Steps to Reduce Wastage in Use of Physical Items in Public Service Spending
27 Jul 2021Parliamentary Question by Mr Leon Perera:
To ask the Minister for Finance in light of the Public Sector Sustainability Plan and its aim to conserve limited resources (a) whether Government agencies track the time period for which physical items can be reasonably used and the time period during which such items are in fact used; (b) what percentage of physical items are estimated to be underused; (c) what percentage of items that are unused or no longer used are (i) sold (ii) given away or (iii) disposed of; and (d) what steps are taken to reduce wastage created by underused and unused items.
Parliamentary Reply by Minister for Finance, Mr Lawrence Wong:
Government agencies adopt a risk-tiered approach to managing physical items that they own, whereby greater scrutiny is placed on assets that are of higher value or risk. Ministries are responsible for maintaining records and conducting annual stock take of their assets. In particular, they have to adhere to requirements and record-keeping for assets worth $5,000 or more. The records would include information such as (i) date of acquisition; (ii) date of disposal; and (iii) expected period the assets could be used (or useful life).
The Accountant-General’s Department provides general guidance on the useful lives of assets that Ministries can use to depreciate their assets. For instance, this is 5 years for IT systems, and 8 years for furniture. However, Ministries can choose to depart from these durations for specific assets, should they assess that these specific assets have useful lives that are different from the standard useful lives. This is to allow Ministries to take into account their use of specialised assets or their different operating circumstances, like the intensity of usage.
Ministries conduct regular reviews to ensure that their assets are in proper working condition and remain relevant. The review could be conducted through routine stock takes, internal audits and external audits.
All Ministries are expected to continue using assets beyond their useful lives if these assets are in proper working condition and still needed. In the event that the assets become obsolete, uneconomical to repair or are no longer needed, Ministries are required to seek approval from their management to dispose the assets in the most cost-effective manner and to recover the residual value as far as possible. For instance, Ministries are encouraged to dispose the assets through sales, transfer to other Government agencies, or donation to charitable or non-profit organisations if the items are in working condition.
Based on our records for higher-value assets, from Fiscal Years 2018 to 2020, roughly 12% of the assets disposed by Ministries were sold, 1% were given away, while the rest were discarded or scrapped. About 70% of the assets disposed were beyond the end of their useful lives.
These numbers do not include assets owned by Statutory Boards, which track and dispose assets separately from Ministries. As legal entities with their own financial reporting to Parliament, Statutory Boards are subject to their governing Acts and the Statutory Board Financial Reporting Standards.
Permanent Secretaries of Ministries and Chief Executives of Statutory Boards are ultimately responsible for ensuring that assets in their agencies are bought only if necessary, and assets bought are well utilised.
As part of GreenGov.SG, we are reviewing our policies and practices to be more environmentally friendly. For example, we will increase the recycling rate for electronic equipment.
To ask the Minister for Finance in light of the Public Sector Sustainability Plan and its aim to conserve limited resources (a) whether Government agencies track the time period for which physical items can be reasonably used and the time period during which such items are in fact used; (b) what percentage of physical items are estimated to be underused; (c) what percentage of items that are unused or no longer used are (i) sold (ii) given away or (iii) disposed of; and (d) what steps are taken to reduce wastage created by underused and unused items.
Parliamentary Reply by Minister for Finance, Mr Lawrence Wong:
Government agencies adopt a risk-tiered approach to managing physical items that they own, whereby greater scrutiny is placed on assets that are of higher value or risk. Ministries are responsible for maintaining records and conducting annual stock take of their assets. In particular, they have to adhere to requirements and record-keeping for assets worth $5,000 or more. The records would include information such as (i) date of acquisition; (ii) date of disposal; and (iii) expected period the assets could be used (or useful life).
The Accountant-General’s Department provides general guidance on the useful lives of assets that Ministries can use to depreciate their assets. For instance, this is 5 years for IT systems, and 8 years for furniture. However, Ministries can choose to depart from these durations for specific assets, should they assess that these specific assets have useful lives that are different from the standard useful lives. This is to allow Ministries to take into account their use of specialised assets or their different operating circumstances, like the intensity of usage.
Ministries conduct regular reviews to ensure that their assets are in proper working condition and remain relevant. The review could be conducted through routine stock takes, internal audits and external audits.
All Ministries are expected to continue using assets beyond their useful lives if these assets are in proper working condition and still needed. In the event that the assets become obsolete, uneconomical to repair or are no longer needed, Ministries are required to seek approval from their management to dispose the assets in the most cost-effective manner and to recover the residual value as far as possible. For instance, Ministries are encouraged to dispose the assets through sales, transfer to other Government agencies, or donation to charitable or non-profit organisations if the items are in working condition.
Based on our records for higher-value assets, from Fiscal Years 2018 to 2020, roughly 12% of the assets disposed by Ministries were sold, 1% were given away, while the rest were discarded or scrapped. About 70% of the assets disposed were beyond the end of their useful lives.
These numbers do not include assets owned by Statutory Boards, which track and dispose assets separately from Ministries. As legal entities with their own financial reporting to Parliament, Statutory Boards are subject to their governing Acts and the Statutory Board Financial Reporting Standards.
Permanent Secretaries of Ministries and Chief Executives of Statutory Boards are ultimately responsible for ensuring that assets in their agencies are bought only if necessary, and assets bought are well utilised.
As part of GreenGov.SG, we are reviewing our policies and practices to be more environmentally friendly. For example, we will increase the recycling rate for electronic equipment.