Speech By Minister Ong Ye Kung at the 2017 Administrative Service Dinner

SPEECH BY MINISTER ONG YE KUNG AT ADMINISTRATIVE SERVICE DINNER, 6 APRIL 2017

Principles of Public Service Innovation

DPM Teo, DPM Tharman
Ministers
Chairman PSC Mr Eddie Teo
Head Civil Service Mr Peter Ong
Friends, colleagues, ladies and gentlemen

1. Thank you for inviting me here tonight. It is a great pleasure to see so many friends and former colleagues tonight.

2. Later, DPM Tharman will be speaking on the contributions of Mr Niam Chiang Meng who retired last year, and Ms Lim Soo Hoon who is retiring at the end of this month. But given that both were my former colleagues, let me first add a personal word of appreciation to them. Both of them taught me good lessons which you are not aware of.

3. I worked with Niam when he was CEO HDB while I was in then DPM Lee’s office. HDB was undergoing a major restructuring exercise at that time.

4. As for Soo Hoon, I got to know her literally on my first day of work, at the then Ministry of Communications. I was Deputy Director at Ministry of Communications HQ and she was the Registrar of Vehicles. At that time, land transport was the hottest subject because of policies like COE and ERP.

5. Both of them had held hot seats, in operational units. The experience of working with public service leaders like them helped me learn quickly that as a staff officer at headquarters, my job was to support the ground generals at the operational departments – to help them get their job done, including redefining the rules when necessary. This was an important lesson to me as a new civil servant during my formative years.

6. In other words, my job description involved a lot more than what a court eunuch had to offer. I am sure over the years, most of our staff officers who are worth their salt learned the same lesson.

Tradition of Public Service Innovation

7. The Prime Minister recently appointed me as the Minister to champion Public Service innovation, which is why I am speaking here tonight.

8. Innovation is a longstanding tradition of the public service. We have been blessed with a strong pioneering spirit – which practical men and women with dare and imagination have lived up to, even when they ran against “conventional wisdom” and against the odds.

9. We built up a world class airport when we had no domestic traffic; offered public housing which was owned, not rented, to the great majority of Singaporeans; added lush greenery to our city in a garden; and expanded our technical and applied education pathways when the rest of the world was moving towards the academic.

10. If our Public Service had been Silicon Valley, we would have created many unicorns. Behind every project was a team of people who believed in the cause.

Ensuring the Pioneering Spirit Lives On

11. We have been called upon to be pioneers of the next generation. But our situation today is different from the past in two distinct ways.

12. One – the Public Service has grown in size and complexity. In the earlier years of nation building, the public service was much smaller and the imperative was simple and clear – we needed to survive.

13. But when we grow in size, it becomes harder to replicate such successes, as things are now more complex and uncertain. There is less headroom to improve, and the path ahead fraught with competing considerations, each important in its own right, but none having the overriding imperative of survival.

14. We have to accept the situation as it is, as complexity in public policy cannot be wished away. But a complex environment should not mean complex or unpredictable policies. We have to make clear choices even in complex situations, and communicate them even more clearly.

15. A second major difference is that the tools of technology are different. We are still in the middle of an IT revolution, brought about by the Internet and the miniaturisation of computers, robots and sensors. This alone can drastically reconfigure our processes and how services are delivered.

16. And so we are confronted with a classic challenge faced by many organisations. The opportunities for big and life-changing transformations are as relevant as ever, but how do we ensure that our organisational DNA can evolve with the times and thrive in this new environment?

17. We see private sector organisations grappling with this challenge too. When Apple first came out with the iPhone, it was a revolutionary product – edgy, non-mainstream, with a certain cache. It has nothing to lose. Now as a tech giant, Apple’s subsequent versions of iPhones tend to generate much less excitement. It has a base to defend now.

18. To tackle this challenge, we can learn from the many principles that have served us well. Today, I will talk about four of them which I hope will endure.

