I believe that Singaporeans have a right to a decent standard of living -- but how we get there is an open question. I am ambivalent on the minimum wage, because of the possible or likely undesirable side-effects.
Workfare is not new and is not a PAP invention. Instead, it is based on the idea of a "negative income tax". But Workfare in its current form tweaks the idea, and channels what is in my view a disproportionate amount of money into CPF. Which then makes its purpose quite different from the objective of a minimum wage.
[note: this was first published in TODAY]
Beefing up Workfare
The economic principles underlying Workfare work but more has to be done for it to deliver help
by Siew Kum Hong
05:55 AM Jan 24, 2011
In the past few months, various eminent persons have weighed in on the debate over a minimum wage. Last week's Parliamentary debate saw Members of Parliament (MPs) endorsing the Workfare Income Supplement Scheme (WIS) as a superior option.
Yet, a number out there seem to remain unconvinced.
I believe it is misconceived to frame the issue as a choice between Workfare and a minimum wage. Workfare in its current incarnation pays employees about 29 per cent of each payment in cash, and the rest into their Central Provident Fund (CPF) accounts. For self-employed persons and informal workers, everything goes into Medisave.
The bulk of Workfare therefore seems to be primarily aimed at helping recipients save for retirement. Indeed, the CPF Board's website states: "… we should not downplay the importance of building up CPF savings as many low-wage workers have difficulties saving enough for their retirement. The WIS that is paid into CPF helps them do that."
Putting it in another way, Workfare today represents an investment by the Government today, to reduce its potential future financial burden of caring for the future elderly and ill. It may not be intended as such but that is the implication.
While it might be argued that the CPF component can be tapped for current housing loan repayments and hospital bills, only 29 per cent of Workfare goes directly towards mitigating today's difficulties in making ends meet. Self-employed and informal workers - arguably the ones who most need help - do not even get this cash component.
A minimum wage, on the other hand, directly addresses low-wage workers' present-day difficulties. It puts cash directly into their hands, to survive today to see tomorrow at a level deemed acceptable by society.
This is why I think it is incorrect to frame the debate as a choice between Workfare and a minimum wage. They ultimately solve different problems. This also explains the cognitive dissonance experienced by those who remain unconvinced after last week's Parliamentary debate.
I do not believe that Singaporeans support a minimum wage for its own sake. Instead, Singaporeans support the fundamental philosophy behind a minimum wage, which is the idea that everyone should be entitled to a decent living wage. That is to our collective credit, speaking as it does to a shared commitment to a caring, compassionate society.
According to Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, Government surveys found that a household of four needs about $1,700 per month for a decent standard of living. So the real question should be, what is the best way to get breadwinners to that number?
I am not a trained economist. But to my mind, it is not entirely clear that introducing a minimum wage today will inevitably lead to better overall results for society. A minimum wage will surely lead to some loss of jobs, and the precise number is unknowable. The status quo is not ideal, but introducing a minimum wage may not necessarily be better.
But that is not to say that we have no other options. The economic principles underlying Workfare, well, work. Radical adjustments to Workfare will be necessary, but we can use the same principles to improve low-wage workers' present-day lives.
We can help workers achieve the decent living wage that they deserve, without the costs of a minimum wage - albeit with different costs, which would presumably have to be borne up front by the Government.
There has been a lot of focus on improving the operational details of how Workfare is currently administered. But what we really need are fundamental changes to Workfare. I have three broad recommendations.
Firstly, the cash component must be significantly increased. Otherwise recipients will continue to struggle to meet their present-day needs, and the calls for a minimum wage will persist.
Secondly, the eligibility criteria must be relaxed. In particular, we have to make Workfare more meaningful, relevant and beneficial to those who need help the most, namely the casual workers.
Finally, and most importantly, the Government must spend dramatically more on Workfare. It currently spends about $400 million a year to benefit 400,000 workers, all of whom earn $1,700 per month or less.
That equates to an average of $1,000 per worker per year, or $83 per month. That would hardly seem near what is needed by Workfare recipients to reach the decent living wage mentioned by Professor Mahbubani.
To put it in perspective, $400 million is 0.8 per cent of the Government's estimated expenditure of $46.4 billion last year. We can definitely do better and do more towards ensuring that all Singaporeans benefit from economic growth.
In many ways, I am heartened by the strong support for a minimum wage, which shows that so many Singaporeans have their hearts in the right place.
