Chairperson Tsai questioned government's economic policy

(Chinese title:) With Taiwan’s economy entering recession, the government should focus on reducing unemployment

At the six month mark of the Ma administration, various leading indicators point to a bleak outlook for Taiwan’s economy. On November 21st, Democratic Progressive Party (DPP) chairwoman Tsai Ing-wen invited Taiwan Thinktank chairman Chen Po-chih, National Taiwan University of Science and Technology professor Liu Chin-hsin, and former Council for Economic Planning and Development (CEPD) chairpersons Ho Mei-yueh and Hu Sheng-cheng to share from their previous eight years of governing experience during the DPP administration to evaluate the Ma administration’s economic policies.

In her opening statement, Chairwoman Tsai pointed out that during these past six months the Ma government’s forecasting of economic trends has completely missed the mark. It was only the day before that President Ma apologized for going back on his campaign promises. If Ma’s miscalculation of economic trends led to his overly optimistic outlook towards the economy, than the effectiveness of the rest of his administration’s economic policies must be called into question. For example, Ma’s plan to expand domestic demand needs to be concluded by the end of this year, but any experienced administration should know that this is impossible. Moreover, measures to “save the stock market” not only misled small investors, they also produced no tangible results. She went on to state that the government’s recent stimulus measures such as the issuance of consumer vouchers have been ad hoc in nature. The timetable to issue consumer vouchers along with its accompanying measures should be discussed further. However, the government’s desire to pour millions of NT dollars into this plan at a moment’s notice and its lack of fiscal discipline for the sake of achieving short-term economic goals are a cause for worry.

Chairperson Tsai stated that with all the different economic policy instruments available, a government needs to have an overarching goal that determines which policies to implement. However, this is completely absent in the Ma administration. If the goal is to increase employment, than economic policies should be evaluated according to how effective they are in contributing to that goal. The government has only been focusing on saving the stock market, raising the GDP, and other surface indicators, yet they fail to evaluate these measures in light of how relevant they are to the people and whether they affect the unemployment rate. This kind of national policymaking gives cause for concern. Furthermore, the government’s recent efforts to stimulate consumption have failed to form a link between the consumption plan and domestic industries. As a result, no matter how large the consumption stimulus plan becomes, even if it were to increase GDP, it would not have a direct effect on the people’s employment and standards of living.

Chairperson Tsai thus called upon the Ma administration to clarify its economic strategy as well as to go on the public record in calling for the administration to provide an answer to the following questions:

I. Economic Policy

a. What matters most is the overall direction of policy. With this in mind:

i. What has been the fundamental direction of economic policies and measures carried out during the past half year? What have been the results?

ii. What is the government’s future direction and strategy in facing a global recession?

b. The government’s financial planning determines in large part the success or failure of its policies. With this in mind:

i. Where is the money coming from to fund the government’s economic plans?

ii. What is the future direction of the government’s financial planning? What kind of effect will they have on the future?

iii. What is the connection between the purposes of the recently introduced 4-year/NT$40 billion economic stimulus plan and the policies and projects promoted by the Ma administration since it came into power?

II. Assisting Domestic Industry

a. In order to provide assistance to domestic industry, economic policies must be coordinated with industrial policy. Please clarify the following:

i. The administration’s industrial policy

ii. Principles for assisting domestic industry

iii. Evaluation and supervision mechanisms

b. Assistance to domestic industries should not end up causing additional debt burdens upon the government. Please clarify the following:

i. The exact debt burden that would be incurred by the government

ii. The range of assistance provided to domestic industry

iii. The amount of funds set aside for this purpose annually

iv. Measures to maintain international competitiveness after providing assistance

v. The responsibilities of business owners, large shareholders, and related banks

Chairperson Tsai stressed that the government is certain to resort to various fiscal measures to deal with future economic challenges. The opposition must strictly supervise the government’s finances, but the current supervisory mechanism in the Legislature is inadequate. She hopes that a stronger, bipartisan supervisory mechanism can be established through negotiations between the ruling and opposition parties.

Chairperson Tsai went on to state that the economy is Taiwan’s lifeblood. The DPP will not irrationally disparage Taiwan, nor will we maliciously obstruct the nation’s economic development. In the same vein, the DPP is extremely worried that the Ma administration’s policies will seriously harm Taiwan’s economy and drag it into a recession. The people expect bipartisan cooperation on getting through these difficult times and we will not let them down. However, bipartisan cooperation needs to be based upon a common understanding rather than the opposition blindly following the wishes of the ruling party. The people do not expect the DPP to sign off on blank checks, and they will certainly do not want us to stand by idly while inappropriate economic policies are being proposed.

With regards to the media’s queries about whether she would accept President Ma’s invitation to meet and discuss national affairs, Dr. Tsai stated that the DPP is willing to work together with KMT to evaluate the government’s performance, but the government must also be sincere in facing up to the results of its policies and fundamentally reconsider its handling of the economy. Once the Ma administration publicly addresses each of the questions we have listed above, we would be willing to consider the possibility of issuing an invitation at our own initiative at an appropriate time.

Chairperson Tsai said that President Ma has stated upon different occasions his desire to meet, but it seems like his purpose is just to meet for the sake of meeting. If the ruling party insists upon bundling the consumer vouchers and the NT$40 billion stimulus plan together and is looking for the DPP to sign off on a blank check, than it is better not to meet at all. The government should give serious consideration to answering our questions and allow economic specialists from both parties to engage in dialogue and craft policies that will look to the concerns of all parties.

Chairperson Tsai pointed out that economic policies involved enormous budgetary sums and it is the responsibility of the legislature to evaluate how these funds are used. The DPP hopes that the Ma administration will respect the role of the legislature, especially the supervisory powers of the DPP’s 27 seats. The DPP has always advocated bipartisan dialogue to begin in the legislature, so the party hopes that the questions brought up by the DPP can be discussed in the legislature and be publicly addressed by the Ma administration.

Chairperson Tsai emphasized that the DPP does not wish to create an extra-governmental mechanism; however, if the ruling party does not change its principles for determining the legislative agenda and allow the opposition party to have real supervisory powers, then the DPP will strongly demand the establishment of a higher level, more effective supervisory mechanism.