Budget projects country’s forward march - President

This year’s budget is a budget which explained the government’s successful march forward as indicated by the people’s response shown to it said President Mahinda Rajapaksa in Parliament on Wednesday.

President made this observation joining the committee stage debate of the Appropriation Bill in relation to the finance heads of the Finance and Planning Ministry in his capacity as the Finance and Planning Minister.

The President who said that it was with deep pleasure that he was participating in the budget debate added that even though there was an attempt to obstruct him when he presented the budget in Parliament on November 21 the TNA, JVP and New Democratic Front attended Parliament, honouring Parliamentary procedure and he highly valued and appreciated the example given by them. Their behaviour gave hopes for achieving a solution to the political problems which had remained unsettled for a long time. If they acted in a flexible and positive manner regarding natural problems this parliament would gain historical significance as a historic parliament since independence which settled a large number of unsettled problems in this country. I wish to invite all parties in the Opposition to assist in this endeavour.

On this day of the committee stage of the Budget relating to the Finance Ministry, I value the ideas and criticisms made by honourable MPs regarding that ministry and the overall budget proposals. Various views have been expressed about the budget outside parliament too. However as a whole, the budget has been accepted as a successful one where the government is conducting economic and financial matters in the correct path according to these views.

People’s budget

A research conducted by the Financial Times which is a reputed magazine in the finance and economic field it has been revealed that 64 percent of the people in the country maintained that this budget was people-friendly. I consider it as a people’s referendum in support of the budget and the government. This was the first time in history that a budget was appreciated outside parliament, parallel to the passing of the Appreciation Bill with a majority of 91 votes at the second reading.

The survey on development activities carried out upto October 2, 2011 made in preparation for the budget showed that 68.7 percent of the people were content with the development projects implemented by the government that survey indicated that out of the total number of public servants engaged in service nearly 70 percent gave a high contribution and that the balance 30 percent ought to offer a better contribution and commitment to their work. The 35 percent are disaffected not due to any fault on the part of the government but due to certain high handed activities of certain people working with us. There are malicious acts intended to cause disaffection among the people and credit them to the Rajapaksa account. But the government’s vision and endeavour is to listen to that 35 percent disaffected people as well and foster development which will bring maximum benefits to every citizen.

According to the constitution, full power and responsibility regarding the government financial matters vested with parliament while the government is responsible for administrative development and welfare activities. The government presented a budget to obtain annual financial allocation for the above-mentioned activities and obtain parliamentary approval to gain revenue through income sources and local and foreign credit. It is the duty of the government to maintain a majority in parliament to gain approval for the budget. It is the duty of the opposition to criticize those activities, correct the wrongs committed by the government and support it to carry forward its activities on the correct path. If the budget is a failure and it does not cater to people’s welfare what must be done is to defeat the budget in parliament rather than obstruct the presentation of the budget.

Unlike other Bills if the budget is defeated in parliament a fresh budget should be presented and approved with opposition support.

If that too is defeated, parliament should be dissolved and a fresh general election should be called. This shows how a government is responsible to parliament in financial management. That is why the second stage of the budget becomes a platform to use this strong weapon. The dates and times of the budget debate are decided by the opposition because they should exercise people’s power and right. I feel that the main opposition party shirked this responsibility during this budget debate. Certain committee stage budget debates could not be continued because there was no proper opposition representation.

Government answerable to Parliament

There were many instances where proceedings had to be postponed due to this factor. Only the government party participated in certain debates pertaining to certain ministries. The democratic opportunity to obtain alternative ideas was lost due to this.

I have made a great attempt to build an active and working co-operation between the executive and the legislature and make the government answerable to parliament by creating a constitutional responsibility to attend parliamentary sessions at least once in three months and visiting parliament to present the budget every year since I assumed duties in my office. This offers a great opportunity for the opposition and the government and the government and the legislature to build a working relationship. I believe that the opposition could have played a greater role in making parliament a meaningful platform to perform their role.

