Towards a New MPPP Budgeting Process

The following is the address to the Full Council Meeting of MPPP on October 28, 2011 presented by Dr Lim Mah Hui.

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Towards a New MPPP Budgeting Process

Selamat pagi and selamat sejahtera. Yg Bahagia YDP Ar Puan Patayah and Ir Ang Eng Thye, Pengarah2 and Ketua2 Jabatan, Ahli2 Majlis, Para wartan, tuan dan puan.

Saya harap membincang tentang proses bajet MPPP.

Saya minta izin untuk memberi pembentangan dalam bahasa Inggeris.

I wish discuss the MPPP Budgeting Process and suggest that we adopt a new approach to looking at budgeting and several steps for improving this process.

First, our budget must be objective driven not department driven. A budget is not simply a routine financial document. It is a financial statement of the objectives of our local government. In other words, the objectives must drive the budget and the budgeting process. It cannot be simply an exercise in filling in expenditures by the various departments. Hence, in our next budget, we should first identify what are MPPP’s objectives and priorities for the coming year; our expenditure should follow these objectives and priorities.

Second, in striving towards an objective driven budget, we should adopt a participative budgeting process, i.e., we must identify what are the needs and priorities of the ratepayers we serve. To do this we must consult with the target groups early in the budgeting cycle. For example, if one of our objectives is to have a cleaner and greener Penang and one of the target group is the wet market or the hawker centers, then we must do a proper survey and consultation with them. I understand the MPPJ has started to consult their wards on their budget.

Third, the budget must be performance based. Using input from local communities and target groups, we then set up measureable objectives, methods to achieve them, and ways to monitor the performance and achievement of these objectives through KPIs. In fact, we should set up committees that include not only MPPP staff and councilors but also the stakeholders and civil society groups or from resident associations that will monitor the performance and implementation of these objectives.

Fourth, we should be always be guided by big picture and not be lost in details. We begin with an overview, start from the top and drill down to the bottom. We must be able to discern the forest from the trees. We cannot be pinching penny here and there and then ignore the big-ticket items; as the saying goes being penny wise and pound-foolish.

Fifth, we should focus both on revenue and expenditure. Our present practice is focused on expenditure and not on raising revenue. Also the focus has been to increase and not to decrease expenditure; it is a one-way street. Going forward every department should be forced to suggest some new ideas and ways to raise revenue and to reduce expenditure, and how to improve efficiency.

Finally, 65% of our 2012 budget is allocated to make Penang cleaner, or to make the Pearl of the Orient shine. On the one hand this seems good; on the other hand, it is means something is wrong somewhere because we have to spend so much to keep our city clean. Perhaps we are focusing on the wrong thing, i.e., to pay for more cleaners to sweep the streets, to pick up and dispose garbage. It means Penangnites are not doing their duty in keeping the own city clean.

I suggest that instead of simply hiring more cleaners to pick up garbage, we should tackle the problem at the SOURCE, not at the end. This means reducing solid waste at the source through segregation, reduction, composting etc. Our priority should be to come up with a credible waste disposal system, not just hiring more garbage collectors. Money should be spent on the former.

It also means we must sternly go after people who throw garbage indiscriminately, who put up posters illegally, park illegally etc. We should raise fines and penalties and enforce our laws more strictly. This will not only make our city cleaner but also bring in more revenue. Again, there must be ways to monitor the implementation of these policies.

YDP and fellow councilors, we project a deficit of RM 77 million in our 2012 budget. This is one quarter of our total budget. We cannot do business as usual.

Our sister PBT, the MPSP has turned things around from years of budget deficits to budget surplus, while we are moving in the opposite direction from surplus to deficit. I also understand that they have started to adopt a transformative budgeting process.

I am sure we can do the same, if not better, under the wise leadership of our YDP and councilors. If we have to engage outside people to help us in this process, we should do that. I urge you to adopt this new approach and start the process now.

Thank you.

-Written by Dr. Lim Mah Hui

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On Sustainable Development for Penang

The following is the address presented to the full council meeting of MPPP on August 26, 2011 by Ahli Majlis Dr. Lim Mah Hui.

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On Sustainable Development for Penang

I would like to touch on the issue of what type of development is Penang, in particular Penang island, heading towards.

Let me begin with an anecdote. Last week I had dinner with Mr Ramesh Chander who was a Chief Statistician in the Dept of Statistics of Malaysia in the 1970s who then went to work for the World Bank and is an advisor to many countries in setting up their statistics department. He was here on a visit from Washington DC to advise SERI, now Penang Institute, on improving their data collection. He said the last time he came to Penang was about 3 to 4 years ago and the thing that struck him the most this time was the enormous number of high-rise and tall buildings all over Penang island. He is not the only one to say this. Many other visitors have observed the same thing. And he continued he fears that we are heading towards a housing and construction bubble.

