In his first public speech since the announcement of him as the leader of the Party’s 4G team, Finance Minister Lawrence Wong said how he sees governments can play a “more active and purposeful role”, which gave a glimpse of how Singapore could look like under the 4G team.
Speaking at the Peterson Institute for International Economics, Minister Wong said: “We need to re-purpose fiscal policy and renew the social contract. This is not a call for bigger government per se. Rather it is about the state playing a more active and purposeful role to achieve important longer-term goals – to raise productivity, to tackle inequality and rekindle social mobility, and to catalyse the green economy.”
He is on a trip to Washington DC and New York City to meet members of the United States administration and attend the World Bank-IMF Spring Meetings.
He gave three suggestions.
Re-purpose fiscal policy and the role of the state
First, he suggested to re-purpose fiscal policy and the role of the state towards building public goods and longer-term collective capacity.
He gave the example of how the US budget, in the 1960s, two-thirds of it went to public goods such as infrastructure and defence while one-third went to some form of individual benefits.
“Today that balance has more than reversed. Social transfers are certainly necessary to help us deal with immediate problems, but only a focus on building collective capacity can sustain long-term growth. So wherever we are, we need to get the balance right.”
Examples of making public spending work better for the common good include rejuvenating and expanding critical infrastructure such as digital payments; investing in early child development; having inclusive neighbourhoods with a good socio-economic mix and quality public facilities that matter greatly to a child’s life outcome; and retirement benefits and healthcare.
“In healthcare, too much of the spending today is allocated for medical treatments, only after people fall sick. We must invest more upstream in preventive care. We must centre the healthcare system around the patient – design incentives to keep them healthy, and to be cared for at the most appropriate setting,” he explained, highlighting the Health Minister Ong Ye Kung’s recently announced, game-changing Healthier SG strategy, which calls for preventive care.
“In short, such investments by the state and designing the right incentives, whether in eldercare, healthcare, early childhood development or infrastructure, are the bedrock for building inclusive and sustainable growth.”
Strengthen public-private collaborations
That said, Minister Wong is cognisant that ” it will not be possible for governments alone to fund these investments or to resolve many of today’s complex challenges'”.
That’s why the need to strengthen public-private collaborations.
He cited NASA’s work with SpaceX and the role Operation Warp Speed has played in developing effective Covid-19 vaccines in record time.
In Singapore, a key area where we need stronger public-private partnerships is continuing education and lifelong learning to equip workers with the relevant skills for the evolving jobs of the future, he said.
“This is a key priority in Singapore. On the demand side, we have set up individual learning accounts for everyone, with periodic top-ups by the Government into these accounts. On the supply side, we are working with employers and training institutes to design training programmes relevant to the industry. We aim to integrate these efforts, strengthen the overall ecosystem, and to ensure a good match between the skills demanded by the industry, and those offered by the workforce.”
This key priority is being emphasised many times by Education Minister Chan Chun Sing, who spoke of a school of life that encourages continual learning.
Strengthen multilateral cooperation on global public goods
Last but not least, Minister Wong suggested to strengthen multilateral cooperation on global public goods such as promoting public health security and sustainability.
He cited a $10 billion Global Health Security Financial Intermediary Fund proposed by the G20 High Level Independent Panel to ensure more reliable funding to prepare for future pandemics.
“The contributions to such a fund, when spread out equitably over different countries, are affordable – they work out to less than 0.02% of their GDPs. It’s an insurance premium well worth paying for, because future pandemics are likely to happen more frequently, and they can be as severe or even more severe than Covid-19.”
On sustainability, Minister Wong suggested to improve the availability, quality and comparability of data – to enable companies, financial institutions and investors to measure progress towards sustainability goals.
“Indeed, there has been an increased momentum of critical climate finance initiatives over the past year, and Singapore is actively involved in many of them. We must all do our part – as regulators, standard setters, investors, asset managers and financial service providers – to scale up green finance globally.”
He added that while the world seems more divided than before and the future seemingly more uncertain, governments must find common ground with one another to solve collective problems by keeping international system open and arriving at new sustainable working arrangements between countries.
Cover photo credit: Ministry of Finance