Unfair and wasteful govt subsidies

Record unemployment, disastrous crop failures and other calamities have by now reduced untold millions to or below subsistence levels.

Widespread social unrest and food rioting can no longer be discounted as levels of destitution are inexorably nearing the point of sheer desperation.

Massive government subsidies, however, remain largely meaningless to the truly poor and destitute for whom even the lowest prices for food and basic necessities remain out of reach.

Since IMF sanctioned government subsidy programs are applied across the board, the rich and well-off are unfairly benefiting from subsidized lower prices whereas the poor and destitute, except for occasional free food handouts, go empty handed.

As they now stand, subsidy programs are inevitably unfair, wasteful and largely ineffective and new approaches are needed urgently if social disaster is to be prevented.

Government subsidies, which to a major extent account for an estimated 8.5 percent budget deficit, are at best a short-term measure and cannot be financed indefinitely. As a first step, government subsidies may have to be reduced with resulting savings redirected more equitably to the truly poor and destitute.

Second, with international bailout financing and other aid eventually running out, alternative sources for continued subsidy funding will have to be found locally.

One possible revenue source could the introduction of "solidarity" or "wealth" taxes as is the case in Germany or France and which could be readily assessed based on luxury car registration or upmarket house ownerships.

Other revenues targeted at the more affluent could include import surcharges or special sales taxes on luxury consumer goods and more importantly so, a complete overhaul of the existing tax assessment and collection apparatus.

If history is anything to go by, valuable lessons could be drawn from the 1930s world recession, depression era America or World War II Europe, where problems ranging from record unemployment, widespread poverty, hyperinflation to unaffordable or scarce basic necessities had to be faced.

Emergency measures initiated at that time such as massive public works programs, food stamps, soup kitchens, rationing tickets or entitlement vouchers were not always successful but nevertheless kept large segments of the afflicted populations from starvation.

Some of the more successful emergency measures such as public works and food-for-work programs or discount vouchers for basic necessities should be seriously considered for implementation in Indonesia.

Strictly volunteer-based religious, social or private charitable institutions at neighborhood communities (RT and RW) level rather than existing state bureaucracies should be entrusted with their execution so as to ensure the fastest possible implementation with a minimum of misuses and abuses.

To the extent possible, the allocation of free food or discount vouchers should be linked to public works programs in order to prevent a "handout" or "assisted" mentality from permanently taking root.

Compassion and human caring rather than bureaucratic procedures would have to be relied upon if more equitable and less wasteful subsidy programs are to succeed.

Any misuse, abuse or diversion of subsidies should be considered crimes against humanity and as such, sanctioned by the stiffest penalties permitted under Indonesian criminal law.

JOSEPH LOUIS SPARTZ

Jakarta