Friday, November 5, 2010

Keep policy debates open and open-minded

Nov 2, 2010

Nimbleness paramount in social policy, which must evolve with society

By Chua Mui Hoong

WHEN I interviewed Mr Ravi Menon two years ago for a book on the history of the civil service, I asked him about the future of the service. One issue he spoke about then was the legacy of success and the risk of civil servants becoming afraid or hesitant to challenge the status quo.

He added: 'It will be a pity if our younger officers feel that all the big challenges, the big questions, were settled during Goh Keng Swee's time and that we're now dealing with the nitty-gritties and incremental improvements.'

Mr Menon, now the permanent secretary at the Trade and Industry Ministry, reprised this issue at an economic policy conference recently. In a brilliant tour de force, he described Singapore's approach to public policy as one that was pragmatic and eclectic, not wedded to any single ideology. It was governance that got its market principles right, based on rigorous attempts to suss out what worked.

He went on to add this caveat: 'This is not to suggest that Singapore has got the balance right. Far from it. Singapore is still an experiment, a work-in-progress.

'If anything, the key takeaway from the Singapore story is to keep an open mind, measure outcomes, continually review policies and learn from mistakes.'

In a speech to Nanyang Technological University students on Friday, Senior Minister Goh Chok Tong made a similar point when he supported a call by academic Koh Tai Ann for a more 'thinking' society. He went on to express his hope that young Singaporeans will 'continue to be engaged, to pursue your passion and your dreams, to challenge conventional wisdom, to do things and make Singapore better.' (emphasis mine)

SM Goh's words are timely.

There is a tendency to assume that Singapore has got its Big Policies right. Indeed, it may be true that the key principles, decided on decades ago, remain sound, especially regarding defence, national security, industrial relations and macroeconomic management.

Whether it is national service, the need for Singapore to 'punch above its weight' in international relations, tripartism, or the iron curtain between the Ministry of Finance which spends the Government's money and the central bank that manages it, these keystone policies remain relevant to Singapore today - although even in these sacrosanct areas the need for constant review persists.

When it comes to social policy, however, the need to be nimble and open-minded is paramount, since social policy must evolve with social circumstances.

Increasingly, the policy choices Singapore will have to grapple with are those of a social nature, which tend to be more tenuous and less clear-cut than defence or macro-economic policies. Social policy options will be more open to debate, requiring the state to work harder to build consensus and get buy-in from citizens.

Among the list of key issues preoccupying today's leaders and which will continue to befuddle future generations, most are social or environmental in nature. SM Goh's own list for young Singaporeans to ponder include: 'How do we support an ageing population? Can we increase our fertility rate? Have we reached the limits to our growth? How do we overcome our land constraints? Can we find new growth engines which are environmentally sustainable? How do we continue to provide... affordable housing and health care? How do we meet Singaporeans' higher expectations? How do we compete against other emerging economies?'

These issues have no clear right and wrong answers. They are qualitative issues, to do with managing expectations as much as managing resources.

Unlike defence policy, say, where hardware is paramount and national conscription can be decided upon by fiat, social problems cannot be solved by state spending on hardware and legislation to compel behavioural changes alone.

Social change requires the people to be engaged and mobilised. Without buy-in, there can be no shift from a disposable consumer society to environmental sustainability, for example. And certainly no amount of government spending or laws can persuade citizens to marry and have more children, a pressing demographic issue in a country with a rapidly ageing population and declining fertility rate.

This means the Government has to engage citizens more. When policy options are open to debate, the Government and citizens also have to learn how to engage each other respectfully in the cut and thrust of debate, even on sensitive issues like the income gap.

A good start has been made on issues to do with the income gap. This has been openly discussed for the last 10 years or so, with the aid of government data that showed clearly the trend of stagnating incomes at the bottom.

The result was one of the most important social policy innovations in recent years - Workfare. The Workfare Income Supplement (WIS) began as a pilot programme in 2006, and was institutionalised after much public debate in 2007. It is given to workers 35 and above, who earn $1,700 or less a month. A 65-year- old earning $1,000 a month will get the maximum payout of $2,800 a year, of which $800 is in cash and $2,000 goes into his Central Provident Fund account.

Workfare is a good programme, as MPs, academics and its beneficiaries attest. But in the nature of social policy, getting the Big Picture right alone is not enough. Policy details must also cohere.

The next phase of public discourse on the income gap would be to look at policy effectiveness and study outcomes. For example, on Workfare: how much does it contribute to the disposable income of families? Are the quantums enough? What is its effect on the employment rate? On the job decisions of workers, of employers? On productivity? What is its deadweight loss - that is, the impact on social welfare?

A related issue is to consider if Singapore can learn from other approaches to raising low wages of less skilled workers, besides supplementing incomes and upgrading skills. As can be seen in the debate on a minimum wage, not all academics are convinced that Singapore has exhausted the range of policy options.

With social issues likely to feature more prominently, policy debate must become more sophisticated than a reiteration that the status quo works best. There has to be an openness to test outcomes and a willingness to challenge conventional wisdom.

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