Band-aid measures will not close this IncOme-gap

Some say the State should spend more on welfare, but question of who pays and how bears careful thought

In his New Year’s message, Prime Minister Lee Hsien Loong flagged three challenges that Singapore faces.

The writer is assistant professor

First is the need to “manage the inflow of foreign workers and immigrants”.   [WHATEVER fOreIgn is hOt like fOreIgn MONEY ? ? ? ?]

The second challenge is to “keep home ownership affordable to all”.

Helping low-income Singaporeans cope with the cost of living is the third challenge.

While confident that the Government has the means to tackle these problems, Mr Lee also stated the policy realities in tackling the challenges. Calibrating the number of foreign workers and immigrants [DrIvIng UP InflatIOn & cOst Of lIvIng ? ? ? ?] 

requires taking cognizance of the policy imperative to keep Singapore “open and welcoming to talent”.

In providing affordable HDB flats, there is the need to “preserve the value [DrIvIng UP InflatIOn & cOst Of lIvIng ? ? ? ? and make the RICH RICHER ? ? ? ?] of the flats of 800,000 HDB homeowners”.   [jUst  brOke  1 mIlliOn in 2010]

Similarly, in helping low-income workers, the help rendered has to “strengthen the spirit of self-reliance” among Singaporeans.

These issues are not new.

[bUt  nOt  resOlved  thrOUghOUt  DECADES ? ? ? ?]

The Prime Minister’s explicit reference to them is to reassure Singaporeans that they are receiving due attention.

The three big issues will likely be hot-button election issues.

In recent years, the Government has sought to help the bottom 20 per cent through a variety of schemes such as Workfare, the Resilience Package, CPF top-ups, housing grants and utility rebates. In 2009, these infusions of income constituted a whopping 41.4 per cent of the annual incomes for HDB 1- and 2-room resident households.

The Government recognises that there are less well-off Singaporeans who need help but it would not want them to be dependent on the State. Low-income Singaporeans are a heterogeneous group. Some are aged, some are chronically ill, others are poorly educated, some do not want to be helped, and there are those who have a crutch mentality. For this last group, there is a limit to what the State or voluntary welfare organisations can do.

Should Singapore tweak or fundamentally reform its social support system?

Certainly, as society evolves and changes, what may work in the past may have limited efficacy today. In the past decade, we have seen the social compact being tilted in favour of lower-income Singaporeans.

The current approach towards sharing the nation’s wealth is not so much about equality but equity. Not every Singaporean will get the same rebate, subsidy or top-up.

Less well-off Singaporeans will get more.

State support will invariably increase given growing needs and the smaller tax base. Furthermore, with the restructuring and transformation of our economy, there will be Singaporeans who would need help to cope with the changes.

Our social welfare approach, while staunchly anti-welfare, seeks to promote the dignity of work, the ‘many helping hands’ approach, and the family as the first stop for assistance. The abiding theme is that of self-reliance first, family as an important resource and support for the individual, with the community also doing its part for the less fortunate – and when all else fails, the State as a last resort.

Should the Government have more ‘heart’ and spend more on welfare support and the like? More pertinently, are Singaporeans prepared to pay more in taxes (direct and indirect), or accumulate budget deficits, or even advocate drawing down current reserves? So while it is desirable to wish for more welfare support, the question of who pays and how to pay must be carefully thought through as well.

Ultimately, the question is whether the system that we have or that we aspire to sustains our social cohesion well enough.

Does it enjoy the support of the population, and is it seen as a legitimate expression of the social compact not just between citizens and the State, but among citizens as well?

There is an urgent need to mitigate the income gap but not through band-aid measures that merely patch the income gap. Such efforts, while well-intended, are not sustainable and may well generate a handout mentality.

We must strive to make our social assistance system more pro-active, robust and integrated so that no one falls through the cracks.

A coordinated system — of helping those truly in need and determined to break out of the poverty trap, by providing targeted assistance and perhaps even interventionist measures — can help the poor avoid being entrenched in the have-nots zone.

In this regard, the children of less welloff Singaporeans deserve close attention to avoid the perpetuation of an underclass.

There is room to refine and enhance our welfare policy so that it rapidly adapts to changing times and needs. The measure of success is whether we reduce the number of chronically poor Singaporeans, and whether we are able to break the vicious cycle that afflicts families on assistance.

Otherwise, there will be a stark division between the haves and the have-nots in society.

If this comes to pass, the ethos of our society will be fundamentally different and social tensions will increase.