| I will now update the House on what
is being done by Government to achieve greater efficiency
and accountability in public expenditures.
The Civil Service is in the process
of introducing fundamental reforms to its management
and control system. This will have wide-ranging impact
in the way public sector organisations operate. The
goal is to create a public sector which will provide
higher quality service at lower cost through better
management practices.
Let me explain the need for this reform.
Over the years our public sector has
been kept lean and efficient, and has provided an efficient,
honest and competent public service. This has contributed
to our economic growth and competitiveness. However,
there is no room for complacency. We cannot take for
granted that what has worked well for us so far will
also see us through the future.
Singapore is entering a new stage of
development. We are approaching developed country status,
and face intense competition not only from low-cost
developing countries that are fast catching up, but
also from advanced countries in a rapidly changing and
highly competitive external environment. On the domestic
front, the emergence of a generation of better educated
Singaporeans and an ageing population means higher expectations
of and demands on all aspects of public services.
The response cannot simply be to expand
the size of Government. The experience of many developed
countries has shown that unrestricted expansion of bureaucracies,
even with the best of intentions, just leads to bloated
and inefficient public sectors. The result is not better
services but higher taxes to finance the cost of Government,
which in turn becomes a drag on the economy. Indeed,
many developed countries which expanded their public
sectors during good times are now taking painful steps
to downsize and cut back. Others cannot do so for lack
of political will.
To meet the challenges ahead, we need
a first class Civil Service that can create the conditions
for Singapore to stay ahead of competition and, at the
same time, provide a level of public services that will
meet Singaporeans' aspirations. To do this, civil servants
need more autonomy than is possible under the existing
structure, which is built around centralised control.
We cannot accept a Civil Service mindset that places
compliance above initiative, process above people and
rules above flexibility.
This is no different from what progressive
business organisations are doing in response to changes
to their environment. All over the world, well-run corporations
are dismantling internal bureaucracies, empowering front-line
employees, focusing on quality and getting closer to
customers in order to stay ahead of competitors.
The Civil Service will be restructured
along similar lines. We have called this process Budgeting
For Results, or BFR for short. Under BFR, all government
units such as Ministries and Departments will be managed
as autonomous agencies. Each autonomous agency, or AA
in short, will have considerable autonomy in financial
and personnel management in exchange for greater accountability
for the results to be achieved with the public funds
allocated to them.
I will now explain briefly how the
AA and BFR system works:
Firstly, every government unit will
be required to specify its outputs and set performance
targets as part of the annual budgeting process. That
is, they must identify the results to be achieved with
their budget allocations. These targets will be monitored
and will form the basis for evaluating the performance
of the units. For example, the National Registration
Department has set a target of issuing ICs within 14
days. Previously this took about 21 days. Under BFR,
Permanent Secretaries will be accountable for achieving
their targets.
Secondly, a unit's operating budget
will depend on its output levels. The driving force
of the budgeting process will shift from resource requirements
to output levels. For example, Toa Payoh and Tampines
Polyclinics will be funded this year based on the number
of patients they serve. Immigration Department will
be funded by the number of persons cleared at checkpoints
as well as the number of passports issued.
For units whose output and services
are not easily measured, their operating budget will
be allowed to grow roughly at the nominal GDP growth
rate. In these cases, GDP growth rate is used as a proxy
for output growth. When applied across the board, the
effect of this is to limit the share of the economy
taken up by the public sector.
Thirdly, as an incentive for better
financial management, Ministries will be allowed to
carry forward a portion of their savings to the next
financial year. Such savings may be used to finance
new programmes, purchase capital equipment or meet future
contingencies. This will discourage the rush to use
up operating budgets at year end.
Fourthly, units will be given maximum
autonomy to achieve their goals. For instance, Permanent
Secretaries will be allowed to increase their headcount
to cope with increases in workload or initiate new activities
within the agreed budget.
Elements of AA and BFR will be introduced
progressively in all Ministries, Departments, Organs
of States and Government-funded Statutory Boards over
a two-year period. From FY96, 14 Government Departments,
including three Ministry HQs will start operating as
AAs. The rest of the Civil Service will be managed as
AAs by FY97.
The quality and efficiency of the public
sector is a major contributor to the competitiveness
of a country. BFR should enable us to maintain and improve
on our competitiveness. |
