By Alisha Gill and Donald Low
It’s not all bad: Good policies and good governance in Singapore.
When we were asked to write a piece for IPS Commons on good policymaking and good governance in Singapore, we were initially quite dumbfounded. As policy researchers and analysts, we tend to focus on the negatives – on what’s not working, rather than on what’s working well. The more widely circulated articles about the government’s performance in recent years have also been those which concern how it has under-performed, especially in relation to its past record and achievements.
At the risk of simplification, these pieces often follow a predictable template. They criticise the government’s performance in a number of areas: immigration and foreign worker policies, transport, housing, healthcare, the rising cost of living, and inequality and wage stagnation for lower-income Singaporeans. These critics also highlight the government’s heavy-handedness, its elitism, its “we know best” instincts, and its less-than-democratic politics. They are also often reflexively cynical of the government’s good intentions, and of its sincerity to formulate policies in a way that promotes citizen well-being or in a manner that is consistent with the public’s preferences.
Some of these criticisms and concerns are valid. For instance, the reduced affordability of public housing in recent years, the lack of certainty and “peace of mind” in healthcare finance, the inadequacies of the current public transport network, and rising inequality and slowing social mobility are genuine problems which Singapore’s policymakers must address. Nonetheless, we do a disservice to ourselves if the only arguments circulating in the public discourse, and in our minds, are those which highlight the state’s recent failings. An excessive focus on the negatives may lead to fundamental misdiagnoses and false policy solutions. For instance, we may become unduly pessimistic about our future, fail to consider a sufficiently wide range of alternatives, or respond in a knee-jerk way because we have perceived our problems to be more severe than they actually are. Or we may point the finger at convenient scapegoats – immigrants and foreign workers for instance – without realising that the real source of the problems lies somewhere else.
In the rest of this essay, we discuss a few examples of good policies and good governance that have operated, often in hidden ways, to create a Singapore that is actually quite good, and often uncommonly so when we consider the experience of other developed countries.
Hawker Centres
Our hawker centres have been one of the most enduring and inclusive social institutions devised by Singapore’s policymakers. Even as they evolved, the hawker centres have remained congenial places for people from different socio-economic classes, races, religions and nationalities to gather.
Up to the mid-1980s, hawkers in Singapore were itinerant, and sold their foodstuffs on the streets and on pedestrian pathways, competing for space with vehicles and people. As a result of the competition for space and the lack of proper sanitation, city planners considered these hawkers a public nuisance that had to be removed from the streets.
There are several policy approaches for achieving this objective. The market-friendly solution would have been to allow the private sector to acquire land to build food courts. The entrepreneurs could then either directly sell food or rent out the space to other hawkers at market rate, or both. Under such an approach, the cost of doing business would have increased for the hawkers, and they would have had to charge higher prices. Still, the government could have persisted with this economically efficient policy but provide direct transfers to achieve the social equity objective. It could have given vouchers or food stamps to lower-income Singaporeans for use at the hawker centres. This demand-side subsidy would have also strengthened the viability of the hawker centre, without compromising on the efficiency of commercially run hawker centres.
Although consistent with Economics 101, the above solution sounds ludicrous to many of us. Perhaps this is because the idea of food stamps smacks of welfarism. In any case, we should be glad that the government decided to subsidise the supply-side (and not the demand-side) of the hawker food market by building public hawker centres and subsidising the rent for the hawker stalls. The subsidised rents reduced the cost of doing business; these savings were passed on to consumers in the form of low prices. By serving as a price benchmark, the low prices also exerted a downward pressure on hawker food prices even in privately run food centres. The supply-side subsidy not only ensured the affordability of hawker food, but also kept hawker centres socially inclusive as places for all to enjoy.
By undertaking the responsibility of building hawker centres, the government also had to take on additional roles that have been conducive for preserving the inclusiveness of our hawker centres. First, the government has had to ensure that public hawker centres are viable. In the 1970s, this meant that hawker centres had to be built reasonably apart from each other. In recent times, this has taken the form of financing the upgrading of hawker centres and subsidising the training of a new generation of hawkers.
Second, the government has been attentive to whether hawker centres continue to provide affordable food and serve a valuable public purpose. In 2011, after a 25 years break in building new hawker centres, the government announced that it would be building 10 new hawker centres to ensure that Singaporeans continue to have access to affordable food in public hawker centres.
Public Housing
It is quite easy to forget HDB’s success in housing the nation because the most salient arguments about public housing in the last few years have been those around its lack of affordability, its reduced availability, and even its shrinking floor areas. But the fact remains that public housing policy has worked for the large majority of Singaporeans. Unlike social housing in advanced economies like the United States and France, public housing here is well-maintained with a good mix of people from different economic and ethnic backgrounds living in close proximity. These desirable outcomes are not accidental; rather, they are the result of quite deliberate planning and interventionist policies by the state, e.g. the way public housing estates are designed, the policy of upgrading old estates, and the Ethnic Integration Policy.
