THAT mythical beast, homo economicus, is utterly clear about the purpose of work: to get paid. He is keener on leisure than on work, and if money can be got without effort, he downs tools. If real people feel the same, then bountiful out-of-work benefits should be found in the same places as work-shy citizens.
Yet a cross-country comparison of benefits and attitudes to work published on January 28th finds precisely the opposite pattern.
Showing posts with label welfare. Show all posts
Showing posts with label welfare. Show all posts
Wednesday, 4 February 2009
This just in: do welfare benefits really erode the work ethic?
Someone just sent this to me -- it is an Economist article titled "British attitudes to work: Can't or won't?" Very interesting, very timely, I only wish I had it 30 hours ago. This is how it starts:
Video: Speech on Budget Statement 2009, 3 February 2009
The TOC folks seem to have beaten me to it -- here is the video of my speech in 3 parts. The exchanges with PAP MPs are in Part 3. Thanks watchtowerv!
Part 1
Part 2
Part 3
Tuesday, 3 February 2009
Budget 2009: Speech on Budget Statement, 3 February 2009
This is the final prepared text of my speech on this year's Budget. The version that I actually delivered may have some minor changes, but this is fairly definitive.
Right now, it looks like this speech may be under some sort of media blackout. The only media coverage I've seen is limited to the points I made about the use of the reserves, and the desirability of having the President publish details of his deliberations in approving the use of the reserves.
To me, those were self-evident and entirely uncontroversial. I think the points I make about the Jobs Credit scheme are much more interesting and newsworthy. Yet, I have dim hopes of them being covered by the MSM with fairness or in detail.
After I completed my speech, four PAP MPs stood up to question me. This is the first time this has ever happened to me, and it was really quite intimidating and unnerving. I really had to think on my feet. I hope I acquitted myself well.
When Mr Low Thia Khiang spoke earlier in the day, he had six PAP MPs stand up to question him, and that is being covered in the MSM, including the CNA website and on TV. Curiously, the CNA and TV coverage absolutely omits any mention of my exchanges with the PAP MPs. ST does have a short reference to my disagreement with the Jobs Credit scheme, but with very little detail. It also looks a little odd, that they used my photo to lead the story but there is only a one-line reference to my speech. I'll wait and see what is published tomorrow. [update 1: I thought the coverage in ST and TODAY turned out to be, on the whole, quite fair]
I'll try to get my exchanges with the PAP MPs transcribed. In the meantime, I'm trying to get the video uploaded -- Youtube has rejected the entire speech (plus questions) because the single clip is too long. [update 2: the video is now available here]
1. Mr Speaker Sir, thank you for allowing me to join the debate on the Budget Statement. I will touch on three aspects of this Budget: the use of the reserves, the Jobs Credit scheme, and the amount of help for the retrenched and unemployed.
Using the reserves
2. First, the unprecedented use of our reserves, to fund the Jobs Credit scheme and the Special Risk-sharing Initiative. I applaud the Government for taking this step.
3. Our reserves have always almost bordered on the mythical: Singaporeans speak of them proudly and reverently, but we know so little about these fabled reserves. Using them now sends the right signal about just how dire the situation is. It assures Singaporeans that the reserves are not sacrosanct, that they are not being accumulated for the sake of accumulating them, and that they will be used when it is necessary to do so. If the worst economic crisis the world has seen in six decades does not merit the use of the reserves, then nothing ever will.
4. But I have some concerns about the process in which the use of the reserves is being approved. We have always been told that the reserves are a hard-earned strategic asset of Singapore, and that the Elected Presidency is necessary to safeguard them. And yet, there has been precious little information about the deliberations of the President or of the Council of Presidential Advisers, in giving in-principle approval to use the reserves.
5. The Government should ask the President and the Council to publish detailed reasons for their decisions. This is the first time we are using the reserves. It is therefore a golden opportunity to define the principles for doing so. The Elected Presidency is all about the process for using the reserves – so it is important to ensure that the process in this instance is transparent and clearly articulated.
6. The Government has stated some principles for using the reserves, but principles articulated by the Government do not -- and more importantly, should not -- bind the President. After all, the President is supposed to be the independent check on the Government in its use of the reserves. The President is the guardian of the so-called second key to the reserves. It would therefore be helpful for the President, and the Council of Presidential Advisers, to publicly explain to Singaporeans why they approved the use of the reserves, and what principles they intend to adopt moving forward. Doing so would buttress the institution of the Elected Presidency.
7. These principles and guidelines do not have to be legally binding or even binding on subsequent requests to use the reserves. But they would certainly provide helpful guidance if we ever want to use the reserves again. Now is the time to set a sound foundation for the future.
8. This is all the more important, given that this Government has actually accumulated sufficient reserves during its term to fund the Jobs Credit and SRI schemes. The Government should therefore ask the President to explain whether and why he is satisfied with the Government’s reasons for not using its accumulated reserves.
Jobs Credit scheme
9. I now turn to the Jobs Credit scheme. It is one of the lynchpins of the Budget, and it seems to have caught the imagination of Singaporeans. Call it what you will, but it is fundamentally a wage subsidy for employers. It equates to a 9 percentage point cut in the employers’ CPF contribution rate. It will cost taxpayers S$4.5 billion dollars, and will be funded by our reserves.
10. The objective of this scheme is to save jobs. But how effective will it be?
11. Clearly, the effectiveness of the scheme for each employer will depend on the proportion of its costs attributable to wages. If wages form just 10% of an employer’s overall costs, then the Jobs Credit scheme will reduce its total costs by up to 0.8%. On the other hand, if 70% of costs are wages, then the scheme will reduce total costs by a maximum of 5.5%. These are theoretical maximums, based on improbable assumptions of 100% local employees, all earning $2500 per month or less.
12. The Minister has explained that the global economic crisis is caused by a worldwide collapse in demand. Simply put, there is massively reduced demand for the goods and services produced by our economy.
13. Last week, the EDB released a report on the manufacturing sector’s business expectations for the next six months. This report paints a shocking picture of just how dire things are expected to get. An across-the-board negative outlook for the first half of 2009 for manufacturing, with similarly negative forecasts for output and employment for Q1. For instance, 92% of data storage firms and 81% of precision engineering firms predict a drop in output.
14. When demand falls off a cliff like this, many businesses will face a drop in revenue far exceeding 8%. Businesses will have no choice but to cut costs to stay afloat.
15. In this context, I suspect that the Jobs Credit scheme will turn out to just a band-aid. Yes, it will provide a temporary cushion for businesses, especially SMEs. Yes, it will make employers a little bit more reluctant to lay off locals. Yes, whatever protection it creates will probably benefit the low-income more than the high-income. But it will still only be a band-aid at best, in stopping job losses.
16. And what a very expensive band-aid it will be. Citigroup’s head of Singapore research Dr Chua Hak Bin has pointed out that if the Jobs Credit scheme helps to save 50,000 jobs, then the cost of saving each job is $90,000 – three times the median annual salary of each job in Singapore. Even if it helps to save 100,000 jobs, the cost of saving each job is $45,000 – still 50% more than the median annual salary.
17. And contract workers, who are probably most at risk when a business cuts staffing costs, may not benefit from the Jobs Credit scheme. Contractors are usually hired by employment agencies and farmed out to companies. The agencies will receive the subsidy. They have no incentive to pass it on to the companies. Unlike with property tax rebates, the Government has not exhorted these agencies to pass the savings on to their customers. And so, the scheme could make contractors, who form a growing proportion of the workforce, even more vulnerable than they otherwise would be.
18. I agree with people like NUS professor Shandre Thangavelu, who has said that the Jobs Credit scheme will only have a short-run impact on the retrenchment behaviour of employers. Even the MOF team who designed the scheme is unable to predict just how many jobs it will help to save, and for how long. Mr Poon Hong Yuen, who led the team that put the scheme together, said:
20. The Jobs Credit scheme will end up benefiting capital owners disproportionately. It will reduce business costs, but I do not expect it to save very many jobs, and even then not for very long. It is essentially a special transfer to capital owners, such as business-owners and entrepreneurs. And considering that around 50% of the Singapore corporate sector is foreign-owned, a big chunk of this transfer will leak out of Singapore.
21. Today’s Straits Times Forum carried a letter from someone who works in an SME, praising the Jobs Credit scheme. But if you drill into the details, it is clear that the business was not considering retrenchments in the first place. Instead, it is considering using the Jobs Credit funding to invest further in its business. In these times, that is not a bad thing. But it clearly shows up the limitations in the scheme’s ability to achieve its stated goal of saving jobs.
22. The Jobs Credit scheme will have, at best, a marginal impact on businesses’ decisions on whether to retrench. Businesses facing collapsed demand will still retrench. Businesses doing well will reap a windfall benefit. MNCs will still, by and large, follow their corporate headquarters’ directions on retrenchments.
23. True, the Jobs Credit scheme is not meant to be the complete answer. It is not a panacea. It is one piece of the puzzle, albeit a big centrepiece, and there are many other measures to reduce business costs and help businesses through this difficult period. But the question must be whether spending $4.5 billion on the Jobs Credit scheme produces the most bang for the buck for Singaporeans.
24. This is a hand-out for businesses. But we have always opposed hand-outs for Singaporeans. Why are businesses different? In giving all this money away to businesses, are we somehow being psychologically held hostage to the ideological dogma that the best way to help Singaporeans is to help businesses, instead of helping Singaporeans directly?
Lack of help for the retrenched and unemployed
26. That brings me to my third point. This Budget does little for the retrenched and the unemployed.
27. The various elements that made up the GST offset package first announced in 2007 have been enhanced. The amount of GST credits for each household has been doubled, and there are additional S&CC and rental rebates.
