MINISTRIES AND STATUTORY BOARDS (Review of organisational structures)

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MINISTRIES AND STATUTORY BOARDS:

(Review of organisational structures): 4.

Mdm Ho Geok Choo asked the Deputy Prime Minister and Minister for Finance (a) what steps are being taken to review the organisational structures of the various Ministries and Statutory Boards with a view to having a flatter structure and lesser layers, in line with the mission of the Cut Waste Panel; and (b) what will be the estimated number of positions in the whole Government machinery that could be collapsed, re-combined or re-designed for greater efficiency.

The Second Minister for Finance (Mr Lim Hng Kiang) (for the Deputy Prime Minister and Minister for Finance): It is not practical for the Ministry of Finance to approach the Cut Waste Exercise on the basis of studying every organisation to see how it could or should be restructured. This will require armies of consultants. Ministries and statutory boards would be very defensive of what they do and the external auditors will have a hard time figuring out what to cut, and where.

Restructuring efforts yield worthwhile results only when the organisations themselves see the need to change and want to economise and cut waste so as to release their resources to improve or offer services of higher priority. My Ministry has, therefore, sought to force ministries to reassess their priorities and seek economies through two actions. First, by setting a clear upper bound on their budgets, and second, by making clear the requirement for best sourcing.

Expenditure budgets must adjust with revenues. When GDP and revenues go down, the Government is prepared to have budget deficits to help businesses and Singaporeans cope. However, we cannot have deficits year after year as a

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standing practice. It will undermine fiscal discipline and Singapore's financial standing. This is why ministries' budgets are kept and pegged to Singapore's GDP. Once the budgets are set, ministries are left to decide how best to operate within their own budgets.

When budgets are tight, ministries need to make trade-offs on where to spend the money. Some ministries would decide on a head-count freeze. Others may decide to cut expenditure on areas like infrastructure and hardware. A freeze on teacher recruitment, for example, is not a good idea for the Ministry of Education, whereas slowing down their school upgrading programme is probably more viable. The Ministry of Finance and the Ministry of Trade and Industry, on the other hand, have implemented head-count freezes. The Ministries of Health and Home Affairs cannot have head-count freezes because of the challenges created by SARS and the terrorism threat. They have to find other ways to cut costs. We have, therefore, left it to each ministry to decide where best to spend their resources to achieve the best outcomes. But everyone knows that, as a rule, their budgets will go up and down with the GDP. Nevertheless, when new expenditure is necessary, as in the setting of the Workforce Development Authority, we must be prepared to spend. So it is not possible for the Ministry of Finance to pre-determine or to estimate the number of positions in the whole Government machinery that could be saved through greater efficiency, restructuring and cutting down of waste.

What we do know is that results of international surveys have shown that the Singapore Civil Service is consistently ranked among the lowest in terms of relative head-count and expenditure as compared to countries such as Australia, Japan, Finland, Canada, the US and UK. Notwithstanding this, the Government is aware of the need to be lean and prudent

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in expenditure. But it will not be wise to simply set a target upfront of the number of positions or officers which has to be reduced. For example, defence, education and health, together account for more than half of all Government spending. We can cut the spending in these areas, and reduce the number of people employed in these sectors. But this would definitely mean that we will weaken the SAF, reduce the teacher-student ratio in schools and reduce the standard of subsidised healthcare in our hospitals. I am sure this is not the outcome that we want. So we have to approach restructuring and cutting waste in a pragmatic way.

Mdm Ho Geok Choo (West Coast): In a typical structure in a ministry, is it right to say that we normally have a divisional director, a deputy director, a senior manager, followed by a manager and assistant manager? Can the Minister enlighten what would be the distinction between the areas of responsibilities and the scope of authority of these various positions in the hierarchy?

Mr Lim Hng Kiang: Members should not get the impression that just because we have a director, deputy director, assistant director, managers, that workflow goes up in a very hierarchical manner. In fact, most of the ministry headquarters are structured as teams looking after different areas. These designations are just to reflect the seniority of the people. You will find that many directors do a lot of leg-work. They write their own papers, they do their own secretarial support and they do the whole range of policy research, formulation and development. So please do not be mistaken that just because we have different designations, which should really reflect the grade and experience of the officers, that submissions go layer by layer. That is not the case.