Avoiding Those Blind Spots In Making Decisions

Source : The Straits Times Forum News, Aug 24, 2007

NO ONE can possibly say no to more money.

So when I first heard that the Central Provident Fund (CPF) rate of return was to be increased, I thought: 'Oh good!'

But another reaction that came as swiftly was to wonder: 'Just like that? So does it mean the CPF has been underpaying us all this while?'

Like any CPF member, I'm happy with the promise of an extra 1 percentage point return for the first $60,000 of CPF funds.

But as a journalist who writes on political issues, I could not help feeling a sense of deja vu when hearing the news about changes to the CPF, which also include plans to delay the draw-down of the Minimum Sum, and to make annuities compulsory for the under-50s.

It brought to mind the way the hike in goods and services tax (GST) was announced last November: without much fanfare, taking people by surprise.

Because of the lack of 'ground' preparation, many people are uncertain about the impact of the changes.

At a policy level, some big questions have not been answered adequately.

The biggest question of all is what has changed for the Government to be able to announce an increased 1 percentage point in the CPF rate of return overnight.

Was it the performance of stock markets? But no, CPF does not invest its funds in stocks. Also, equities markets took a beating in the week running up to the Aug 19 announcement by Prime Minister Lee Hsien Loong in his annual National Day Rally address.

If market conditions cannot explain the sudden increase, what can?

Has the CPF Board been given a wider mandate to invest in higher-yield, higher-risk funds that would justify giving the higher return? It isn't clear.

Manpower Minister Ng Eng Hen may clear the air when he speaks on this next month.

There have been calls to raise CPF returns for years, with the Government having hinted recently it's a priority issue. So the question really is why now?

Maybe the Government reckoned it's a good move for social and political reasons. In the words of the Nike advertisement, maybe the Government decided: 'Just do it!'

If so, this begs the question of whether the return could have been raised sooner.

Singaporeans have complained for years about the low 2.5 per cent a year return on their Ordinary Account balances. If the Government decided this August to raise the rate, could it be that actually the rate could have been raised one, two, three or more years previously?

It may sound churlish to quibble over this in the face of promised higher returns.

But the question really addresses the process by which the decision to revamp the CPF is reached.

Neither PM Lee nor Dr Ng said much about how the Government arrived at the decision to raise the rate. They only said that the 1 per cent figure was not 'tikam-tikam' (by chance) but was financially feasible and would need the President's approval.

The CPF change is not the only recent policy surprise to be announced recently.

Last November's news that the GST will go up from 5 to 7 per cent was also a shocker.

To be fair, the Government does consult widely before some policy changes, for example, on whether to allow integrated resorts with casinos.

More recently, the public's input was sought on the draft Mental Capacity Bill, which lets people state who they wish to appoint to care for them if they are mentally unsound.

In the case of the recent CPF and GST changes, however, the impact is so wide that maybe more effort should have gone into engaging citizens.

To be sure, the changes are sound, both in fiscal terms and in enhancing overall welfare.

But taken together, they can cause citizens to wonder if the Government could have done more to engage them in the decision-making process: to share relevant information explaining the need for such a change, discuss the pros and cons, get people used to the idea, and then make a firm decision.

Now, policies seem to be announced as fait accompli; so that what remains is to convince citizens of the merit of these policies and iron out implementation details.

Such an attitude may have been appropriate for the People's Action Party in an earlier era with a less educated population comfortable with leaving big decisions to 'zhenghu' (Hokkien for government).

But it appears increasingly outmoded for a society that wants to foster a sense of belonging and cohesion, with citizens who are among the best educated, most electronically well-connected and globalised in the world.

In their book Dynamic Governance, academics Neo Boon Siong and Geraldine Chen survey the public sector in Singapore and highlight a few 'systemic risks'. One of these is what they call the 'intellectual elitism' of the public service.

The root of the problem, they argue, is the perception that 'policy elites often do not expect the same quality of thinking and ideas from others who are not like them'.

As a result, 'consultation' may be viewed as a waste of time, attracting complaints rather than substantive suggestions. 'At best they expect feedback that may result in fine-tuning and marginal amendments to the implementation process but not fundamental changes to their well-thought-through and laid-out proposals.'

If such a perception is true, there is a risk that policy leaders develop blind spots intellectually, closing themselves off to alternative ways of seeing things. Also, citizens get put off by the lack of openness to their ideas and may slowly stop giving ideas, say the authors.

The way the GST and impending CPF changes have been decided on and announced suggests that the Government may still be operating in that 'we know best, just accept that this is good for you' mode.

Yes, the policies including the changes to the CPF are solid ones which will give younger Singaporeans like myself that much more retirement security.

I am also sure dialogues galore will be conducted to help Singaporeans 'understand' the policies.

But share critical information, include citizens in the decision-making process, get their buy-in before changes are finalised?

It is done sometimes now, but could be done more often, especially for policies that have wide impact.