28. But let us be honest with ourselves. These are mostly enhancements of measures previously announced to alleviate the pain from the GST hike in 2007. But the coming storm will inflict much more pain and much more suffering than the GST hike of two percentage points did. To equate the two is to severely understate the impact on Singaporeans in the coming year. They are simply incomparable. It is inconceivable to me, that the exact same tools used to soften the impact of the GST hike could be enough to address the worst recession the world has seen in 60 years.
29. In the past few weeks, various ministers have spoken about the need to save jobs. Rightly so. Saving jobs has to be the #1 priority. I may disagree on the effectiveness of the Jobs Credit scheme in achieving this goal, but I do not argue with the goal itself. And I would argue that helping those who have lost their jobs deserves to be the #2 priority.
30. Prevention is better than cure, so the saying goes. “Better than”, not “instead of”. When prevention fails, we still need a cure. Saving jobs is only one side of the coin; the other side of the coin must surely be to help those whose jobs were not saved. This Budget seems to have produced the singular oddity of a one-sided coin, where we concentrate so much of our efforts on saving jobs, but do so little to help those who do lose their jobs.
31. It is almost as if the retrenched are being dealt a double-whammy: the first hit is the loss of their jobs, and the second hit is the lack of assistance for them.
32. To be fair, SPUR have something for the unemployed. An unemployed, low skilled Singaporean who attends training courses to learn new skills can get an allowance of $4 per hour. A PMET who undergoes a PCP – a professional conversion programme -- can get an allowance of up to $1000 per month.
33. But SPUR is not without problems in implementation. It adopts the co-payment requirement of so many government measures. This strict insistence on a 10% co-payment of course fees means that trainees must still fork up an upfront fee. This can be difficult for many, since they by definition have no source of income. We should provide trainees with interest-free loans for the co-paid amount, with repayments in instalments and possibly interest-bearing after the trainee finds a job, which can be monitored through the CPF system.
34. Also, the PCPs will be unattractive to most retrenched PMETs. Some retrenched PMETs will have skills that are obsolete, and PCPs will be appropriate for them. But the majority of retrenched PMETs will have skills that are not obsolete; they are retrenched not because they are in sunset industries, but because their companies needed to cut costs.
35. Their skills will be in demand when the economy picks up again. They do not need and they do not want retraining for a new profession, because they will in all likelihood continue doing the same thing once the economy recovers. And in most cases, that is the rational choice, if only because retraining for a new profession means starting all over again at entry-level pay, wasting their accumulated experience in their existing profession.
36. For these retrenched PMETs, SPUR does not provide meaningful assistance. For these retrenched PMETs, the Budget has little else. For these retrenched PMETs, there is little help forthcoming.
Suggestions
38. I spoke about the Government’s approach to helping Singaporeans in my Budget speech last year. I spoke about my disappointment at how we put so much more emphasis on GDP growth than on helping less fortunate Singaporeans. I criticized this Government’s approach to social assistance, of being willing to let Singaporeans suffer rather than risk any wastage of public funds in helping them.
39. This year’s Budget again does not risk any wastage of public funds in helping Singaporeans. But it does risk wasting public funds in helping businesses. Even in these tough times, we do not give away money with no strings attached to individual Singaporeans. But it seems that these tough times justify giving away money with no strings attached to businesses, regardless of whether they are prospering or despairing.
40. Last year, I was criticized for being reckless and dangerous. At the risk of being called the same or worse this year, I will have to press on. I continue to believe that it is possible to craft targeted social assistance schemes to help the unemployed, that minimize the risk of eroding the work ethic. I have a few suggestions, and I hope I can articulate them clearly enough.
41. I ask the Government to introduce some form of unemployment insurance. In 2007, we introduced social risk-pooling for longevity risk, which is the risk of living longer than we expect or can afford to. Why not social risk-pooling for retrenchment? Not unemployment as such, but targeted for retrenchment with low benefits. This can be restricted so that only workers who are retrenched with payouts below a certain stipulated amount, say the lower of three months of the last-drawn salary or a stipulated quantum, get a few hundred dollars for so long as they remain unemployed up to six months, provided they seek re-employment during this period. This is targeted and limited. This will not sustain long-term unemployment, but is intended to tide over those who have been retrenched while they find another job. The pay-out will be small, but the assurance to those retrenched could mean so much.
42. And if the Government will not introduce unemployment insurance on a permanent basis, then I ask it to consider unemployment benefits for the retrenched, just for this year. It can be limited to workers who were retrenched since last November or who are retrenched this year. The amount can be limited to the lower of half of the last drawn salary or $1000 per month, capped at 6 months of payments. Just like the Jobs Credit scheme, it is a one-off scheme in light of the worst recession in 60 years.
43. But I know that realistically, both of these options will not be acceptable to this Government. And so I ask the Government to introduce a temporary assistance loan scheme, loosely modeled after the UK’s social fund. It should be made available to unemployed Singaporeans including the recently retrenched, to provide small loans for certain approved purposes. We can call this the No Jobs Credit scheme.
44. Examples of approved purposes could include medical expenses that are not covered by insurance, Medishield or Medifund for whatever reason, and expenses not covered by Comcare for whatever reason. To avoid abuse or misuse, the loan amounts could be disbursed directly to the persons charging for these bills and expenses. The loans should be interest-free and payable in small instalments once the borrower starts working again, perhaps by deductions from salaries through the CPF framework. Such a scheme would reduce the incidence of folks in desperate need for cash going to loan sharks or maxing out their credit cards, which would result in a downward spiral of crippling interest at a time when they could least afford it.
45. I also ask the Government to introduce more special transfers to the low-income. The doubling of GST Credits and the additional SC&C and rental rebates are helpful, but they are small in size. Inflation hit 6.5% last year, and even in this recessionary environment, there will be a time lag before prices go down. More special transfers in the first half of this year will help the low-income cope, until such time as disinflation kicks in. This will also provide a helpful fiscal boost, given that the MAS’s own Monetary Model of Singapore shows that direct transfers to the low-income has a high fiscal multiplier for the Singapore economy.
46. Sir, I do not see these suggestions as reckless or dangerous. I do not think they will necessarily result in a bloated bureaucracy. And even if they require some more resources on the part of the Government for implementation, that should not, in and of itself, automatically rule out policies that could benefit Singaporeans. Maintaining a lean government is a means to an end, and cannot be the end itself.
47. I know that there is Comcare, and it plays an important role in helping needy Singaporeans. Today’s edition of the TODAY newspaper carried a useful reminder of that scheme. But it is an ad hoc scheme that is highly discretionary, and only intended for 3 to 6 months of assistance. That timeframe may be too short for retrenched workers in this recession. The discretionary element does not give workers the all-important assurance and security that a formalized scheme provides. These times are already so uncertain, why add to the stress of retrenched workers by making assistance uncertain as well?
48. I think we can, and we must, do more and do better for Singaporeans who lose their jobs. When Franklin D. Roosevelt was inaugurated for his second term as US President in 1937, he said in his inaugural address:
Right now, it looks like this speech may be under some sort of media blackout. The only media coverage I've seen is limited to the points I made about the use of the reserves, and the desirability of having the President publish details of his deliberations in approving the use of the reserves.
To me, those were self-evident and entirely uncontroversial. I think the points I make about the Jobs Credit scheme are much more interesting and newsworthy. Yet, I have dim hopes of them being covered by the MSM with fairness or in detail.
After I completed my speech, four PAP MPs stood up to question me. This is the first time this has ever happened to me, and it was really quite intimidating and unnerving. I really had to think on my feet. I hope I acquitted myself well.
When Mr Low Thia Khiang spoke earlier in the day, he had six PAP MPs stand up to question him, and that is being covered in the MSM, including the CNA website and on TV. Curiously, the CNA and TV coverage absolutely omits any mention of my exchanges with the PAP MPs. ST does have a short reference to my disagreement with the Jobs Credit scheme, but with very little detail. It also looks a little odd, that they used my photo to lead the story but there is only a one-line reference to my speech. I'll wait and see what is published tomorrow. [update 1: I thought the coverage in ST and TODAY turned out to be, on the whole, quite fair]
I'll try to get my exchanges with the PAP MPs transcribed. In the meantime, I'm trying to get the video uploaded -- Youtube has rejected the entire speech (plus questions) because the single clip is too long. [update 2: the video is now available here]
Budget 2009
1. Mr Speaker Sir, thank you for allowing me to join the debate on the Budget Statement. I will touch on three aspects of this Budget: the use of the reserves, the Jobs Credit scheme, and the amount of help for the retrenched and unemployed.
Using the reserves
2. First, the unprecedented use of our reserves, to fund the Jobs Credit scheme and the Special Risk-sharing Initiative. I applaud the Government for taking this step.
3. Our reserves have always almost bordered on the mythical: Singaporeans speak of them proudly and reverently, but we know so little about these fabled reserves. Using them now sends the right signal about just how dire the situation is. It assures Singaporeans that the reserves are not sacrosanct, that they are not being accumulated for the sake of accumulating them, and that they will be used when it is necessary to do so. If the worst economic crisis the world has seen in six decades does not merit the use of the reserves, then nothing ever will.
4. But I have some concerns about the process in which the use of the reserves is being approved. We have always been told that the reserves are a hard-earned strategic asset of Singapore, and that the Elected Presidency is necessary to safeguard them. And yet, there has been precious little information about the deliberations of the President or of the Council of Presidential Advisers, in giving in-principle approval to use the reserves.
5. The Government should ask the President and the Council to publish detailed reasons for their decisions. This is the first time we are using the reserves. It is therefore a golden opportunity to define the principles for doing so. The Elected Presidency is all about the process for using the reserves – so it is important to ensure that the process in this instance is transparent and clearly articulated.
