Bridging S'pore's 2025 public expenditure gap

SINGAPORE - In this fiscal climate of declining revenues and maintaining expenditure, it is no wonder that many are worried over what the future holds for government public services. Just by examining current Singapore trends to 2025, a massive expenditure gap on public services is opening up between the current trajectory of public sector spending and the demand-driven estimates.

According to the new Accenture report titled Delivering Public Service for the Future: Navigating the Shifts, the modelling commissioned from Oxford Economics shows that Singapore will need to spend an additional $13 billion, or 2.3 per cent of GDP, to close this gap.

This increased spending for Singapore's public services will be driven primarily by its rapidly ageing population, the fastest growing of the 10 countries surveyed in the report. Singapore also has among the highest life expectancy in the world, ranking 4th out of 221 countries. By 2025, people aged 65 or older will make up 17 per cent of the general population, a 113 per cent increase from today.

Efficiency and productivity

Increasing efficiency and productivity is being touted as the solution for the situation. The report indicated that a 1.4 per cent annual increase in Singapore's public service efficiency would close this gap.

For context, the private-services sector has netted a 2 per cent annual productivity improvement between 2000 and 2010. This strategy must lead the way to a sustainable future for Singapore's public services, but how can this be accomplished?

Globally, we have seen governments taking steps to bridge this massive gap across the spectrum of public services - from defence to health care and employment services.

The implementation of the National Electronic Health Record (NEHR) system by the Singapore government is a good example which aims to optimise efficiency and cost in the healthcare ecosystem. It is being built to enable the sharing of patients' medical information for a population of 5.1 million among the 36,000 healthcare providers across the public and private sectors.

Another initiative is the deployment of a shared human resources, finance and procurement system supporting 15 government agencies and 17,000 users that would help cut IT infrastructure costs by 30 per cent over the system's lifespan by dramatically increasing efficiency.

The US Department of Defence is fundamentally changing how it delivers its mission. The US Army streamlined business processes to create a single source for financial, property, cost management and performance data at more than 200 locations worldwide.

It is one of the largest ERP (enterprise resource planning) systems in the world, processing more than one million transactions a day and supporting a US$140 billion general fund.

In Germany, the Virtual Labour Market electronically connects job seekers, employers, third parties, job portals and employment agencies to improve how the unemployed get jobs. The system manages more than 50 million job matches per month, effectively helping to decrease the unemployment rate.

Confident and satisfied

While citizens are demanding a more productive and efficient government, the study reveals that Singaporeans are most confident and satisfied with public services among the 10 countries surveyed. Fifty-six per cent of Singapore respondents are satisfied with the services they receive and 70 per cent of them are confident that the government would be able to deliver public services that meet people's needs and expectations over the next five years.

All these findings drive home the need for a "whole of government" strategy - a comprehensive plan across all ministries and agencies - and a new paradigm for public services that embraces the major structural shifts:

• from standardised services to personalised services: shifting from the current model of one size fits all, to customising services to the individual citizen, and in doing so, help enhance desired objectives and outcomes from the individual services provided;
• from reactive to insight-driven delivery: leveraging the use of government information and on-demand data collection in order to better predict the need for different public services, and meet the changing needs of citizens in the future;
• from public management to public entrepreneurship: entrepreneurship implies innovation and resourcefulness, national public procurement is one way to leverage the size of government for the good of its citizens;
• from budget cuts to mission productivity: realising the benefits of synergy of all departments and all functions which help eliminate duplication and improve public service design, delivery and efficiency.

This type of comprehensive commitment by the government has not been fully achieved yet, but it is the way forward. Singapore could save $13 billion in public service expenditures by 2025 by increasing public-sector efficiency by just 1.4 per cent a year, more than enough to close the projected funding gap.