Infrastructure development

A feel that the opposition in our country proved to be a failed opposition through this budget. Instead of rallying round the leader and formulating an alternative programme to make preparation to face the next election as a strong opposition certain opposition MPs worked according to different agendas and tried to fight for the leadership by trying to build up their own personalities.

Therefore I wish to call upon the UNP to rally round their leader respecting the party constitution and rise up as a group working for the country’s progress. In 2005, through the Mahinda Chinthanaya, we built a wide alliance and approached a programme which was considered as correct. Through this we have been able to work as a administration sensitive to various angles. Although this is a difficult journey I wish to state that this is a correct journey which enabled the government to bring great progress to the country.

There are many reasons for the 2012 budget to be commonly accepted as a successful budget. There is a common belief that ever since the UPFA government was set up under my leadership in 2005 there had been massive development in the country both at national and rural level.

Whatever differences and jealousies we have politically or on regional or other basis we all have to accept the fact the country experienced its first six-year period of massive development after our government assumed office in 2005. This is the common view of all including ministers and MPs of the previous PA government as well as these who have joined us after breaking away from the UNP, JVP, SLMC, TNA and even the LTTE members who have joined the democratic political process.

Highways, Power, Irrigation and drinking water projects have been implemented covering each and every electrotate. People are living with anticipation of rebuilding their roads, canals and anicuts obtaining electricity for their village. Farmers whom met to resolve the crates problem requested me to rebuild their roads quickly. Peoples enthusiasm has increased to an extent where the government found it difficult to cope with.

The work has increased to such a great extent causing a shortage of raw materials labour, engineers, technicians and supervisory staff. Agriculture, fisheries, livestock and other activities have been rejuvenated improving income and living standard as indicated by those engaged in these sectors.

The transport of vegetables disrupted due to the activities of an invisible political hand has been brought back to normal and the glut of vegetables and other products which flowed into the market thereafter showed that there is large scale daily production throughout the country. The Divi Neguma project could be extended from one million to 1.5 million domestic units due to the great enthusiasm shown by the people to the production process.

What they need are fertilizer, seeds, transport facilities, fair price for their products and infrastructure providing connectivity to markets rather than to hang on to agendas pleasing the international community which defamed the country’s image and endangered its sovereignty.

A former Minister who earlier joined the government and later left it during his tenure as Minister told us and our officials that he had never seen a government which did so much of development work. He made another comment.

He said however much the government was involved in good work it did not receive sufficient publicity. A JVP MP who was a minister some time ago subscribed to this same view. I remember that eventhough the ‘1,000 tanks’ and ‘regaining Sri Lanka’ programmes were not so successful they gained immense publicity. Although construction of one tank gained much publicity we have not been able to gain sufficient publicity even after completing 32 major tanks including Weheragala, Deduru Oya, Iranamadu, Yoda Wewa, Welioya and Moragahakanda and repaired all small irrigation schemes. But I believe that good work done by the government will be appreciated by the people whether it gained publicity or not.

It is not to seek publicity that we are providing fertilizer subsidy, seeds, electricity, building, irrigation works and roads, extending IT and computer education, developing temples, building, maternity clinics and pre-schools, engaged in demining work, rehabilitating former LTTE cadres constructing expressways power plants, playground and performing arts theatres. We are doing this to improve community life and provide the economic development that has been denied to our children and youth. People highly value and appreciate this work.

Commitment to budget preparation

It is not by chance that the 2012 budget became a successful budget. Preparation of the budget begun to June. We engaged in a wide programme to ascertain people’s view for it. I personally chaired 33 such meetings. While treasury officials held 23 follow up meetings.

All Ministers, Deputy Ministers, Secretaries, Senior officials and civil society representatives attended in these meetings. 2,917 individuals representing far off villages including the North and South, business and other sectors attended these meetings and expressed their views.