6. The Government has stated some principles for using the reserves, but principles articulated by the Government do not -- and more importantly, should not -- bind the President. After all, the President is supposed to be the independent check on the Government in its use of the reserves. The President is the guardian of the so-called second key to the reserves. It would therefore be helpful for the President, and the Council of Presidential Advisers, to publicly explain to Singaporeans why they approved the use of the reserves, and what principles they intend to adopt moving forward. Doing so would buttress the institution of the Elected Presidency.
7. These principles and guidelines do not have to be legally binding or even binding on subsequent requests to use the reserves. But they would certainly provide helpful guidance if we ever want to use the reserves again. Now is the time to set a sound foundation for the future.
8. This is all the more important, given that this Government has actually accumulated sufficient reserves during its term to fund the Jobs Credit and SRI schemes. The Government should therefore ask the President to explain whether and why he is satisfied with the Government’s reasons for not using its accumulated reserves.
Jobs Credit scheme
9. I now turn to the Jobs Credit scheme. It is one of the lynchpins of the Budget, and it seems to have caught the imagination of Singaporeans. Call it what you will, but it is fundamentally a wage subsidy for employers. It equates to a 9 percentage point cut in the employers’ CPF contribution rate. It will cost taxpayers S$4.5 billion dollars, and will be funded by our reserves.
10. The objective of this scheme is to save jobs. But how effective will it be?
11. Clearly, the effectiveness of the scheme for each employer will depend on the proportion of its costs attributable to wages. If wages form just 10% of an employer’s overall costs, then the Jobs Credit scheme will reduce its total costs by up to 0.8%. On the other hand, if 70% of costs are wages, then the scheme will reduce total costs by a maximum of 5.5%. These are theoretical maximums, based on improbable assumptions of 100% local employees, all earning $2500 per month or less.
12. The Minister has explained that the global economic crisis is caused by a worldwide collapse in demand. Simply put, there is massively reduced demand for the goods and services produced by our economy.
13. Last week, the EDB released a report on the manufacturing sector’s business expectations for the next six months. This report paints a shocking picture of just how dire things are expected to get. An across-the-board negative outlook for the first half of 2009 for manufacturing, with similarly negative forecasts for output and employment for Q1. For instance, 92% of data storage firms and 81% of precision engineering firms predict a drop in output.
14. When demand falls off a cliff like this, many businesses will face a drop in revenue far exceeding 8%. Businesses will have no choice but to cut costs to stay afloat.
15. In this context, I suspect that the Jobs Credit scheme will turn out to just a band-aid. Yes, it will provide a temporary cushion for businesses, especially SMEs. Yes, it will make employers a little bit more reluctant to lay off locals. Yes, whatever protection it creates will probably benefit the low-income more than the high-income. But it will still only be a band-aid at best, in stopping job losses.
16. And what a very expensive band-aid it will be. Citigroup’s head of Singapore research Dr Chua Hak Bin has pointed out that if the Jobs Credit scheme helps to save 50,000 jobs, then the cost of saving each job is $90,000 – three times the median annual salary of each job in Singapore. Even if it helps to save 100,000 jobs, the cost of saving each job is $45,000 – still 50% more than the median annual salary.
17. And contract workers, who are probably most at risk when a business cuts staffing costs, may not benefit from the Jobs Credit scheme. Contractors are usually hired by employment agencies and farmed out to companies. The agencies will receive the subsidy. They have no incentive to pass it on to the companies. Unlike with property tax rebates, the Government has not exhorted these agencies to pass the savings on to their customers. And so, the scheme could make contractors, who form a growing proportion of the workforce, even more vulnerable than they otherwise would be.
18. I agree with people like NUS professor Shandre Thangavelu, who has said that the Jobs Credit scheme will only have a short-run impact on the retrenchment behaviour of employers. Even the MOF team who designed the scheme is unable to predict just how many jobs it will help to save, and for how long. Mr Poon Hong Yuen, who led the team that put the scheme together, said:
“If just because of this they rethink (retrenchments), then I think it’s already quite an achievement.”19. I would praise the Ministry for its willingness to take a chance on the Jobs Credit scheme. I think this sort of policy risk-taking is important and helpful. But I don’t think the risk will pan out in this case. And I think Mr Poon sets a surprisingly modest target. At $4.5 billion, I would expect more.
20. The Jobs Credit scheme will end up benefiting capital owners disproportionately. It will reduce business costs, but I do not expect it to save very many jobs, and even then not for very long. It is essentially a special transfer to capital owners, such as business-owners and entrepreneurs. And considering that around 50% of the Singapore corporate sector is foreign-owned, a big chunk of this transfer will leak out of Singapore.
21. Today’s Straits Times Forum carried a letter from someone who works in an SME, praising the Jobs Credit scheme. But if you drill into the details, it is clear that the business was not considering retrenchments in the first place. Instead, it is considering using the Jobs Credit funding to invest further in its business. In these times, that is not a bad thing. But it clearly shows up the limitations in the scheme’s ability to achieve its stated goal of saving jobs.
22. The Jobs Credit scheme will have, at best, a marginal impact on businesses’ decisions on whether to retrench. Businesses facing collapsed demand will still retrench. Businesses doing well will reap a windfall benefit. MNCs will still, by and large, follow their corporate headquarters’ directions on retrenchments.
23. True, the Jobs Credit scheme is not meant to be the complete answer. It is not a panacea. It is one piece of the puzzle, albeit a big centrepiece, and there are many other measures to reduce business costs and help businesses through this difficult period. But the question must be whether spending $4.5 billion on the Jobs Credit scheme produces the most bang for the buck for Singaporeans.
24. This is a hand-out for businesses. But we have always opposed hand-outs for Singaporeans. Why are businesses different? In giving all this money away to businesses, are we somehow being psychologically held hostage to the ideological dogma that the best way to help Singaporeans is to help businesses, instead of helping Singaporeans directly?
Lack of help for the retrenched and unemployed
26. That brings me to my third point. This Budget does little for the retrenched and the unemployed.
27. The various elements that made up the GST offset package first announced in 2007 have been enhanced. The amount of GST credits for each household has been doubled, and there are additional S&CC and rental rebates.
28. But let us be honest with ourselves. These are mostly enhancements of measures previously announced to alleviate the pain from the GST hike in 2007. But the coming storm will inflict much more pain and much more suffering than the GST hike of two percentage points did. To equate the two is to severely understate the impact on Singaporeans in the coming year. They are simply incomparable. It is inconceivable to me, that the exact same tools used to soften the impact of the GST hike could be enough to address the worst recession the world has seen in 60 years.
29. In the past few weeks, various ministers have spoken about the need to save jobs. Rightly so. Saving jobs has to be the #1 priority. I may disagree on the effectiveness of the Jobs Credit scheme in achieving this goal, but I do not argue with the goal itself. And I would argue that helping those who have lost their jobs deserves to be the #2 priority.
30. Prevention is better than cure, so the saying goes. “Better than”, not “instead of”. When prevention fails, we still need a cure. Saving jobs is only one side of the coin; the other side of the coin must surely be to help those whose jobs were not saved. This Budget seems to have produced the singular oddity of a one-sided coin, where we concentrate so much of our efforts on saving jobs, but do so little to help those who do lose their jobs.
31. It is almost as if the retrenched are being dealt a double-whammy: the first hit is the loss of their jobs, and the second hit is the lack of assistance for them.
32. To be fair, SPUR have something for the unemployed. An unemployed, low skilled Singaporean who attends training courses to learn new skills can get an allowance of $4 per hour. A PMET who undergoes a PCP – a professional conversion programme -- can get an allowance of up to $1000 per month.
33. But SPUR is not without problems in implementation. It adopts the co-payment requirement of so many government measures. This strict insistence on a 10% co-payment of course fees means that trainees must still fork up an upfront fee. This can be difficult for many, since they by definition have no source of income. We should provide trainees with interest-free loans for the co-paid amount, with repayments in instalments and possibly interest-bearing after the trainee finds a job, which can be monitored through the CPF system.
34. Also, the PCPs will be unattractive to most retrenched PMETs. Some retrenched PMETs will have skills that are obsolete, and PCPs will be appropriate for them. But the majority of retrenched PMETs will have skills that are not obsolete; they are retrenched not because they are in sunset industries, but because their companies needed to cut costs.
35. Their skills will be in demand when the economy picks up again. They do not need and they do not want retraining for a new profession, because they will in all likelihood continue doing the same thing once the economy recovers. And in most cases, that is the rational choice, if only because retraining for a new profession means starting all over again at entry-level pay, wasting their accumulated experience in their existing profession.
36. For these retrenched PMETs, SPUR does not provide meaningful assistance. For these retrenched PMETs, the Budget has little else. For these retrenched PMETs, there is little help forthcoming.
Suggestions
38. I spoke about the Government’s approach to helping Singaporeans in my Budget speech last year. I spoke about my disappointment at how we put so much more emphasis on GDP growth than on helping less fortunate Singaporeans. I criticized this Government’s approach to social assistance, of being willing to let Singaporeans suffer rather than risk any wastage of public funds in helping them.
39. This year’s Budget again does not risk any wastage of public funds in helping Singaporeans. But it does risk wasting public funds in helping businesses. Even in these tough times, we do not give away money with no strings attached to individual Singaporeans. But it seems that these tough times justify giving away money with no strings attached to businesses, regardless of whether they are prospering or despairing.
40. Last year, I was criticized for being reckless and dangerous. At the risk of being called the same or worse this year, I will have to press on. I continue to believe that it is possible to craft targeted social assistance schemes to help the unemployed, that minimize the risk of eroding the work ethic. I have a few suggestions, and I hope I can articulate them clearly enough.