Principle 1: Innovation is Bottom-Up

19. First, innovation is by nature bottom up. Even if Government comes up with a grand and bold plan, it is bottom up ideas and actions that give substance to the plan to make it successful.

Be Open Minded

20. This means that Government, even with the most well thought out plan, must be prepared to rethink and to adapt.

21. Last year, LTA called a tender for an operator to run a bicycle sharing programme, to bridge the first and last mile in public transport. The conventional wisdom then was that such schemes needed some Government support and funding in order to be sustainable. But then other bike sharing companies like ofo, Mobike and oBike – they entered the market and they had a different concept.

22. The market had evolved and provided a solution that required no government funding, and LTA wisely adapted and decided not to award the tender. Things will happen without plan nor permission.

Suspending Judgement in a Regulatory Sandbox

23. In this regard, public agencies will need to master the technique of using regulatory sandboxes, to create an environment where regulations can be relaxed within parameters, so that experiments can take place with limited risks.

24. MAS has been applying this tool judiciously in FinTech. For instance, in March this year, it created a sandbox for PolicyPal. A company called Policy Pal. It is a digital application to help users organise and identify possible gaps in their insurance coverage.

25. The sandbox enables PolicyPal to test their technology and algorithm within a limited number of transactions in over six months.

26. The sandbox is not just an excuse for agencies to issue a temporary permit, but an exercise of smart regulation. For MAS, this first exercise was an intensive one. Lots of tos and fros and iterations. But it will no doubt get better and more efficient.

Procurement

27. The principle of embracing bottom up initiatives extends to Government procurement.

28. The Committee for Future Economy conducted extensive consultation in the course of its work, and one major feedback from entrepreneurs was that Government as a reference buyer can play a big part in encouraging innovation and enterprise.

29. They are not asking for special favours, but the way projects are structured and procured can determine whether an SME or a small start-up have a fighting chance.

30. This is a point I very much agree with. The public interest in procurement is value for money, and that must mean level competition between tried, tested, reliable players as well as new players, smaller companies, start-ups, with fresh ideas and solutions.

31. There are agencies which have honed this into an art. SCDF took an outcome-based approach in preparing tender specifications. This has enabled a young company called Technik to develop the Red Rhino, a fit for purpose Light Fire Attack Vehicle that has served our Home Team well.

32. The Defence Science and Technology Agency has developed 21 specialised domains in procurement. Contracts involving system integration, off-the-shelf solutions, strategic sourcing for indigenous capabilities, full scale development of systems, buying of commodities – all involve different techniques and approaches in procurement.

33. We will find ways to transfer such knowhow and best practices throughout the public service.

34. On the opposite end of procurement, small purchases by Ministries and agencies play a big role in encouraging enterprise too. More people are freelancing, starting micro businesses, offering services from photography and web design, to catering and event organisation.

35. Today, the procurement rules of MOF already allow small purchases below $5,000 to be awarded without tender or three quotes.

36. Some ministries are tapping on such flexibility for a variety of small purchases. But I sense that within most Ministries and agencies the internal rules are probably much stricter.

37. We should encourage the management within each public service organisation to exercise this flexibility fully, and responsibly. It will open up opportunities for many freelancers and micro businesses. At the same time, the Government benefits from more ideas, more players and more competition.

38. MOF will take the lead in this effort.

Principle 2: Optimise at the National Level

39. The second principle to support innovation is to optimise our decisions and actions at the national level. No one will disagree with that, but it is not easy to put into practice.

40. This is because for projects and issues that cut across agencies, an initiative may make eminent sense for one agency, but not for the rest.

41. Every agency has its own mandate, for which it is allocated headcounts, budgets, resources, policy controls, and decision rights that go all the way up to the Minister. It is not straight forward for an agency to devote resources to support an issue that is not in its mandate, or even compromises its mandate.

42. The concept of Whole-of-Government is to encourage agencies to work through the trade-offs and try to optimise the costs and benefits at the national level. But there are inherent risks in such an inter-agency process, as you all will know.

