Midway through my speech, Minister Tharman got up and went to discuss something with the Prime Minister. That was a little unnerving. I look forward to his response tomorrow.
1. Mr Speaker Sir, much has been said about this year’s Budget – much praise, many keen observations, and certainly, plenty of smart suggestions. I hope that this House will bear with me, as I add a few more comments.
2. We had a surplus of $6.45 billion last year. This year’s Budget is projected to incur a deficit of $0.8 billion. There will remain a huge amount of funds from last year’s surplus that remains untouched.
3. Singaporeans see last year’s unexpected surplus, as a windfall generated in large part by the increased GST rate, their overall increased consumption, and their property purchases. It is only then natural for Singaporeans to want to partake of this perceived windfall.
4. The Government has argued in favour of prudence, of keeping something in reserve to meet unexpected contingencies. The other side of the coin, then, is that the Government must not hesitate to use this massive war chest to provide assistance if and when needed. I think if either the economy or inflation gets much worse over the course of the year, Singaporeans will rightly expect appropriate off-Budget measures from the Government.
5. Perhaps more accurate forecasting and projections in future would go a long way towards avoiding the repetition of such surprises. After all, surprises on such a scale are not desirable.
6. Thanks to this Government’s ability to consistently perform better fiscally than initially projected, many people have learnt to discount its forecasts. Even before we start the new fiscal year, economists have begun contradicting the official forecast of a deficit for this year. This state of affairs cannot be healthy.
7. More importantly, improved accuracy in forecasting will ensure that we do not raise taxes like GST, or government fees and charges, unnecessarily, to make up for revenue shortfalls that do not materialize. Such increases impose a burden on the people, and as we have seen, have a strong inflationary effect.
Who benefits from GDP growth?
8. Sir, the Minister has attributed this massive surplus to an active property market and better-than-expected economic growth. But despite last year’s impressive real GDP growth of 7.7%, many Singaporeans still do not feel better off. Instead, in the face of the worst inflation experienced in 25 years, there is an extremely strong sense of being worse off amongst many Singaporeans. Why is that so?
9. No less than Nobel laureate Joseph Stiglitz has criticized the use of GDP growth as an indicator of progress. He noted that GDP growth does not measure environmental degradation or depreciation of natural resources. It can mask declines in quality of life, where GDP may go up but people’s income could be going down. He also pointed out that such a practice rewards governments only for increasing materialistic production. Well, Mr Stiglitz has been asked by the French President to head a panel, tasked with devising a new method of economic calculation that includes quality-of-life measures.
10. Indeed, there is a view amongst some Singaporeans, that our stunning headline growth numbers do not tell the full picture. We are told that Singapore has done well, is doing well, and will continue to do well. Our blistering GDP growth in recent years supports this view. Even with the imminent slowdown, we are still expected to grow by between 4 and 6 percent this year – healthy by any standards.
11. And yet, some questions persist. Who exactly has benefited from all this growth? How much have Singaporeans benefited from it?
12. Sir, I will try to shed some light on those questions. Let me start with wages. Wages as a proportion of Gross National Income has stayed relatively stable, averaging 43% in the period between 1993 and 2007. It was 41% in 2007.
13. We do not have official statistics on the breakdown of wages between residents and non-residents. But we do know that the majority of jobs created in the past three years went to foreigners.
14. As at December 2007, there were 900,800 non-resident foreigners employed here, or one-third of our workforce of 2.73 million. This compares with 671,200 non-resident foreigners employed here as at December 2005, or 28.9% of the 2.32 million workforce then. The proportion of non-resident foreigners in the workforce has increased by 15% over the past three years.
15. Unless most of the jobs that went to non-resident foreigners during the past three years were low-income jobs, which I certainly hope was not the case given how heavily our growth strategy relies on the attraction of high-quality foreign talent here, the increase in the proportion of non-resident foreigners in the workforce means that the share of wages going to foreigners has probably also increased in the past three years.
16. And this is based on non-resident foreigners. Once permanent residents are factored in, the proportion of wages going to non-citizens would be even higher.
17. In other words, in proportionate terms, non-citizens seem to be benefiting from our GDP growth more than Singaporeans are, at least in terms of wages. As our population moves towards 6.5 million in Year X, fuelled mainly by more foreigners coming to Singapore, this trend will only accelerate.
18. Well, what about capital? Perhaps if Singapore-owned capital is benefiting from the economic growth, then we could make the case that economic growth has benefited Singaporean entrepreneurs and investors.
19. Unfortunately, the picture may be even bleaker for capital. According to the Singapore Corporate Sector Report, in 1995, 30% of the paid-up shares in Singapore companies were foreign-owned. By 2005, this percentage had jumped to 45%.
20. In other words, the proportion of foreign ownership in the Singapore corporate sector increased by 50% in the 10 years between 1995 and 2005. If I had to guess, I would say that this proportion has increased further in the three years since.
21. Sir, even I would say that the statistics I have cited are not conclusive. There is a fair amount of inference and guesswork there. But I think it all shows that there are some very legitimate questions that can be asked, that need to be asked, about the true extent to which Singaporeans are benefiting from all this economic growth.