41. I ask the Government to introduce some form of unemployment insurance. In 2007, we introduced social risk-pooling for longevity risk, which is the risk of living longer than we expect or can afford to. Why not social risk-pooling for retrenchment? Not unemployment as such, but targeted for retrenchment with low benefits. This can be restricted so that only workers who are retrenched with payouts below a certain stipulated amount, say the lower of three months of the last-drawn salary or a stipulated quantum, get a few hundred dollars for so long as they remain unemployed up to six months, provided they seek re-employment during this period. This is targeted and limited. This will not sustain long-term unemployment, but is intended to tide over those who have been retrenched while they find another job. The pay-out will be small, but the assurance to those retrenched could mean so much.
42. And if the Government will not introduce unemployment insurance on a permanent basis, then I ask it to consider unemployment benefits for the retrenched, just for this year. It can be limited to workers who were retrenched since last November or who are retrenched this year. The amount can be limited to the lower of half of the last drawn salary or $1000 per month, capped at 6 months of payments. Just like the Jobs Credit scheme, it is a one-off scheme in light of the worst recession in 60 years.
43. But I know that realistically, both of these options will not be acceptable to this Government. And so I ask the Government to introduce a temporary assistance loan scheme, loosely modeled after the UK’s social fund. It should be made available to unemployed Singaporeans including the recently retrenched, to provide small loans for certain approved purposes. We can call this the No Jobs Credit scheme.
44. Examples of approved purposes could include medical expenses that are not covered by insurance, Medishield or Medifund for whatever reason, and expenses not covered by Comcare for whatever reason. To avoid abuse or misuse, the loan amounts could be disbursed directly to the persons charging for these bills and expenses. The loans should be interest-free and payable in small instalments once the borrower starts working again, perhaps by deductions from salaries through the CPF framework. Such a scheme would reduce the incidence of folks in desperate need for cash going to loan sharks or maxing out their credit cards, which would result in a downward spiral of crippling interest at a time when they could least afford it.
45. I also ask the Government to introduce more special transfers to the low-income. The doubling of GST Credits and the additional SC&C and rental rebates are helpful, but they are small in size. Inflation hit 6.5% last year, and even in this recessionary environment, there will be a time lag before prices go down. More special transfers in the first half of this year will help the low-income cope, until such time as disinflation kicks in. This will also provide a helpful fiscal boost, given that the MAS’s own Monetary Model of Singapore shows that direct transfers to the low-income has a high fiscal multiplier for the Singapore economy.
46. Sir, I do not see these suggestions as reckless or dangerous. I do not think they will necessarily result in a bloated bureaucracy. And even if they require some more resources on the part of the Government for implementation, that should not, in and of itself, automatically rule out policies that could benefit Singaporeans. Maintaining a lean government is a means to an end, and cannot be the end itself.
47. I know that there is Comcare, and it plays an important role in helping needy Singaporeans. Today’s edition of the TODAY newspaper carried a useful reminder of that scheme. But it is an ad hoc scheme that is highly discretionary, and only intended for 3 to 6 months of assistance. That timeframe may be too short for retrenched workers in this recession. The discretionary element does not give workers the all-important assurance and security that a formalized scheme provides. These times are already so uncertain, why add to the stress of retrenched workers by making assistance uncertain as well?
48. I think we can, and we must, do more and do better for Singaporeans who lose their jobs. When Franklin D. Roosevelt was inaugurated for his second term as US President in 1937, he said in his inaugural address:
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”49. This year, there will be many amongst us who will have too little. Economists have forecast anything between 30,000 and 300,000 jobs lost over the next 1 to 2 years. But this Budget does little to provide for them. What then is the extent of our progress? Singaporeans will have to judge for themselves.
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
Speech by Minister Tharman: 27 February 2008
Minister Tharman delivered his round-up speech today, on the debate on the Budget statement over the past couple of days. The text of his speech is available here, while the video will be available here for a limited time. I have reproduced his response to my speech below (from the prepared text, not checked against delivery).
I have always maintained that my speeches must speak for themselves, must stand and fall on their own. So I will only make a few short comments:
5.1. Mr Speaker Sir, the most important debate in the last two days has been about the basic ethic that we want to sustain in our society.
5.2. We all aspire to help and uplift the less fortunate members of our society.
5.3. Mr Siew Kum Hong made an impassioned speech. He says that the Government is only concerned about not eroding the work ethic, rather than caring for Singaporeans, and so we tend to provide the bare minimum to Singaporeans in need such that they have just enough to survive.
(a) His description does not square with the reality of Government interventions to support the lower income group. Through Workfare, through our housing subsidies, through our CPF subsidies and top-ups, through the support we provide the poor with Medifund and through the many flexible schemes that ComCare offers, we are providing substantial support for lower income Singaporeans.
(b) His desire to see nobody left behind is noble and shared by us all. But his exhortation that we should ignore waste, ignore deadweight loss, ignore disincentives to work is quite reckless.
(c) As Chew Chu Ching pointed out in his ZaoBao column today, commenting on Mr Siew Kum Hong’s speech, “if a country does not care about creating wealth at all, it is big question whether it could survive in the real world." [cartoon from ZaoBao to the same effect]
(d) To be able to help the poor, we must first create wealth, grow our GDP and provide every incentive for Singaporeans to strive and work to improve their lives and that of their families.
(e) If our policies harm that, for the noblest of reasons, we will be in serious trouble, as many other countries have found. Instead of helping the people we all want to help, we will be doing worse for them.
5.4. The real issue is how we can keep our economy productive and vibrant, and how we can keep our society resilient and caring, not just now or for a few years, but for many years to come. Will it be achieved by Government giving more and more and handing out more and more goodies, which MPs like Mr Sam Tan, Dr Ong Seh Hong, Mr Baey Yam Keng and Dr Lim Wee Kiak cautioned against?
5.5. As Chua Mui Hoong put it in yesterday’s Straits Times, “it is timely to recall that the Finance Minister is not the God of Fortune, and that not all calls for spending have merit. Even if there is a $6.4b surplus”.
5.6. Our basic philosophy has been and must remain what Mr Zaqy Mohamad, Mr Zainul Abidin Rasheed, Dr Lily Neo, Ms Lee Bee Wah, Mrs Josephine Teo and Dr Lim Wee Kiak expressed – we must keep alive the incentive for every Singaporean to strive and maximize opportunities to do better for themselves and their families.
5.7. This Budget has given Singaporeans something to tide over their present difficulties. But far more important is what we do to help every individual upgrade himself through education and training, to stay in a job and keep advancing his skills, and to save for retirement.
5.8. We have embarked on new initiatives, and there is much more work ahead. We will stay focused on this central task. As Mdm Halimah Yacob summed up, it is what we have to do so that this continues to be a place where everyone has the opportunity to fulfill his dreams through hard work and can look forward to the future with hope.
5.9. This is the philosophy which will keep Singapore going through good years and bad, which will ensure that prosperity will last more than 3 generations as Mr Seng Han Thong hoped. And above all, which will make this a society where every Singaporean can be proud that they are playing their part, not just by doing better for themselves, but by contributing to Singapore.
I have always maintained that my speeches must speak for themselves, must stand and fall on their own. So I will only make a few short comments:
- Minister Tharman did not say anything about the first part of my speech, about the benefits of GDP (not) going to Singaporeans.
- Someone (whose views I respect) told me that this was not one of my better speeches, that it was not constructive or different. Well, I think there is nothing constructive that can be said here about compassion -- either you believe in the idea of what I said, or you don't. It is about the idea, not about specifics.
- I did not advocate completely ignoring waste, deadweight loss and disincentives to work. Instead, I believe that in some situations, some wastage of public funds should be tolerated, if the overall benefit outweighs that wastage. While the road to hell may be paved with good intentions, not all good intentions lead to hell.
- I did not say anything that could possibly be construed as not caring about creating wealth at all, as the Zaobao columnist seems to have suggested. That is a strawman argument, and it's easy to debunk a strawman argument. Indeed, I do believe in and applaud the Budget measures aimed at our long-term competitiveness -- I merely chose not to include it in my speech.
- Finally, I suspect that as these things go, I got as mild a rebuke as I possibly could have. And I appreciate that.
Speech by Minister Tharman
27 February 2008
5.1. Mr Speaker Sir, the most important debate in the last two days has been about the basic ethic that we want to sustain in our society.
5.2. We all aspire to help and uplift the less fortunate members of our society.
5.3. Mr Siew Kum Hong made an impassioned speech. He says that the Government is only concerned about not eroding the work ethic, rather than caring for Singaporeans, and so we tend to provide the bare minimum to Singaporeans in need such that they have just enough to survive.
(a) His description does not square with the reality of Government interventions to support the lower income group. Through Workfare, through our housing subsidies, through our CPF subsidies and top-ups, through the support we provide the poor with Medifund and through the many flexible schemes that ComCare offers, we are providing substantial support for lower income Singaporeans.
(b) His desire to see nobody left behind is noble and shared by us all. But his exhortation that we should ignore waste, ignore deadweight loss, ignore disincentives to work is quite reckless.
(c) As Chew Chu Ching pointed out in his ZaoBao column today, commenting on Mr Siew Kum Hong’s speech, “if a country does not care about creating wealth at all, it is big question whether it could survive in the real world." [cartoon from ZaoBao to the same effect]
(d) To be able to help the poor, we must first create wealth, grow our GDP and provide every incentive for Singaporeans to strive and work to improve their lives and that of their families.
(e) If our policies harm that, for the noblest of reasons, we will be in serious trouble, as many other countries have found. Instead of helping the people we all want to help, we will be doing worse for them.
5.4. The real issue is how we can keep our economy productive and vibrant, and how we can keep our society resilient and caring, not just now or for a few years, but for many years to come. Will it be achieved by Government giving more and more and handing out more and more goodies, which MPs like Mr Sam Tan, Dr Ong Seh Hong, Mr Baey Yam Keng and Dr Lim Wee Kiak cautioned against?
