ERADICATING subsidies has been an old idea, but it is gaining new enthusiasm as it courses through Putrajaya.
Prime Minister Datuk Seri Anwar Ibrahim's pre-budget warning of subsidy removal in the education sector is a reflection of such an ardour.
The motivation seems to be a shortfall in government revenues, not to mention its desire to put an end to the exploitation of subsidies by the rich.
Be that as it may, we think any removal of subsidies, especially in the education sector, must be done with extreme caution.
There are a few reasons for our view.
First, we are talking about subsidies for government schools and universities.
How many rich Malaysians send their children to such schools and universities?
If they study in Malaysia, they attend private or international schools.
A growing number of elites engage private tutors at considerable costs, hoping to educate their children to international standards, whatever that means.
The rest of the rich send their children to elite schools overseas.
It is children of the Bottom 40 and Middle 40 households who attend government or government-aided schools.
As for the universities, the number of students from rich families may not be significant enough to remove the subsidies.
Second, if Putrajaya is dead set on reviewing the subsidies being provided by the education sector, it should opt for targeted subsidies.
Certainly, the blanket subsidy of RM150 one-off aid to school children announced in December 2020 is a no-no.
If our estimate is right, there were five million of them in the country at that time, tearing a RM788-million hole in the government coffers.
It cannot be denied that some don't deserve the subsidy.
Implementing targeted subsidies isn't as insurmountable a challenge as it may seem.
Schools and universities have a system to tell those who can afford the fees from those who can't.
This is robust enough to design targeted subsidies for the deserving. Do not get us wrong.
We are not downplaying the amount of money the government is spending on subsidies to schoolchildren and university students. Not at all.
It is a humongous amount, year after year.
But our argument is against blanket subsidies.
We live in an age where nations are making education up to tertiary level free.
Malaysia can do that, too.
Here is how Putrajaya can do that without facing a shortfall in revenue, our final point.
Put an end to corruption in the public service. It is that simple.
The amount of money the government loses to leakages and wastage in the civil service varies from hundreds of billions to a few trillions, depending on whom you ask.
In May last year, Emir Research, a think tank, estimated that Malaysia lost at least RM2.3 trillion in the last 26 years.
That could have paid off Putrajaya's RM1.3 trillion debt, leaving RM1 trillion to spare for subsidies in the education sector.
If we annualise this number, even though it is a conservative estimate, we are talking of a loss of RM45 billion per year to corruption.
There is no better shortcut to Putrajaya's shortfalls.