Singapore Economy Policy 1. Output controls: licensing and quotas Benefits 1.

Limiting car ownership and hence indirectly, the number of cars on the road can reduce air pollution and more efficient (less congested) road transport network time-saving for commuters higher productivity 2. COE premiums used for financing land transport and public transport development. Limitations 1. Limiting car ownership, not usage => targets the output and not the root problem of car usage. 2. High cost people use the car more often to spread out the high expenditure on COE may not reduce pollution nor congestion

Traffic congestion and air Certificate of Entitlement (COE) pollution (Negative - Limits car ownership and thus the number externalities) of cars on the road. - Quota limits the max amount of output to socially optimal level, Q2, where MSC=MSB increases price of COE higher car ownership costs

2. Managing car usage: congestion charges Electronic Road Pricing (ERP) - Congestion charge= MEC deducted when vehicle uses a priced road. - Motorists can choose a different route, mode of transport, time of travel or not travel at all. - Specific tax If tax = exact MEC, drivers MPC increased to MSC (MPC+tax)

1. Most direct way of tackling congestion as it tackles car usage. 2. Flexible: charges by time, location, traffic flow on the roads can be adjusted up or down to keep smooth traffic flow. 3. Fair: charged based on usage, those who contribute more to congestion pay more

1. Public acceptance as it entails the pricing of a service that was previously free (road usage).

Concl: Govt. can manage traffic congestion via the use of price signals + public transport partially govt. funded.

Education economic and social benefits to society on top of those to themselves.

1. Direct provision: Compulsory Education Act (2003) makes it compulsory for all Singaporean children to receive education till primary 6. 2. Heavily subsidised education. (varies for different levels and types of education) - Secondary school: essential in achieving higher productivity rates - Higher education: least subsidy as more private benefits than social. 3. Government provision of facilities and resources required.

1. Private benefits: increased wages, reduces inequality, improves welfare of lower income groups, essential to upward social mobility. 2. External benefits: educated and skilled workforce v impt to a knowledge-based economy, drives economic competitiveness, attracting MNCs. 3. Promotes social norms and values reduce social, political instability and crime rate

1. Hard to calculate of marginal external benefits of different levels of education. 2. Government may not be able to gauge the demand for education accurately for the direct provision. may have shortages and surpluses of teachers.

Healthcare 1. Primary care (Preventive healthcare and health education) 2. Hospital care

4. Ensure equitable and fair opportunity to all. Concl: Education system govt. intervention + free market. 1. Government regulation: to reduce supplied induced demand, govt. regulates no. of hospital beds and doctos. 2. Subsidies set by MOH 3. Public hospitals restructured into govt.-owned non-profit companies, giving the hospitals greater flexibility over their operation, while imposing discipline on cost-control and seeking out savings and efficiencies. Means-testing (2009): a way to focus limited resources for needy Singaporeans by channeling it to those who need it the most. - Higher-income patients get less subsidy for their hospitalization fees (ward prices). 3Ms framework: Future challenges: Medisave compulsory saving scheme where individuals savings are - Pressures on the government to spend more designated solely for financing of non-primary healthcare. on healthcare with ageing population and Incorporates personal responsibility with risk pooling and community increasingly affluent lifestyles. support. - Prevention policies (cheaper): healthy lifestyle Medishield catastrophic medical insurance scheme to complement Medisave. promotion Opt-out scheme administratively less costly Medifund to cater to those too poor to pay for medical bills despite subsidies. Acts as a safety net for the very poor who may lack Medisave and family support.