5.5. As Chua Mui Hoong put it in yesterday’s Straits Times, “it is timely to recall that the Finance Minister is not the God of Fortune, and that not all calls for spending have merit. Even if there is a $6.4b surplus”.
5.6. Our basic philosophy has been and must remain what Mr Zaqy Mohamad, Mr Zainul Abidin Rasheed, Dr Lily Neo, Ms Lee Bee Wah, Mrs Josephine Teo and Dr Lim Wee Kiak expressed – we must keep alive the incentive for every Singaporean to strive and maximize opportunities to do better for themselves and their families.
5.7. This Budget has given Singaporeans something to tide over their present difficulties. But far more important is what we do to help every individual upgrade himself through education and training, to stay in a job and keep advancing his skills, and to save for retirement.
5.8. We have embarked on new initiatives, and there is much more work ahead. We will stay focused on this central task. As Mdm Halimah Yacob summed up, it is what we have to do so that this continues to be a place where everyone has the opportunity to fulfill his dreams through hard work and can look forward to the future with hope.
5.9. This is the philosophy which will keep Singapore going through good years and bad, which will ensure that prosperity will last more than 3 generations as Mr Seng Han Thong hoped. And above all, which will make this a society where every Singaporean can be proud that they are playing their part, not just by doing better for themselves, but by contributing to Singapore.
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.
Tuesday, 3 April 2007
Response to speranza nuova: who should pick up the bill for social assistance?
speranza nuova posted this comment in response to my posting on the TODAY article "How Many Portions Of Help, Sir?":
I thought this to be too important to bury in a comment, so I will respond to that article in this post. It has taken me a few days to write this.
Before I start, I will state for the record that I am fortunate enough to pay taxes (both direct and indirect), and a lot more taxes than what I directly receive from the system. (I am undecided on whether to put quotation marks around "fortunate" -- nobody likes paying taxes, but all things considered, including the fact that my revenue is almost 100% taxable income, I would rather be paying income tax than not. Unfortunately for me, I am not one of those lawyers whose salaries form the basis of the MR4 and SR9 benchmarks...) Please feel free to make of and extrapolate from that whatever you will.
Firstly, I'd like to take a step back from all that intellectualisation and rationalisation and philosophising in and around that article, and talk about what a society is or should be about.
To quote Wikipedia -- as unreliable as that can be for contentious issues:
I guess that is the "technical" meaning. To that I would the concept of values -- a society is also characterised by a common (if not universal) set of values and goals/aspirations.
So what sort of values and goals/aspirations should Singapore as a society have? What do we want it to be? Is it enough for Singapore society to exist in purely economic terms? Or do we want it to be something more?
I for one want it to be something more. I want Singapore to be a society that cares for and looks after its under-privileged and the less fortunate. I want it to be compassionate and inclusive, as over-used as that term has become. I want it to to go beyond numbers and statistics and economics and cold logic. I want it to empathise and sympathise.
In short, I want Singapore to have a heart. And I do not think that that is necessarily inconsistent or irreconciliable with Singapore as a functioning, effective, successful capitalist economy plugged into a globalised world.
So let's go back to the article. As I see it, the problem is that the article is too intellectualised and overly-grounded in economic theory. It approaches the issue in a vacuum of economic theory. It is perfect fodder for technocrats, but it does not describe real life.
A government that is nothing more than a technocracy would make for a truly sad society. I do not think -- and I pray -- that we do not have such a government or such a society.
Yes, this is a more emotive and emotional approach than the stone-cold rationality and logic employed in the article. I do not see that as a flaw, but as a strength.
So let's move from a generalised critique to a more detailed examination of the article's points.
I have already defined what sort of society I want Singapore to be. In theory, this may be achieved by the efforts of the Government, non-governmental actors (such as private charities), or of both.
Zeroing in on the specific issue of the care of elderly citizens who are not being cared for by their children or family, I think the situation in Singapore is that both the Government and private charities play a role, under the so-called "many helping hands" approach. But the primary expectation is for people to take care of themselves, or for their families to step up.
My question is: what happens when people are not, for any reason (including their own financial irresponsibility), able to take care of themselves, and their families do not step up, and they somehow fall through the cracks of private charities? Do we then adopt a judgmental view of them and their actions and their irresponsibility, and deny them assistance on the basis that "they should have known better" and that doing so would be economically inefficient?
Government is about hard choices. But does the choice have to be so hard for other people?
It is fundamentally an issue of one's view on what is the acceptable/requisite level of economic (in)efficiency when allocating scarce resources. I think Singapore as a society can afford to, and should, allocate our resources in a manner that is less economically efficient, but more (to my mind) holistically beneficial. (And that is also my problem with the HDB's position when it comes to allocating rental flats and other forms of accomodation assistance to the needy. Denying help to people who are "financially irresponsible" is not, to my mind, defensible. Not in this day and age of plenty and prosperity.)
I do not advocate unlimited provision of assistance, but I do believe we can do more. It may be economically inefficient, but not everything can or should be reduced to a question of economic efficiency.
An analysis using only economic theory assumes that everything is quantifiable and reducible to value and utility -- well, can you quantify your soul? Can you reduce to a dollar value, or any other objective metric, the general feeling of well-being and security that comes from knowing that you will never be completely abandoned and left in the cold? (And while I do not intend to talk about Bhutan's happiness index because I think it is cliched, I do believe that it is cliched for a good reason. That example does show up the drawbacks of using economic theory as the sole analytical tool and economic efficiency as the only indicator of good governance.)
In a recent posting on Tomorrow.sg, a blogger wrote about how wonderful the UK NHS was -- because he and his wife were benefitting from it. Even though they were foreigners and neither citizens nor PRs. A good friend of mine, whose girlfriend's mum is terminal ill-health in Canada, shares the same view about the Canadian system, which is providing her with free medical care and at a qualitatively high level as well.
These systems are, by most conventional accounts, economically inefficient. But to their beneficiaries, they are important and give huge amounts of comfort. My memory of A-Level Economics is that economic efficiency is about matching cost with utility. So just how do we account for all that utility when assessing whether these public health systems are economically efficient? Do we simply ignore that, just because it is not quantifiable?
I would be the first to admit, that assessments of whether a non-quantifiable benefit is worth the economic inefficiency is inherently subjective. But an argument based purely on economic efficiency itself masks an underlying subjective view, that economic efficiency is the only (or primary) standard of evaluation of policy.
It is true that when I advocate more spending on helping the elderly for whom no other help is available or easily available, I am ultimately advocating how to spend other people's money. I pay a bit in taxes, but I am under no illusion about just how much I spend!
Having said that, the same is true of all public expenditures, even public expenditure on public goods. Take street lighting. The amount of benefit I get from street lighting does also depend on where I live, whether I drive, how far I have to walk to get home, etc. Or defence -- how much it means to me depends on how globally mobile I am, whether I can emigrate, whether I have overseas PR.
So even public goods benefit some more than others. We do not quibble with public goods on that basis. So why do we quibble with private goods on that basis?
If spending a bit more on this would deprive some others of Governmental expenditure, then that merits a closer scrutiny and more thinking about which resource utilisation is more meritorious. But I think our Government has enough money (theoretical Budget deficit notwithstanding -- mark my words, at the end of this Government's term, we will somehow still have accumulated enough surpluses for a generous benefits package) that it is not a zero-sum game.
In conclusion, I would say this. Government is not just about management. It is not just about managing dollars and cents, or an exclusive focus on ensuring an economically-efficient allocation of resources, or an overriding respect for private actors' freedom to allocate their property as they deem fit without state intervention. It is not just about cold hard logic and economic theory.
Government is about all that. But it is also about more. It is also about leadership, political, economic and most of all moral. It is about empathy and compassion. It is about caring and sharing, and ensuring that no one gets left too far behind.
And yes, it is about emotions. Because at the end of the day, people are people. People have hearts. People have feelings. People are not digits. And we always need to remember that.
Hi Mr Siew,
While on this topic, I thought you might want to peek at an article written by one of my Singapore Angle colleagues:
On a Not Uncommon Line of Argument
It raises a difficult issue: Who should pick up the bill, when an elderly person's family has chosen not to provide support?
I thought this to be too important to bury in a comment, so I will respond to that article in this post. It has taken me a few days to write this.
Before I start, I will state for the record that I am fortunate enough to pay taxes (both direct and indirect), and a lot more taxes than what I directly receive from the system. (I am undecided on whether to put quotation marks around "fortunate" -- nobody likes paying taxes, but all things considered, including the fact that my revenue is almost 100% taxable income, I would rather be paying income tax than not. Unfortunately for me, I am not one of those lawyers whose salaries form the basis of the MR4 and SR9 benchmarks...) Please feel free to make of and extrapolate from that whatever you will.
Firstly, I'd like to take a step back from all that intellectualisation and rationalisation and philosophising in and around that article, and talk about what a society is or should be about.
To quote Wikipedia -- as unreliable as that can be for contentious issues:
"A society is a grouping of individuals, which is characterized by common interest and may have distinctive culture and institutions. ... In the social sciences such as sociology society has been used to mean a group of people that form a semi-closed social system, in which most interactions are with other individuals belonging to the group."
I guess that is the "technical" meaning. To that I would the concept of values -- a society is also characterised by a common (if not universal) set of values and goals/aspirations.
So what sort of values and goals/aspirations should Singapore as a society have? What do we want it to be? Is it enough for Singapore society to exist in purely economic terms? Or do we want it to be something more?
