Santiago said the government’s cost-cutting measures should go beyond blanket spending cuts and focus on improving efficiency in public expenditure instead.
In a statement posted on social media, he said chief savings officers could play a key role in identifying unnecessary spending while ensuring that essential services and subsidy programmes remain protected.
Santiago pointed to New York’s model as an example Malaysia could study.
According to him, the initiative in New York identified savings amounting to US$1.77 billion (about RM7 billion) for the 2026-2027 fiscal years, helping to address a projected US$12 billion (RM47.4 billion) budget gap.
He said about US$514 million (around RM2 billion) of the savings came directly from cutting waste, reducing overtime costs, improving contracts, and streamlining operations.
Santiago said the New York model was not based solely on austerity measures, but also involved additional revenue generated through taxes on luxury assets and high-income earners.
“At the same time, agencies were pushed to scrutinise budgets, reduce unnecessary overtime, improve contracts and cut waste,” he said.
He said that despite inheriting a budget gap larger than during the Great Recession, the focus was not merely on reducing deficits but also on reinvesting savings into measures aimed at improving affordability and public welfare.
Among the initiatives cited were universal childcare, cheaper groceries, safer streets, trash containerisation, as well as stronger support for libraries, parks and cultural institutions.
“Better spending, not just less spending,” he said.
The finance ministry said last month its proposed adjustments to operational spending for the health and higher education ministries involved only non-critical items, with all core spending to continue as approved under the 2026 budget.
A Treasury directive outlined potential cost savings for various ministries, departments and agencies, but did not provide a breakdown of where the savings would come from.
The directive said a total of RM10 billion could be saved across the board, including RM3.06 billion from the health ministry and RM2.39 billion from the higher education ministry.
It also ordered the postponement of non-essential official events, meetings, conferences, seminars and workshops, adding that necessary events should be scaled down.