Thursday, January 19, 2012

Model of governance: Big govt or big people?

SMALL government, the opposite of big government, is aimed at reducing the role of the state in the economy. In taking a laissez-faire approach towards regulating the private sector, it is argued that small government lowers costs and promotes efficiency by allowing the market to determine prices and economic outcomes. Former British prime minister Margaret Thatcher was a champion of small government.

By Peter Ho

But small government has not been seen as an unqualified success. Critics have cited increased costs of public services, unemployment and a widening wealth gap as some of the unintended consequences of small government.

After the 2008 global financial crisis that many blamed on unfettered greed and dysfunction in the private sector, we see evidence that the tide of public opinion is turning against small government. So the jury is out and the debate will continue.

Government in Singapore

WHAT sort of government do we have in Singapore? Is it small government - or is it big government?

Depending on who one asks, different commentators will offer different views on the 'size' and influence of Singapore's Government.

Some analysts see our Government as exercising 'big' or substantial influence across a broad spectrum of areas. But on other measures, Singapore's Government is not particularly big.

One of these dimensions is the size of government spending, which at 17 per cent of gross domestic product is one of the lowest in the world. In the United States, such expenditure totalled 38.9 per cent of GDP. In Australia, it was 34.3 per cent, and in New Zealand, 41.1 per cent.

The paradox of government

THERE is a paradox of government that I discovered after many years in the public service. The law of diminishing returns applies to government as much as it does to economics. The marginal return on government policies diminishes over time, even as the effort to implement policy stays constant or even increases.

I surmise that there are a couple of reasons for this. The first reason is that as government policies lead to improvements, the needs of the people change. This is explained by Abraham Maslow's Hierarchy of Needs - a theory in psychology advanced more than half a century ago. Maslow's proposition was that after the basic physiological needs of a person are met, more complex psychological needs will have to be fulfilled. At the top of this hierarchy of needs is the need for self-actualisation, which is to realise the individual's potential.

So if you accept this proposition, then after the government has delivered on the basic needs of food, security, shelter, transport and health, expectations of the people are going to change, not in demanding more of the basic needs, but in fulfilling their more psychic needs in the upper reaches of Maslow's hierarchy, including social, emotional and self-actualisation needs.

The second reason is what I would term the 'third generation effect'. Singapore is now 46 years old, and into the third generation of Singaporeans. The first generation of Singaporeans lived through the turbulence and uncertainties of Merger and Separation. The next generation started life on a firmer footing, but at the same time imbibed from their parents a sense of the vulnerabilities. But the third generation of Singaporeans have known only the affluence and success of Singapore. For them, the uncertainties of the 60s and 70s are abstractions from their school history books. When their grandparents speak of the turmoil and danger that they experienced, they shrug their shoulders because it is an experience outside theirs.

The changing role of government

THESE and other reasons will change and transform the role of government.

In the beginning, the Government was characterised by strong regulation - big government if you will - seeking compliance with policy rules, and maintaining as efficient a system as possible.

But today, citizens and businesses alike have far higher expectations of the Government than before. Access to information has increased dramatically in scope and speed as a result of the Internet revolution. Social networking platforms like blogs, Facebook, YouTube and Twitter have empowered citizens to express their views. Virtual communities are beginning to shape the debate and context of public policy issues.

What is the appropriate model of governance for Singapore going forward? The question is not simply whether the people have a sufficient input in government policy. It is also how much we should rely on the market to decide on policy outcomes and public deliverables.

Big markets

ONE limit on the size of our Government has been our belief that free market forces should determine prices and economic outcomes. This is the approach advocated for small government.

But our faith in the market has not been uncritical or absolute. We have not been ideological about small government.

Economist Dani Rodrik outlined a framework that can usefully be applied to how Singapore has chosen to blend the work of markets and the Government:

First, the Government has sought to enable markets. This includes ensuring rule of law, property rights, and public infrastructure - functions that most governments perform. In Singapore, enabling markets has also included industrial policy and capability development, subjects of some controversy in policy circles around the world, especially among proponents of small government that believe in the laissez-faire approach.

