Source : https://www.facebook.com/notes/amy-khor/my-speech-at-the-budget-2012-parliamentary-debate-on-29-feb-2012/381941965149584
Mr Speaker Sir, as Chairman of REACH and Mayor of the South West District, I have had the privilege of being at close quarters with different segments of the population who have responded to Budget 2012. Since the Budget Speech on 17 Feb 2012, REACH has received more than 600 feedback inputs.
The theme “Building a Fair and Inclusive Society” clearly resonates with many people. It is gratifying for me to hear the spontaneous reactions and support for the Budget. Words like “great”, “responsive” and “caring” have been used. It is the government putting the money where its mouth is.
Many feedback contributors have said that they like the budget as it reflects how we are part of a community that cares for one another and, more importantly, that the ground has been heard and their views taken into account.
I can testify that REACH does not get only pro-government feedback. But, the overall support is indeed encouraging.
However, as with all budgets, we cannot be all things to all men. There will be some trade- offs, which could lead to some stakeholder segments feeling neglected. Already, businesses and some middle income have lamented that this Budget offered few goodies for them. But it must be said that whilst the middle income segment is not singled out, many of the measures such as extending subsidies in the intermediate and long term health care sector to cover up to two thirds of Singaporean households do benefit them.
Let me now highlight some key concerns raised and which the government could address.
CPF Contribution Rates
The move to increase CPF contributions for workers aged 50 to 65 years to encourage them to continue working is welcome. However, it can be argued that since people are becoming more educated and skilled, living longer and healthier and even as we increasingly embrace a performance based wage system, the CPF contributions rates should be similar for all workers regardless of age and should be extended beyond 65 years. Otherwise, the signal would still be that older workers are less valued.
Special Employment Credit (SEC) and WIS for Disabled
It is also suggested that the SEC and WIS for the disabled be extended to Persons with Disabilities (PWD) but who did not graduate from SPED Schools.
Feedback from the disabled community is that even those who graduate from mainstream schools are still discriminated against and the SEC would help to ensure that employers are not discouraged from employing them.
Productivity Drive and Foreign Workers
For businesses, the criticisms to Budget 2012 have been sharper. There are few objections towards the statement that Singapore needs to reduce its reliance on foreign workers and steer its economy toward higher productivity. But, growing productivity takes time and replacing foreign workers with more locals in a tight labour market will be extremely challenging in the short to medium term. Hence, there are concerns that the shortage of foreign labour may hurt small businesses and eventually increase costs for everyone.
We need to stay the course in climbing the productivity ladder, lest cheaper foreign workers become an intoxicant that numbs us to the need to restructure for the long term. However, we should also not dismiss these concerns, especially pressing when a slowdown in the global economy is looming.
Despite increases in foreign worker levies since 2010 and the government’s gradual tightening of foreign worker employment, the number of foreign workers in Singapore has grown. After a strong 11% labour productivity growth in 2010, our productivity growth virtually ground to a halt in 2011 at 1%, Although this may be attributed to a lower 4.9% GDP growth and more jobs being created, it does show that shifting the economy to a productivity-driven model is not so simple.
It is very difficult to wean companies off their dependence on foreign labour because that is the quickest fix, and SME’s rarely have the luxury to think long term when the entrepreneurs who run them have to deal with day to day business challenges.
Besides the measures announced in Budget 2012 to incentivise companies to improve productivity, the government will need to work closely with the various industry sectors to change mindsets and more aggressively drive productivity initiatives. Employers will also have to make concerted effort to adapt their work processes to include more flexible work hours and better HR policies and pay structures to accommodate older workers and other untapped labour pools such as back -to -work women. Here, the Government could take the lead by employing older workers and back – to – work women across all Ministries and agencies.
For work that the Government best sources such as cleaning and security, it could stipulate minimum standards required of these workers, so that they will be able to get better pay commensurate with better skills and improved productivity.
Boosting Bus Capacity
There is significant resentment that public funds are being used to boost bus capacity even though doing so to improve service level is welcome. The government has always maintained that the privatisation model is the best way to ensure that the public transport system operates effectively and efficiently.
Given their size and credit standing, the publicly listed bus companies can quite easily raise funds via bond or share issues to buy the buses. So, many people cannot fathom the logic for the direct use of public funds to ramp up bus capacity. Moreover, it is argued that these companies have been making substantial profits over the years even though their bus business may be running operating losses.