I led treasury officials in discussions regarding estimates and development strategies of their Ministries. With them relevant Ministers, Deputy Ministry Secretaries and other officials contributed towards the preparation of the budget estimates.

We obtained the views and ideas of chambers of commerce, various social organizations, trade unions, MPs retired government servants, the clergy and the ordinary public for the preparation of budget proposals. We were humble enough to pay attention even to the media, newspaper articles, letters and TV discussions. I highly value the interest shown by everyone.

Due to this wide dialogue, we were able to pay attention to pregnant mothers, children, low income earners, elders, disabled, problems of difficult villages and development problems of places of worship. We were able to include proposals for the benefit and welfare of war heroes’ parents, samurdhi recipients and socially marginalized segments due to this. We were also able to pay attention to the difficulties of artistes, issues concerning these engaged in the media and cultural sectors and the development of ancient cultural villages. We made allocations towards the construction of electrified fences and ditches to minimize the elephant-human conflict and an insurance scheme against lives and property damaged by elephants. We removed taxes affecting small enterprises and those collecting green tea and latex. Increased subsidies granted to export agricultural crops.

We drew up a plan to reduce imports milk food, sugar and other food items. We have taken action to create a development bank network within the existing banking system to develop small and medium scale enterprises. We are also able solve salary anomalies of pensioners increase public service salaries and solve problems including salary anomalies of engineers, doctors, university academic and non-academic staff, Grama Niladharis and other field officers.

Although you had a fine opportunity to contribute towards strengthening these programmes included in the budget you did not do it because it would have been politically unfavourable to commend and praise this budget.

I wish to state that the period of service for qualifying to obtain vehicle loans for journalists, artistes and writers will be reduced from 25 to 18 years in response to request made by certain media persons and MPs. Nearly Rs 50 billion has been allocated from the budget for development expenditure of the country. This is 44 percent of the expected revenue. This amounted to 4.4 percent of the gross national income.

This is a high level government investment. From this funds have been allocated for building roads, irrigation works, power supply projects, drinking water supply projects, Housing and Urban Development-domestic Airports, Port development, rural infrastructure projects, coast and environmental conservation. We firmly believe that the development of countrywide infrastructure facilities will enable us to ensure wide national development.

As much as infrastructure development this budget has paid attention for the development of Human resources.

There are proposals for directing children to pre-schools through development of pre- schools, implement a wide education development programme focusing on 6,000 schools and a health development plan targetting, 1,000 hospitals.

Educational development

The Appropriation bill of certain Ministries have been prepared to initiate a vocational education programme to provide knowledge and skills needed by various sectors, develop the National Universities network to provide higher education facilities needed by new sectors and direct intellectuals towards research and technological activities. Through this, there will be a great change in human resources development field within the next three years.

The salutary feature in our labour market is that we have been able to prevent children in the age group of 5-11 years being used for economic activities. Only 2.5 percent of children in this age group are involved in such activities which is much below the 6.5 percent found in developed countries. We have been able to achieve this due to the free education system which has been extended to all villages countrywide.

The 2012 Budget is armed to prevent the use of children in employment and produce a child generation which could improve their educational and technological skills and provide the highest possible contribution towards development in the world.

Mohan Lal Grero joining the budget debate made a very emotional speech and said that since human resources development is a decisive factor which will brighten the country’s future. We all should join hands and contribute towards it with a future vision. He said national problems should not be looked at through petty considerations or tinted glasses as it is not the time for it. I see the example shown by him as a good. Men for the development of human resources in the next decade. Now we have gained an opportunity to utilize his knowledge and service in a fruitful manner.

Certain Opposition MPs tried to belittle this budget describing it as one which is weighted towards a liberal vision. They saw our attempt to limit the budget deficit to 6.2 percent of the national income as a liberal tendency.