I for one want it to be something more. I want Singapore to be a society that cares for and looks after its under-privileged and the less fortunate. I want it to be compassionate and inclusive, as over-used as that term has become. I want it to to go beyond numbers and statistics and economics and cold logic. I want it to empathise and sympathise.
In short, I want Singapore to have a heart. And I do not think that that is necessarily inconsistent or irreconciliable with Singapore as a functioning, effective, successful capitalist economy plugged into a globalised world.
So let's go back to the article. As I see it, the problem is that the article is too intellectualised and overly-grounded in economic theory. It approaches the issue in a vacuum of economic theory. It is perfect fodder for technocrats, but it does not describe real life.
A government that is nothing more than a technocracy would make for a truly sad society. I do not think -- and I pray -- that we do not have such a government or such a society.
Yes, this is a more emotive and emotional approach than the stone-cold rationality and logic employed in the article. I do not see that as a flaw, but as a strength.
So let's move from a generalised critique to a more detailed examination of the article's points.
I have already defined what sort of society I want Singapore to be. In theory, this may be achieved by the efforts of the Government, non-governmental actors (such as private charities), or of both.
Zeroing in on the specific issue of the care of elderly citizens who are not being cared for by their children or family, I think the situation in Singapore is that both the Government and private charities play a role, under the so-called "many helping hands" approach. But the primary expectation is for people to take care of themselves, or for their families to step up.
My question is: what happens when people are not, for any reason (including their own financial irresponsibility), able to take care of themselves, and their families do not step up, and they somehow fall through the cracks of private charities? Do we then adopt a judgmental view of them and their actions and their irresponsibility, and deny them assistance on the basis that "they should have known better" and that doing so would be economically inefficient?
Government is about hard choices. But does the choice have to be so hard for other people?
It is fundamentally an issue of one's view on what is the acceptable/requisite level of economic (in)efficiency when allocating scarce resources. I think Singapore as a society can afford to, and should, allocate our resources in a manner that is less economically efficient, but more (to my mind) holistically beneficial. (And that is also my problem with the HDB's position when it comes to allocating rental flats and other forms of accomodation assistance to the needy. Denying help to people who are "financially irresponsible" is not, to my mind, defensible. Not in this day and age of plenty and prosperity.)
I do not advocate unlimited provision of assistance, but I do believe we can do more. It may be economically inefficient, but not everything can or should be reduced to a question of economic efficiency.
An analysis using only economic theory assumes that everything is quantifiable and reducible to value and utility -- well, can you quantify your soul? Can you reduce to a dollar value, or any other objective metric, the general feeling of well-being and security that comes from knowing that you will never be completely abandoned and left in the cold? (And while I do not intend to talk about Bhutan's happiness index because I think it is cliched, I do believe that it is cliched for a good reason. That example does show up the drawbacks of using economic theory as the sole analytical tool and economic efficiency as the only indicator of good governance.)
In a recent posting on Tomorrow.sg, a blogger wrote about how wonderful the UK NHS was -- because he and his wife were benefitting from it. Even though they were foreigners and neither citizens nor PRs. A good friend of mine, whose girlfriend's mum is terminal ill-health in Canada, shares the same view about the Canadian system, which is providing her with free medical care and at a qualitatively high level as well.
These systems are, by most conventional accounts, economically inefficient. But to their beneficiaries, they are important and give huge amounts of comfort. My memory of A-Level Economics is that economic efficiency is about matching cost with utility. So just how do we account for all that utility when assessing whether these public health systems are economically efficient? Do we simply ignore that, just because it is not quantifiable?
I would be the first to admit, that assessments of whether a non-quantifiable benefit is worth the economic inefficiency is inherently subjective. But an argument based purely on economic efficiency itself masks an underlying subjective view, that economic efficiency is the only (or primary) standard of evaluation of policy.
It is true that when I advocate more spending on helping the elderly for whom no other help is available or easily available, I am ultimately advocating how to spend other people's money. I pay a bit in taxes, but I am under no illusion about just how much I spend!
Having said that, the same is true of all public expenditures, even public expenditure on public goods. Take street lighting. The amount of benefit I get from street lighting does also depend on where I live, whether I drive, how far I have to walk to get home, etc. Or defence -- how much it means to me depends on how globally mobile I am, whether I can emigrate, whether I have overseas PR.
So even public goods benefit some more than others. We do not quibble with public goods on that basis. So why do we quibble with private goods on that basis?
If spending a bit more on this would deprive some others of Governmental expenditure, then that merits a closer scrutiny and more thinking about which resource utilisation is more meritorious. But I think our Government has enough money (theoretical Budget deficit notwithstanding -- mark my words, at the end of this Government's term, we will somehow still have accumulated enough surpluses for a generous benefits package) that it is not a zero-sum game.
In conclusion, I would say this. Government is not just about management. It is not just about managing dollars and cents, or an exclusive focus on ensuring an economically-efficient allocation of resources, or an overriding respect for private actors' freedom to allocate their property as they deem fit without state intervention. It is not just about cold hard logic and economic theory.
Government is about all that. But it is also about more. It is also about leadership, political, economic and most of all moral. It is about empathy and compassion. It is about caring and sharing, and ensuring that no one gets left too far behind.
And yes, it is about emotions. Because at the end of the day, people are people. People have hearts. People have feelings. People are not digits. And we always need to remember that.
Saturday, 31 March 2007
How Many Portions Of Help, Sir?
This article from today's edition of TODAY talks about Singapore's version of a welfare scheme. Welfare-fearing rhetoric from our leaders aside, Singapore is not so heartless that we don't have any welfare schemes at all -- we do.
It's called the Public Assistance scheme. There are only about 3,000 households are on it. I am not sure if that's because there are only 3,000 households that need this kind of assistance, or because of the stringency of the eligibility requirements, viz. Singapore citizens who (a) are unable to work owing to old age, illness or unfavourable family circumstances; AND (b) have no means of subsistence and no family members to depend on. (underlining added)
There is a cash grant component to it, with the amounts on a sliding scale depending on household size and the number of adults and children in the household. A single-adult household is currently given $260 per month, but this number is due to rise to $290 per month.
I don't think the PA scheme was very widely-known outside of the social assistance/welfare sector, at least not until a recent exchange in Parliament between MP Lily Neo and Mr Sin Boon Ann on one side, and Minister Vivian Balakrishnan on the other, that was quite widely reported in the media.
For background, Dr Neo had earlier done a rough survey of her constituents on PA, and discovered that a fair proportion of the single adults on PA had to skip at least one meal a day to get by on $260 per month. By her estimate, a single-adult household on PA actually needed about $400 per month to get by. She had filed a PQ on it in February that was not fully discussed due to time, and also because it preceded the COS debate on MCYS and so the response given to her was "wait for the Budget debate".
I can do no better than to direct you to the TODAY article, and to reproduce the relevant exchanges in Parliament below. As for me, I think $290 per month is disgraceful. At the very least, as pointed out by SPS Amy Khor in the TODAY article, the ministry needs to justify that figure and reconcile it with Dr Neo's $400 figure.
Dr Lily Neo asked the Minister for Community Development, Youth and Sports when was the last review of the Public Assistance Scheme and whether there has been an increase in the number of families on the Public Assistance Scheme.
The Minister of State for Community Development, Youth and Sports (Mrs Yu-Foo Yee Shoon): Mr Speaker, Sir, the Public Assistance Scheme is targeted at helping needy Singaporeans who are unable to work and have no family support. The number of families on the scheme has been stable for the past five years at about 3,000 families at any one time. MCYS reviews the Public Assistance Scheme regularly and takes into consideration changes in the cost of living for families on public assistance. The scheme was last reviewed in 2002 and the revised rates were implemented on 1st January 2003. And I would like to inform hon. Members that there is good news - a review is currently ongoing and likely to be completed within the next few months.
Mr Speaker: Yes, Dr Neo, one minute left.
Dr Lily Neo: May I request that this review be commensurate with inflation because, in the past, the review had not been. And from my study on 32 elderly PA cases, it shows that they need $400 a month, whereas now, from the $260 per month, they only have to live from $5 per day, which is too little even for subsistence living. The other issue is whether we could also look into the eligibility criteria because we have been very stringent as there are less than 2,800 cases of PA allowance cases whereas, according to a study, there are 100,000 households that need assistance from charitable organisations.
Mr Speaker: Order. End of Question time.
Dr Lily Neo (Jalan Besar): Mr Chairman, the Minister yesterday announced that PA allowance will be increased by $30 a month, from $260 to $290. The Minister did not answer my two questions on whether PA allowance commensurates with inflation and whether there has been a study done to ascertain whether PA allowance serves the needs of the recipients.
Sir, my single constituents told me that they needed to skip one meal a day to live on the $260 per month. And now, MCYS is going to give them $1 more a day. But, Sir, $1 a day will not be able to buy them one meal a day in any hawker centre.
Dr Vivian Balakrishnan: When we did this review of the Public Assistance rates, we took into account both the impact of inflation since the last review as well as the impact of the GST increase. There will always be arguments about whether a sum that we have decided is enough or not. As I said yesterday, frankly, one limiting factor must be that the sum that we give through Public Assistance cannot be so generous as to erode the work ethic. As I said again yesterday, if you take a family with three children, the amount they can receive from Public Assistance - I do not have the exact figure now - I think exceeds $900. At that level, you are getting dangerously close to the earnings of a low-wage worker.
Having said that, I think there will always be unique circumstances when some families find that that sum is not enough. And that is where the community and grassroots organisations have to come in and look for those mitigating or exceptional circumstances and more help is necessary. So the key point is that as far as the entitlement portion is concerned, I will admit that that is set low. But have flexibility, have organisations and individuals who are able to assess special needs of special families and then respond accordingly. That is the system which we have.
The alternative is to set the entitlement at a very high level. But once you do that, I think you would not have only 3,000 families on Public Assistance, you will see many multiples of families.
