Friday, February 20, 2009

Full of generalities but short on specifics: President S R Nathan’s (unofficial) guide to rubber stamping

Written by Ng E-Jay,, 18 Feb 2009

President S R Nathan held a press conference on Tuesday to explain why he agreed to the first-ever draw on past reserves.

Being full of generalities but short on specifics, did President Nathan tell us anything that we did not already know?

President Nathan said that the swiftness of the process of obtaining his in-principal approval, which took just 11 days, stemmed from the urgency in giving the Government the confidence to roll out measures to tackle the recession, which could worsen without fast action.

Mr Nathan also said that he need not have held a press conference to explain the decision, as he is required only to convey his decision in writing to Parliament upon the Government’s request.

However, we are not so much concerned with why the decision was made swiftly, which has already been explained by the Finance Minister in Parliament, but whether adequate due diligence was exercised by the President and his Council of Presidential Advisers (CPA).

Mr Nathan tried to assure us that the steps taken to seek his approval did not bypass procedures and went by the book. “Whether you take 11 days or one month, the process will be the same,” he noted. (ST, “Why I said yes”, 18 Feb 2009)

Mr Nathan also disclosed that he and the CPA had sought regular briefings with the Government last year on the state of the global economy and its possible impact on Singapore, and that Prime Minister Lee Hsien Loong also discussed with them his concerns about the dire economic circumstances and the need for extraordinary measures to tackle the downturn.

But being short on specifics, Mr Nathan’s assurance that procedures were followed and that he and the CPA kept themselves updated on the state of the economy leaves many questions unanswered. For example:

  • Is the CPA truly independent of the Government? Are all of its members completely free from Executive influence?
  • Did the CPA examine the Government’s budget position closely to determine whether there was a real need to draw on past reserves to fund the Jobs Credit and Special Risk-sharing Initiative schemes?
  • Did the CPA consider whether suitable alternatives were available that would not have required a draw on past reserves, such as issuing debt or drawing upon current reserves, which is the surpluses accumulated during the Government’s present term of office (since GE 2006)?
  • Did the CPA scrutinize the Government’s accounts on its current and past reserves to satisfy itself that those accounts are properly maintained?
  • How did the CPA satisfy itself that the current economic crisis warrants a draw on past reserves? What economic metrics or models were used? Did the CPA carry out its own independent analysis of economic conditions apart from the views provided by the Government?

I strongly suspect that these questions are left unanswered for a reason, and it is not because reporters did not ask them. After all the late President Ong Teng Cheong recounted that the Accountant General had informed him that it would take 52-man years to produce the list of assets held by the Government (this recount is disputed by the Ministry of Finance — see this link).

President Nathan said that he left CPA members to come to a decision on their own, but revealed that in early January when they were briefed by Trade and Industry Minister Lim Hng Kiang on the state of the economy and Finance Minister Tharman Shanmugaratnam on the Budget strategy, he was already convinced by then of the need to agree to the request for a draw on past reserves.

This begs further questions: What if the CPA had disagreed with the Government’s assessment on the state of the economy or on the need to draw on past reserves? How would the President have acted then? And how was the President sure that using past reserves was the right strategy without first examining the Government’s accounts and considering all possible alternatives?

President Nathan emphasised that the Constitution does not prescribe the process for dealing with a request for using past reserves, and that all it spells out is the need for the President to consult the CPA and to publish his view when he approves a draw on past reserves.

However, this does not mean the public is not entitled to know the process by which the CPA reached its decision, and whether the same process will be used to evaluate further requests in the future.

Without complete transparency from the CPA, how is the public able to determine whether the CPA is consistent in its methodology and procedure of evaluating Government requests to draw upon past reserves?

The President’s explanation of the circumstances leading to his in-principal approval on the use of past reserves as well as his assurance that procedures were followed sound like a veiled justification for what increasingly looks like a rubber-stamping exercise in reality.

Finance Minister Tharman Shanmugaratnam told Parliament that he was not sure the details of the President’s process were relevant.

This is a system that relies on trust in the individuals who are in charge,” he said.

Mr Tharman added that other systems “based on transparency of figures and procedures”, as distinct from trust in the individuals, have been shown to shift towards “wanting to spend more reserves for less and less meritorious purposes over time”.

“That is what we want to resist,” said Mr Tharman.

Read the above carefully. Mr Tharman has said that TRUST is MORE IMPORTANT than TRANSPARENCY.

It is this mentality taken by the ruling PAP that makes President Nathan’s nebulous explanations look all the more precarious.

Also read:
The most expensive President in the world finally replies to justify his $3 million dollars salary