Speech by Minister for the Environment and Water Resources Dr Vivian Balakrishnan at the Inaugural WongPartnership Leaders Forum
Greening the Singapore Economy
We live in a world which is simultaneously confronting a global financial crisis, political upheavals in many parts of the world due to growing inequality, resource depletions, a high energy crisis, a looming food and water crisis, the threat of future global pandemics and of course climate change.
Let’s think about this - at the risk of some exaggeration, these are the ingredients for a perfect storm. There are not going to be any quick and easy solutions and we are certainly not going to solve the world’s problems in this morning’s session. But I just wanted to offer a hypothesis, and then perhaps some principles as to how we could maybe address some of these problems.
The hypothesis I want to offer you is that if you look at all these crises confronting us simultaneously, there is actually a common thread. And the hypothesis I offer you is that, in fact, this is really the crisis of values. And to put it simply, basically, we have to stop stealing from each other and stop stealing from our grandchildren.
Now let me explain what that means - the world has reached a breaking point; where merely exploiting labour or extracting natural resources in the short term, without having to consider the long-term impact or the risk incurred by our choices, is clearly not sustainable. There are no more externalities or buffers that we can rely on to absorb the risks and consequences of our decisions. And this is what I believe is the common thread - whether you talk about inequality, global financial crisis, resource depletion, globalisation, even pandemics. This common defect pervades them all. And the environment is simply a special case. The environment is our collective responsibility; it is also our shared property. And because it is our shared property, the individual and collective actions and decisions of every single person, every single business and even of countries, will transcend territorial boundaries. And every one of us needs to take responsibility for how we impact the environment because what we do affects our neighbours, but more than that, it also affects our grandchildren in time.
Therefore, what we need is a paradigm shift in our attitudes and in our approach to life. We need first the humility to accept that the existence of each one of us is interdependent. We are interdependent on each other and working on the assumption that we will co-exist and help the environment. Secondly, we need the wisdom to understand that the earth’s natural resources - its sustaining capacity for human life - is not unlimited. And that ultimately, there has to be some limits to our consumption and that we cannot tolerate wasteful consumption. Therefore we cannot continue to operate in a way that mortgages the future of our grandchildren in order for today’s prosperity.
In November last year, Mr Ban Ki-Moon, Secretary General of the UN, made a speech which was entitled ‘We cannot burn our way to the future, we cannot consume our way to prosperity’. The economists and bankers here would probably add ‘we cannot borrow our way to prosperity’. Nor can we just simply consume our way to prosperity. So for those of you here who are more economically-minded, even if you consider the central question of prosperity, there are certain things which are not sustainable.
Now let me turn to Singapore. Actually the paradox for Singapore is the fact that we have no natural resources, and we are very, very small and very, very densely packed. The paradox is that all these strategic constraints have actually turned out to be advantages. Let me explain why.
Because we are so small, and because literally there is no difference between our backyard and our front yard, we could never afford to despoil our environment. If you think about Singapore 50 years ago, the economy was a fraction of what it is today, when we were confronting numerous political and economic problems, it is almost astounding that our founding generation and in particular Mr Lee Kuan Yew decided that, that point in time, that we would generate our electricity without using coal-fired power plants. Why not coal, despite the fact that coal is the cheapest source of energy? Because instinctively he understood that we could not afford to pollute the air over such a small density.
Similarly, ideas like having tree planting days, keeping Singapore clean and green, being a garden city - it is amazing when you think about it. That these were ideas and concepts that he had 50 years ago, way before it was fashionable to be green - certainly way before any law firm started the green practice. It shows prescience at an unprecedented scale. So in reality, Mr Lee and his founding generation of leaders were the original environmentalists for Singapore and for the world way, before it was in fashion.
This early vision of high environmental standards has been an imperative in the design of our economic as well as environmental development. And fortunately, it has been one that continues to guide us today, that has put us in good stead. The wonderful thing about it all is that today, clean air, safe environment, blue skies, greenery…all these have today become competitive advantages against many of our other global city states and city entities that compete against us. The point I am trying to make is that it is not an either or, but in fact a virtuous cycle between environmental sensitivity and welfare and prosperity. The question then is one of the future.
Given the constraints that we continue to have, given the changed environment and challenges that we are facing, how are we going to continue to translate and make this environmental imperative a reality in future? I want to leave this thought with you - that it would require the tri-partite approach. What is the role of government? What is the role of private sector? And people sector? So let me just quickly run through some ideas of what I think the respective roles of these 3 sectors are going to be if we are going to have a sustainable long-term approach to the environment.
