BUDGET: Practical and Futuristic

27/11/2009 16:34

The Consumer Council sees the 2010 Budget to be unconventional yet refreshing and practical. The 2010 Budget was prepared with the view to take the country forward.  Instead of alleviating poverty through blanket remedies the government has provided a more targeted approach such as the introduction of a $10000 home grant for new home owners and a $30 additional food allowance for those receiving Social Welfare benefits, to name a few. Now the onus is on respective institutions to ensure the disadvantaged consumers receive these benefits without red tape and mismanagement.

The Council notes the government’s initiative to phase out price control to promote competition in the marketplace. In this regard the Council is pleading with the government to reform the current consumer protection laws and redress mechanism to address anti-competitive behaviour. The Council’s market surveillance indicate that price fixing, collusion, cartel type operation is rife in the marketplace. Unless this is addressed the consumers will not benefit and the good intention of the government will not materialise.

Past market trends indicate that whenever government reduced duty or removed VAT to ease financial burden of consumers, the benefits did not reach the public. The Council is concerned that the removal of Price Control might also be abused by some unscrupulous traders who will see this as an opportunity to increase their profits instead of creating healthy competition and lower prices for consumers. For example in 2008, the government removed VAT from locally produced eggs and the Council through its price survey found that despite VAT removal the prices of eggs continued to increase. Hence the consumers did not benefit but the trader gained through increased profits.

What is required first is to strengthen laws and regulations, and capacity building of regulatory institutions for better enforcement before any phasing out price control is considered.   

The Council notes that many incentives have been given for businesses. The responsibility is on businesses to return the favour by ensuring that consumers and government do get the desired benefits.