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3.20 We also need to respond flexibly to new challenges
to be effective. For example, under the block budget
system, a ministry’s budget is set as a percentage
of GDP, and reviewed every 3-5 years to ensure that
the caps move in line with changing needs and priorities.
The block budget system gives the ministry a greater
degree of certainty, and allows it to plan on a multi-year
horizon. The trade-off, however, is less flexibility
for the Ministry of Finance to respond promptly to changing
priorities and needs.
3.21 To remedy this, MOF extracts from ministries’
budgets a “productivity dividend” tied to
the national productivity growth rate. It pools these
dividends into a Reinvestment Fund. Ministries can bid
for financing from this fund to launch innovative projects
and develop new capabilities. This way we can re-prioritise
and re-allocate resources across ministries from year
to year, while still preserving the advantages of the
block budget system.
3.22 In FY2005, about 50 projects will receive funding
from the Reinvestment Fund. One is the Ministry of Health’s
HealthConnect pilot project, which will use IT to link
up healthcare providers - such as restructured hospitals,
polyclinics and GPs - to treat patients in a patient-focused
manner. This will make our healthcare system more efficient,
reduce costs for patients, and improve their quality
of care.
3.23 Another project that will receive Reinvestment
Funding this year is STB’s multi-language way-finding
project, which will help visitors from Indonesia, China,
and Japan find their way around in their own languages.
Over time, the project will tie together all tourist
facilities into a single network for navigation, providing
greater convenience for visitors and making us a more
attractive tourist destination.
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