They may have done it after reminiscing the unpleasant programme they included in the Budget deficit through the 2002-2004 regaining Sri Lanka. Hon members will remember that they tried to reduce the Budget deficit by pruning the public service to 300,000 employees, discontinuing public service pensioners selling shares in the Insurance Corporation, Sevanagala and Pelwatte Sugar Industries, CPC and making plans for privatising Peoples Bank, Railways, Customs and Inland Revenue Departments. It is true that it was an attempt to propagate new liberation in agreement with Washington. But the budgets we have been implementing from 2005 have been entirely different to it. We have never tried to bridge the budget deficit by selling state ventures. Even private sector participation has been obtained to revive the institutions, such as, Embilipitiya paper factory leaving room for state interventions. There is no room in the Mahinda Chinthana programme to bridge the budget deficit by selling state ventures.

Instead of pruning the public sector, the budget has made allocations for new recruitments. It includes allocations for the implementation of the programme to recruit 15,000 graduates which was postponed due to the local elections in 2011. Apart from this, 3,000 school teachers will be recruited in addition to the recruitment of 5,000 for technical and agricultural extension service posts. Another 2000 will be recruited in 2012 for government management and administrative posts.

This will also be a solution to the graduate unemployment problem. A new service minute is now ready in respect of newly recruited graduate service. Public Service salaries have been increased by 10 percent of the basic salary. The minimum salary of a government servant which was Rs 10,100 in 2005 will increase to Rs 19,339 in 2012. Steps have been taken in 2011/2012 to grant a minimum increase of at lease Rs 2,637 to every government servant.

Pensioners have been made to find solutions to pension and salary anomalies of government servants. That is why Rs 368 billion has been allocated for public service salaries. This is almost one fourth of total state expenditure. Nearly Rs 112 billion will be spent on pensioners in 2012. Fertilizer subsidy has been allocated Rs 40,000 million while another 25,000 million has been set apart for other subsidies liberal economics would indicate the cutting down of this expenditure as well as government investments.

If the 2012 budget is accepted as a liberal budget I would consider it as a great victory for the indigenous vision we introduced for a Mahinda Chinthana new Sri Lanka. Our vision regarding the budget deficit is a longstanding vision. Dr N M Perera presenting the 1972 budget as Finance Minister of the coalition government set up in 1970 stated this: “We agree that we cannot improve our income earning avenues without capital, and goods and technological know-how provided by the developed countries. We are forced to obtain them from developed nations within the next few years. In order to obtain such assistance on conditions agreeable to us is by winning their confidence by acting in a manner which will prove that we have resolved to remedy our weaknesses. We show them that we have the capability to use our resources efficiently. For that we should at least try to do away with the budget deficit in relation to recurrent expenditure. We should try to find the money for recurrent expenditure through taxation. Similarly, we should try to gain an additional income to cater to the daily recurrent expenditure.

The fact that we have to force inflation and other dangers by presenting a deficit budget needs no repetition. It is with this deep issues that we have approached the preparation of the budget. That is why it was planned to reduce the recurrent expenditure deficit from national income which was Rs 120 billion in 2010 to Rs 1.8 billion in 2012 and increase state investments from Rs 357 billion to Rs 498 billion. Through this we have moved from consumption to investment. If that UF government was not defeated we would not have had to speak of a budget deficit today. Instead of importing chillies worth 50 million US dollars we could have exported chillies and instead of a import dependent economy we could have moved into an export oriented economy. If mayor Duraiappa was not assassinated we could have become a prosperous country with national unity without speaking about terrorism. We have to regain all these what we have lost. That is why we have prepared a budget weighted towards investments international trade by increasing local production. That is our duty and responsibility.

The land on which the Hilton Hotel has been built is government property. It is worth Rs 136.8 million. But only Rs 27.3 million of it had been paid up. It had not paid annual rent. Foreign loans for building it had been obtained on a government bond. The majority of its shares were owned by the government. Since then company could not repay loans it owed the government Rs 12,099 million in respect of money pumped by the Treasury. Court actions had confused the activities of the hotel. It had made 37 percent of profits as management fees when actually only 15 percent had to be paid. So is it wrong to resolve an issue which had burdened the government and the country for more than 20 years.

