Columns

• President, PM and others seek and obtain changes, minister faces growing revenue gap
• Positive aspect seen in Govt’s openness to accommodate public protests and changes
• Rajapaksas decide to form new party for local polls, oppose resolution for Constitutional Assembly
• Champika launching Megapolis project to mark anniversary of Sirisena’s election

In his own teaser ahead of the November 20 budget proposals, Finance Minister Ravi Karunanayake described it as ‘revolutionary.’ Even the smartly attired and well coiffured Colombo District parliamentarian did not envisage that his proposals would cause a ‘revolution’ in many fronts. Just to name a few — the displeasure in both United National Party (UNP) and Sri Lanka Freedom Party (SLFP) parliamentary circles including ministers, the private sector, trade unions, the administrative service and even farmers who marched the streets of Colombo in their loin cloths or amudey. A veritable cross section, from power brokers to the helpless common man, were airing their grievances over one proposal or the other. Karunanayake, as the man who has to find the money stood steadfast initially but had to yield to them eventually. The first call was from President Sirisena himself, hardly had he first approved the budget and then the Minister read it out in Parliament, to enhance the duty on beer with an alcohol content of less than five per cent. That was the beginning of ‘running repairs’ to the budget omnibus.

A flashpoint came at Wednesday night’s weekly ministerial meeting, hours after President Sirisena had returned to Colombo from a visit to the Vatican where he met Pope Francis. It was under ‘any other business’ on the agenda and after ministers had cleared the regular items. Media and Parliamentary Affairs Minister Gayantha Karunatilleke raised issue over duty free vehicle permits for parliamentarians. Karunanayake was to respond that he will not be issuing them. Instead, he said, he had already discussed with party leaders measures to increase their monthly allowances. In addition, they were to be issued cars which they could use for the current duration of the Parliament term and buy them, if they so wish, at the depreciated value. For this purpose a loan of Rs. 15 million was to be made available to them.

The Sunday Times learnt that Karunanayake had met party leaders at a meeting chaired by Speaker Karu Jayasuriya. Most parliamentarians had been in the belief that the meeting was being held with the blessings of Prime Minister Ranil Wickremesinghe. At that meeting, a proposal to increase the allowance of MPs to Rs. 400,000 had come up for discussion. At present they receive an allowance of Rs 55,000 a month in addition to Rs. 500 for each sitting of Parliament. This is besides other perks like their entitlement to the services of private secretary as well as office equipment. Karunanayake’s contention for not issuing duty free permits, he says, is because the system is abused. It is known that most MPs who obtained duty free permits sold them and pocketed the money. Former President Mahinda Rajapaksa in fact legitimised such sales during his administration by ruling that the permits could be sold. His theory was to legalise what was done surreptitiously anyway. A Finance Ministry study revealed that from January to August this year 32,287 vehicles were imported by duty free permit holders with the State incurring a loss of more than Rs. 147.3 billion.

Police riot squads with wicker shields block farers protesting in loin cloth.

When Karunanayake declared at the ministerial meeting that he had worked out details with the party leaders, Premier Wickremesinghe reacted strongly. He asserted that he was a party leader too but was not in favour of the move to increase allowances of MPs and in addition giving them loans to buy vehicles. “I am the leader of the UNP and I have to decide,” he emphasised. He said when such a matter would anger the public, it would not be surprising if they hurled stones at Government politicians. He said that the new scheme could not be marketed and it was not the time to change it.

The outcome of the exchange at the ministerial meeting means that MPs will once again receive duty free permits. Finance Minister Karunanayaka said yesterday he would heed Premier Wickremesinghe’s call and restore the previous permit system. Thus, the move to increase MPs’ allowances will remain on hold but they will soon receive duty free permits. He said the modalities of the scheme would have to be worked out. That will include the price ceiling to be placed in addition to the engine capacity.

When the ministerial meeting ended, Wickremesinghe told a confidant, “We may have to amend some of the proposals, let other things remain to be not implemented and yet others to be adopted.” He said that it would have been much easier to have continued with the duty free permit system that was in operation for MPs. In fact, the issue of duty free permits to doctors created a furore with the Government Medical Officers’ Association (GMOA) staging a token strike demanding the restoration of the permit system. Later, the GMOA met President Sirisena for talks together with Health Minister Rajitha Senaratne. The move saw Premier Wickremesinghe announcing in Parliament that selected state sector groups would be entitled to permits twice, once in ten years.

Wickremesinghe also sought the advice of the Attorney General’s Department on a proposal by him to authorise Secretaries in different ministries to appoint chairpersons and members to directorates of statutory boards, corporations and other statutory bodies. The department had advised that such a change could only be effected by amending relevant legislation. The move has been necessitated by some chairpersons and directors refusing to resign their positions to make way for new nominees. This has happened in institutions where Karunanayake was minister in charge after the presidential election but were taken away from him after the parliamentary elections. Despite Premier Wickremesinghe asking them to resign, Karunanayake’s nominees have refused to do so.