43. We can spend too much time on consensus-building, and we end up achieving very little. Optimisation can become a euphemism for the lowest common denominator, or compromises that actually sub-optimise. As the joke goes, if you ask a committee to build a horse, it will come up with a camel, although it still has four legs.

44. Like it or not, when it comes to inter-agency issues, we simply need wise and strong leadership – both at the political and civil service levels – that articulates the objectives, identifies and decides the trade-offs, and implements the changes. I do not have a template for success but we have seen successful examples.

A Driven Common Purpose

45. One example is Kampung Admiralty. It is an integrated development in Woodlands that brings together the services of several agencies, with facilities for all ages, from an Active Aging Hub to a childcare centre.

46. It worked because MND took the lead to drive through the vision of a vertical Kampung, and HDB undertook to own and manage this integrated facility.

Sun, Water and Power

47. Recently, a challenging inter-agency issue cropped up. It concerns PUB and EDB wanting to experiment with installing floating solar panels at Tengeh Reservoir.

48. What PUB really hopes for is to use this cheaper and cleaner energy at their water treatment plants in different parts of Singapore. Or transmit to next door, nearby facilities like the Tuas Checkpoint.

49. This project enables PUB to make use of idle water surfaces to generate clean energy. In a similar vein, HDB today, already uses solar panels on the rooftops of our housing estates to power the common areas of HDB blocks. So why not?

50. But the project encountered a few snags. First, installing solar panels would change the land use, or rather water use, and will attract rental cost. Because our policy, which is a correct policy, is that if state assets are used for commercial purposes, we must charge market rental so that there is no hidden subsidy. But rental will obviously undermine the viability of the project, even before the implementers could try it, to see if it is viable.

51. Second snag, there is a concern about equity in infrastructure cost recovery. What are these? Let me explain. There is the cost of the national power grid, and also reserve generation capacity in case there is a disruption. These costs today, are recovered through a component in the tariffs of electricity purchased from the energy market.

52. So, all consumers on mainland Singapore – including those that tap on clean energy - are users of these infrastructure services. So when PUB sells clean energy across the fence to Tuas Checkpoint, the national grid will be bypassed, and these users will avoid paying their share of the infrastructure costs that is built into the electricity tariff. Other consumers end up having to bear the cost. So at the heart of this concern is equity in public policy.

53. Existing policies are there for good reasons. But when technology and circumstances change, we also need to intervene actively to adapt existing policies.

54. So, on rental of water space, there is no previous tender to determine a market price. Because this is an innovation to make use of idle water surfaces, there is also no alternate economic use to compute opportunity cost. Determining market rental is therefore not very practical – at least from an economist’s point of view. Hence MOF and SLA are now working to facilitate a solution.

55. On equity in cost recovery, there could be other ways, such as paying a fee or a toll, and not necessarily through electricity tariffs from public markets, for Tuas Checkpoint or PUB to pay their fair share of the infrastructure costs.

56. The more fundamental point arising from this issue, which can inform our considerations for future innovation projects, is this:

57. As technology advances and Singaporeans become more entrepreneurial, many Government assets, whether tangible and intangible – water surface, land surface, rooftops, data, our brand name, our education curriculum – can generate economic value.

58. If we are too eager to socialise the resulting economic gains, we will kill innovation. Some of these assets are not even assets, until innovation makes them so. So not every innovation needs to go behind a Government paywall.

59. When we have concerns that existing practices and processes are unable to address certain issues, then we need new practices and processes. And in the meantime, devise a sandbox, allow the experiment to happen.

60. Unless there are obvious and significant dis-amenities to society - we should let innovation happen.

Making Judgement Calls

61. As to what constitutes innovation, what solutions are optimal at the national level – there is no rule book on this. These are decisions involving discretion and judgement by senior decision makers.