Dr Lily Neo: Sir, the Minister said that the increment was done in such a way so as not to take away the work ethic. Surely, this argument cannot be applied to PA allowance recipients because this is a group of people that can never work either due to poor health, old age or disability. Therefore, this work ethic concept does not work. The other point is that the Minister said that this group of people can depend on grassroots organisations and others. Am I to understand that MCYS cannot provide adequately for the most vulnerable group of our society and that PA recipients must go and seek help from others? He said yesterday that in this globalisation, he will ensure that increasing number of Singaporeans will not feel left out and that he will provide more assistance to the poor to cope with the higher cost of living. May I ask him: should providing three meals a day not be a priority of his promise?
Dr Vivian Balakrishnan: I take the Member's point that for Public Assistance, we have fairly strict criteria. But having said that, I am still not willing to go to the other extreme and say that since we have got strict criteria, we can afford to be generous. This is the same point that Mr Seah Kian Peng raised yesterday. I have sympathy for that point, but I would still appeal to Members of this House to exercise caution.
Her second question was: why must they go and seek help? Why must they ask for it? I would like to remind her again of my speech yesterday when I said that if it is going to be low on entitlement and high on flexibility, then we do want some effort to be exerted on the part of the recipients. Yes, we do want them to go and ask for help. But I also said yesterday that, let us not get too carried away and reach a stage where if someone does not know or does not want to ask for help, we ignore that person. I have also asked the community organisations, neighbours, voluntary welfare organisations and the rest of us, if we see someone who needs more help, enquire about that person and organise the help.
Let us talk about meals since the Member has phrased her question specifically about three square meals. You and I, in fact, all of us, know that there are programmes for meals at home. There are organisations which specifically bring bread and rations, many of which are bought from FairPrice, gratitude to Mr Seah as well. But there are schemes like this. That allows me to say with a clear conscience to both the PAP and the Opposition MPs that nobody in Singapore needs to starve, nobody needs to be deprived of healthcare, and nobody needs to be deprived of a roof over his or her head. If someone indeed is so destitute and is starving, we have other means and other safety nets for them. We can bring them to the Pelangi Home, and I would invite all of you to come to Pelangi Home and see the standard of care, the facilities, the food and the way we look after them.
So, please do not run away with the misconception that Singapore is a cold, heartless place where, because we are so strict on criteria and entitlements, people are starving, freezing and denied the dignities of life. All I am asking members is just to bear these principles in mind. Entitlements will always be low, ie, the person has to ask you for help and not bang on your table for help. We will always need the many-helping-hands model, not because the Government is broke. We can always do more and we can always raise GST further. But that is not the tone of the society that we are trying to create. We are saying that, yes, there will always be problems in society and it cannot be only the Government to do it because, if you want the Government to do it all, it means higher taxes and a large bureaucracy. As we can see in many other countries who have created elaborate welfare-states based on the best of intentions and the softest of hearts, such systems ultimately failed, they are not efficient and they are going to run out of money. We will see that happen in our lifetime, but we will make sure that that does not happen in Singapore.
As the Minister for MCYS, those are the dilemmas and the trade-offs that I have to make.
Mr Sin Boon Ann: This relates to the same point too. I am assured by the Minister's reply that no one in Singapore needs to go hungry. But the fact remains that we come across people who are indeed hungry, people who are left out and who basically fall through the cracks. I suppose this must be something to do with our communication process, our ability to reach out to these people and to tell them where help can be delivered. Surely, the Minister would also, in his deliberations, consider whether or not the communication channel or the outreach channel, is adequate and could the Ministry be doing more in this regard to reach out to these needy Singaporeans.
Dr Vivian Balakrishnan: Absolutely. I shared the story of Tan Sai Siong yesterday to make the point that it just needs sometimes one email or one phone call. Singapore is a very small place. It is not difficult for Members to contact the Prime Minister or myself directly. I am not saying that that should be the modus operandi here and everything should be solved that way. But what I am saying is that, if you do detect families in such distress, do something about it. Do not just complain but ask yourself first what should you do about it and who else can help. As far as the Government is concerned, what systems, structures, institutions and policies are needed. I want to get these things clear in our minds that there is a role for the individual to help himself or to seek help. There is a role for families. There is a role for community organisations. There is a role for interested and compassionate individuals and Tan Sai Siong was an example. And there is a role for Government. But let us keep all these respective roles organised in such a way that each one does what he or she is best at.
That is why I am appealing for understanding that our entitlement system will be low. That also means, as the Member has quite rightly said, we need to communicate, we need to keep all channels of communication open and we need to keep our eyes open. We cannot, like what I said yesterday, whenever you see someone whom you think needs help, just shrug our shoulders and say, "See, that is the Government's job." Ask yourself what you yourself have done about that individual and about that family. Singapore has got to where it is now, not just because of hard work but also because there have been family obligations and community compassion. And we have been almost schizophrenic in the sense that I believe that we have done better than communist and socialist countries in looking after the poor.
Yet, we have also been one of the most free-market capitalist economies. It is this ability to pick and use the best aspects of both capitalism and socialism - the head and the heart - which is the secret to our success. So we must disagree, we must have tensions and we must debate this, but let us not lose that sense of balance. I am sure there will be implementational and operational problems. And when these come up, Members must tell me and I must do my best to fix it. But when it comes to policy and entitlements, I will tell Members quite frankly that I start from a rather stringent and tight perspective.
That is why, yesterday, I said that I am not here to argue for a bigger budget for MCYS, although I also showed Members yesterday that the budget is increasing at a very significant rate. But I am more focused on the policies, the rules, the systems and organisational roles than on absolute sums. It is very easy for me to stand here and say, "I can double public assistance", and try to persuade my Cabinet colleagues to agree to that. But, in my heart of hearts, I will know that it is wrong and that, ultimately, it will short change the very poor that we are trying to help and the entire group of people called Singaporeans.
Dr Lily Neo: Sir, I want to check with the Minister again when he said on the strict criteria on the entitlement for PA recipients. May I ask him what is his definition of "subsistence living"? Am I correct to say that, out of $260 per month for PA recipients, $100 goes to rental, power supply and S&C and leaving them with only $5 a day to live on? Am I correct to say that any basic meal in any hawker centre is already $2.50 to $3.00 per meal? Therefore, is it too much to ask for just three meals a day as an entitlement for the PA recipients?
Dr Vivian Balakrishnan: How much do you want? Do you want three meals in a hawker centre, food court or restaurant?
Dr Lily Neo: It is cheaper to cook for one person.
Dr Vivian Balakrishnan: It is cheaper to cook for one person.
The point I was trying to make is that every family will have different needs and preferences. I am not by any stretch of the imagination claiming that what we are offering as public assistance is a generous package. I am not saying that. But what I am saying is that it is enough, by and large, for most families to get by and, for those who have needs over and beyond that, there are other means to do so. If every one was starving on this amount that we are giving and is totally devoid of any other sources of help, Pelangi Home would be overcrowded, and I would be building many, many more Pelangi Homes. So, in the end, the proof of the pudding is in the eating. Yes, any one of us, if we search hard enough, may be able to find a family or people who need additional help. But I would also say that any one of us, if we really put our minds to it, is capable of finding those additional sources of help. What I am designing is a system in which public assistance can and should be complemented by other sources of help. I think we can continue arguing this and we can continue finetuning the exact amount that is needed. But let us just bear in mind the fact that the system is set up with a certain amount of tension, and it is a healthy tension.
It's called the Public Assistance scheme. There are only about 3,000 households are on it. I am not sure if that's because there are only 3,000 households that need this kind of assistance, or because of the stringency of the eligibility requirements, viz. Singapore citizens who (a) are unable to work owing to old age, illness or unfavourable family circumstances; AND (b) have no means of subsistence and no family members to depend on. (underlining added)
There is a cash grant component to it, with the amounts on a sliding scale depending on household size and the number of adults and children in the household. A single-adult household is currently given $260 per month, but this number is due to rise to $290 per month.
I don't think the PA scheme was very widely-known outside of the social assistance/welfare sector, at least not until a recent exchange in Parliament between MP Lily Neo and Mr Sin Boon Ann on one side, and Minister Vivian Balakrishnan on the other, that was quite widely reported in the media.
For background, Dr Neo had earlier done a rough survey of her constituents on PA, and discovered that a fair proportion of the single adults on PA had to skip at least one meal a day to get by on $260 per month. By her estimate, a single-adult household on PA actually needed about $400 per month to get by. She had filed a PQ on it in February that was not fully discussed due to time, and also because it preceded the COS debate on MCYS and so the response given to her was "wait for the Budget debate".
I can do no better than to direct you to the TODAY article, and to reproduce the relevant exchanges in Parliament below. As for me, I think $290 per month is disgraceful. At the very least, as pointed out by SPS Amy Khor in the TODAY article, the ministry needs to justify that figure and reconcile it with Dr Neo's $400 figure.
OPQ (by Dr Lily Neo, 12 February 2007)
Public Assistance Scheme (review)
Dr Lily Neo asked the Minister for Community Development, Youth and Sports when was the last review of the Public Assistance Scheme and whether there has been an increase in the number of families on the Public Assistance Scheme.
The Minister of State for Community Development, Youth and Sports (Mrs Yu-Foo Yee Shoon): Mr Speaker, Sir, the Public Assistance Scheme is targeted at helping needy Singaporeans who are unable to work and have no family support. The number of families on the scheme has been stable for the past five years at about 3,000 families at any one time. MCYS reviews the Public Assistance Scheme regularly and takes into consideration changes in the cost of living for families on public assistance. The scheme was last reviewed in 2002 and the revised rates were implemented on 1st January 2003. And I would like to inform hon. Members that there is good news - a review is currently ongoing and likely to be completed within the next few months.