If the $1.1 billion subsidy is inevitable, then the Government must have strict oversight over these operators and impose conditions to ensure that we achieve the desired service level improvements and the extra money does not go toward boosting dividends or share prices. These conditions should be made known to the public.
Some questions also remain unanswered – if government pays for the buses, will they be “given” to these bus companies, or more appropriately, leased to the bus companies at market rates? The very idea of public funds being used for the purchase of buses for private transport companies also raises the question whether nationalisation or some hybrid model similar to those in Australia and the UK should be the way forward.
Mr Speaker Sir, at this juncture, I want to take a step back and look at the Budget from a macro perspective. From the point of view of depicting priorities, Budget 2012 indicates a stepped up response to realities that have asserted themselves more and more forcefully. The opposition would like to think that Budget 2012 is a reaction to the GE last year. But clearly, deeper forces are at work.
Let me organise my thoughts under four headings:
1. A persistent problem
2. A fresh approach
3. A social partnership
4. A real danger
1. A persistent problem
Mr Speaker Sir, globalization — which Singapore has whole heartedly embraced and continues to do – has two opposite effects.
Firstly, it produces big winners: a start up of the “Next Big Thing” that goes IPO and enriches its founders by millions, top financial talent that attract salaries and sign-on bonuses which international banks clamour to offer, obscure artists on YouTube that goes viral and draws the attention of record companies or sports promoters.
But, globalization also produces big losers.
While Singapore has one of the highest percentage of millionaires in the world, the lower segments of the population find it difficult to pull themselves out of their difficulties.
Our Gini Coefficient without government transfers and taxes increased from 0.442 in 2000 to 0.473 in 2011. While government transfers and taxes have brought down the corresponding Gini Coefficients for 2000 and 2011 to 0.434 and 0.452 respectively, it has thus far not reversed the general rising trend of income inequality.
This is despite the higher and higher amounts of funds allocated to social development. For instance, social spending rose from $13b (or 5.5% of GDP) in FY 2006 to $21.5b (or 6.6% of GDP) in FY 2011, both in absolute terms and in proportion to share of overall budget. Even so, the gaps have not closed.
These observations point to deepening and chronic income divisions that need urgent attention. This is compounded by the rapidly ageing population which many people have noted, with the attendant problems of slowing growth in the domestic workforce, and a higher fiscal burden for health care.
It will be foolish to jettison the dogma of globalisation and free markets because it has brought enormous benefits to Singapore. Millions have been uplifted from their poverty in many countries that have embraced market reforms and plugged their economies into the global trading system. But, we need to address the inequalities which plague dense cities like Singapore.
The problem will not easily disappear anytime soon. In fact, perhaps alarmingly, it is likely to worsen as the numbers of dependant aged rise. The investment in up-levellers like education (which this Budget also offers) pays dividend only in the long term.
The persistence of the widening income gaps thus call for a reinforced fiscal policy to tackle the problem.
2. A fresh approach
When the global financial crisis broke out in 2008, central banks around the world resorted to a massive and co-ordinated injection of liquidity to decisively unclog credit channels and help re-start bank lending.
In the US, they pursued an unconventional fiscal policy called quantitative easing or QE, and Mr Ben Bernanke even initiated 3 rounds of it.
Speaker Sir, I am not at all advocating that we start pouring vast sums of money into the social sector, but – poor analogy as it is –there is a need for the rough equivalent of QE for social development.
In this respect, I am grateful to Minister Tharman for heeding comments I and others have made last Budget about the need to raise the social allocation even further. I call this a responsive government although some opposition members would label it a populist move. But, this is not a course correction as the member for Aljunied, Miss Sylvia Lim, suggested yesterday. It is the reinforcement of an existing policy.
What Budget 2012 implies is a further loosening of the purse strings to help the most vulnerable segments of the population, with full awareness that the help they receive may be prolonged over many budget cycles.
Indeed, Budget 2012 signals in my view, a fresh approach the government has taken in cognizance of these social realities. It is a fresh approach because the government has brought to bear substantially more funds than hitherto to try and decisively tackle the income gap. Hence, we have a permanent GST voucher scheme.