62. The civil service is already doing this for municipal projects that have no clear owner, through the Rapid Response Mechanism. Under the Mechanism, there is a strict, time bound protocol that escalates decisions to the PS(MND).

63. It is a model we can follow in other areas where quick decision making is needed in order for us to progress innovatively.

Principle 3: Don’t Boil the Ocean

64. The third relevant principle is: Don’t try to boil the ocean.

65. Technology has empowered individuals to make changes and has democratised innovation – whether it is through a rules review, a better process, or a new service. But individuals may not have learned how to make use of these opportunities. Either we are afraid to try, or we are still waiting for a clear plan from start to finish before we do anything.

Start Somewhere

66. In innovation, there is no perfect comprehensive grand plan. If we over plan, we run the risk of paralysis by analysis. It is also not very helpful to ask for three or five years of KPIs even before we try.

67. In transformation and innovation, we just need to start somewhere, know roughly where we want to go, and learn along the way. It is a gradual evolution, not a big bang creation.

68. As a well-known dictum goes: Think big, start small, act fast. Let passion and belief, not bureaucratic reports and KPIs, drive the process.

ePayment

69. One area which I see immediate application of this principle is ePayment. The Smart Nation and Digital Government Office (SNDGO) and MAS have been working on this.

70. We need to increase the take-up of ePayments in Singapore. We should work towards a future where our phones really replace cash and cheques. We send money to each other like sending WhatsApp messages. We don’t draw money from the ATM, but transfer it from our bank accounts directly into the e-wallets in our phones. All done securely. It will be a more efficient and convenient economy.

71. The backbone for the ePayment system I just described is taking shape – it is called the FAST system. By the second half of this year, the banking industry will have enhanced it to make ePayment more accessible and convenient and move towards the vision that I just described.

72. The key challenge is to get people to register for the service. It means having Internet banking, then linking our accounts to our mobile phone numbers or NRIC.

73. It will not be a difficult registration process, but there is an initial inertia that needs to be overcome. To kick start this, one way is to encourage certain ministries and agencies to move decisively to this mode of ePayment.

74. I can foresee some possible reactions. Why not have all Government agencies come on board at once? Why not do this only when enough merchants have accepted such a payment mode? How about also digitising upstream processes in the supply chain? How about getting the hawker centres and char kway teow man to start first. There will be all sorts of requests.

75. We have to start somewhere. Perhaps with a few selected Ministries that handle a significant volume of transactions. Then the rest can follow.

My Role as Minister to Promote Public Service Innovation

76. In my capacity as the Minister to promote Public Service innovation, I will not try to boil the ocean, but focus on the few things I have mentioned.

77. First, working with MOF to raise capability in the Public Service in procurement. Second, work with SNDGO to promote ePayment. Third, facilitate the resolution of regulatory issues, especially those of an inter-agency nature that can hold back innovation.

78. So at the risk of asking for trouble, I invite all of you to raise relevant cases to me so I can take a look at it. There is no Public Service Innovation Office, no big multi-ministry committee - I will be supported by a small, part-time secretariat.

Principle 4: Preserve Trust Between Political Leadership and Civil Service

79. The last principle is to ensure that there is strong trust undergirding the working relationship between political leadership and the civil service. This is not a principle just for innovation. It speaks to good governance in general.

80. At an informal dinner, one of you asked me ‘What are the Fourth Generation Ministers’ expectations of civil servants?’

81. Three generations of political leaders have forged very strong working relations with the civil service. There is strong mutual trust and respect. A new generation of Ministers have entered Cabinet, including me, so the question is a very valid one.

82. I canvassed several of my colleagues. The short answer is that our expectations are no different from the earlier generation Ministers.

83. The basic direction of policies and the core of it all must come from political leaders, who have been vested with an electoral mandate to carry out their agenda during their term of office.

84. In line with this direction, the job of the Public Service is to provide clear-eyed analyses of options and effective implementation of policies. Civil servants have broad discretion over implementation and administration, which are crucial to the success of any policy. In fact, there is a saying in the service, that ‘implementation is policy.’

