Set the benchmark

Some people argue that the government should not be involved in providing services, such as public transport, communication services or health care - that these services are better left to the market.

There are two arguments for the government to be involved:

• Where the services are provided by large businesses with strong pricing power, such as in our public transport and communication services
• Where there is the need to set a benchmark for the prices - such as in health care

In these cases, the government can play in regulating the prices and standard of service, to be used as a benchmark for special services to be provided by the private sector to serve special needs. For example, if the fare for travelling a certain distance on public transport is known, consumers can form a decision to pay a higher price to take taxis or other types of private transport.

It would be best for the services to be provided by many private operators following the benchmark prices. If the benchmark prices are too low, there will be lower supply and higher demand, leading to imbalance. In that situation, the prices can be raised so that the supply and demand becomes more balanced. There is still a need for flexibility in adjusting prices and judgement to be made in this regulated environment.

Health care is another important area to be regulated. The public needs to know the price and standard to be expected for certain types of treatment. They can use them to judge the performance in the private sector.

I urge the government to be more active in setting the regulations, but to allow flexibility so that the regulated prices and standards can meet the changing needs.  Please share  your views.