Speech in Parliament (27 May 2014) 1. As we embark on the second half of our term and debate the direction of the Government as set out in the President’s Address, I think we should get a sense of perspective – of where we came from, and where we go from here. Allow me therefore to start, not with the speech that was delivered by our President two weeks ago, but by reminding ourselves of his inaugural Address at the opening of the 12th Parliament back in October 2011. 2. Back then, just a little more than 30 months ago, there was a broad spectrum of challenges which Singapore and Singaporeans were already facing, and these were significant challenges. Some were easy to solve, some less easy. I think its fair to say that we in this House had our work cut out for us from day one. 3. In 2011, we had just come off an excellent economic rebound, and quickly moving into more uncertain and increasingly difficult economic times. Cost of living was on the rise. Singapore’s very open economic and geographic position, and the fact that we are not naturally blessed with rich resources, meant that there was little that could be done to curb this rise. The increasing income gap was also a challenge, and we had to find ways to sustainably raise wages to bridge the gap and also to deliver specific targeted assistance to the vulnerable groups. 4. In addition, healthcare costs were on the rise. These costs, fuelled by a combination of a shortage of hospital beds and a rapidly ageing population, showed no signs of abating. 5. Home ownership, which signified every Singaporean’s tangible stake in Singapore, was a particularly pressing issue. Short supply and long queues meant that many Singaporeans had to delay their plans to marry, settle down and have children. This itself played a part in exacerbating the problems we had, dealing with a declining TFR and a shrinking population. 6. At the same time, Singaporeans felt the tangible effects of the influx of foreigners on our shores, competing for space not only physically in our already limited common spaces and on our MRT trains and buses, but also for better paying jobs and for places in schools for our children. Our education system, widely regarded as being amongst the best in the world, was also not spared. It was criticised as being too prescriptive, unduly pressurising on our children, too high stakes and not having sufficient pathways. 7. In response, the Government consulted widely with many Singaporeans to understand and embrace these and other issues which Singaporeans cared and were concerned about. Through various platforms like Our Singapore Conversation, in public forums, in coffeeshops, on cyberspace and mainstream and social media, in small groups and large ones. These issues were raised and we had robust debates in this House on a wide range of issues. Many suggestions were offered to the front bench on how these issues should be tackled. Some worked very well, some less so. 8. In the end, the result was an array of measures – a broad range of them – which were introduced over the last 3 years to address the concerns of Singaporeans on the ground, and to improve lives both in the long and short term. 9. Take housing for instance. We have seen broad sweeping changes. In fact, I recall that well before Members of this House had even been sworn in, Minister Khaw and his team had already taken steps to revise the income ceiling upwards for HDB applications, thereby ensuring that more Singaporeans would qualify for HDB housing. As the Honourable Member Zaqy Mohd said yesterday, the number of appeals that we see at MPS from first-timers have fallen dramatically. Further measures since then, to safeguard the interests of and give priorities to families with children, singles and divorcees – all issues debated in this House - have all been positive refinements. 10. We have also continued with the re-structuring of our economy to spur increased productivity and uplift our workforce, to drive wages up. The transport sector has been overhauled. There will be more trains and buses, in response to waiting time and overcrowding. There will be more hospitals and beds, and healthcare costs will be alleviated by MediShield Life and of course the Pioneer Generation Package. There will also be a review of the CPF scheme to improve life annuity schemes. Our children’s education choices have been opened up significantly through an assortment of different pathways. 11. But, we are far from done and I am sure this House will see and debate further improvements to our policies. Many Singaporeans will, however, agree that we have come a long way. PM, in his first National Day Rally after GE2011, described the issues Singaporeans faced as a “powerful storm causing a difficult ride for all of us – bumpy, stormy and causing anxiety.” I think the steps which have been taken so far would have gone a long way torwards smoothening that ride. 12. I would add too, that these measures to improve the lives of Singaporeans did not happen by chance. They happen because we have a Government committed to constructive politics of proactive consultation, robust debate, and then, most importantly, translating that debate into real tangible outcomes for Singaporeans. That is the real value of having a debate. Taking a position in a debate is a means, not an end. 13. This leads to me to my second point. In his Address, the President has emphasised several times the need to strengthen our safety nets, to make sure that the vulnerable and disadvantaged Singaporeans are well cared for. I agree wholeheartedly. 14. But this means that our social programs, which already play a key role in our fiscal policy, will have to play an even bigger part. 15. In order to sustain these programs, Government spending will inevitably have to increase over the next decade and probably beyond that. This leads me to what I regard as one of the key aspects of the President’s Address during the re-opening of Parliament. 16. There are two points. First, each of us in this House has a duty “to ensure that our social spending can be sustained, and that we have enough revenue to balance our budget”. This is echoed by the MOF’s Addendum which has stressed that we must be anchored in a system of sound and sustainable finances as government spending goes up. 17. Second, this increased social spending “must be matched by individual and community effort and initiative”. More than once, the President has stressed that even as we continue to do more for the vulnerable, we must also give people the means and the incentive to help themselves, to preserve and build dignity and self-worth. Those are values which have formed the bedrock of our social programs over the years, and we must continue to place them at the front and centre of these programs. 18. Madam, allow me to elaborate on this by making a few points. 