We already have a number of “permanent” assistance schemes such as Workfare and now, we have a permanent GST vouchers program. But a “QE” for the social allocation does not and should not negate the core principle of self reliance. The GST vouchers are subject to some measure of means testing and equally important are targeted. For instance, only about a third of the GST voucher scheme is in cash whilst the other two portions are directed toward Medisave for the elderly and utility subsidies. Whilst some of these might need further refinements, we must never veer away from the goal of all such schemes, that is to give a leg up and promote self reliance as far as possible.
At the same time, measures to ensure social mobility for the young who may come from low income families are crucial so as to ensure that they have a chance of getting out of the poverty trap. We must do all we can to preserve social mobility, which is likely to get harder over time, so that a permanent underclass will not coalesce.
3. A social partnership
Building and being an inclusive society does not just mean the government singularly putting in place policies to redistribute resources to help the vulnerable. It is also as much about individuals wanting to be helped and to help themselves, families bearing responsibility and the community coming forward to lend a helping hand. Everyone must chip in and do their part. This is the social partnership Singapore needs to forge and strengthen even as we face a period of greater economic uncertainty.
But, while the government has done more, and no doubt, will continue to do so in the years ahead, the problems have to be collectively owned and comprehensively tackled. They will require a total response from everyone.
Having more social workers as called for in the Budget will help, but the problems still cannot be resolved without the support of the family and other stakeholders.
I draw an analogy from the short video clip and frequent announcements at MRT stations. In the clip, a suspicious looking man boards an MRT and deposits a bag under his seat. He disembarks the train several stations away but leaves the bag on the train.
Shortly after he disembarks, the train explodes as it enters a tunnel. The message is clear, and is reinforced by the announcement over the PA system – if anyone sees a suspicious object at the station that is left unattended, he or she should alert the station staff, lest it turns out to be an explosive device from a terrorist. The responsibility falls on everyone so that everyone is safe.
Likewise, we need to pursue a social partnership that leverages off the strengths of each party – the government’s resources, the community’s local networks, the neighbour’s alertness to specifc people in need. The community must look out for one another, and the able must stoop to help the less able. In this way, the holes are plugged and more sustainable solutions can be proffered.
Let me cite an example to illustrate such a social partnership. This is the case of a resident in my constituency who alerted us of the Chow family of four siblings in a neighbouring HDB unit. All four were afflicted by a genetically inherited disease and all became blind. Life has dealt them many harsh blows. One of them is now in a nursing home, one works as a masseuse supporting himself and his two sisters staying at home.
GRLS did not know about the family as the family never switched on the lights – since they were blind — and sleeps early every night. Hence, we never reached them during house visits.
The masseuse was able to support the family until he fell down. The neighbour alerted GRLs that this family needs help. The CDC is now helping them with monthly cash, food rations and other subsidies. The RC visits them every month.
I visited them and was impressed that even though they were blind and only the youngest sibling — already aged 50 –has some vision, they kept their house very neat, without a speck of dust on the floor. And they were very independent, able to cook and feed themselves.
Hence, we need the community to come forward to reach out and support such vulnerable families, hand-in-hand with the government.
4. A real danger
While we pursue inclusiveness, and open government purse strings, we must also jealously guard the principles of individual and collective responsibility and not go down the unconditional welfare route which will erode our work ethic and our sense of responsibility. I cannot stress this enough.
Ultimately, growing the economic pie via productivity, innovation and higher skills must be done so that we have the resources for the programmes and initiatives that will help us achieve a vision of an inclusive and stronger Singapore. To do so means we must also have a robust and sustainable fiscal policy that can ride through the economic cycles.
A number of my fellow MPs have indicated these concerns, and I myself have raised this during last year’s Budget debate. Amidst the pressure to spend and spend to address real needs, we need to preserve the ethos of prudence in our fiscal policy needed to buffer ourselves against global volatilities.
We must not go the way of countries like Greece and France whose large government spending, often in excess of 40%, on welfare payouts and unemployment benefits are funded by cripplingly high taxes and unsustainable budget deficits. Their high social spending has not prevented but entrenched a permanent underclass dependent on handouts and experiencing high unemployment within the community.
In sum, balancing the budget & removing obstacles to sustained growth are the best safeguards against welfarist budgeting.
Sir, I support the Budget.