When the government in Putrajaya highlighted its policy of warmer air-conditioned office temperature as part of its drive to save energy, Malaysiakini exaggeratedly called it as an austerity drive.
It is not at all but several weeks later, it has come to public knowledge that the government is carrying out a larger spending adjustment exercise by cutting what the Finance Ministry calls non-critical expenditure across all ministries in order to accommodate for the ballooning fuel subsidy cost, which in turn is created by military conflicts in the Middle East.
I still would not call it austerity for the same reasons I rejected the charge the same reasons I rejected the charge levelled at the 2018-2020 Pakatan Harapan government: at that time, total spending and the economy itself actually grew. For 2026, total government spending and the economy would very likely expand too. It is just not the mainstream view to expect a recession and an aggregated government spending are coming to Malaysia in the next 12 months. (Still, it does not help that the Anwar Ibrahim-led government itself uses the language of austerity…uses the language of austerity…)
Yet, I find the cuts disagreeable though understandable. Disagreeable because, for instance, to have RM3 billion worth of non-critical spending within the Ministry of Health that suffers all kinds of manpower and facility shortage sounds incredible. So outrageous that even the Ministry of Health is contesting the cuts. One would expect that if there were indeed that size of non-essential spending, it should be redistributed to essential services within the ministry instead of being redirected towards fuel subsidies that are not just unsustainable financially, but wasteful in terms of opportunity cost at a time when economies are competing at the technological level that could redefine future growth in a big way.
Ideally, what should be cut instead is the fuel subsidy spending, which has failed its purpose. The regime was designed to save money but the truth is, it was designed to show that the government is making progress on that front instead of actually making progress.
Just imagine the kind of policy we could run based on the amount used and to be used for fuel subsidies. Turbocharge electrification throughout Malaysia. Fortify our health and education system. Build larger and stronger public transport network. Provide very large cash transfer programs. We could even pay Sabah and Sarawak large petroleum payments and address the cause of that one episode of national divisions substantially.
Nonetheless, the cuts are understandable from various aspects.
The most important of them is the national election, which could happen as early as this year. In fact, some state elections are slated for this year, which shows Anwar Ibrahim is running out of option. Inflation negative affects voters’ satisfaction with the government of the day and after the disaster of Sabah for Pakatan Harapan along the general discontent faced by the coalition within its own camp with Umno sharpening some long knives in the passenger seat, anybody in PH seeking reelection would have to think twice before committing to an energy price hike.
But for Anwar Ibrahim, it is doubly so because he and his allies have spent their political capital on self-serving items that include Azam Baki, the Sabah corruption and corporate scandals. These actions easily wash out actual (though limited) reforms done by the government. Not to mention, PH (and PKR especially) have spent an outrageous amount of time fighting its own base instead of its opponents.
As a result, in the PH tank there is no more political capital to be spent on tough policy for the common good at the non-instant gratification horizon. That is a tragedy for a coalition that ran reformasi as a slogan. PH has always needed to use its political capital for tough decisions. Close at the end of the line, it is plain to see that capital has been misspent on political machination that would never inspire confidence among the public, or fire the imagination of the PH base.