85. When we have agreement on both the direction and the means of implementation of policies, we are united in forging ahead and delivering results. It is through this process that we deepen trust and respect. For a country to do well, we need these two hands to clap. We cannot take for granted that this is the natural course of things – in many countries, it doesn’t work that way.

86. If I were to go a level deeper, what should guide the interactions and behaviour between political leaders and the civil service? Here is what we think:

87. First, brainstorm and challenge. At the stage of formulating policies and deriving solutions, by all means, research all past experiences, offer all suggestions, including radical ones; debate, help us derive the best solution.

88. Don’t try to second-guess the policy preferences of the Ministers. Look at issues, analyse the problems, explore options and express your recommendations and views honestly. We may or may not agree with you, but we want people to come to meetings, ready to contribute their ideas and be open to the views of others.

89. The same spirit applies to Ministers too. We must also be open to challenge, confront trade-offs squarely, and debate the merits of various solutions to today’s problems.

90. Second, civil servants must understand ground realities and constraints.

91. We all strive to design policies from first principles, and this often forms the basis for sound policies which we have succeeded in implementing in many areas.

92. For example, instead of subsidising essentials such as food and fuel – which many countries have do, regret and are trying to unwind – we price them right and provide means tested assistance to lower income families. In national defence, small countries like ours need compulsory conscription, which we implemented in 1967 and never looked back.

93. But first principles can also result in theoretical policies that can be impractical. For example, can we have a housing voucher system that replaces our HDB programme? Or a congestion control system that relies solely on ERP and we abolish COE and ARF? I know for a fact that such policy papers were actually written before.

94. These policies are theoretically more efficient but from a ground perspective, they are not implementable.

95. We have to operate in the real world, and not a policy incubator. This is called “theory of the second best” – where we often have to set aside theoretical ideals and work on a sound and practical understanding of how people are likely to react and respond to any policy change.

96. Third, make things happen. Within the directions given, civil servants must implement, outreach, listen out for feedback, and keep improving what we do. It means hitting the ground running, taking some calculated risks, overcoming obstacles, negotiating conflicting concerns across agencies, and finding a way forward.

97. This is how Jurong Island was built, how HDB took off, FTAs were signed, and how the Pioneer Generation Package was implemented and reached to the level of the households. Behind each successful project were enterprising civil servants who took risks and assumed responsibility, at every level. Our appraisal system must recognise these qualities.

98. As you carry out your tasks faithfully and to the best of your ability, political leaders of today, like before, must stand up to defend unfair criticisms of civil servants, because your professional ethos prevents you from having a political voice to defend yourself.

99. Finally, we must share the common aim of building a better life for all Singaporeans. This is regardless of whether we are political leaders, public service leaders, civil servants, or public officers in statutory boards.

100. We are all in public service, not for ourselves, but to serve our nation. The civil service has played an outstanding role in the development of Singapore over the past five decades. We have to continue to uphold and strengthen this institution.

Conclusion

101. In conclusion, it is sometimes said that the role of great ideas is to lead men out of deep difficulties. Tackling a complex issue with multiple considerations can feel like, as Wittgenstein put it, being a fly in a glass bottle. It is knocking against walls that cannot break, flying in a space which seems to reward activity, but is going nowhere.

102. Our collective mission, especially in an age of complexity and great contestation of ideas, is to distil common interests, and make the best case for the difficult, even unpopular and painful path up the neck of the bottle.

103. By working and applying the principles of innovation together, we may even recognise that the walls of glass are of our own making, and that not only can we see through them, we can maybe even find a way to break them or fly through them.

104. We are all on this journey together. Now, more than ever, Singapore has no path to follow and no models to copy. We will need constant, pervasive and endemic innovation, whose lifeblood is great ideas and an enterprising spirit.

105. Thank you for your attention and have a good evening.