More visible productivity drive could set example for rest
By Ignatius Low, The Straits Times, 3 Mar 2012
YESTERDAY'S Committee of Supply proceedings, and to some extent the debate over the Budget that preceded it, saw the return of two commonly held perceptions about the Singapore Government.
The first is that when it rolls out a new scheme, it likes to make things unnecessarily complex. There is usually a whole host of qualifying criteria, and the benefits are often finely gradated by segment.
To make sure that an applicant really qualifies and gets exactly the right amount of help - no more and no less - a lot of questions are asked, which in turn translates to a lot of paperwork.
Depending on how you see it, this can be a strength or a weakness. On the one hand, it shows we have a prudent Government that is always seeking to stretch every dollar it spends.
On the other hand, the complexity of the scheme can stand in the way of the help getting to intended recipients, as several MPs have noted has been the case with the Government's new Productivity and Innovation Credit (PIC) scheme.
Government Parliamentary Committee chairman for Finance Jessica Tan was just one voice yesterday among the chorus of calls in the House for the qualifying criteria of the scheme to be relaxed and the application process simplified.
That will help more small- and medium-sized enterprises (SMEs) benefit from the scheme's cash payouts and tax credits for expenditure on improving productivity, and therefore ease the pain of the impending economic restructuring exercise.
The second commonly held perception raised in the House yesterday is in regard to the efficiency of the public service and whether it is as productive as it could be.
Ms Indranee Rajah (Tanjong Pagar GRC) let fly a string of amusing stories showing how a lack of coordination between government agencies has forestalled community improvement projects in her constituency.
Nominated MP Laurence Lien implied that hiring in the public service had outstripped the national average.
And the testimony of someone like him (having crossed over from the civil service to the non-profit private sector) that the public service has manpower resources that 'most private sector firms can only dream of' must have resonated with many.
Both these commonly held perceptions about the Government - that it makes its schemes complex and is inefficient - have been raised many times before, but they are particularly relevant in today's context.
After all, the Government is trying to persuade companies and workers to endure some pain as the economy restructures to move to a higher plane of productivity growth.
So it is particularly galling to the private sector when the Government appears less than generous with its schemes, and worse if it seems unable or unwilling to walk the talk on productivity. To be fair to the Government, there is often a gulf between perception and reality on these matters.
On the issue of increasing productivity, for example, the various ministries and government agencies have in fact put in place many innovative programmes that have raised efficiency.
In some cases, centralisation has reaped economies of scale. In many others, the harnessing of IT has quickened work processes and cut down on manpower needs.
And despite the many complaints about the PIC, Minister of State for Finance and Transport Josephine Teo yesterday revealed that within the scheme's first year of launch, one-third of Singapore's small companies had already claimed PIC benefits, which is really not bad at all.
The Ministry of Finance has also been actively responding to feedback, widening coverage, increasing cash payouts and making them more regular, as well as smoothing the application process.
Why, then, is perception on these issues still lagging behind reality? And does it matter that it does?
The answer to the second question is more apparent. If the Government does not show that it is itself serious about the nation's drive for higher productivity, then it loses the moral high ground on what it has billed a critical do-or-die mission in the next few years.
The private sector may be prodded along with the odd crack of the foreign worker levy/ceiling whip, but it will not feel particularly inspired to do anything that the nation's largest employer is not.
The Government would do well, therefore, to pay attention to this and fix any misperceptions that may have arisen over its own record. One way is to quickly address any misinformation where it has arisen.
It was revealed yesterday, for example, that even though public sector hiring was higher than average in recent years, two-thirds of the hires were teachers, allied educators and security personnel - all employed for reasons that few would quarrel with.
And the PIC is not so difficult to apply for. According to Mrs Teo, claims are made as part of the annual tax filing process, something that SMEs have to do anyway. And they need only provide a few additional lines of information on their productivity investments in an appendix to the tax form.
But these ad hoc clarifications alone will not be enough to bridge the perception gap, so I feel the Government needs to make a grander statement.
In 2004, the Finance Minister announced a permanent 2 per cent reduction in the budget caps of all ministries except Mindef. The following year, he exacted another 3 per cent cut.
Even though the rise in Singapore's gross domestic product cushioned the blow, the cuts caused some serious pain in the public sector. It caused many agencies to rethink their work processes and resulted in solid productivity increases, if one assumes the 'output' of the ministries did not fall.
Is it time for the Government to do something similar in order to lead by example in its big national productivity push?
In fact, should the Government start a renewed, highly visible public sector productivity drive? If the drive is successful, the fruits of the productivity gains may well spill over to benefit the network of private sector contractors that service the Government.
That could in turn kickstart a nice multiplier effect in their corresponding industries as other players rush to adopt cost- cutting improvements that (thankfully) someone else bore the risk for.
However it is done, the bottom line is that the private sector cannot be made to feel like it has to pay the price of economic restructuring alone.
It is nice that the Government has pledged help, but it must share the burden in a far more demonstrable way.
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