22. I do not think it is enough to merely say that our economic growth has created jobs for Singaporeans, that the low resident unemployment rate serves as a proxy indicator of the benefits from growth. That is a purely quantitative measure. Quite apart from the point that the statistics available group both Singaporeans and permanent residents together, those figures do not shed any light whatsoever on the quality of jobs going to residents, on the extent to which residents have benefited.
23. Sir, I do not mean to be xenophobic, or to argue against having foreigners here. I work in a US MNC, mostly with foreigners, and certainly I appreciate the many important contributions they make to our economy. But surely, Singapore’s economic growth should benefit Singaporeans more than others.
24. Some Members have already questioned the so-called “grow at all costs” strategy, of growing the economy as much as we can in good times, to make up for the years of slow or no growth. This seemingly unrelenting focus on GDP growth alone does not take into account the quality or nature of that growth, or the distribution of its benefits.
25. And I have to ask: why should Singaporeans continue to support this pursuit of GDP growth, when they pay the price for it in terms of higher inflation and more stressful and poorer quality of lives, and yet may not be reaping the benefits to an appropriate extent?
The Government’s approach to helping Singaporeans
26. Sir, a possible answer may be that even if Singaporeans are not benefiting as much as others, the Government does reap a fair amount of gains, which it then uses to assist needy Singaporeans.
27. Certainly, the special transfers are welcome. I applaud the Government for its efforts to re-distribute all this money to the needy and the lower-income. And I must confess that it dismays me, when higher-income Singaporeans complain about getting less than their less well-to-do brethren.
28. But special transfers are ad hoc in nature. Unless we tap on the reserves, they are conditional upon surpluses in past years. We need to make sure that there is protection for Singaporeans in bad times as well, which is exactly when the need for help is at its greatest.
29. Sir, I do not intend to suggest specific measures for the Government to consider. Other Members have made many sound suggestions, and I am sure that many more will be made over the next two weeks.
30. Instead, I propose to explore what seems to be the Government’s philosophy in helping Singaporeans. Its approach seems to be underpinned by three fundamental principles: avoid wasting public funds; avoid undermining the work ethic; and avoid creating a bloated bureaucracy by keeping things simple. Unfortunately, this approach will often clash with our basic human impulse for care, concern and compassion, and it will generally overlook intangible and unquantifiable factors.
31. Sir, last year’s Budget and Committee of Supply debates were my first. They were memorable for many reasons, but one particular sequence stood out in my mind. During the COS debate on the issue of a caregiver’s allowance for those looking after the disabled and older relatives, the Minister for Community Development, Youth and Sports referred to a concept in policy circles called “deadweight funding”.
32. The argument was that a caregiver’s allowance will require the Government to spend a lot of money, spread out over a very large number of families, and so the families who really need help will end up receiving less than they otherwise would. So, there will be no caregiver’s allowance. We should not waste public funds on those families with caregivers that do not really need help, never mind that there is currently no direct financial assistance at all for caregivers, never mind that this means that those who do need help will not get it, and never mind that the gesture of an allowance means a lot more than the actual amount.
33. I would hazard that a similar sort of thinking underlies the Workfare Income Supplement Scheme’s approach to casual and self-employed workers. To ensure that WIS payments are made only to those who are truly working, to encourage people to continue working, we require beneficiaries to make Medisave contributions to qualify.
34. This is in stark contrast to the previous Workfare bonuses, where casual and self-employed workers qualified for the payments simply by signing a form. As a result, only 54,000 out of an estimated 160,000 casual workers and self-employed are actually receiving WIS payments.
35. Sir, the reason is not difficult to understand. These workers are usually very cash-strapped, living day-to-day, hand-to-mouth. And that is exactly why the WIS was implemented in the first place, to supplement their low incomes.
36. But by requiring them to use their already insufficient cash to make Medisave contributions to qualify for WIS, the inevitable occurs. Many simply opt out, and we end up missing out on two-thirds of a key group that we were trying to help through the WIS.
37. Or take means testing. I will speak more about means testing during the COS debate on the Ministry of Health. But for present purposes, it suffices to say that the current proposal is to perform means testing based on one’s income level, and housing type for those without income, such as retirees. The rationale is to keep things simple.
38. But this is likely to end up penalizing the high income with big families and multiple dependents, households with a low per capita income. In effect, this is the group that ends up bearing the cost for the Ministry’s desire to keep the method of means testing simple.
39. In fact, the lesson seems so well learnt by some, that during the public feedback sessions on means testing, there were even calls to cut back on the subsidies even more. Have we really lost the capacity for compassion? I am glad that the Health Minister rejected this suggestion outright.
40. And what about Public Assistance? The Minister has announced a $40 increase in monthly PA payments, which for a single-person household represents a 13.8% increase, from $290 to $330.
41. But with prices having increased 6.6% over the past year, $330 is really worth $309.50 in January 2007 dollars. In other words, that singe-person household would only be seeing, at best, a 6.7% increase in real terms. I say at best, because the inflation rate experienced by the lowest income group tends to be higher than the average inflation rate.