Similarly, valuable property owned by the BOI and the UDA had been neglected for many years. Sugar factories and large estates which had contributed towards national production had been privatized. They have not been developed according to the stipulations made in granting tax concessions. Didn’t you all in the opposition privatize these institutions to make them more efficient than under state administration. shouldn’t they have been taken over by the government if they didn’t adhere to those conditions. Should inefficiency in certain State ventures be made an issue to excuse or condone inefficiency in the private sector. This Act will not harm anyone in the private sector who is using lend and tax concessions received from government in the proper manner. The country has now gained an opportunity to properly utilize these assets. Is it not the government’s responsibility to ensure that these properties are used properly without distinguishing them as private or State property. Can a responsible Opposition oppose such moves either.

Some Opposition members argued that money paid by investors for land purchased should not be taken into account when computing investments. How can the payment made for a land not considered as an investment when a bank issues a loan for building a house. The payment made for the land is also considered part of the investment. It can be done only when land is given free.

It is true that this has been the policy of previous governments. Even land in Colombo had been given for hotels and housing schemes at nominal prices. We not only reject such policies but consider them as wrong policies. I wish to categorically state that this government will not commit this wrong. We don’t issue land to businessmen on long-term lease basis. It is mandatory for them to pay up the assessed value of the land. This is the main difference between our policies. It is for the first time that foreign investment has reached over US $ 1,000 million in 2011. Tourist arrivals is nearing one million. Private investment has widened in many sectors. Bank loans to the private sector has increased by 22 percent and interest rates have been reduced by almost 50 percent. Nearly 8,000 new hotel rooms are under construction. Investments have increased in garment, tea and rubber industries, food production, cement and steel industries and service sectors. Private investment has increased to 23.5 percent of the National income. That is why unemployment had remained at a low level of five percent and poverty has remained less than nine percent.

Except criticisms levelled in Parliament for criticism sake there was no rational opposition to the budget within or outside Parliament. That is because we have a development approach agreeable to all.

Shouldn’t we pay attention to export of goods, such as, rice in which we have achieved self-sufficiency. Should not we try to produce food, drugs, sugar, milk and other products locally. Is it wrong to provide incentives for investment in these sectors. Can we reduce the international trade deficit without reducing expenditure on imports? Should not we produce a labour force with productivity for the local and foreign job market through skills development instead of an unskilled workforce. It is wrong to implement a programme to earn a higher income by utilizing our bio diversity by developing the tourism industry restricted to the coastal regions. Is it wrong to send housekeepers abroad instead of housemaids. Would not the diversion of expatriate workers returning to Sri Lanka towards investment projects help their future development.

We have been able to maintain the eight percent growth rate achieved in 2010 this year too. It has become 8.4 percent by the end of the third quarter of 2011. We have planned to maintain this in 2012 too. The 2012 budget has given incentives to widen investments in all sectors. If not for the world economic downturn, we will be able to achieve an 8.5 percent growth rate in 2012. We were able to achieve this by diverting the country towards a production driven economy from a free market economy. Certain sections in the Opposition believed in

Opposition members often point out that we should try to control inflation, budget deficit and state debts. Has not inflation reduced to nearly six percent? Is it wrong to reduce the budget deficit to six percent, why can’t they appreciate efforts made to control the budget deficit without reducing government investment? Shouldn’t we all appreciate our effort made to bring down state debt which was 100 percent of the GNP to 75 percent?

Apart from controlling inflation and managing money supply we have obtained good results in efforts to increase production and market supply of food crops. Prices of textiles, rice, vegetables, meat, and eggs and several other products have come down sharply this Christmas season when compared to last year. We should ensure excess production to provide a supply to meet increasing demand by encouraging farmers and small and medium-scale entrepreneurs. Why don’t certain learned members of Parliament accept this fact.