Second, the Government has sought to regulate markets. This includes supervision of the financial sector, competition regulation, and taxation of negative externalities. But a key feature of Singapore's approach has been the shift towards lighter regulation accompanied by risk-based supervision.

Third, the Government has sought to stabilise markets. This is the bread- and-butter of macroeconomic management. Singapore's basic approach in monetary and fiscal policy is not far different from global practices. But its efforts to address asset price inflation and credit crises are interesting examples of targeted interventions that harness market forces.

Fourth, the Government has sought to legitimise markets. Globalisation, free trade and open markets lead to significant dislocations. Some of the sharpest debates over the role of governments centre on this: To what extent should governments facilitate adjustments, redistribute incomes or provide social safety nets, so as to maintain public support for market-oriented policies?

Engaging big society

COMPLEMENTING government and markets, we will also need a strong society - one that is robust and resilient - to tackle the great challenges of the 21st century.

These challenges will increasingly be 'wicked problems' - characterised by multi-dimensionality and growing complexity. Their causes and contributing factors will not be easily identified ex ante. Today, the Government faces an increasing number of complex public policy issues in which the trade-offs are much more difficult to make, because each could lead to unintended consequences and risks. Many of these public policy issues exceed the capacity of the Government working alone. Instead, they require the active contribution of the private and people sectors.

This approach has been most evident in the economic arena. A succession of four economic reviews - in 1986, 1998, 2003 and 2008 - saw the public and private sectors coming together to produce far-reaching policy recommendations for Singapore's long-term economic competitiveness.

The coming years will see a growing need for governance - which requires collaboration across the public, private and people sectors - rather than the Government acting as the sole, or even dominant, player.

A key part of this governance process will be growing mutual engagement between the public and people sectors. In his 2011 National Day Rally speech, Prime Minister Lee Hsien Loong underscored the importance of such engagement, pointing out that the nation needs to 'harness diverse views and ideas, put aside personal interest and forge common goals'.

There are four broad areas where engagement will be important:

Public information

IN SOME cases, engagement will involve the Government informing the public: Providing objective information clearly and succinctly, that helps the public understand the context, alternatives and choices involved in an issue. Traditional channels for this include fact sheets, websites, open houses and press releases. It calls for good communication skills, such as sharing concise, specific and relevant information in a timely manner.

Public consultation

A SECOND form of engagement is public consultation, which involves gathering ideas and feedback from the public on analyses or proposals by the Government, so that the public's perspectives, concerns and aspirations can be taken into consideration.

An example of this was the Ministry of Health's (MOH's) work on means testing in health care. In a series of dialogues, MOH officers distilled and used the learning from each session to refine the policy, then tested the new ideas out at the next meeting. Dialogues to seek citizens' views on the pegging of subsidy rates were reported in the media. As more people understood the rationale for change, support for it grew.


A THIRD form of engagement is to partner the public in framing issues, developing alternatives and building consensus on preferred solutions.

An example of such consensus-building is the Land Transport Authority's (LTA's) efforts to work with communities. In some private estates, for instance, the LTA worked with grassroots leaders to facilitate a dialogue so residents could voice their concerns. Together, they agreed on a traffic scheme to optimise roadside parking spaces in the estate. Residents then helped to enforce the scheme by reporting infringements.

More of such conversations will need to be extended into the public space to deepen collective understanding, and build society's capacity to deliberate issues rationally in a safe environment.


IN SOME instances, a fourth form of engagement can involve community co-creation of policies. This can engender greater ownership of outcomes and increase overall public value beyond what any single sector can achieve on its own.

The 'Community in Bloom' programme, initiated by the National Parks Board and People's Association to foster a love for gardening and promote community bonding, is an example of such collaboration between the Government and people.

The future of big society

I HAVE deliberately spent some time on how society can evolve, and how government can play a part in that. This has not been an area where Singapore has had extensive experience. It will be a shift from 'Government to you' and 'Government for you', to 'Government with you'. The imperative is for the Government to move towards a collaborative approach to policymaking, and be prepared to co-create and connect with the people.

The writer is senior adviser to the Centre for Strategic Futures, Prime Minister's Office.