42. The Minister for Community Development, Youth and Sports recently said that the groceries necessary to satisfy the Health Ministry’s nutritional recommendations for a person would cost $95 every month, and so $290 a month should be enough for a single-person household on PA.
43. Never mind that individual circumstances may result in some having greater needs than others. Never mind the stories of PA recipients surviving on rice and soy sauce, barely making ends meet. Never mind that limiting the amount so tightly seems to begrudge PA recipients some degree of comfort above subsistence levels.
44. To avoid eroding the work ethic, we leave no room for generosity, no room for error or contingency for PA recipients, no room for an occasional treat unless it is given to them by charities. Never mind that PA recipients are, by definition, unable to work in the first place.
45. Sir, we do not want to undermine Singaporeans’ work ethic. So we decline to implement an institutionalized social safety net that is either expansive or generous. We choose to err on the side of being conservative, some might even say stingy. We are willing to be under-inclusive and leave some of the needy out in the cold, instead of being over-inclusive and allowing some undeserving persons to slip through the cracks and benefit. We prefer to focus on safeguarding public funds, instead of helping people.
What does it mean to be Singaporean?
46. Many Singaporeans ask why the Government does not do more to help Singaporeans. Why doesn’t the Government help Singaporeans, when it has the resources to do so? I would rephrase the question like this: what does it mean to be Singaporean?
47. The Government consistently emphasizes the importance of individual responsibility, of ensuring that people do not abdicate responsibility for their lives to the Government. As a result, we provide the bare minimum level of assistance so that Singaporeans will not starve.
48. Yes, we are all responsible for our lives. We have to be. But that is not the full story. It cannot be.
49. The point is not about judging those who made mistakes or wrong choices somewhere along the line, of finding them undeserving. To cast the question in terms of whether a person deserves aid, is to miss the point.
50. The point is to help our fellow Singaporeans in their times in need. The point is to be compassionate, because there, but for the grace of God, go I. The point is to assure Singaporeans, that if, touch wood, they fall on hard times, they will be taken care of. Simply because they are Singaporeans, and Singapore will take care of its own.
51. We have to. Because if we don’t, nobody else will. The world does not owe Singaporeans anything. It has no obligations to do anything to help Singaporeans. But maybe, if being Singaporean is to mean anything, Singapore does, just like how the more fortunate amongst us have the duty to help the less fortunate.
52. Yes, help needs to be applied in a smart, careful and judicious manner. But avoiding waste, avoiding erosion of the work ethic and avoiding a bloated bureaucracy should not detract or distract us from the very reason for providing assistance in the very first place. We should not extend help with our right hand, and then pull it back with our left hand.
53. Sir, sometimes, it can be worth having some wastage or inefficiency, or “deadweight funding”, if the net benefit to Singaporeans outweighs such wastage or inefficiency or deadweight. And by benefit, I mean benefit in a holistic sense, both tangible and intangible, and not just economic or financial benefit.
54. Intangible benefit could mean better peace of mind for PA recipients, secure in the knowledge that there is some buffer in their monthly allowances. It could mean the sense of recognition enjoyed by caregivers from having their efforts recognized by the state in the form of a caregiver’s allowance, even if they don’t necessarily need that money, or even if the sum is more symbolic than substantial.
55. It could mean the relief felt by casual workers and self-employed, in not having to make Medisave contributions before enjoying the benefits of WIS. Or it could mean the security of the middle class and especially the sandwiched class, whose high salary translates into a low household per capita income when spread across all of their dependents, in knowing that they will still be entitled to the full subsidy offered by the Government if they opt for a C Class ward.
56. Sir, Mr Ngiam Tong Dow, in an interview with the Petir magazine, cited the view of a so-called "thinking Singaporean”, that “all our national policies serve only at the altar of economic survival”. Mr Ngiam argued that “The government has to appeal to the people’s heart to build the nation of Singapore, not just their stomachs.”
57. I agree whole-heartedly with Mr Ngiam. And appealing to the people’s heart, requires the Government to put aside its penchant for hard calculations, and occasionally err on the side of generosity and graciousness.
58. Sir, I want to live in a country that cares for its people first and foremost, not a country that prioritises GDP growth for its own sake. I want to see a nation where Singaporeans are valued for everything that we are, not just the economic contribution we can make. I want to grow old in a state that places a higher premium on helping citizens, than on ensuring that there is no wastage. I want to be part of a generous society that helps its most vulnerable members, instead of counting the pennies and tightening the purse strings.
59. I do not think that I live in such a country yet. And that disheartens me. I sometimes question what it means to be a Singaporean, and I consider myself one of the lucky ones. This bodes ill for us in this era of global mobility, if other Singaporeans are similarly disenchanted. And those who leave, those who are able to leave, the 1000 Singaporeans who leave every year and never come back, are exactly the ones that we need to stay.
60. Sir, I hope one day, I can say that I do live in such a country. Maybe one day, I will see a Budget that reflects the principles and ideals that I have just spoken about. Until then, I can only continue to hope.