First - role of the government. The government has to set the right policies - policies that will guide the behaviour of people and of the private sector. Governments ultimately produce legislation and establish a regulatory framework. And this framework should promote the efficient, safe and responsible way of doing things. In greening our economy, there will always be best practices that we can emulate, new technologies that we can implement and standards that we need to enforce. And whether it is in sustainability reporting, or in reporting PM2.5 or sulphur dioxide or nitrous oxide - all these need to be published and need to be made transparent. And legislation is a leader to nudge people, to sanction, to mandate, and to move us in the right direction in the pursuit of the big picture. Equally important is the role of government to prevent companies from unfairly, and in the short term, exploiting opportunities for short term gains at the expense of long term viability and health and safety of the people. So the Government has to be a neutral, honest umpire.
The government also needs to set the right price on scarce resources. Right pricing is actually not so straightforward. For example, many governments subsidise energy. In an age when you are concerned about carbon footprints, a subsidy provides a perverse incentive, it causes consumption to be higher, it causes artificial shortages…and you can distort the price but it does not really distort your true cost to the environment.
Another example is that we are all still free riding because we do not pay for our carbon footprints. We do not pay for the external consequences of decisions that we make. At some point, the question of a carbon tax will arise. Well, let me first reassure everyone that we are not going to unilaterally impose a carbon tax because of competitive reasons. But on a global level, the concept of paying for externalities has to be addressed at some point in time. And if and when and hopefully when we get to that point, Singapore will have to play its part. And our legislation, our regulatory frameworks will have to express that. So remember this concept - right pricing. That means eliminating subsidies and paying for your externalities.
Similarly, where research and development is concerned, Governments clearly have to play a role - establishing universities, research institutes, and then having an intellectual property regime which allows such discoveries to be disseminated to the private sector, to be exploited and to be rolled out for society to benefit from that. And finally of course, it is essential that governments continue to invest in infrastructure. In particular, investing in the most cost-effective and least-environmentally degrading infrastructure remains the role of government because only governments can do it on a scale that is necessary.
And finally, of course - transparency. When we read today’s Straits Times (about NCCS’s survey on climate change) - more than 70 per cent of Singaporeans are aware of climate change, do feel a sense of responsibility and are concerned. Governments have to be transparent, whether it is of the quality of the air, water, the food…because I believe government transparency will empower individuals to put pressure not just on governments but also on companies.
Let me now move to the role of the private sector. We believe that businesses need to take a long term view on the sustainability of their operations. And businesses need to concentrate on creating value. I said just now we cannot just burn our way to the future, or consume or borrow our way to prosperity. We have got to get back to the basics. Creating value means you either build something or you make something, grow something or provide the service which makes someone’s life better. Everything else is peripheral. If you are not creating value, not making positive difference to people’s life, then you’re really a side show. This also means businesses have to find ways to use resources efficiently, to be cost-effective and be sensitive to the social and environmental impact of your decisions and your operations.
I know many companies now adopt CSR (corporate social responsibility) or report the triple bottom-line, which means you report not only on economic or fiscal matters, but also the impact on society, and in particular, on people and on the environment. But we need companies to truly understand that this is in their own long-term interest. As in the case of Singapore, our early obsession with the environment, in fact, has turned out to be a long-term, strategic, competitive advantage for us. Because for Singapore in the future, it is not just the old EDB model of attracting companies by offering first-world infrastructure, low taxes, high discipline and well trained workers. It is about making, creating an environment where talented people want to live, where it is safe to bring up your families, where you can be surrounded by a beautiful world. And it is where talent accumulates, that future engines of prosperity can be created. Again, the point here is that there is a virtual cycle that we can set up. And we need companies therefore to pollute less, to use capital technology and labour more rationally in the long-term in an enlightened way. And to also then understand that this is where the future lies. Sustainability and protecting your reputation - there is value in the brand and in the way people perceive it.
Finally, let me talk about the individuals. It is the collective decisions of individual choices made by people that determine outcomes. It is like an election, where everyone has one vote. But it is the summation, the integration of those choices that ultimately decide the outcomes. I believe we have to start with transparency. And individual Singaporeans must demand transparency. Transparency not only from the Government but also from companies.
For example, let’s take the Mandatory Energy Performance Standards. This allows the consumer to decide what is the true life cycle cost - should I buy this air conditioner versus that, this fridge versus that or any other consumer product - for us to make informed choices because I believe the majority of us want to make the right choice. But very often, we do not have access to the information to make an informed choice. The government-public feedback is therefore a crucial part of this. We need to know what people are feeling. Equally, we need to make the data available. My operating principle in my Ministry has been to remind my staff that every complaint is a data point, and sharing data is part of the solution. And this is the same approach that we can use for many other aspects, including especially, the environment.
So let me conclude with 6 words for you to bear in mind - Right pricing, informed choices and value creation. If we can get to a world where the right price is exposed and discovered for whatever resource we consume, if we can get to a world where individuals are empowered to make informed choices and a world in which the private sector is truly creating value and not just engaging in predatory behaviour on labour or on the environment - I think we will have a much better world and a sustainable future for all of us and our grandchildren.
Thank you very much.
Source: Ministry of the Environment and Water Resources