Policy Implementation Requires Reason and Determination
China Times editorial (Taipei, Taiwan, ROC)
March 22, 2012
Summary: Sean Chen never imagined this. He was highly praised. The public felt blessed to have a cabinet staffed by the fiscal and economic experts who helped us weather the European debt crisis. Sean Chen has been in office less than two months. The European debt crisis has eased. But the Chen Cabinet is now being battered by the beef and chicken imports controversies. The beef and chicken issues have yet to be resolved. But the the cabinet is already being blasted over gas prices, electricity prices, health care fees, and university tuition. Public approval has plummeted.
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Sean Chen never imagined this. He was highly praised. The public felt blessed to have a cabinet staffed by the fiscal and economic experts who helped us weather the European debt crisis. Sean Chen has been in office less than two months. The European debt crisis has eased. But the Chen Cabinet is now being battered by the beef and chicken imports controversies. The beef and chicken issues have yet to be resolved. But the the cabinet is already being blasted over gas prices, electricity prices, health care fees, and university tuition. Public approval has plummeted.
The beef and chicken imports issue has been politicized, But people can choose to eat or not eat on their own, The problem is manageable. But price increases affect ordinary people's pocketbooks and daily lives. The public reacts badly to price increases. It seldom bothers to ascertain where the price increases are taking place, or who is benefiting. It assumes the price increases are always at its expense. Public discontent of this sort is often difficult to assuage.
But viewed calmly, gas prices, electricity prices, health care fees, and university tuition are different. They increase for very different reasons, and by very different degrees. The public often fails to understand this. The government often fails to communicate why to the public. Its policies are often sound. But it lacks the determination to stay the course. In the end, the most severe blow is to the morale of the cabinet. This makes it increasingly difficult for the administration to implement perfectly sound policies.
Take the gas and electricity price increases. Gasoline and electricity prices have been frozen for quite some time. No matter how moderate the price increases or decreases might be, the taxpayers are always the victims. The reason is simple. The larger the losses suffered by China Petroleum and Taipower, the larger the subsidies they receive. Any shortfall is invariably made up by subsidies from the national treasury. It is invariably borne by taxpayers as a whole. Ordinary wage earners enjoy no tax breaks. Not a dime's worth. Ordinary wage earners do not realize that price freezes victimize them the most. Take electricity for example. The government subsidies the industrial use of electricity to the tune of 90 billion dollars per year. This is a vast sum. The average household uses only about 300 kWh per month. Super-rich households use about 10,000 kWh per month, The average large commercial and industrial firm uses nearly seven million kWh per month. Those who use the most electricity benefit the most from a price freeze. This is the obvious reason.
If gas and electricity prices return to normal, Taipower and China Petroleum will no longer receive 180 billion dollars in subsidies. That 180 billion dollars could do so much good. It could underwrite so many social welfare, educational, and cultural programs.
The fact is, electricity prices on Taiwan are low by international standards. Any government hikes would take into account the needs of the disadvantaged. Take electricity for example. The government has established a clear power consumption threshold. Anyone using less than 110 kWh per month will not be subject to a price increase. Those who use the most electricity will be subjected to the largest rate increases. To some extent this will encourage electricity conservation. Government agencies have been thinking in terms of "reasonable price hikes." Of course it must explain what it means by "reasonable." It must avoid a public backlash provoked by erroneous perceptions.
The main reason health insurance will increase is the debut of second-generation health care in July. Last year the health care premium was hiked. The government tried to smooth over public discontent. It adopted a single rate, variable subsidy program. These government subsidies will end upon the implementation of second generation health care, An estimated 10.1 million people will see their monthly premiums increase anywhere from 19 to 44 dollars. No matter what adjustments are made, we must ensure medical treatment for disadvantaged members of society. for low-income households, for those with disabilities, for low and middle-income households, and for elderly people over 70. They must continue to benefit from premium subsidies.
Let those who are able, pay an additional ten or twenty dollars a month. This will maintain Taiwan's internationally acclaimed health care system. Who can complain? Besides, each penny paid is eventually returned in the form of medical care resources needed over the rest of a person's life. The government knows its policies are reasonable. It must now communicate this fact to the public. it must convince them. After all, if the health care system collapses everyone will suffer.
University tuition has not risen for seven years. During these seven years, prices have risen. Compulsory education depends on government subsidies. This is one of the government's most important policies. University education is no exception. Everyone who has studied abroad knows that university tuition on Taiwan is low by international standards. We live in a knowledge-based economy, Yet we undervalue the seeking of knowledge. This is a huge irony.
Admittedly, hiking university tuition will impose a heavy burden on households with students. But scholarships and school loan programs will make students appreciate the sacrifices families make for their education. They will make them appreciate their learning opportunities. This is a good thing.
Society on Taiwan is different from the past. The era when everything relied on the government is long past. Everyone must understand the relationship between taxes and benefits. The government cannot shoulder the cost of everything. We reject tax increases. We refuse to allow the price mechanism to return to normal. As a result, the the government cannot make ends meet. The public will not benefit. It can only suffer.
The Sean Chen Cabinet is determined to get things done. It has not been entirely successful. Many major policies are being implemented. This makes it even more important to prioritize. Take gas and electricity prices, for example. Taipower and China Petroleum are overwhelmed by heavy subsidies. This has gone on for some long time. Must we launch both at the same time? The Chen Shui-bian era "scorched earth diplomacy" left bitter memories. The Ma administration must not unwittingly provoke unrest where there was none. It must not unwittingly implement "scorched earth domestic policy." Political appointees are responsible for policy. Their first responsibility is to defend their policies. They must have sound justifications for their policies. They must also be determined to implement their policies. They must not be timid. The Sean Chen Cabinet must roll up its sleeves and get down to work.