A delegation of some 18 trade union leaders, including those from the state banking sector also met the Premier for talks on matters arising out of the budget proposals the previous Saturday. Despite pleas not to stage a strike, the unions in state banks went on a day’s token strike on Tuesday — a move that angered Wickremesinghe. He presented a Cabinet Memorandum that Government transactions be shared with private banks too. He contended that such an arrangement was necessary to overcome emergency situations. At present, all Government transactions are carried out through state banks. Some ministers raised objections to the move and President Sirisena has declared that the matter should be studied further. He sought a week’s time.
It is not only at the weekly ministerial meeting that the budget proposals became the subject of discussion. Sri Lanka Freedom Party (SLFP) ministers, deputies, state ministers and MPs held a meeting with President Sirisena on Thursday night to discuss issues arising from the budget. That was a note of caution to Sirisena by the SLFP component in the Government. They were testing the waters ahead of a move to oppose some provisions in the budget. Their spokesperson Minister Dilan Perera told the Sunday Times that President Sirisena “was very receptive to our representations. After hearing the viewpoints we presented, he arranged for us to meet the Prime Minister on Friday.”

A Trade union protest in the City. Pix by Amila Gamage

He added that during the meeting with Premier Wickremesinghe we raised issue over a number of proposals. “The Premier was considerate enough to hear our representations. He agreed to most of them,” Perera added. Among the changes the Premier agreed, he said, were: There will be no amalgamation of the Employees Provident Fund (EPF) and the Employees Trust Fund (ETF); extension of fertilizer subsidy to rubber, coconut and vegetable/fruit production sectors; fee for vehicle emission tests lowered from Rs 5,000 to Rs 1,500; a percentage payment to banks for cash withdrawals of over one million rupees; to restore the issue of duty free permits to state sector officers upon retirement; two thousand rupees to be added to the basic salary of state sector employees from January next year and leasing to be carried out by state banks. Even before these changes were made known, Minister Karunanayake declared that previous changes to his proposals would have an overrun of seven billion rupees on his budget proposals. He said yesterday that the new changes would further increase the amount but the details were being worked out. “This shows that the two parties, the SLFP and the UNP, can get together and work. The same co-operation will be extended to other national issues like the adoption of a new constitution, electoral reforms and rehabilitation,” Dilan Perera said.

The first step in the introduction of a new constitution will get under way on January 9 when Premier Wickremesinghe introduces a resolution in Parliament to set up a Constitutional Assembly. This is by converting Parliament into an Assembly for “deliberating on, and seeking the views and advice of the people, on a new Constitution for Sri Lanka.” A Steering Committee will be responsible for the business of the Assembly and for preparing a draft of a new Constitution. The Prime Minister will be the Chairman of such a Committee that will include the Leader of the Opposition, Leader of the House, the Minister of Justice, and not more than eleven other members of the Constitutional Assembly. The latter will be selected by the Assembly.

Bank employees on strike gather outside the Fort Railway Station.

Objections to the formation of the Constitutional Assembly are to be raised by a group led by former President Mahinda Rajapaksa. He and former Economic Development Minister Basil Rajapaksa have been meeting regularly in the recent weeks to look at issues arising from it. One of the arguments put forward by them is that the SLFP, unlike its UNP counterpart, did not seek a mandate from the people to change the Constitution. Hence, they contend that prior to the setting up of a Constitutional Assembly, the Government should seek approval from the people through a national referendum. An even more significant decision by the pro-Rajapaksa group is to form a new political party under Rajapaksa’s leadership. The former President is expected to announce next month the new party and its opposition to change the Constitution without following the due process. The proposed party will be one that will be re-named from an existing registered political party. This is because of delays in official recognition if one is formed anew. Rajapaksa expects to field candidates to the forthcoming local council elections through this new party and thus offer a challenge both to the UNP and the SLFP. One of the moves is to woo membership from grassroots level organisations of the party.

In Parliament yesterday, Janatha Vimukthi Peramuna (JVP) leader Anura Kumara Dissanayake raised a point of order over the proposed resolution to appoint a Constitutional Assembly. He said in terms of the Standing Orders, Parliament could only appoint Select Committees and asked whether the move would not undermine Parliament. Premier Wickremesinghe replied; “We will not undermine Parliament. It can be put to the people and a decision can be taken. We have worked so far in keeping with the Constitution. Our plea is to go direct to the people and get an opinion through a referendum.”

Wickremesinghe noted that the creation of a Constitutional Assembly will come through a resolution and not as an amendment to the Standing Orders. According to the existing standing orders if a Resolution is submitted it can be accommodated in the Order Paper. However, Mahajana Eksath Peramuna (MEP) leader Dinesh Gunawardena argued that in terms of the Standing Orders (86.1) such a resolution would only mean that Parliament would convert itself to a Committee. Such a Committee, he said, would have to deliberate and report back to the House.

