Tuesday, March 12, 2013

Govt needs to explore new revenue sources to cope with ageing population

SINGAPORE — Minister of State for Finance Josephine Teo has said that the Government will need to consider additional revenue sources as it copes with an ageing population and a rise in social spending.
By Imelda Saad Aziz -
11 March

SINGAPORE — Minister of State for Finance Josephine Teo has said that the Government will need to consider additional revenue sources as it copes with an ageing population and a rise in social spending.

She was speaking during the Committee of Supply debate for the Finance Ministry.

Mrs Teo also announced further measures to up the pay of low-wage workers and enhance procurement processes within the public sector.

Several Members of Parliament (MPs) expressed concerns about Singapore’s fiscal sustainability during the Budget debate.

Nominated MP Tan Su Shan said: “The Government has given out handouts, subsidies and top-ups to the welfare assistance scheme to meet this higher cost of living but, if the inflation we are creating becomes structural, how long more can we keep giving these handouts? As our population ages, the need for more healthcare and social subsidies will also rise. We cannot take our nation’s fiscal sustainability for granted.”

Mrs Teo said it is the changes made over the past five years to enhance revenues through changes to the Net Investment Returns framework and raise the Goods and Service Tax that has given Singapore the fiscal space to make significant investments in infrastructure and social spending.

“We have to use taxpayers’ monies carefully, to make sure our expenditure gets the best value, and our programmes are both effective and efficient. This is why, despite keeping social spending relatively low, our social outcomes are not inferior to many countries by most international reckonings.”

For instance, Singapore’s spending per capita on primary school education is about S$7,000 - much lower than the US which spends about S$9,400.

“Similarly, our spending per capita on secondary school education is also lower than in the US. Yet most international assessments place our school system as amongst the best internationally, and well above that of the US, based on outcomes for students of all abilities,” said Mrs Teo.

And while providing broad-based support to give all Singaporeans the chance to achieve their aspirations, social spending is directed at Singaporeans who need the most help.

For instance, Mrs Teo said the Workfare Income Supplement (WIS) scheme is targeted at older low-wage workers, to encourage them to stay in employment. And in healthcare, the government aims to support both lower and middle-income Singaporeans.

What’s important, said Mrs Teo, is to maintain a tax regime that’s fair, equitable and able to sustain Singapore’s economic dynamism.

The public sector is also hoping to lead the way in efforts to raise the pay of low-wage workers.

From April, the Government will engage only accredited cleaning companies, under the National Environment Agency’s Enhanced Clean Mark Accreditation Scheme.

What this means is that Singaporean cleaners on Government contracts will be paid according to the Progressive Wage Model - a system described as a component of Singapore’s own Minimum Wage model.

Mrs Teo said the Education Ministry, which is the government’s single largest buyer of cleaning services, has taken the lead, with all its contractors on board.

“Effectively, this means about half of all cleaners employed under government contracts, or over 3,500 cleaners, now receive basic wages of at least S$1,000 per month. Further, with training, improved skills and bigger job scopes, the cleaners can earn more,” she said.

Next month, the initiative will cover the security sector - where the Government will procure only from agencies graded by the police.

Separately, in its continuing effort to enhance procurement processes within public sector agencies, the Government is developing a Procurement Specialist Track for its officers.

Mrs Teo said: “There are over 2,000 officers across the Public Service today who perform procurement roles as part of their job responsibilities. However, not all agencies have dedicated procurement teams. In some agencies, procurement could be decentralised to many different officers for whom procurement is a secondary role. It is also likely viewed as an administrative support function, rather than as a profession. As a result, there are uneven standards of procurement capabilities across the public service.”

The Procurement Specialist Track will offer officers proper career pathways and equip them with skills to be discerning when evaluating bids. The Finance Ministry is also working with various agencies to identify opportunities to cluster their procurement functions, where feasible. This is so that capabilities are more centralised. It will also open up more career options for procurement officers.

Rules on the Government’s tender process were tightened last year following some high profile lapses involving several ministries.

Finance Minister Tharman Shanmugaratnam had said in Parliament in August last year, that the competency of its public officers has been a problem and that the government will look into a career track for procurement officers.

Separately, Mrs Teo said the Government has also put in place additional measures to reinforce the accountability and responsibility of supervisors.

Complaints about procurement practices are brought to the attention of the Permanent Secretary or CEO in charge and investigated.

The Finance Ministry also shares audit findings on procurement lapses and common pitfalls with public sector directors of finance and at various management forums.

To help officers who are responsible for approving procurements, the ministry has developed checklists to guide them on what to look out for before giving approval.

“Our system handles over 80,000 procurements each year, the vast majority of which are processed by our officers in accordance with well-established guidelines. However, even with the best of efforts, there will be instances of lapses or misconduct. Therefore, there is no substitute for robust audit and enforcement, along with the willingness to acknowledge problems and correct them,” Mrs Teo said.


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