Budget 2012: Thoughts on the $1.1 billion Bus Fund

Here is my take on the $1.1 billion that Tharman announced the Government will be setting aside to help alleviate the public transport problem. While there are not many details currently released on how the partnership between the Govt and the PTOs is going to be structured, IMHO the Govt should follow these principles in structuring the public-private partnership.

Tharman's 2012 Budget Speech & the Spectre of Government Failure

One of the key features, if not the key feature of the 2012 Budget Speech, is the reduction in foreign worker dependency ratio ceilings (DRCs) and Man-Year Entitlement (MYE) quotas. Stung by the results of the 2011 general elections, the PAP has u-turned on its pro-foreign worker stance and the Minister for Finance has stated unequivocally to businesses that they must reduce their dependence on foreign labour.

Read deeper between the lines, however, and you will see a tacit admission of Government failure. Here are two critical paragraphs in Tharman's budget speech regarding the clamping down of foreign labour inflow:

The Myth of PAP’s Miracle – Paul Krugman Revisited; Productivity Problem Redux

Singapore has struggled with the issue of productivity growth for a very long time.

As far back as 1972, Singapore set up the National Productivity Board (NPB) to improve individuals' and companies' productivity in all sectors of the economy. The NPB adopted a so-called "total productivity" approach, which emphasized productivity measurement, product quality, worker training, and assistance to small- and medium-sized enterprises (SMEs).

In the 1980s, growth via productivity was a key agenda on policy makers’ minds. In 1981, Singapore set up the Productivity Standards Board (1981). In 1982, NPB launched a nationwide productivity campaign (remember Teamy the Productivity Bee?) to encourage the move from labor-intensive activities to more highly-skilled and technology-driven work. In 1986, then cabinet minister BG Lee Hsien Loong pointed out that Singapore was industrially “still predominantly a manufacturing production base. Products are designed overseas, and then only produced in Singapore factories on our production lines.” The budgets of the 1980s had as part of their objectives, the goal to get out of the cheap-labour trap and to move into high-skill industries. 1980s budgets often created incentives and disincentives for this transformation.