The changes to budget proposals and others that were to follow later in the week were bitter pills for Minister Karunanayake to swallow. Yet, that was by no means a personal defeat. The Finance Minister had in fact briefed the political hierarchy before he formally presented the proposals in Parliament. If protests in different ways are taken as a whole, they are also an indictment on the Government leadership since most changes came only as a result of protests. This is not to say that there were no controversial proposals, like for example, the levy on one’s own cash withdrawal of more than one million rupees.

The budget was approved by a two-thirds majority in Parliament last night. Voting in favour were 160 whilst 51 opposed it. A further 13 abstained. That brought the curtain down on a month-long debate. Among the notable absentees were former President Mahinda Rajapaksa and National Freedom Front (NFF) leader Wimal Weerawansa. Voting in favour of the budget were Eelam People’s Democratic Party (EPDP) leader Douglas Devananda, Ceylon Worker’s Congress leader Arumugam Thondaman and opposition MP Lakshman Seneviratne.

Rajapaksa, however, read out a six page text when he spoke at the Committee Stage of the Finance Ministry votes yesterday afternoon. He said. “‘I have heard many in this government say ‘we can’t do this, we can’t do that. We can’t give relief to the public sector ‘ But I advise you to look at these things positively and you can overcome economic challenges,” the former president who also served as finance minister in the former government said.

He added that many had said that the separatist war could never be won but he had proven that with a positive outlook, victory could be achieved whatever the odds were. Rajapaksa also urged the government to resume all the stalled projects. He called for special attention to be paid to farmers. He said he had expected that the President would intervene and restore the fertiliser subsidy for farmers. Rajapaksa thanked Prime Minister Ranil Wickremesinghe for listening to public concerns regarding some of the budget proposals and amending them.

There were some firsts too during the budget debate. President Sirisena took the unprecedented step of participating in the Committee Stage debate of the budget speaking on the days when the votes of the Office of the President and the Defence Ministry were taken for debate. Another was the handing over of a no-confidence motion against the Finance Minister just days after he presented the budget. Speaker Karu Jayasuriya has said he will decide the fate of the motion next year.
Instead of a no confidence motion, Premier Wickremesinghe offered to appoint a Parliamentary Select Committee to study the references made in the motion. There was, however, no finality over this matter.

The string of changes to the budget proposals has led to a huge gap — Rs. 35.5 billlion — as the latest deficit. Finance Minister Karunayake told Parliament the biggest component was the increase in state sector employees’ basic salary by Rs. 2,500 from next month. Labour Minister John Seneciratne said yesterday that the wage increase will also cover those in the plantations sector.

There was also some drama when UNP MP Suresh Vadivel who had during the budget threatened to set himself on fire. Police stopped him from entering the House with a fuel can. Vadivel’s threat was if the Government failed to increase the wages of plantation workers. Prime Minister Wickremesinghe was a regular participant in the budget debate playing a crucial role to help circumvent the fierce opposition drawn by some of the proposals. He said during this month “we have seen banks closed due to strike, farmers protesting, doctors on strike etc. All this shows that there is more democracy in the country.”

If the changes saw a shortfall in revenue and a resultant widening of the budget gap, the developments came in the wake of an adverse report from the International Monetary Fund (IMF). A statement issued last week by the IMF from Washington DC, among other matters, noted that “deterioration in the overall balance of payments, the loss of Central Bank foreign exchange reserves, the weak state of public finances, and growing public debt are reasons for concern.” The IMF’s Executive Board which issued the statement noted that “despite continued access to international debt markets, these trends suggest that financial risks for Sri Lanka have increased” and added that “improvements in the business climate, reform of state owned enterprises, and a more open trade regime are key to boosting competitiveness and growth.” If the Finance Ministry was more focused with other international agencies than the IMF in the weeks before the budget, this week it was busy in talks with a visiting delegation from Washington. The team met Prime Minister Wickremesinghe and Finance Minister Karunanayake for talks yesterday. A high ranking source said yesterday that a Sri Lankan delegation was likely to visit Washington DC next month to discuss “issues over which they have raised some concerns.”

Other than the resolution in Parliament on January 9 for the setting up of a Constitutional Assembly, the day will also see the unveiling of an ambitious development plan by Megapolis and Western Province Minister Patali Champika Ranawaka. The event will mark the first year in office of President Maithripala Sirisena and envisages a number of changes in the Colombo City. Pettah’s Manning Market is to be shifted to Peliyagoda. The resultant vacant area is to be used for the Central Bus Station so it could function as a road cum railway hub. A major transport hub is to be sited south of Colombo in Moratuwa. Minister Ranawaka told a conference recently that earlier moves to have a monorail system in the City of Colombo had been dropped since the venture would be too capital intensive. The gains from it due to limited passenger capacity, he said, would not be commensurate with the investment to be made.

This is perhaps the first time that a budget presented by a Finance Minister has been subject to so many amendments. They have come from President Sirisena, Premier Wickremesinghe, trade unions and many others. With that over, the first popularity test for the UFGG Government will come when the local polls are held next year. There is also a positive aspect. After many long years, a Government in power has demonstrated its willingness to heed public opinion and make changes. That is to its credit.