Forcing politicians to pick up the tab should make populism less popular
The Prayut government has set a precedent in seeking massive compensation from elected politicians found guilty of negligence in their duties under the state officials’ civil liability law.
Former premier Yingluck Shinawatra is now the highest-profile defendant accused of violating this law, which was enacted in 1996. According to deputy premier Wissanu Krea-ngam, Yingluck ignored written warnings from the National Anti-Corruption Commission (NACC) twice over the implementation of the policy between 2012 and 2014.
In other words, the problem was not the policy itself, but its implementation and supervision.
The NACC had warned Yingluck that the scheme, in which her government purchased an unlimited amount of paddy rice from farmers at Bt15,000 per tonne against the prevailing market price of only Bt7,000-8,000, was untenable and should be reviewed to avoid further damage to the state.
The warnings went unheeded and the scheme went on operating throughout Yingluck’s tenure.
To implement the unlimited subsidy, the Bank for Agriculture and Agricultural Cooperatives (BAAC) was ordered to lend Bt110 billion to the government and issue bonds worth another Bt400 billion, to fund the purchase of more than 10 million tonnes of paddy rice at an inflated price that had been one of Yingluck’s key election pledges.
The Finance Ministry is now responsible for repaying the BACC, with the first instalment of Bt59 billion set aside from taxpayers’ money in the 2017 fiscal budget.
Paying back the debt plus interest will take an estimated 16 years.
Hence, the government has financial as well as legal grounds to seek massive compensation from previous public officeholders found guilty of negligence in overseeing the rice scheme.
But Yingluck and her Pheu Thai Party were not the first politicians to implement populist schemes at vast expense to taxpayers. Her opponents in the Democrat Party and other factions have implemented similar policies in the past.
One alternative way of helping low-income workers would be to adopt the negative income tax (NIT) system, whereby registered farmers whose income is below a target level receive direct supplementary payments.
Such a system could be a cornerstone of a more efficient and effective welfare policy, especially if facilitated by the government-sponsored “Prompt Pay” electronic payment infrastructure. For example, registered farm households would be entitled to an NIT payment based on the size of their plot and the prevailing market price for their crop.
Many farmers were happy with the Yingluck government’s rice-pledging policy because they made good profits on the guaranteed price for their harvest, but the government faced heavy losses not only from the price differential but also from storage, administrative and other costs, not to mention corruption.
The huge market-intervention scheme also depressed domestic and global rice prices, resulting in deeper losses from sales of the government’s rice stockpiles. In effect, these losses were from taxpayers’ money, spent by politicians on behalf of the public.
After the massive Bt35-billion compensation lawsuit filed against Yingluck, politicians will now have second thoughts over any plan to pour taxpayers’ money into their populist schemes. The civil liability law will loom large in their minds.
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