19. First, we have to learn quickly that there is no free lunch. We cannot just dip into own reserves, like the NIRC, to fund our social spending as if it were a bottomless pit – that would be completely irresponsible. It is also too blasé to say that the Government should just subsidise healthcare insurance, as has been suggested. So, in order to fund the programs, the Government will have to raise money; and it has to be done in a sustainable manner without it being a burden on a future generation of Singaporeans. 20. It is all too easy to spend our reserves. We all want to better the lives of the less privileged, low income and disadvantaged. In fact, in times of need, it can be very tempting to resort to dipping into a higher proportion of the reserves to fund our social programs, but this can have very devastating and destructive effects on the long term good of our country. We only have to look at the recent experiences of some countries in Europe, like Greece, Portugual, Spain and Ireland. These nations are now saddled with large unsustainable debts and enormous deficits following years of popular government spend on social programs. Dependence on hand-outs (I would say over-dependence) has led to a sharp drop in productivity and loss of competitiveness in those economies, which are marked by its high unemployment and high taxation rates. They are struggling to make ends meet, and need a bailout, let alone keep their social programs sustainable. 21. Closer to home we see similar examples in Taiwan, Hong Kong, South Korea. All of these countries have seen social spending increase dramatically over the years with no corresponding reduction in the income inequality. In fact, in some countries, that gap has widened. 22. It is also not as if the greater the spend, the more effective the program. 23. We have many examples of well-intentioned schemes, designed by governments to benefit its population but instead brought about significant liabilities for generations to come. In 1965, President of the USA, Lyndon Johnson introduced Medicare and MedicAid. When it started, Medicare, the healthcare programme for the elderly, was a US$12 billion program. It has ballooned to almost US$550 billion in 2012. The Hospital Insurance Trust Fund, which manages the funds and pays the expenses, in projected to be solvent only for the next 14 years on average. 24. So much for being able to accurately estimate healthcare inflation. It is a dire situation, caused by spiralling costs and uncontrolled spending, and could cripple the country. 25. The United States spend 17% of its GDP on healthcare alone, one of the highest in the world. Yet, I would argue that the average US resident arguably gets no better standard of medical care than do our citizens at a fraction of their cost. Especially with Dr Puthucheary’s super cost effective 8 steps to good health! 26. The National Health System (NHS) in the UK is another example. The NHS provides free medical service to all, with no means testing. So anyone can avail themselves of these services. It sounds like such a dream proposition – free healthcare for all. But anyone who has experienced the system will tell you that it is riddled with inefficiency and in need of serious reforms. Waiting times (even for an operation which is needed) is inordinately long, and standards of medical care are inconsistent. Just last year, British Prime Minister David Cameron acknowledged that the NHS, in its 65th year, has deep-seated problems. 27. Hence, it is crucial, as we step up our social programmes and strengthen our safety nets, that we do so only by striking the right balance, and ensure that every program, every commitment, every promise we make is sustainable in the long term. We spend what we can afford, and never give in to the temptation to continually expand social entitlements. Over the remainder of our term in this House, we must remain vigilant and critical, to ensure that our programs have clear financial sustainability. 28. Second, we have to ensure that our social programs and spending remain firmly anchored on principles which serve to incentivise work and reward productivity and improvement. This is the only way in which to keep social programs sustainable. 29. Take Workfare for example. It sounds like welfare, but it is not. Workfare is one of the key pillars of our social safety nets, but it is not a handout. 30. In 2007, when Workfare was introduced by DPM who was then 2nd Minister for Finance, it was made very clear that “Workfare is a scheme to supplement income and incentivise work. It is not a needs-based welfare scheme”. 31. I am sure we all want the low income worker to be paid higher wages. But should that also be the case if there is no increase in productivity, or where there are no skills upgrading? We would be selling ourselves short if we did. We want our people to benefit and then graduate from Workfare. They must use Workfare to upgrade their skills, get themselves a better job, and a chance to better their and their family’s lives. That is how our social programs must work. 32. Welfarism and handouts drain our country’s fiscal resources, erode the work ethic which has been the bedrock of our success and encourages an entitlement mentality. All of this makes for a softer, less competitive Singapore and we will gradually be marginalised. We cannot afford this. We all joke about being the kiasu Singaporean in school or at work. But in many ways, this is what stands us apart – our strong work ethic and ethos, and our willingness to go the extra mile should all be part of what it means to be Uniquely Singaporean. 33. Madam, in the foreseeable future, it is likely that social policies and transfers aimed directly at helping the low-income will become a mainstay feature in our fiscal policies. The GST Voucher Fund is an example of a permanent feature of our fiscal policy and not just a temporary offset measure. Introduced two years ago, it was recently reinforced and will be made available until 2020. This signifies the Government’s assessment that the income gap will not be significantly bridged anytime soon, and, by extension, we are also likely to see progressively enhanced social policies to assist lower-income Singaporeans. 34. I am concerned that we do not create a dependency on such transfers which are not paired with co-funding or co-payments. In contrast to off-set packages, once we introduce a permanent transfer, especially over a sustained period, it will be difficult to withdraw or even re-calibrate. Come 2020, we may either have to find a way to top up this fund, or create another one. 35. We should therefore place more emphasis on other ways of closing the income gap. A key pillar of the President’s Address is the need to ensure a fair and inclusive society. Central to that must be social mobility. At its core, what this means is that all Singaporeans regardless of background or station in life must be given equal opportunity and access to be able to improve themselves and move up the socio-economic ladder. 36. That is the only way our social programs can remain sustainable in the long term. 37. With that, I support the Motion. EDWIN TONG (27 MAY 2014)
Posted on: Tue, 27 May 2014 23:49:21 +0000
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