Pay Raises for Military and Teachers Highlight Government Red Ink

Pay Raises for Military and Teachers Highlight Government Red Ink
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
April 18, 2011

The proposed pay raise for military personnel, civil servants, and public sector school teachers was stalled for eight months. The matter will probably be settled this week. But the budget process that follows will shine a light on the nation's deteriorating fiscal circumstances, This is something the current administration will soon have to face.

Last August, Taipei Mayor Hau Lung-bin pleaded on behalf of the nation's civil servants. He raised the issue of a pay raise. Since then, various parties have debated the issue. They have tackled the issue from the perspective of electoral politics, consumer inflation, stimulation of consumption, and competition over human resources. Each approach has its own advocates. In his capacity as a policy maker, last year Premier Wu spoke of five criterion for a pay raise: exports, economic growth, taxation, prices, and corporate year-end bonuses. These were later reduced to two: taxes and economic outlook. Finally, last week, he said "we have an excellent opportunity" to increase salaries for military personnel and teachers by approximately 3%. He will report to President Ma this week. If the Legislature agrees, then 800,000 military personnel, civil servants, and public sector school teachers can expect a pay raise by July 1. But as Premier Wu himself said, the case has been under discussion for almost a year. He was embarrassed about the fact. But whose fault is that?

Consider the policy alternatives. Should military personnel, civil servants, and public sector school teachers receive a pay raise? One should consider recent price increases, private sector pay raises, and economic growth forecasts, before arriving at a decision. But such indicators are merely for reference. They are not rigid salary thresholds. Therefore the pay raise issue is fundamentally a political issue. Government policy makers make decisions based on their own subjective priorities. This is true for salary increases. The current salary increase will require an additional 21 billion NT per year. It accounts for only 1.2% of the central government's total budget. But it nearly equals the annual operating budget for the Judicial Yuan and the Examination Yuan. It could underwrite the Ministry of Economic Affairs' development projects for an entire year. It could underwrite the operating expenses for the International Airport Park for an entire year. It could underwrite road construction and improvement plans. As we can see, many other major projects would have to be shelved due to a lack of funds. The government has decided to use the 21 billion NT for a pay raise and not something else. Naturally it was a political decision made in response to current circumsances.

But any political decision that calls for the use of resources, must withstand the test of fiscal soundness. This may be the most painful aspect of Premier Wu's decision. The Ma administation took office in 2008. Since then, the government has run a deficit for three years in a row. The national debt reached a new high each year. This year is it close to 5 trillion NT. That is roughly 37% of the gross domestic product. This was unavoidable. The financial tsunami forced the government to maintain growth by increasing public infrastructure construction. But year upon year of fiscal deficits suggest that when the government issues a pay raise for military personnel, civil servants, and public sector school teachers, it is living beyond its means. If the government enjoys a budget surplus, like Hong Kong, then a pay raise for military personnel, civil servants, and public sector school teachers would be perfectly reasonable and justifiable. The government would not need to hem and haw about conditions and circumstances.

Premier Wu has made clear that this year's pay raise for military personnel, civil servants, and public sector school teachers will come out of a supplementary budget. The funding may dervive from the issuance of public shares. It may exceed tax revenues and income derived from the activation of idle military land. The government has declared that it will not underwrite the pay raise by increasing debt. But this argument has two problems. The first is the legality of the supplementary budget, Article 79 of the Budget Act prescribes four preconditions for a supplementary budget. Essentially it requires a new law. Its agencies require new authority, and some sort of major incident. The Executive Yuan will of course have to present a legal case. Precedents may exist, but the circumstances are now very different. Therefore controversy is inevitable.

Secondly, once military personnel, civil servants, and public sector school teachers have been given pay raises, this recurring expense must be sustainable. It can be made part of this year's supplementary budget and underwritten by specific revenue sources. But next year it will require regular budgets at all levels of government. If governments at all levels cannot balance their budgets next year, the government will have to increase its debt. If the pay raise indirectly increases the budget deficit, it is the same as increasing the debt. The only real solution is to reduce the deficit and reduce the debt, The government cannot underwrite a pay raise for military personnel, civil servants, and public sector school teachers through a Ponzi scheme.

As we can see, a pay raise for military personnel, civil servants, and public sector school teachers is a political decision. It must be accompanied by a clear plan for deficit reduction and debt reduction. The government's fiscal affairs must be credible and sustainable. The financial crisis has passed. But the European debt crisis remains. The key is long-term deficit and unresolved debt problems. The government need not pay off all its debts before implementing a pay raise. But it must at least initiate deficit reduction and debt relief.

