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September 26, 2017

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Bonus, allowance reform must signal solidarity, not populism

By Alan Fong--Talk of cost cuts has been dominating the news cycle in Taiwan. Lawmakers on Monday questioned Executive Yuan Secretary-General Steven Chen (陳士魁) over the Cabinet's proposal to cut the annual bonuses of retired state employees, while at the same time bracing for possible legislative allowance cuts themselves.

Instead of sending the intended message of government officials working with the people in the face of Taiwan's dire economic challenges, current proposals on the table for two budget-trimming plans are being ridiculed as political posturing and hypocrisy.

At a hearing held by the Legislative Yuan's Internal Administration Committee (內政委員會), Chen was forced to admit that a plan to cut year-end bonuses to retired civil servants — which could save the nation over NT$18 billion a year — is possibly a one-off policy effective only for 2013.

Democratic Progressive Party (DPP) Legislator Lee Chun-yi (李俊俋) and Taiwan Solidarity Union (TSU) Legislator Hsu Chung-hsin (許忠信) both criticized the decision and urged the Executive Yuan to legislate the cuts instead of making year-to-year changes via executive orders. Hsu painted the government's decision as politically motivated and aimed at appeasing civil servants, who are considered a major source of votes for the ruling Kuomintang.

Lawmakers, however, are facing calls to cut extralegal perks of their own. KMT lawmaker Tsai Cheng-yuan (蔡正元) last week called for the end of nine legislative allowances he described as without legal basis. The annual subsidies for overseas observation trips (NT$320,000 per lawmaker), stationary and mobile phone calls (NT$420,000), accommodation (NT$216,000), gasoline (NT$310,000), research (NT$100,000), highway toll fees (NT$57,600), service center rent (NT$240,000), health checks (NT$14,000) and lawmaker aide business expenses (NT$42,000) add up to a yearly allowance of NT$1.72 million for each lawmaker.

The KMT legislative caucus supports the elimination of two allowances, namely for accommodation and for research — amounting to an annual cut of NT$316,000 per lawmaker. The DPP, on the other hand, has yet to commit to any specified cuts, saying they will make a decision by tomorrow (some DPP lawmakers agreed to consider a monthly cut of NT$14,672 per head in administrative subsidies).

Local media and pundits are quick to call some lawmakers hypocrites as their indecision or unwillingness to cut the nine allowances come in sharp contrast with their enthusiasm over government retirees' year-end bonus cuts. It seems that a perk being extralegal is not a problem for lawmakers as long as the perk is theirs.

What's missing in all this talk of cuts, however, is the government's long-term plan to turn around Taiwan's economy and to ensure its fiscal sustainability. The allowances cuts, for example, are not in themselves all that financially important (the nine allowances for all 113 lawmakers amount to only about NT$200 million a year). The action's greater significance is as a government message to people who are enduring hardships and making sacrifices — including the government retirees who will see year-end bonus cuts. The cuts send the message that the government is standing by them in this difficult time. Without a clear message or vision, these cuts will be nothing more than knee-jerk responses to populist demands.

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