Budget cuts reflect fixation on elections

 

This clueless Madani government, headed by failed reformist Anwar Ibrahim, is so fixated on imminent elections that it has completely refused to take the right moves to deal with oil price increases, trying to please all but pleasing no one.

That stems from the return of Umno-style money politics, which is premised on handing out money and reducing pain for as wide a part of the electorate as possible in the erroneous belief that it alone will help win the elections.

The lessons of the 14th general election in 2018 have been forgotten. Those who believe money wins have no other weapon, implicitly and explicitly accepting corruption as the means to triumph at the polls.

Corrupt politicians use money to win, as they simply have nothing else to offer. They sugar-coat everything, are afraid to take bold steps to ensure the future and harp on race and religion to whip up sentiment against what is right and reasonable.

When Anwar came to power, even if it was with Umno’s support, there was hope and belief that at long last there would be meaningful change - fighting corruption, improving education for all, greater efficiency, a fair shake for everyone.

Political expediency rules

However, it all crashed on the rocks of political expediency, doing almost anything and everything possible to cling to the tenuous reins of power, not realising that he could only keep it if he, Anwar, delivered on his promises.

Let’s look at the bare figures to get a grasp of the enormity of the wrong that this government is pursuing.

Just so that people, rich or poor, can enjoy paying low prices for energy, the government is projected to spend RM57 billion on subsidies this year, up from RM15 billion, a RM47 billion difference.

The Finance Ministry has confirmed issuing guidelines telling ministries and government agencies to reprioritise operational expenses, following reports that the government has ordered RM10 billion to be slashed from the original RM229 billion approved as operational expenses under Budget 2026.

‘Black magic’

“The Finance Ministry also wishes to emphasise that the recalibration will be done without affecting economic stability and critical services to the people,” the ministry was reported as saying.

Is this government using black magic, too? Otherwise, how could it “recalibrate” a cut of RM10 billion without affecting critical services when a RM3 billion cut involves health?

And where is it going to get the other RM37 billion to bridge that RM47 billion deficit? Borrow?

The solution, when you sideline politics and focus on economics, is simple and straightforward. Accept the reality of the situation - oil prices have gone up, and subsidies cannot be increased. Government finances are stretched. Cut subsidies!

There is a gap of RM47 billion. Part of it is being bridged by an RM10 billion cut in operating expenses.

Here’s the rub - the cut, according to reports, is coming from crucial cuts in operating expenditure.

Malaysiakini, quoting Free Malaysia Today, said: “Of these, RM3.06 billion could come from the Health Ministry’s RM46.5 billion budget, while RM2.39 billion could come from the Higher Education Ministry’s RM18.6 billion budget.

“The Treasury could be cutting RM664 million from its own budget, while the Home Ministry and Defence Ministry could reduce their budget by RM647 million and RM508 million, respectively.

“Other multi-million-ringgit cost reductions suggested include the Rural and Regional Development Ministry (RM571 million), the Education Ministry (RM466 million), and the Digital Ministry (RM508 million).”

All these cuts, while people can scoot and ride around with RON95 at one of the world’s lowest prices of RM1.99 per litre when the unsubsidised price is double, yes double that at RM3.97 per litre. That is a ridiculous amount of subsidy by any reckoning.

But the PM is very proud of that, so enamoured of it that he cannot even raise prices by a sen, even though the Health Ministry will face a massive cut of RM3 billion, which is bound to affect the already declining quality of health services.

Untargeted subsidies

The tragedy is that most of the people getting the subsidies can afford to pay them. The bottom 20 percent will be hit but not by a lot - the middle 40 percent somewhat, and the top 40 percent can afford it with no problem at all.

Back to that RM10 billion cut, it can easily be recovered by reducing subsidies by a like amount. That means instead of RM57 billion (against a budgeted RM15 billion), remove subsidies by an equivalent amount to RM47 billion. That’s a reduction of 17.5 percent.

For simplicity’s sake, let’s say a 20 percent reduction in energy subsidies will do it and assume that it takes place uniformly on all energy sources.

For RON95, that means the price increases by a fifth to about RM2.40 per litre from RM1.99. Compare that to the unsubsidised price of about RM4.00, and that’s still a damn good subsidy.

And you do not even have to do it at one go; spread it out over four months to ease the pain and get people used to paying higher prices. That is far better than cutting funds for our already poor health services.

Questionable motives

What could be the motive for this cut? The effects of a cut in government services won’t be immediate, probably well beyond the point of a snap election in the next few months. How shortsighted is that, and how so against the rakyat. That is bad politics.

One more thing, the impact on the poor of that increase is likely to be small because they use little petrol. A check online shows a litre of petrol will fuel a 100cc motorcycle somewhere between 40km and 50 km.

If the average poor motorcyclist travels 50km a day, his increase in costs is a mere 40 sen per day or RM12 a month.

If he drives a small capacity car for 50km daily, his cost is RM24 a month, assuming 25km a litre.

Even this can be ameliorated by the government giving a direct grant to the poorest 20 percent. They have the data through the Central Database Hub (Padu).

If the government had stuck to the original scheme of pure targeted subsidies, instead of the virtual blanket subsidies now, we would not have this problem.

Instead, this spineless Madani government was more focused on indirectly bribing the electorate into voting for them.

But it did not figure on the Iran war and fuel disruptions.

If the government should go ahead with this ludicrous cut in expenditure when it is so unnecessary, the rakyat should do what it did in 2018 against a corrupt regime - vote this inept, vote-buying government out for the protection of our own interests.

Hopefully, the next government will have learnt its lesson and at least try to do better than this one. - Mkini

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P GUNASEGARAM says it is high time we expected a lot more from our politicians or reject them otherwise.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.