At the heart of the Singapore story in the past 50 years is its broad-based social upliftment, not its multi-fold increase in gross domestic product per capita, said Deputy Prime Minister Tharman Shanmugaratnam yesterday as he stressed that the Government’s more decisive shift towards mitigating inequality began close to a decade ago.
“It’s not just the innovation of the last five years. And I recognise, of course, that there’s some political cunning in saying that this all came about because of GE2011,” he said, referring to the General Election four years ago.
“I’m sorry, it didn’t. The world didn’t start in 2011. We made very clear our intentions and our motivations in 2007, stated that it was going to be a multi-year strategy and, step by step, starting from the kids when they’re young, through working life, and into the senior years, we’ve been moving towards a more inclusive society.”
Mr Tharman, who is also Finance Minister, added: “We intend to continue on this journey, learning from experience and improving where we can. But this is not the result of 2011.”
The broad-based social upliftment came about through a combination of economic and social policies, and Singapore’s economy could not have succeeded without social strategies, he said at the Economic Society of Singapore’s SG50 Special Distinguished Lecture last night. “Social strategies were critical all along the way,” he said. “Economic and social strategies have gone hand in hand and that is the Singapore story.”
From the 1960s to 1980s, the focus was very much on economic survival with very little support for the poor in the “explicit sense”, he said. Social well-being went up through focusing on the fundamental basics such as jobs and housing.
Mr Tharman noted that in the 1965 Budget speech by Mr Lim Kim San, there was only one mention of social intervention — the provision of 40 more places at Mount Emily Girls’ Home to cater to a total of 85 girls.
From the 1990s, social policies started coming to the fore, with Edusave grants for students, Medifund to assist the poor with medical expenses and housing grants for the resale market announced, he said.
From around 2006, a more decisive rebalancing to ensure Singapore remains an inclusive society began, he added.
Rebutting sceptics who said the shift came about after the 2011 General Election, Mr Tharman flashed charts to show the amount of government transfers lower-income households received, after paying taxes.
In 2005, the bottom 20 per cent of households in terms of income received S$103 in net government transfers for every S$100 earned. In 2010, the quantum of net transfers increased to S$136. By 2015, the figure was S$163.
Government transfers include Workfare income supplements, housing grants, healthcare and education subsidies.
In the next phase of development, the Government wants to make sure Singapore becomes a more inclusive and innovative society, said Mr Tharman, who noted that “the two things go hand in hand”.
Singapore must keep creating value and earn its place in the world by being original to keep incomes growing. It must also keep working to ensure “birth is never destiny”, he said. The low- and middle-income will also need more assurance as they get older.
The Silver Support Scheme, which will provide payouts to needy elderly, will temper inequality in one’s golden years. The Central Provident Fund scheme is also a key pillar as it is not only an individual savings scheme, but also one that features government transfers to the lower-income through Workfare, housing grants and extra interest earned.
Based on the latest policies in these areas, a 25-year-old at the 10th percentile of the income ladder today would have received about S$200,000 from the Government — or about 40 per cent of his total CPF savings — by the time he turns 65, Mr Tharman said.
All countries would like to sustain income growth, mitigate inequality and keep social mobility, but few have succeeded or maintained success on all three fronts, he said. But Singapore has not done badly on these fronts.
Singapore’s Gini coefficient was relatively high even back in 1980 and its level of inequality now is “not particularly high” before taxes and transfers, when compared with countries such as Finland and the United States, using the OECD method that adjusts for family size.
Countries like Denmark and Finland achieve large reductions in their Gini coefficients after taxes and transfers, but this is through heavy taxation on the middle-income, said Mr Tharman.
Singapore’s approach is to provide targeted help to temper inequality, while keeping relatively low overall tax revenues and helping everyone to move up, he said.
The Republic needs to work hard at it, experiment where possible and learn from mistakes, “but not think there’s only one model that we need to follow”, said Mr Tharman.
“We can’t take a hands-off policy, it can’t be all about self-reliance because the natural workings of the market will lead to inequality. Excessive inequality and it will just sap the morale of our society,” he said. “Neither do we want a strategy of handouts all the way because that just takes the pride out of people and it saps the energy of our society.”
Mr Tharman added: “We’ve got to have a system … of hand-ups starting from young, helping everyone discover their strengths, helping them to have a real chance of succeeding in what they’re doing and having the pride of contributing, so that everyone feels they’re contributing even as they get a fair deal.”
Source: www.todayonline.com