In public housing as in hawker centres, the government avoided the economically purist solution of relying on the market to provide the service, and intervening only to subsidise middle and lower-income Singaporeans through direct transfers. Instead, its approach was quite uncommon in at least three respects. First, the state took on the role of developer, financier and provider of public housing. This meant that the state had to take on higher risks than if it had, say, outsourced provision to the private sector (in which case the government’s risks and liabilities would be capped). Second, the HDB embraced quite a universal approach. It sought to ensure that the large majority of Singaporeans would benefit from subsidised public housing, and that most would be home-owners rather than tenants by directly providing housing loans at concessionary interest rates to buyers. Third, instead of giving vouchers to those who were entitled to subsidies (the economist’s preferred solution), the state’s subsidies were mostly provided in-kind in the form of lower prices of new flats.
In recent years though, there has been a distinct shift to inject more market forces into public housing. These measures may have inadvertently undermined the public and social objectives of state provision of housing for the masses. One such decision is the adoption of schemes, such as the Design, Build and Sell Scheme (DBSS) and Executive Condominiums (ECs), which cater to the housing aspirations of middle-class Singaporeans. DBSS flats and ECs are more expensive as they tend to be located in mature estates; they also have design features not unlike those found in privately developed condominiums. These flats are out of the reach of lower and some middle-income Singaporeans, reducing the chance interactions between people of different socio-economic status.
The government’s decision on whether it should continue with schemes like DBSS (which is currently under review) and EC should be guided by the social purpose that public housing ought to serve. Insofar as we value social interaction across class and affordability, the government should re-examine whether DBSS and ECs are the best strategies for achieving these objectives.
Privatisation and Regulation of the Utilities
Many Singaporeans are frustrated with the inadequacies of the current public transport network. Adding to this frustration is the public’s concern that the government will agree to fare hikes even before service standards are improved. Not surprisingly, some have wondered if the problems with our public transport system can be traced back to the government’s decision to privatise SMRT and SBS, both of which enjoy monopoly power along the routes that they ply. There is a risk that our problems with public transport may lead us to wrong conclusions about the government’s ability to manage privatisation. We may also develop a reflexive bias against policies that rely on the private sector to provide a good or service.
In theory, the privatisation of state-owned enterprises is an appropriate goal in economic reform. The underlying assumption is that competitive private markets are a superior way at meeting consumers’ needs. Privatisation also reduces government’s involvement in markets, reducing the likelihood of it crowding out private initiative. But there is an important caveat: the benefits of privatisation only materialise if governments have the capability of regulating the newly created private companies, especially if they have a degree of monopoly power. The private companies which have residual monopoly power can undermine consumer welfare by raising prices and restricting supply.
Notwithstanding our recent experiences with SBS and SMRT, the government has a good track record in managing privatisations. First, privatisations have resulted in greater competition. For instance, the privatisation of SingTel in 1992 paved the way for the liberalisation of the telecommunications market in 2001. The entry of M1 and Starhub into the market has increased price and service competition in the industry. Another example is the privatisation of the electricity generation market which subsequently led to the liberalisation of the retail electricity market. These have enabled major users of electricity (or about 75% of demand) to buy electricity directly from the most price-competitive generation companies.
Second, the government ensured that citizens benefitted from the privatisation of state-owned companies. This was achieved through selling discounted shares to citizens when companies like SBS and SingTel were listed on the Singapore Stock Exchange. This is starkly different from countries which disposed of state assets at fire-sale prices and at no benefit to the wider population.
Effective governance
There are two common features across the policy successes, which have been identified above. First, the government chose or designed policies that were socially equitable and inclusive. They not only enabled a broad section of the population, especially the lower and middle-income group, to share in Singapore’s prosperity but also fostered social inclusion by facilitating mixing and interaction between people of different incomes.
Second, the government had the capacity (or in the case of public housing, rapidly developed the capabilities) to effectively carry out the functions that it chose to undertake. This suggests that the ability of the Singapore government to make, implement and enforce policies is strong. It is also quite remarkable that Singapore managed to develop an effective and capable government even though there was little political competition. History is littered with examples of autocratic regimes that were extractive, grossly inefficient and inept. In the words of Francis Fukuyama, “[a]uthoritarian countries as a group might do well if they could all be run by Lee Kwan Yew; given that they are as often run by a Mobutu or a Marcos, it is not surprising that authoritarian regimes show much greater variance than democratic one in terms of development outcomes.”
Conclusion
There is nothing inherently wrong with the proliferation of negative views of the government on the Internet. However, when combined with people’s natural tendency to focus only on ideas and evidence that do not upset their pre-existing world views, this can skew public discourse and polarise society. A person who is upset with the recent performance of the government may choose to read only likeminded viewpoints. In the process, he becomes more convinced of the government’s shortcomings, moving to a position more extreme than his starting one. Conversely, a person who is happy with the government may, after reading positive representations of the government, become more convinced about the government’s capability and may also move to a more extreme position in the opposite direction. The result would be a politically more polarised society. The Internet – by virtue of how quickly it spreads and amplifies information – has the inherent capacity to produce more, not less, political polarisation.
The best safeguard against polarisation is for us to resist the very natural human tendency to look only to evidence and arguments that confirm our existing worldviews, and to deliberately find counter-arguments and evidence that challenge our mental models and basic assumptions. We acknowledge that this requires a great deal of cognitive effort and mental discipline. As F Scott Fitzgerald once said, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”
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Alisha Gill is a researcher and case writer at the Lee Kuan Yew School of Public Policy.
Donald Low is Senior Fellow and Assistant Dean (Research Centres) at the School.