If the development programme implemented under Mahinda Chintana is a failure the Opposition should have announced an alternative programme if hoped to implement if it come to power during this budget debate. Are they going to promise that they won’t do away with the recruitment of people into the public service and desist from privatising State ventures, curtailing the fertilizer subsidy and they would not curtail or prune programmes prepared to improve the rural economy. The people will be able to know the policies which we both agree and disagree.

Instead of indulging in false propaganda to create resentment among the public and please international friends. The Opposition should try to move close to the people and divulge the truth now. After ending the terrorist conflict, a report made by the LLRC has now been tabled in Parliament. The Provincial Council introduced hastily as a solution to the problems in the North and East has been implemented in the South more than in those provinces. We can now monitor the experiences gained through that decentralization of power. We have appointed a PSC to provide a political solution agreeable to all parties. Why don’t senior politicians, such as, R Sampanthan realize at least now that the solution they expect from foreign countries does not suit the realities in the country today. Many people in the North and South have now entered the system of Parliamentary democracy and this has to be highly valued and appreciated. Why can’t we find our own solutions to problems with these MPs with experience in terrorist activities who have now embraced Parliamentary democracy?

Therefore, I consider the LLRC report and the PSC as a great opportunity to work together to brighten the country’s future.

It is necessary for the TNA to move away from the LTTE mentality and enter a political process that would build national unity and trust among Sinhala, Tamil and Muslim communities. Senior MPs, like my friend R Sampanthan should dedicate themselves towards this. I invite them to come and join hands with us to achieve this goal.

Through the budget, we have approached a long march towards building a strong economy. All arrangements have been made to bring about an economic reawakening within the next two years by maximum utilization of sports, culture, air, naval and human resources as well as local agriculture and natural resources, to celebrate the 700th anniversary of the Asgiriya Viharaya, stage the Commonwealth Summit, CPA sessions, World Tea Summit, international sports events and creating an identity for Ceylon Tea. Development of home-guardening with the participation of 2.5 million families, creating food security and reducing prices of food items are some of the main objectives of the budget. A large number of ex-LTTE child combatants have been rehabilitated. Steps have been taken to create social integration by enabling all communities to work in their own language. An All Party Conference has been summoned to solve political problems, social welfare schemes targeting elders, low income Samurdhi families and underprivileged people have been extended. Senior Minister DEW Gunasekara in his capacity as COPE Chairman has submitted a important report to Parliament. The report has made recommendations for overcoming shortcomings in 229 state ventures on the basis of investigation made into them I appreciate the contribution made by him and members of the three sub committees to make it a success.

The Secretary of the Treasury has been directed to study the report and strength the monitoring of these institutions by implementing the recommendation. Through the 2012 Budget too I have proposed to amend the Finance Act. I expect the support of Parliament to strengthen these State enterprises by considering the recommendation in the report.

During the debate on the Ministry of Defence and Urban Development, certain Opposition MPs had criticized the services rendered by Security Forces. Certain people had belittled the contribution made by the war heroes. They not only liberated the country from terrorism they built the environment necessary for normal civilian life by engaging in demining work in these areas.

They are engaging in various development work in the South to bring about a significant change in the country’s development image. They have even taken part in international peace keeping duties. Unlike in other countries we did not bring about a scheme to disband them and sent them on retirement after ending the war that is why I made allocations from this Budget to create a professional security force by improving their talents and skills. In addition to the welfare programme for war heroes this Budget has proposed a scheme for the welfare of their parents in order to provide them with an exalted and dignified position in society. Army camps have been set up on district basis for national security. That is a policy adopted by every government since independence. Therefore, I request the Opposition to refrain from belittling the services of war heroes and obstructing our efforts to transform them into a professional service.

Hon. Speaker, I highly appreciate the support extended by you, the Secretary General of Parliament and his Staff, Secretary of the Finance Ministry and officials during the Budget debate and the Budget period by devoting their valuable time and energy. Wish you all a happy Christmas and a bright and prosperous New Year.