軍教加薪凸顯政府減赤減債的壓力
【聯合報╱社論】
2011.04.18 02:59 am

懸著八個月的軍公教加薪案，可望在本周塵埃落定；但接下來的預算程序，也將同步把國家財政惡化的問題推上桌面，終是政府當局必須面對的課題。

從去年八月台北市長郝龍斌為全國公務員請命，拋出加薪議題以來，各方討論不斷，選票操作說、追趕物價說、刺激消費說、競爭人才說等眾「說」紛紜，各有立論，也各有擁護者；做為決策者的吳揆，則從去年底的五狀況說（出口、經濟成長、稅收、物價及企業年終獎金）調整為兩條件說（稅收、經濟展望），並終於在上周明確表示，軍公教調薪「有滿好的機會」，可能調幅是百分之三，本周向馬總統報告，若立法院也同意，最快七月一日時全國八十多萬軍公教人員就可以加薪。然而，就像吳揆自己說的，這個案子討論已快一年，講到他都不好意思；但是，敦令致之？

從政策的選擇而言，軍公教調薪與否，可以參考近年物價漲幅、民間薪資漲幅，再佐以經濟成長的預估，做出綜合的判斷；不過，這些具體的指標也僅止於參考之用，並非軍公教調薪政策的剛性門檻。因此，調薪案的本質仍是個政治決定，政府決策者據其主觀來決定施政的優先順序，調薪幅度自也在排比之列。即以這次加薪案需新增的一年支出二百一十億元來看，雖僅占中央政府總預算的百分之一點二，但它約當司法院、考試院一個年度的運作預算，可支應經濟部一年的科技發展專案計畫，並可做為國際機場園區公司一年的經營費用，更是公路建設改善計畫所需，可見其要；相對的，還有更多的重大計畫因政府財源不足而遭擱置或暫緩。政府決定將這二百一十億元的有限資源用於加薪，而非用於其他，自然是審酌當前情勢下的政治決定。

可是，任何的政治決定一旦涉及資源的使用，終究還是要回歸到財政面的實質檢驗，這或許才是吳揆此一重要政治決定的最大的痛。畢竟，從馬政府二○○八年上任之後，其所提出的中央政府總預算案已連續三年都是入不敷出的赤字預算，國家債務未償餘額更連年創新高，今年度已逼近五兆元，占國內生產毛額比率也衝向百分之卅七，這雖是金融海嘯爆發、政府須擴大公共建設以維持成長動力的不得不然，但連年的財政赤字讓政府在為軍公教加薪時，總顯得有些心有餘而力不足；試想，如果政府能像香港一樣享有財政盈餘，要為軍公教加薪自然是理既直、氣更壯了，又何需狀況說、條件說來轉移社會焦點呢？

此外，吳院長已表明，今年的軍公教加薪案將以追加預算辦理，經費來源可能包括公股事業額外增加的繳庫盈餘、高於預期的稅收及軍方閒置土地活化後的收入等，以宣示不是舉債加薪。這樣的說法將面臨兩大嚴峻考驗；第一是追加預算的適法性，預算法第七十九條明白揭示的四個追加預算情況，大底需以法律新設、機關新增所需、重大事故等方可辦理，行政院定然須找出加薪案的適法性，儘管曾有前例，但時空環境大不同，爭論難免。

第二是軍公教薪資一旦調整，就是持續性的經常支出，即使今年可以追加預算、特定財源補足，但明年度就須編列常規的各級政府預算，只要明年各級政府仍是收支有短絀的赤字預算，就代表政府仍需要舉債籌措財源。因此，加薪若間接造成預算規模的擴大、舉債規模的擴大，那跟舉債加薪沒什麼不同；唯有縮小赤字、減少舉債，方足以說服社會，軍公教加薪不能是政府打腫臉充胖子。

準此以觀，軍公教調薪的政治決定，須伴隨政府明確的國家財政減赤、減債規劃，讓民眾了解國家財政的未來具有可信度及可持續性；不要忘了，即使金融海嘯已過，歐債危機卻依然未平，關鍵即在其長期的赤字、債務問題未解。因此，加薪固然不必等政府還清債務才做，但減赤、減債一定要開始了。