Bangkok Post: 17/06/08

Food coupons can help poor, but only if...

The two most important economic issues arising out of the recent cabinet resolutions are both of great interest.

The first one, the rice price guarantee, is yet another episode of what has become an epic rice saga for this government, and a somewhat tragic one for the Minister of Commerce, Mingkwan Sangsuwan.

In a bid to stave off the threat of street protests by farmers, the government hurriedly rushed out plans for the paddy guarantee, notably without the presence of either the Minister of Commerce or Agriculture.

I wrote all the way back in my first Shadow Boxing column that a major problem for this government was unity and teamwork, and the result shows. It will be interesting to see how the rice management scheme will fare without the support of the two ministries normally responsible for similar policies in the past.

The second important plan again hatched by the Finance Ministry is the Coupon for the Poor programme.

I say both are important programmes because they will cost us a lot of money a combined total of around 70 billion baht a year; but with the rice programme, at least the government is receiving rice stocks in return.

If implemented poorly, there may be very little to show for the cost of the coupons, save for the votes the ruling party would be hoping to gain. However, done right, the coupon plan could bring genuine relief to those who are suffering the most in this high cost of living environment. Proper debate is thus required and I was pleased to read Khun Suranand Vejjajiva's column in this newspaper last week. He calls the programme ``Opium for the Masses'' and I surmise that he is using his long experience in the Thaksin government to deduce that this policy will end up being poorly implemented and used only as a populist vote-grabbing opportunity.

The Democrats are in their usual frustrating position on this issue as Khun Suranand correctly pointed out, it was the Democrats who initiated the idea a couple of months ago.

Though, to be fair, it is hardly a novel one in the global context. Food coupons have been used elsewhere, mostly in poor countries but also in the United States. However, there is every danger of the policy being completely mishandled by the government in their rush to implement what is in fact a very complex programme.

Allow me to stress what this programme should not be.

First, it is ludicrous for Finance Minister Surapong to indicate a life for the programme of only 6-12 months. Does he think the target group will no longer be poor after that time? Or and allow me to be cynical here is that the amount of time required to optimise any political benefits?

What Khun Abhisit Vejjajiva stressed in our shadow cabinet meeting is that the most important point to understand about a coupon plan is that it must be part of a long-term commitment by the government to stand by and provide for those who cannot help themselves.

This means a proper census of who and where the needy are. Having community leaders point their finger to designate recipients is unscientific, non-transparent and open to abuse. The government needs a proper understanding, through house-to-house survey of the needs and behaviour of the chronically poor.

The broad estimate number of those who fall below the poverty line is 6 million. Almost by definition these are people who are not working and have many dependents including the elderly, children or the sick and handicapped. Providing them with six months' help solves nothing.

Among the 6 million will also be those who wish to work but have no skill or opportunities. For this category, and in order to attempt to ensure that those who are today categorised as poor at least have a chance to get out of the trap able recipients of coupons should be provided skills training to which they need to be committed.

In order to achieve all of this, some leading economists such as Dr Ammar Siamwalla have suggested the need to have a bureaucracy dedicated to the poor. This call reflects the lack of official understanding and monitoring of those in need, exemplified by the nationwide registration programme for the poor under the Thaksin administration, which, beyond generating false hope and excitement for the 8 million who lined up to fill in the forms, ended up achieving very little. Genuine commitment is required and a six-month coupon plan is not it. Beyond the need to ensure that the coupon plan is a part of a long-term strategy to help the poor, measures in the short term are also required to provide the transparency and legitimacy to the programme. This includes the need to be specific on what goods can be exchanged using the coupons. It would not be acceptable for coupons to be used for general purposes the government needs to identify basic foods such as rice, milk powder and cooking oil and limit access to five or six items.

We already addressed the issue of eligibility, through a thorough survey, but the physical form of the coupons themselves is important. Minister Surapong claims that he will use the smart ID cards and not paper coupons. I do not know enough about the IQ level of the smart card sitting in my wallet but even if it is smart enough to ``carry'' money and even assuming the targeted poor are carrying these cards, I still wonder how money will be debited from these cards when goods are exchanged at villages across the country.

Finally, there is the issue of fiscal impact. So far the government has come up with two policies not initially planned or provided for, with a combined value of about 4% of the national budget that will be debated in parliament in two weeks' time.

Bear in mind that there is barely 25% of the budget left over from government salaries and other similar commitments, and bear in mind also that the government has yet to fully fund committed policies such as free education and a supplementary budget for the elderly both requirements according to the Constitution.

What we are seeing is a weak government desperately buying favours with tax money, while not much is being done to address the fundamental problem on the revenue side, and the fact that our tax revenue is only 15% of GDP and a GDP that is not growing very fast at that.

The Democrats believe that the Coupon Plan can be a very useful and impactful tool to help alleviate the cost of living problem for the poor. If properly managed, it need not be, as Khun Suranand calls it, ``an opium for the masses''.

However, I too am concerned that in the government's haste and lack of proper commitment, this programme will indeed end up more of a drug than a medicine.

Korn Chatikavanij