The present state government is right to say that it wants it Georgetown to be an international livable city and to be a magnet to attract talent to this city. In its rush to achieve this goal, it has opened the flood-gates to developers to build as much and as fast as possible: more houses, more high-rise apartments, more shopping malls, more commercial offices etc. If this is not properly planned and controlled we could end up destroying the unique charm of Penang island. One reason why Georgetown was awarded world heritage city status is Penang has the largest stock of prewar houses in South East Asia. Indiscriminately allowing high-rise buildings to sprout anywhere and everywhere, particularly in areas where the surrounding buildings are low rise and historic (not necessarily heritage) will kill the goose that lays the golden egg. International tourists come to Penang not to see more tall buildings; that they can find in Hong Kong, New York and Singapore. They come to experience the historic heritage of not only the heritage zone but the whole city.

The intention of the recent state government policy of increasing the plot ratio from 1:1 to 2.8:1 or the density to 87 units per acre is to increase the supply of more affordable housing. This intention is good. However, it is unclear whether that objective can be achieved under this policy without fine-tuning.

I have often been told that we need more housing because there is not enough houses in Penang and by increasing the density ratio we can supply enough houses to bring down the prices to affordable levels. How true is this argument? Is it based on facts? The 2010 Population and Housing Census of Malaysia showed that there are 385,658 households and 468,278 housing units in Penang state, an excess of 82,620 housing units. In plain language, there are 21% more housing units than there are households.

The problem of affordable housing is very complex and I cannot offer a full explanation here. It is good that the state has asked the Penang Institute to undertake a detailed and proper study. Good policies must be based on proper and thorough studies; they cannot be rushed into.

But briefly we can say the housing problem is not that there are not enough housing units in Penang. The problem is too many of these housing units are built to cater to a small group of rich local and international investors and speculators who view Penang property prices as still cheap by international standards and whose demand is pushing up prices beyond the reach of the average income earner in Penang. Many own multiple units. The state has to come up with a better policy to address this issue.

With increased permissible density, land suddenly becomes even more valuable and landowners can demand higher land prices. Developers sensing there is more money to make rush to purchase land with expectation of making higher profits. Of course, they would then want to build up to the maximum limit and to maximize their profits. That is the nature of their business.

It is, however, the responsibility of the state – the politicians, the councilors, the civil, the policy makers - to provide the checks and balances, to protect public interest, to come up with sensible policies to ensure we have sustainable development. The increased density ratio is a blunt policy instrument for a good objective. Policy planners and implementers must implement it judiciously and not indiscriminately.

Indiscriminate approval for developers to build to the maximum of 87 units per acre without due consideration of ample green spaces, adequate sunlight and air flow, fields and trees, public amenities, traffic congestion, availability of good transport network etc. will destroy our livable environment. A livable city has to enhance rather than degrade the natural environment.

We recently read in the papers about plans to build 30 to 40 stories high-rise in Cantonment Road, Burma Road and Jelutong Road with little regard for the traffic impact in these already overloaded areas. If we continue to indiscriminately approve high-rise and developers continue to buy up every piece of available property to build to the maximum density ratio, we will end up like Hong Kong city with high-density development and over crowding without the public infrastructure to support it.

I am not against development. The important question we need to ask is what type of development? Is it rampant and unbalanced development or is it sustainable and balanced development. The adjective is more important than the noun.

I am afraid our concept of development is simply too property centric. Can we learn any lessons from the over development of property in Dubai that has collapsed? Do we have enough public parks, green spaces, recreational facilities, good public transport system to sustain a livable city? Too much emphasis has been placed on property development and not enough emphasis is given to these other aspects of development.

Town planning must take into account the use of land space, the natural and cultural environment, the community needs, the amount of walkways and streets, the fields and trees, the movement of people, the type of buildings, do they blend or clash with the environment? 1 It cannot be just about putting up more bricks and mortar.

Let me quote a definition of town planning as the “ordering of building and land use according to a visually pleasing but practical scheme for the economy, and achieving convenience and beauty by ensuring accessibility and managing resource use while avoiding land use conflict.”2

Finally I would like to put forward a proposal for consideration. We know that the traffic impact studies for big construction projects have not been effective. One reason is because consultants are hired by developers. I suggest that developers pay to a pool to be managed by MPPP to hire its own independent consultants. This will reduce any element of conflict of interests. It will also enable a more integrated approach to traffic impact studies beyond single projects.

Thank you for your attention.

-written by Dr. Lim Mah Hui-

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