Mr Speaker: Yes, Dr Neo, one minute left.
Dr Lily Neo: May I request that this review be commensurate with inflation because, in the past, the review had not been. And from my study on 32 elderly PA cases, it shows that they need $400 a month, whereas now, from the $260 per month, they only have to live from $5 per day, which is too little even for subsistence living. The other issue is whether we could also look into the eligibility criteria because we have been very stringent as there are less than 2,800 cases of PA allowance cases whereas, according to a study, there are 100,000 households that need assistance from charitable organisations.
Mr Speaker: Order. End of Question time.
MINISTRY OF COMMUNITY DEVELOPMENT, YOUTH AND SPORTS (9 March 2007)
Dr Lily Neo (Jalan Besar): Mr Chairman, the Minister yesterday announced that PA allowance will be increased by $30 a month, from $260 to $290. The Minister did not answer my two questions on whether PA allowance commensurates with inflation and whether there has been a study done to ascertain whether PA allowance serves the needs of the recipients.
Sir, my single constituents told me that they needed to skip one meal a day to live on the $260 per month. And now, MCYS is going to give them $1 more a day. But, Sir, $1 a day will not be able to buy them one meal a day in any hawker centre.
Dr Vivian Balakrishnan: When we did this review of the Public Assistance rates, we took into account both the impact of inflation since the last review as well as the impact of the GST increase. There will always be arguments about whether a sum that we have decided is enough or not. As I said yesterday, frankly, one limiting factor must be that the sum that we give through Public Assistance cannot be so generous as to erode the work ethic. As I said again yesterday, if you take a family with three children, the amount they can receive from Public Assistance - I do not have the exact figure now - I think exceeds $900. At that level, you are getting dangerously close to the earnings of a low-wage worker.
Having said that, I think there will always be unique circumstances when some families find that that sum is not enough. And that is where the community and grassroots organisations have to come in and look for those mitigating or exceptional circumstances and more help is necessary. So the key point is that as far as the entitlement portion is concerned, I will admit that that is set low. But have flexibility, have organisations and individuals who are able to assess special needs of special families and then respond accordingly. That is the system which we have.
The alternative is to set the entitlement at a very high level. But once you do that, I think you would not have only 3,000 families on Public Assistance, you will see many multiples of families.
Dr Lily Neo: Sir, the Minister said that the increment was done in such a way so as not to take away the work ethic. Surely, this argument cannot be applied to PA allowance recipients because this is a group of people that can never work either due to poor health, old age or disability. Therefore, this work ethic concept does not work. The other point is that the Minister said that this group of people can depend on grassroots organisations and others. Am I to understand that MCYS cannot provide adequately for the most vulnerable group of our society and that PA recipients must go and seek help from others? He said yesterday that in this globalisation, he will ensure that increasing number of Singaporeans will not feel left out and that he will provide more assistance to the poor to cope with the higher cost of living. May I ask him: should providing three meals a day not be a priority of his promise?
Dr Vivian Balakrishnan: I take the Member's point that for Public Assistance, we have fairly strict criteria. But having said that, I am still not willing to go to the other extreme and say that since we have got strict criteria, we can afford to be generous. This is the same point that Mr Seah Kian Peng raised yesterday. I have sympathy for that point, but I would still appeal to Members of this House to exercise caution.
Her second question was: why must they go and seek help? Why must they ask for it? I would like to remind her again of my speech yesterday when I said that if it is going to be low on entitlement and high on flexibility, then we do want some effort to be exerted on the part of the recipients. Yes, we do want them to go and ask for help. But I also said yesterday that, let us not get too carried away and reach a stage where if someone does not know or does not want to ask for help, we ignore that person. I have also asked the community organisations, neighbours, voluntary welfare organisations and the rest of us, if we see someone who needs more help, enquire about that person and organise the help.
Let us talk about meals since the Member has phrased her question specifically about three square meals. You and I, in fact, all of us, know that there are programmes for meals at home. There are organisations which specifically bring bread and rations, many of which are bought from FairPrice, gratitude to Mr Seah as well. But there are schemes like this. That allows me to say with a clear conscience to both the PAP and the Opposition MPs that nobody in Singapore needs to starve, nobody needs to be deprived of healthcare, and nobody needs to be deprived of a roof over his or her head. If someone indeed is so destitute and is starving, we have other means and other safety nets for them. We can bring them to the Pelangi Home, and I would invite all of you to come to Pelangi Home and see the standard of care, the facilities, the food and the way we look after them.
So, please do not run away with the misconception that Singapore is a cold, heartless place where, because we are so strict on criteria and entitlements, people are starving, freezing and denied the dignities of life. All I am asking members is just to bear these principles in mind. Entitlements will always be low, ie, the person has to ask you for help and not bang on your table for help. We will always need the many-helping-hands model, not because the Government is broke. We can always do more and we can always raise GST further. But that is not the tone of the society that we are trying to create. We are saying that, yes, there will always be problems in society and it cannot be only the Government to do it because, if you want the Government to do it all, it means higher taxes and a large bureaucracy. As we can see in many other countries who have created elaborate welfare-states based on the best of intentions and the softest of hearts, such systems ultimately failed, they are not efficient and they are going to run out of money. We will see that happen in our lifetime, but we will make sure that that does not happen in Singapore.
As the Minister for MCYS, those are the dilemmas and the trade-offs that I have to make.
Mr Sin Boon Ann: This relates to the same point too. I am assured by the Minister's reply that no one in Singapore needs to go hungry. But the fact remains that we come across people who are indeed hungry, people who are left out and who basically fall through the cracks. I suppose this must be something to do with our communication process, our ability to reach out to these people and to tell them where help can be delivered. Surely, the Minister would also, in his deliberations, consider whether or not the communication channel or the outreach channel, is adequate and could the Ministry be doing more in this regard to reach out to these needy Singaporeans.
Dr Vivian Balakrishnan: Absolutely. I shared the story of Tan Sai Siong yesterday to make the point that it just needs sometimes one email or one phone call. Singapore is a very small place. It is not difficult for Members to contact the Prime Minister or myself directly. I am not saying that that should be the modus operandi here and everything should be solved that way. But what I am saying is that, if you do detect families in such distress, do something about it. Do not just complain but ask yourself first what should you do about it and who else can help. As far as the Government is concerned, what systems, structures, institutions and policies are needed. I want to get these things clear in our minds that there is a role for the individual to help himself or to seek help. There is a role for families. There is a role for community organisations. There is a role for interested and compassionate individuals and Tan Sai Siong was an example. And there is a role for Government. But let us keep all these respective roles organised in such a way that each one does what he or she is best at.
That is why I am appealing for understanding that our entitlement system will be low. That also means, as the Member has quite rightly said, we need to communicate, we need to keep all channels of communication open and we need to keep our eyes open. We cannot, like what I said yesterday, whenever you see someone whom you think needs help, just shrug our shoulders and say, "See, that is the Government's job." Ask yourself what you yourself have done about that individual and about that family. Singapore has got to where it is now, not just because of hard work but also because there have been family obligations and community compassion. And we have been almost schizophrenic in the sense that I believe that we have done better than communist and socialist countries in looking after the poor.
Yet, we have also been one of the most free-market capitalist economies. It is this ability to pick and use the best aspects of both capitalism and socialism - the head and the heart - which is the secret to our success. So we must disagree, we must have tensions and we must debate this, but let us not lose that sense of balance. I am sure there will be implementational and operational problems. And when these come up, Members must tell me and I must do my best to fix it. But when it comes to policy and entitlements, I will tell Members quite frankly that I start from a rather stringent and tight perspective.
That is why, yesterday, I said that I am not here to argue for a bigger budget for MCYS, although I also showed Members yesterday that the budget is increasing at a very significant rate. But I am more focused on the policies, the rules, the systems and organisational roles than on absolute sums. It is very easy for me to stand here and say, "I can double public assistance", and try to persuade my Cabinet colleagues to agree to that. But, in my heart of hearts, I will know that it is wrong and that, ultimately, it will short change the very poor that we are trying to help and the entire group of people called Singaporeans.
Dr Lily Neo: Sir, I want to check with the Minister again when he said on the strict criteria on the entitlement for PA recipients. May I ask him what is his definition of "subsistence living"? Am I correct to say that, out of $260 per month for PA recipients, $100 goes to rental, power supply and S&C and leaving them with only $5 a day to live on? Am I correct to say that any basic meal in any hawker centre is already $2.50 to $3.00 per meal? Therefore, is it too much to ask for just three meals a day as an entitlement for the PA recipients?
Dr Vivian Balakrishnan: How much do you want? Do you want three meals in a hawker centre, food court or restaurant?
Dr Lily Neo: It is cheaper to cook for one person.
Dr Vivian Balakrishnan: It is cheaper to cook for one person.
The point I was trying to make is that every family will have different needs and preferences. I am not by any stretch of the imagination claiming that what we are offering as public assistance is a generous package. I am not saying that. But what I am saying is that it is enough, by and large, for most families to get by and, for those who have needs over and beyond that, there are other means to do so. If every one was starving on this amount that we are giving and is totally devoid of any other sources of help, Pelangi Home would be overcrowded, and I would be building many, many more Pelangi Homes. So, in the end, the proof of the pudding is in the eating. Yes, any one of us, if we search hard enough, may be able to find a family or people who need additional help. But I would also say that any one of us, if we really put our minds to it, is capable of finding those additional sources of help. What I am designing is a system in which public assistance can and should be complemented by other sources of help. I think we can continue arguing this and we can continue finetuning the exact amount that is needed. But let us just bear in mind the fact that the system is set up with a certain amount of tension, and it is a healthy tension.
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