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2010 Asiyah Kassim

Copyright 2010 Asiyah Kassim

Government Activities
Activities
Government

At what
what level
level public
public
At
service should
should be
be
service
performed
performed
Public Spending
Spending vs
vs
Public
Private Spending
Spending
Private

Copyright 2010 Asiyah Kassim

To be
be able
able to
to explain
explain the
the
To
various government
government
various
activities
activities
To be
be able
able to
to analyze
analyze at
at
To
what level
level public
public service
service
what
should be
be performed
performed
should
To distinguish
distinguish Public
Public
To
Spending Private
Private
Spending
Spending
Spending

Copyright 2010 Asiyah Kassim

Government Activities
Activities
Government

Public Financial Activities

Government
Activities

Overall government services

Copyright 2010 Asiyah Kassim

Government Activities
Activities
Government

Public Financial Activities

1
Taxes

2
Borrowing

Preparation
of Budget

Purchasing
of
Goods &
Services

Keep Record of
Financial

Auditing

Accounting
Copyright 2010 Asiyah Kassim

Accountability

Government Activities
Activities
Government

Overall government services

Welfare
Social Security
National Defense
Education
Health
Info/Infrastructure
Copyright 2010 Asiyah Kassim

At what level public service


Should be performed?
1. Urgencies /
Contingencies

2. Public Choice

Natural Disaster (flood,


earthquake, etc)

Public demand for it as a result


from electing the government

War

For instance: Better


infrastructure, low fuel price, low
taxation

Disease outbreak (SARS,


Influenza, Denggi etc)

The leadership
3. Political
Decision

Prestige and Image of the country


Political Support
Copyright 2010 Asiyah Kassim

Public Spending vs Private Spending

1. Objective

2. Procedures

3. Decision Making

4. Resource Fund

5. Charges

6. Resource Allocation

7. Influence

8. Control System

Copyright 2010 Asiyah Kassim

Level of
of Differences
Differences
Level

Public Spending

Private Spending

Objective operating &


development by sectors

Objective Profit &


Investment

Procedures Budget Cycle


(the 4 stages)

Procedures BOD &


Shareholders

Decision Making Slower &


Bureaucratic in nature

Decision Making Faster &


only involved min. level

Resource of Fund Through


public revenue (Tax, NonTax, Non Receipt Revenue)

Resource of Fund through


shares, capital etc

Copyright 2010 Asiyah Kassim

Differences (Cont)
(Cont)
Differences

Public Spending

Private Spending

Charges No direct fees


act as public good

Charges Exclusive use


fees are imposed

Resource Allocation
according to priority by
sectors & contingencies

Resource Allocation
according to profitability

Influence political parties,


interest groups etc
Control System Federal
Constitution / Financial
Procedure Act 1957

Influence mainly by
Shareholders or market
condition
Control System
Companys Policy

Copyright 2010 Asiyah Kassim

Differences (Cont)
(Cont)
Differences

Public Spending

Private Spending

Relationship of expenditure to
income the government will first
determine what expenditure is to
be incurred and then proceeds to
find out funds

Relationship of expenditure to
income the expenditure is
limited by the amount of income
or fund raised

Saving private tries to save


something to meet various
exigencies and future liabilities

Saving surplus is not the


deliberate aim of public finance as
it no guarantee of sound financial
policy it is all depends on
national objectives and other
issues
Copyright 2010 Asiyah Kassim

To What Extent Balance is


Achieved?
In
In mixed
mixed economy,
economy, there
there is
is no
no total
total balance
balance
between
between public
public and
and private
private spending.
spending.
Note
Note that,
that, private
private spending
spending is
is still
still much
much required
required
for
for some
some reasons:reasons:To
To help
help reduce
reduce government
government burden
burden ie
ie government
government
will
will be
be able
able to
to focus
focus on
on priority
priority mission
mission
To
To give
give public
public wider
wider choices
choices of
of services
services depending
depending
on
on their
their affordability
affordability and
and accessibility
accessibility
To
To generate
generate domestic
domestic economy
economy in
in which
which the
the
private
private sector
sector become
become the
the major
major driver
driver (more
(more
productive,
investment,
create
productive, boost
boostCopyright
investment,
create employment
employment
2010 Asiyah Kassim
etc)
etc)

Copyright 2010 Asiyah Kassim

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