ARE federal earnings funded by taxpayers in Pakatan Rakyat (PR) states returning to benefit the public in those states? What's clear in the case of Selangor is that funds are used for development but are not channelled through the state government. That has become clear in Penang as well, where promised funds for Georgetown's heritage status have not been delivered to the PR-governed state.
In the second and final part of an interview with The Nut Graph, Selangor executive councillor Dr Xavier Jayakumar talks about the round-about manner in which the federal government handles funding meant for the state through various ministries. It appears to be similar to the problems opposition Members of Parliament face when requesting for the Prime Minister's special constituency fund.
Xavier, who is the Sri Andalas assemblyperson from Parti Keadilan Rakyat, says that as a result, it is unclear how much and for what purpose federal funds for state development are used.
TNG: The Selangor government has been accused of incompetency. How has it been learning the ropes of governance?
Xavier Jayakumar: I agree that we didn't expect to be ruling Selangor. And it is not easy because Selangor is the richest, most developed state and the demands are tremendous. I think we've come to a stage where we understand better how the system works. I think we understand at least 80% to 90% of how the system works. We are encouraged that we can now move into implementation of projects and programmes.
But at the same time there is a lot of federal government interference in terms of limiting our financial resources. Of the federal government's revenue for income tax alone, 24% comes from Selangor. Previously, there were a lot of federal projects that were implemented in Selangor through the state government at the time. But now the funds are not coming in the sense that the state is not given the privilege to access these funds. The funds are being disbursed through different sources without the state government having any say as to how they are allocated.
Meaning, federal agencies in the state?
Yes, the funds go directly to them without going through the state. They have a Special Development Office (SDO) which they opened in Glenmarie, and the funding goes through that office without involving the state system.
For example, previously the Ministry of Rural and Regional Development used to give the state money to service all the kampungs and rural areas. Now we don't have the funds at all. We are being pressured by [ketua-ketua] kampung for basic amenities in their villages. Funds from the Housing and Local Government Ministry for things like parks, recreational areas and the environment have also dried up. The ministry conducts its own programmes through the SDO. The town councils don't get those funds anymore. Whatever the SDO does with federal funds given to it, the state government doesn't know.
That is going to pose problems in terms of overlap, isn't it?
Yes, it's already happening. The Youth and Sports Ministry is building futsal courts and playgrounds here and there without permission from the town councils.
What can the town council do when it finds out?
They have to stop it. They are putting up structures which don't have permission. Actually, we're not saying stop the building. We welcome it, but why not go through the proper channel? We want our youths to have amenities like futsal courts and basketball courts. The federal funds are there anyway. Every ministry has a chunk of money to spend for Selangor. Since they have to spend it, we just want them to go through the proper channel. Otherwise, how do you keep track of how much was spent and the quality of work done? How are you answerable to the Auditor-General? Who will the Auditor-General get the information from? Because the officers in the land office and district office which used to oversee the implementation of projects have now been supplanted by the SDO.
Khalid Ibrahim
Is the state's shortage of funds why the Menteri Besar suggested using funds from Baitulmal? Tan Sri Khalid Ibrahim was criticised for it.
Baitulmal is just an idea the MB put forth for all tax payers in Selangor. Baitulmal is just the term used. It might sound Islamic or Arabic, but it means it is a type of funding where we are saying, rather than you paying tax to the federal government, you might as well pay to the state.
Under federalism, the federal government is supposed to share some 80% of revenue with the states. That is the way it's done in well-developed democracies. That is also the formula in the BN-ruled states.
But isn't the objective of Baitulmal to help Muslims?
It was supposed to be a new fund. The state doesn't have an existing Baitulmal fund.
There's some confusion. The state does have a Baitulmal fund managed by the religious authorities, right?
That is zakat and collection of money from Muslims. That is different. The Baitulmal the MB proposed will not come under the Selangor Religious Council. Baitulmal will come under the state, under a new purpose vehicle.
So will it really happen?
It was just an idea that was thrown out. It would take a long time for implementation.
In the short term, what is being done to increase revenue?
Our revenue sources are from land taxes, development taxes, quit rent and special taxes. Our budget is RM1.4 billion. Half of that goes to emoluments. But we can run on the other half and we have a sound fixed deposit which we can run on for another three years.
But this year we expect a budget deficit with the economic downturn. Our tax collection may not achieve what we expect. That's why we approved additional budget expenditure of RM120 million in the July state assembly sitting. Next year's budget most probably might be a reduced budget because of the economy and reduced collection.
We are also encouraging business [people] to develop in the state. We'll be announcing some new strategies. And we're encouraging foreign investors to open up businesses here in Science Park 2 and in Pulau Indah. There have been quite a number of inquiries.
What about PKR as a whole, is the party learning to behave like a ruling party?
The party has changed in that we are coming to terms with being the ruling government in some states. Some of us have to learn that to govern, we cannot act like the opposition anymore. You cannot be antagonistic with the civil service or your work gets delayed. You have to learn how to work the system to get things done. The party is addressing this through seminars for leaders and councillors. 
See also:
The Furore Over Hindu temples
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