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Ethos Issue 6, Jul 2009
Extraordinary Times,
Fundamental Principles:
The 2009 Budget and the Ministry of Finance’s
Approach to Countercyclical Economic Strategy
Jonathan Pflug
ACT IN PARTNERSHIP: MOVE COHESIVELY WITH ALL STAKEHOLDERS, PUBLIC AND PRIVATE
A timely response need not also be
reactionary. Due to the volatility of
the situation, it was essential not to
launch schemes on the scale of the Jobs
Credit scheme and the SRI without
careful assessment.
The complexity of the modern
economy means any successful
countercyclical strategy requires both
whole-of-government collaboration and
private sector buy-in. MOF’s processes for
involving relevant government agencies
and the private sector in formulating the
Budget are well institutionalised. These
range from a defined work stream of
developing, reviewing and fine-tuning
the budgets of individual Ministries,
to pre-Budget consultations with
businessmen, subject experts, unionists
and other key stakeholders in Singapore.
The formulation of the Budget 2009
measures illustrates MOF’s longstanding
commitment to inclusiveness.
For instance, the need to ease business
costs in an environment of declining
revenues was a recurrent theme in pre-
Budget dialogues. Similarly, the SRI
is the product of intense engagement
with the banking community and
corporate representatives of the worst-affected
sectors.
On the Government front, in
formulating the policies, MOF worked
very closely with the Ministry of
Manpower (MOM) on the structural
elements of the Jobs Credit scheme, and
with MTI, SPRING and IE Singapore for
the SRI.
The same cohesiveness has been
reflected in the execution of the
measures. Multiple government Ministries
monitor the impact of the Budget
2009 measures, evaluate private sector
feedback, and share policy-relevant
information across agency boundaries.
The Minister for Finance has
consistently reiterated that the success of
both the Jobs Credit scheme and the SRI
requires the private sector to collaborate
with the Government to achieve the
objectives that are in the best interest
of all parties. The Government can take
in feedback, set clearly defined policy
objectives and commit substantial
resources in support of the business
sector. However, it does not have control over hiring and retrenchment
decisions of employers, nor does it have
the expertise to evaluate commercial
viability and credit worthiness of
businesses across the whole of
Singapore’s diverse economy. For the
Jobs Credit scheme and SRI to succeed,
we need companies and financial
institutions to respond positively.
CONCLUSION
These basic principles are not specific to
anti-recessionary measures, nor are they
unique to MOF or new to the Singapore
Public Service. Indeed, they are defining
characteristics of the public policy
landscape in Singapore.
The two key Budget 2009 measures,
although differing in many ways, are
illustrative of how these principles are
expressed and embodied in Singapore’s
major public policies.
However, to paraphrase Keynes, the
injunction that "when the facts change,
we change our minds" remains the most
fundamental principle of all. Given the
volatility of the economic environment,
the Government must place a premium
on flexibility and remain nimble in
its responses. Should the needs of the
Singaporean economy change, the
Government will not hesitate to fine-tune—or, if necessary, overhaul—our
strategies and policies, in order to
advance the interests of Singaporeans
and Singapore businesses.
Jonathan Pflug is an Associate for Economic
Strategy in the Ministry of Finance. He
is a member of both inter-agency teams
responsible for formulating, implementing
and monitoring the Jobs Credit scheme and
the SRI.
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