply because of Guan Eng’s exemplary economic skills. This is the classic art of embellishing one’s economic credentials without basis. I prefer to call it "Guanomics".
Here is the example.
On page 9 and 10 of Penang’s 2011 Audit Report, the Auditor General acknowledged that Penang’s Consolidated Revenue Account (Akaun Hasil Disatukan) had increased by 24.2% compared to 2010.
In the same the report, Auditor General clearly stated that this was due to an extraordinary increase in non-revenue receipts (Terimaan Bukan Hasil) of RM176.12 million, which jumped by 182.5% from the previous year. The reason for this was because the Penang government decided to close its Trust Accounts (Akaun Amanah) and transfer the balance (Lebihan Dari Penutupan Akaun Amanah and Lebihan Dari Penutupan Kumpulanwang Amanah) into the state’s Consolidated Revenue Account.
Please refer to "Penyumbang Utama Hasil Kerajaan Negeri Pulau Pinang" for 2011 in the chart below.
The term “Terimaan Bukan Hasil” used by the Auditor General to classify monies transferred from Trust Accounts into the Consolidated Revenue Account says it all. It simply means non-revenue receipts. In short, it is not increase in revenue per se. Please do not say it is increase in revenue when it is the act of taking money from left pocket and putting it in right pocket. At the end of the day you end up with the same amount of money. No increase.
If we examine the chart above closely, we will find that the land tax (cukai tanah) collection had grown marginally since DAP took over the state in 2008. Hence, the bulk of increase of Penang's income came from land premiums and transfer of Trust Account’s balance. I believe this included selling off state lands. These should not be used to indicate real growth in Penang's economy.
This is hardly an isolated case.
Since he became the Chief Minister, Lim Guan Eng has the habit of brazenly embellishing Penang’s economic numbers.
Take for example his statement last year, which was quoted by The Malaysian Insider (http://www.themalaysianinsider.com/malaysia/article/penang-is-proof-that-pakatan-can-deliver-says-guan-eng/).
He claimed that Penang had hit record of RM88 million surpluses in 2008 and RM77 million in 2009 through “the dividends of anti-corruption” measures. Of course, by saying so, his real intention was to insinuate that the previous BN government was corrupt.
First of all, let’s set the record straight. Penang had surpluses even during BN government administration, so there are no surprises there. Look at the table below.
It is more interesting to ascertain if Lim Guan Eng had indeed commit the sin of "kreatif aka-untung" and "guanomics" by creatively interpreted the surpluses in 2008 and 2009 were due to his “dividends of anti-corruption” policy?
Let’s see where the extra revenue came from, shall we? Please observe the table below.
Again, Penang revenue in 2008 and 2009 were largely derived from Non-Tax Revenue (Hasil Bukan Cukai) and sizeable Non Revenue Receipts (Terimaan Bukan Hasil).
If we look at the table below, clearly the “record surplus” of 2008 was contributed by:
- “Premium Tanah - Tukar Syarat” which went up by 330.7%
- “Pemberian Pertambahan Hasil” (increase by 496.2%) which included RM9.84 million revenue during BN government in 2007 but accounted in 2008
- “Premium Tanah” - Pemberian Milik Bayaran Khas (increase by 120%)
- “Permit Pengalihan Batu Batan Lain (increase by 204%)
- “Cukai Tanah” (15.6%).
More details can be read from following two tables:
From the tables above, in 2008 and 2009 alone, clearly Lim Guan Eng had misled Malaysians (and poor Penangites) when he claimed that Penang’s record surplus was due to his anti-corruption drive when in actual fact much of the revenue came from land related and non-economic transactions.
So folks, there you have it. I have clearly shown you the mechanism of “guanomics” and “kreatif aka-untung” in Penang.
I hereby rest my case.
(For more info on YAB Lim Guan Eng's guanomics and kreatif aka-untung, please read http://satdthinks.blogspot.com )