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Speech By Mrs Lim Hwee Hua, Minister Of State For Finance, At The Committee Of Supply Debate 2006 In Parliament, 1 Mar 2006(cont'd)

01 Mar 2006

Sir, let me first thank the Member for his comments and suggestions. I wish to inform him and the House that audits are only a part of the Government's overall efforts to achieve value for money in public spending.

2. As I mentioned in my speech earlier on this afternoon under Head M, the Government's philosophy is to exercise prudence in spending and to deliver more for the dollar as a standing demand on all Government agencies. While some other jurisdictions, as those cited by the Member, may choose to focus on what we call ex-post audits to check excesses and inefficiencies, in Singapore, we aim to achieve value for money proactively at various levels as a matter of habit. Let me just elaborate.

3. Firstly, at the agency level, there is management oversight on spending that is guided by Government-wide principles of effective budgeting, awareness of value in public spending and efficiency in operations. The PS21 (Public Service in the 21st Century) movement drives the whole public sector to productivity, quality service and organisational excellence. The block budget system which sets caps on Ministries' spending as a percentage of GDP, the Economy Drive initiative which requires Ministries to strive for cost savings, and market testing and best-sourcing of non-core functions are all important ways by which the Government seeks to enhance efficiency and reduce costs in the public sector.

4. Secondly, all Ministries today have internal audit functions. In addition, the Accountant-General's Department assists the Ministry of Finance (MOF) in looking out for issues relating to efficiency in operations and excesses in spending. As an example of tightening up on spending, the Ministry of Finance introduced in 2003 the requirement for statutory boards to refer all projects above $50 million to MOF for clearance, whereas previously statutory boards were free to proceed on their own if they did not need grants from the Government.

5. Centrally, MOF has also initiated and will continue to initiate a consolidation and standardisation of processes for economies of scale. Let me just quote three examples. The first is the shared services centre for the conduct of HR and finance services. The second is the standard operating environment for a common platform for info-comm technology across all the Ministries. And, thirdly, it is the aggregation of demand for common goods and services which different Ministries might need to procure. So far, the net savings have been encouraging.

6. Finally, there is of course the external audit function performed by the Auditor-General. The Auditor-General's audits encompass the review of key systems and controls. In the course of such reviews, the value-for-money issues present themselves. They would be pursued and reported. The Auditor-General's past reports have included many value-for-money issues such as the cost of car park maintenance, the cost of vacant flats for rental, utilisation of vacant Government properties, the high cost of contract variations for private estates upgrading, and so on.

7. While the audits by the AGO encompass both process and outcome, the Audit Report itself tends to focus only on the outcomes to demonstrate the effect of some of the control weaknesses. Control weaknesses and recommendations are then reported to Ministries after each audit project and brought before the Public Accounts Committee of this House by the Auditor-General.