Austerity starts at the top and there’s no other way round

Comment

LAHORE: Austerity is the most misunderstood concept in most of the government circles which believe it to be nothing more than absolute cutbacks in spending, a clampdown on expenses, or extreme economy.

Austerity, in fact, means ensuring prudent spending only by employing good management practices. In other words it is a situation where you have a limited amount of money that requires to be spent only on things that cannot be avoided.

Economists say austerity is a decrease in the structural deficit of the government, that is to say, disregarding the effects of the economic cycle.

Austerity is also a mindset both at government and private level. It is wise to use water conservatively and it falls under austerity. In Pakistan, austerity at a personal level is required the most.

The perks and privileges enjoyed by the government functionaries particularly the high-level bureaucrats and ministers including prime minister and chief ministers could be cut by 75 percent. Even then they would be living much above the levels of upper middle class. The proponents of high salaries, perks, and privileges to high-ups in government point out such measures would not result in any significant savings. They are right as far as actual savings are concerned which are too small in a national budget of over Rs5 trillion.

However, the simplicity in living standards of the ruling elite would induce the entire nation to live simply. When politicians, bureaucrats stop using luxury cars the majority in the private sector would do the same. If the ruling elite stopped using imported products, the general public would be forced to follow the suit. The legislature would then impose punitive duties on luxury imports if they and their families are officially required to live simply. The electorate would then judge their candidates on the basis of character instead of wealth.

It would not be possible to reduce the non-development expenditure by a large margin; however the government could still make a saving of Rs200-300 billion if it adopts prudent austerity measures. They said all non-essential expenditures have to be stopped. This amount could reduce the budget deficit appreciably.

We should take cue from Japan where austerity is actually practiced. The official residence of Japanese prime minister for instance is an old three-storey house that has been denied major repair by Japanese parliament for past few decades on the plea of lacks of funds. Japan is one of the four major economic powers of the world. It may be mentioned that only one or two Japanese prime ministers has stayed in this official residence. The privileges of PM house are available only at the official residence. The others who lived in their private residences were denied fixtures, furniture or renovation at the government’s expense. In Pakistan all federal and provincial ministers enjoy even better perks.

It has been observed that if the Prime Minister is from outside the federal capital his residence in his hometown is also declared PM house and enjoys all privileges and security as available in the official PM house in Islamabad. The same is true in case of chief ministers’ houses in the provinces.

The prime ministers of Pakistan go on official tours on exclusive jets allocated to them. They take huge entourage that enjoys all perks including stay in 7-star hotels and separate limousines hired by the government of Pakistan.

Why can’t our prime ministers go on commercial flights with a delegation of 3-5 people needed at the meetings abroad? Japanese prime minister travels by normal commercial flight when visiting a foreign country and his entourage is limited to three or four persons including some of his cabinet members.

Pakistan needs to save every penny to spare funds for development and welfare of the people. There should be performance based justification of all expenditures of the government. All the additional allocations in the next five years should be on the amount needed for increasing the salaries after drastically reducing the perks of highest grades.

Moreover, federal and provincial ministers regularly visit their hometowns on weekends at the government’s expense. This blatant waste of taxpayers' money should be stopped among all other things so that funds could be spared for purposeful expenses.