I am also a little disappointed that while the supporters of Workfare agree that low-wage workers need help today, they fail to recognise that Workfare in its current form does little to deliver that help.
We need to fundamentally re-think the objectives of Workfare and re-engineer it accordingly - and we need to act soon, for the sake of those workers.
Siew Kum Hong is a corporate counsel and a former Nominated Member of Parliament.
Showing posts with label Workfare. Show all posts
Showing posts with label Workfare. Show all posts
Monday, 24 January 2011
Wednesday, 26 March 2008
Videos of Budget 2008 speech
Here are the videos (in two parts) for my speech on the Budget statement on 26 February 2008, once again courtesy of Watch Tower V.
Wednesday, 27 February 2008
Budget 2008: Speech on Budget Statement, 26 February 2008
This is the prepared text of my speech. For the next few days, there will also be a video on CNA. The speech speaks for itself.
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.
FY2007 surplus
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.
Conclusion
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.
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.
Budget 2008
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.
FY2007 surplus
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.
Conclusion
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.
Thursday, 7 February 2008
OPQ 22 January 2008: Workfare Income Supplement Payment
It's almost a year since the Workfare Income Supplement scheme was announced, and the first tranche of payments were recently made on 1 January. So I thought it was an opportune time to get an update on it.
When I spoke on last year's Budget (my maiden speech to boot), I said:
Back then, I pointed out that the requirement for the self-employed and casual workers to make Medisave contributions before they are entitled to the WIS payments is likely to deter them, making it a self-defeating proposition. I think the numbers bear it out -- it seems that only one-third of those eligible have signed up. In our effort to ensure that no resources are wasted, are we effectively barring people from the help we want them to get?
12. Mr Siew Kum Hong asked the Minister for Manpower in view of the first Workfare Income Supplement payment on 1st January 2008 (a) how many persons received this payment; (b) what was the aggregate amount paid under this first payment; and (c) what was the average amount received by each person.
The Senior Parliamentary Secretary to the Minister for Manpower (Mr Hawazi Daipi) (for the Minister for Manpower): Sir, the first payment of Workfare Income Supplement (WIS) was made on 1st January 2008 for work done in the first half of 2007. 287,000 workers received a total of $146 million. On average, each recipient received $510. The WIS for work done in the whole of 2007, less the first payment, will be paid in April for employees, and in May for self-employed persons.
Mr Siew Kum Hong: Sir, I have two supplementary questions. My first question is what is the Ministry's preliminary assessment of Workfare to date?
My second question is: what are the ongoing efforts to encourage more persons, especially casual workers, to sign up for Workfare? Because when I went back to the 2007 Budget Statement, it seems that the estimate was that there were 438,000 persons who could potentially benefit, and only 287,000 workers had received Workfare.
Mr Hawazi Daipi: Sir, our assessment is that workers are quite aware of WIS and the benefits of it. People are gainfully employed and we want to encourage employment of Singaporeans and this has worked. As to how to encourage more casual workers to sign, I think we have done some work. MOM has worked with grassroots organisations, reaching out to hawkers and other casual workers, and self-employed persons to inform them about WIS. We have published a booklet on Workfare Income Supplement Scheme distributed at grassroots outlets, including the community clubs. So, people can look up this information.
The public can also look up the website. If they want to find out how much they need to contribute as casual workers or part-time workers to their Medisave account, they can look up www.wis.sg. It is very simple. Even if they do not have a computer and do not have access to Internet, they can go to a community club and find out for themselves.
Mr Speaker: Mr Siew, last question.
Mr Siew Kum Hong: Sir, given all these outreach attempts, it seems that there are still a number of workers who are not signing up for Workfare. What is the Ministry's assessment as to the reasons why they are not signing up?
Mr Hawazi Daipi: We have not found out the reasons. But it is true that quite a large number of casual workers and self-employed have not signed up for WIS. Only 54,000 such workers received WIS, as compared to 160,000 workers who received Workfare Bonus the year before. Some informal workers may not be aware of this. So, we want to step up effort and reach out to them through various organisations. Already in the past year, quite a number of activities were organised - briefing grassroots leaders and voluntary welfare organisations, including residents, hawkers and hawker assistants.
