SINGAPORE: A government-wide push to get civil
servants to be more revenue and cost conscious has fizzled out
after about a decade.
Today has learnt that the Net Economic Value (NEV)
framework, which was gradually implemented among ministries and
statutory boards since 2000, has been scrapped.
Under the framework, which is equivalent to the
private sector's Economic Value Added accounting, the public
agencies were encouraged to raise annually their NEV, which is
defined as the revenue minus the operating and capital costs.
Senior civil servants told Today that while the framework
discourages overspending, there was concern that the emphasis on
revenue and cost would compromise the delivery of public
services.
One of them, who works in a statutory board, noted that the NEV
framework may skew spending on public infrastructure, for instance,
to become "overly conservative", even if it tends to help control
costs and discourage overspending on items such as office equipment
and manpower.
"Watching financials is a good thing, but if it is overzealous, it
can swing the other way - causing under-spending which in turn may
lead to the public good not being achieved," the civil servant
said.
Another civil servant noted that the NEV framework may have been
unsuitable for certain ministries, such as the Ministry of
Community Development, Youth and Sports (MCYS). He said: "Say, you
hire another 10 probation officers and you rehabilitate the
delinquents, how do you measure the value to that?"
According to the Ministry of Finance (MOF), the head agency which
implemented the NEV framework, it was dropped in the 2011 Financial
Year.
An MOF spokesman said: "We have since evolved our approach in
recognising that the effectiveness of the public sector is not just
about financial/economic value but the whole-of-government outcomes
that it delivers to the public."
Nevertheless, the spokesman noted that the use of NEV accounting
incentivised public agencies to improve on how well they utilise
their available resources or assets, and has resulted in "several
improvements", for instance the better utilisation of land leading
to parcels freed up for other uses.
MOF said that public agencies are now instead asked to monitor
outcomes from services that are delivered to the public, and adopt
various initiatives that enhance efficiency and optimise resources,
such as the Manpower Management and Office Space Management
frameworks.
Looking long term
Pointing out that a weakness of the NEV framework is its narrow and
short-term focus, Chua Chu Kang GRC Member of Parliament Zaqy
Mohamad, who sits on the Government Parliamentary Committee for
Finance and Trade and Industry, felt that scrapping the NEV
framework sends a signal to the civil service to be "more holistic
in the way they work … (and) gives the government the flexibility
to do longer range projects", such as growing Singapore's native
population.
Singapore Management University finance professor Annie Koh pointed
out the difficulty in measuring outcomes using the NEV approach,
especially in today's "highly uncertain climate".
The NEV framework might also lead to silos and non-collaboration
between different agencies, she said.
Citing how civil servants worked across ministries and agencies to
craft the Jobs Credit scheme during the financial crisis between
2008 and 2009, Prof Koh added: "If everything has to be justified
by NEV measures, we will not have been able to ride out that stormy
period quite so successfully."
National University of Singapore corporate governance expert Mak
Yuen Teen pointed out that an improved NEV for an agency does not
necessarily lead to higher efficiency.
"If there are no checks and balances, it is very easy for the
public sector to increase revenue even if costs increase, whereas
in the private sector, that would not be so easy because of
competition," said the associate professor.
Nevertheless, the experts noted that the NEV concept could still
serve a purpose in some areas.
For instance, Prof Mak agreed that NEV incentivised more efficient
use of land. "If you don't have NEV - you have land and you are not
charged for it, you can just sit on it and nobody uses it. But on
the other hand, you also worry that they will just increase revenue
by charging people even more," he said.
Prof Koh cited the determining of investment proposals: "If a
hospital is trying to decide whether to invest in a specific new
equipment - then measuring if economic value will be created in
buying such a piece of equipment is fairly defined."
NEV or not, a senior civil servant working in a ministry reiterated
that he and his colleagues "think beyond monetary value".
He said: "Sometimes returns are not immediate, it may be about
long-term change in behaviour ... sometimes you have to pump in a
lot of resources for a little bit of gain, but the gain means a lot
to the people you are serving, I would like to think that all civil
servants behave that way."
- TODAY