Sunday , December 17 2017

Subsidies a kettle with a lot of holes

Ahmed Al-Jarallah – Editor-in-Chief, the Arab Times
Ahmed Al-Jarallah – Editor-in-Chief, the Arab Times

A CERTAIN voice wants the government to remedy the economic and financial crisis caused by the oil price decline without touching the service earnings which put a huge burden on public funds and continue to go to waste. The reason is those benefiting from subsidies have louder voices and they are great in the art of misleading people.

As talks about lifting subsidies on goods and services intensified over the past months, they have become more vocal in rejecting even the act of looking into the matter despite the high cost of about KD 7 billion per year — a large percentage of which goes to foodstuff and most benefits go to the importers, in addition to some who receive grants through the process.

Kuwait is the only country which subsidizes foodstuff without justification, so when Chairperson of the parliamentary Finance and Economic Committee MP Faisal Al-Shaya said, “Lifting subsidies on foodstuff has become necessary,” he realized from his position as an MP the extent of the issue’s effect on public funds.

Naturally, countries secure the necessary foodstuff for their people, but this is usually done during crises. Under ordinary circumstances and in Kuwait’s condition, what is the motive behind the foodstuff subsidies?

Kuwaitis and the State are victims of unregulated subsidies on foodstuff and health services, especially the ‘overseas medical treatment’. This has become a predicament, particularly in the midst of financial demands from foreign hospitals due to the parliamentary exploitation of this service which is supposed to be for health cases that cannot be treated locally. Unfortunately, it has been transformed into a political touristic benefit which possesses keys to the electorate.

With regard to the housing welfare which stands on wrong foundations, radical solutions are needed by changing the philosophy of distributing land, building villas and granting soft loans. Instead, they should implement modern housing projects with comprehensive services through the joint ownership system as it is being applied in various advanced countries. How wonderful it will be if such a modern housing project is implemented inside the capital, which becomes a city of ghosts once the Sun sets because people are moving to distant residential areas?

Perhaps, there is a voice saying the State should distribute what is known as ‘government houses’ to citizens. Sadly, it is not a solution, given that such houses are built based on standards which render them unsuitable for living, in addition to their ugly shapes as if they were built to benefit the contractors. This means delay in granting houses to those who need them due to bureaucracy in the distribution of land and selection of location.

Furthermore, this policy will be a heavy burden on the citizen who spends excessively on the construction of a house on par with standards exceeding his actual need. The cost will be lower if the citizen owns an apartment measuring 300 or 400 square meters in a residential complex with regular standards. In fact, the State will save the loan it grants to citizens and invest the money in projects which are more beneficial to people and give more returns to public funds.

The voice we hear today, opposing the lifting of subsidies, reminds me of the situation in the United States of America from 1920 to 1933 when the federal government issued a law banning alcohol. As a result, the alcohol smuggling market became active and the number of drug users increased. The government decided to lift the ban 13 years after the enactment of the law — in 1933. The decision prompted the ‘bootleggers’, those engaged in the alcohol smuggling business, to fiercely stand against this move.

The bootleggers even went to the extent of saying that their opposition against lifting the alcohol ban is based on religious beliefs or to protect the religion of people, claiming the decision will lead to higher crime rate and the people will desert the worship houses.

Indeed, it is time to face the reality. The basis of waste found in subsidies is unjustified. If it continues with the same tune, the State’s attempt to solve the problem — whether by borrowing from outside, selling assets or spending the country’s financial reserve — will be futile because you cannot fill a kettle, which is full of holes, with water.

By Ahmed Al-Jarallah

Editor-in-Chief, the Arab Times

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