Secondly, unlike the Workfare Bonus Scheme, self-employed and informal workers need to fulfil their Medisave liabilities before they can receive WIS. Many such workers did not receive WIS because they have not yet contributed to their CPF. Nevertheless, if they contribute before 31st March 2008, they will get the full sum of WIS on 1st May this year.
Mdm Cynthia Phua: Sir, just one question. I would like to inform SPS that during the recent walkabout, the residents complained that they did not -
Mr Speaker: Mdm Phua, are you asking a question or informing the SPS?
Mdm Cynthia Phua: The question is this. A lot of them do not know that they need to apply every year. Can the SPS do a little bit more publicity?
Mr Hawazi Daipi: Sir, the suggestion is taken.
When I spoke on last year's Budget (my maiden speech to boot), I said:
"In my view, the WIS is one of the most important programmes to help the low-income in Singapore’s history, and I applaud the Government for introducing it."
Back then, I pointed out that the requirement for the self-employed and casual workers to make Medisave contributions before they are entitled to the WIS payments is likely to deter them, making it a self-defeating proposition. I think the numbers bear it out -- it seems that only one-third of those eligible have signed up. In our effort to ensure that no resources are wasted, are we effectively barring people from the help we want them to get?
OPQ
Workfare Income Supplement Payment
12. Mr Siew Kum Hong asked the Minister for Manpower in view of the first Workfare Income Supplement payment on 1st January 2008 (a) how many persons received this payment; (b) what was the aggregate amount paid under this first payment; and (c) what was the average amount received by each person.
The Senior Parliamentary Secretary to the Minister for Manpower (Mr Hawazi Daipi) (for the Minister for Manpower): Sir, the first payment of Workfare Income Supplement (WIS) was made on 1st January 2008 for work done in the first half of 2007. 287,000 workers received a total of $146 million. On average, each recipient received $510. The WIS for work done in the whole of 2007, less the first payment, will be paid in April for employees, and in May for self-employed persons.
Mr Siew Kum Hong: Sir, I have two supplementary questions. My first question is what is the Ministry's preliminary assessment of Workfare to date?
My second question is: what are the ongoing efforts to encourage more persons, especially casual workers, to sign up for Workfare? Because when I went back to the 2007 Budget Statement, it seems that the estimate was that there were 438,000 persons who could potentially benefit, and only 287,000 workers had received Workfare.
Mr Hawazi Daipi: Sir, our assessment is that workers are quite aware of WIS and the benefits of it. People are gainfully employed and we want to encourage employment of Singaporeans and this has worked. As to how to encourage more casual workers to sign, I think we have done some work. MOM has worked with grassroots organisations, reaching out to hawkers and other casual workers, and self-employed persons to inform them about WIS. We have published a booklet on Workfare Income Supplement Scheme distributed at grassroots outlets, including the community clubs. So, people can look up this information.
The public can also look up the website. If they want to find out how much they need to contribute as casual workers or part-time workers to their Medisave account, they can look up www.wis.sg. It is very simple. Even if they do not have a computer and do not have access to Internet, they can go to a community club and find out for themselves.
Mr Speaker: Mr Siew, last question.
Mr Siew Kum Hong: Sir, given all these outreach attempts, it seems that there are still a number of workers who are not signing up for Workfare. What is the Ministry's assessment as to the reasons why they are not signing up?
Mr Hawazi Daipi: We have not found out the reasons. But it is true that quite a large number of casual workers and self-employed have not signed up for WIS. Only 54,000 such workers received WIS, as compared to 160,000 workers who received Workfare Bonus the year before. Some informal workers may not be aware of this. So, we want to step up effort and reach out to them through various organisations. Already in the past year, quite a number of activities were organised - briefing grassroots leaders and voluntary welfare organisations, including residents, hawkers and hawker assistants.
Secondly, unlike the Workfare Bonus Scheme, self-employed and informal workers need to fulfil their Medisave liabilities before they can receive WIS. Many such workers did not receive WIS because they have not yet contributed to their CPF. Nevertheless, if they contribute before 31st March 2008, they will get the full sum of WIS on 1st May this year.
Mdm Cynthia Phua: Sir, just one question. I would like to inform SPS that during the recent walkabout, the residents complained that they did not -
Mr Speaker: Mdm Phua, are you asking a question or informing the SPS?
Mdm Cynthia Phua: The question is this. A lot of them do not know that they need to apply every year. Can the SPS do a little bit more publicity?
Mr Hawazi Daipi: Sir, the suggestion is taken.
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