Perspectives 2019 2020 Public Sector

50 Putting Public Assets to Work Institutionalizing the management of public commercial assets Increasing reliance on debt to finance public expenditures has led governments to professionalize public debt management in a drive to minimize the costs of central government financial management without incurring excessive risk. Similarly, independent central banks were created to oversee interest rates with the aim of keeping prices steady while politicians set broad economic policy goals. In 1971, the newly independent state of Singapore created the Monetary Authority and delegated management of the asset side of its public sector balance sheet. Its commercial assets therefore became the management responsibility of professionals inside independent public wealth funds (see Box 2). Goh Keng Swee, the deputy prime minister of Singapore at the time, explained why Singapore chose private sector discipline and governance tools borrowed from the private sector to manage commercial assets: “One of the tragic illusions that many countries entertain is the notion that politicians and civil servants can successfully perform entrepreneurial functions. It is curious that, in the face of overwhelming evidence to the contrary, the belief persists.” Since then Singapore’s wealth management funds — Temasek and the Singapore Government Investment Corp (GIC) — have helped fund the economic development of the city-state, while the Housing Development Board (HDB) has provided almost 80% of its citizens with affordable and well-maintained public housing.