PUBLIC SECTOR (Containment of size to free resources for private sector to stimulate economic growth)

Mr Tay Beng Chuan asked the Minister for Finance how the Government will contain the size of the public sector to free resources for the private sector to stimulate economic growth in the face of the regional financial turmoil.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, the Government has a long standing policy of keeping the public sector lean and trim. This is to free manpower and financial resources for the private sector to function as the engine of economic growth.

Over the years, we have contained the size of the public sector by restraining operating expenditure (by operating expenditure I mean recurrent expenditure which is mostly manpower cost) to grow no faster than GDP growth, thus keeping operating expenditure constant as a share of GDP. This has been achieved by stringent control on cost increases, with some allowance for heavier workload, new programmes and better quality of services to meet public demands and expectations.

At around 10% of GDP, our operating expenditure is considerably lower than that of most developed countries. This is because Government expenditure is focused on providing only public goods and services, such as security, basic healthcare, public housing, national infrastructure and education. We have also steered clear of many forms of state welfarism, thus avoiding large scale public assistance programmes which would have drained heavily on our coffers. Instead, our approach is one of many helping hands with co-funding from Government and public donations, and services rendered by volunteers and members of the community at large.