Budget 2014 – Building a Fair and Equitable Society


Budget 2014 also takes forward the major strategies We are building on the broader initiatives
we have taken in the last five years: in education, work, housing and healthcare. The changes
reflect the new phase that we have entered as a country: with incomes rising less quickly,
and disparities between different groups becoming a greater concern; and with
a growing population of older Singaporeans, often with
fewer children to support them, needing security and assurance in their retirement years. It’s a new phase. Our
thinking has shifted in this new phase, and our initiatives are helping to level up our
society and mitigate inequalities. These policy interventions also help to explain why, taking
into account government transfers and taxes, Singapore’s
Gini coefficient was lower in 2013 than it had been in over a decade. We take seriously
the challenges faced by our lower-paid workers, and are helping them through both our economic
and social strategies. First and always, we must have a competitive
and vibrant economy: that is the only way we can have
good jobs and rising incomes for average and lower-income Singaporeans. Jobs are the most important
safety net, and the most meaningful way we can keep society inclusive. Second, we are mitigating wage disparities, by using tax
revenues to top up the wages of those in the lowest 20% through Workfare. Wages for these
workers are in fact going up, as I mentioned earlier. With Workfare, and the Special Employment
Credit, the average older lower-wage Singaporean will receive wages at least one quarter higher
than what their employers will pay. With Workfare, and the Special Employment Credit, they receive pay that is one quarter higher, at least, on top of what their employer is in fact paying. The three-year Wage Credit Scheme (WCS) that
I introduced in last year’s Budget is also working well. Wages for lower-paid
Singaporeans have in fact improved the most rapidly, helped by the Wage Credit Scheme. Our third strategy has been
to tackle the problem of cheapsourcing. It is a specific problem that has required a more interventionist solution, worked out among the tripartite partners.
In industries such as cleaning and security, cheap-sourcing has held down pay and also
led to high attrition, making it difficult for workers to acquire skills and upgrade themselves. The Progressive Wage Model (PWM), which will be a licensing requirement for companies in both these industries, will ensure that cleaners and security guards too enjoy significant upgrades in their basic pay, and have a pathway to improve their skills and wages over time. We are making progress, but there is more
work to do. We cannot change the realities of global competition
and technological advances that put pressure on less-skilled
workers all over the world. But we can do much more to improve
the lives of lower income workers, and to give their children the best
chances to do well, so that disadvantage is not passed from
one generation to the next, and so that our society preserves
a sense of equity and opportunity. Let me now summarise the major social planks of this year’s Budget. We are giving special recognition
to the Pioneer Generation through a package that assures them
of affordable healthcare. The Budget will also set aside funds today
to meet the full cost of the Pioneer Generation Package in future.
By doing so, the Government is assuring the Pioneer Generation that the commitment we are making today will be met,
regardless of future economic or fiscal circumstances. By taking
advantage of current resources to provide fully for this
special package for our pioneers, we will also allow future Budgets
to focus on the needs and challenges of the future, such as in education,
transport and the healthcare needs of all Singaporeans. The Budget will continue with our efforts to support social mobility, and to build a
strong and sustainable social safety net. First, we will boost education subsidies, starting with the
early childhood years. The earlier we intervene to help children who start
with a disadvantage, the better their prospects for
achieving their full potential in life. We will also
strengthen support for the middle-income group, especially in tertiary education. Second, we will continue to enhance healthcare
subsidies for both the lower- and middle-income groups.
Besides enhanced government help, we will increase
employers’ CPF contributions so as to increase the retirement
savings of workers.
Third, we will buttress schemes to help the disabled, from
young. Their difficulties are the greatest, and often their
courage too. They deserve greater support. Taken together, our initiatives of the last
five years, plus the further steps in this year’s Budget too, amount to a major
programme to support lower- and middle-income Singaporeans
— in fact 2.5 times more,
compared to what it was ten years ago, both for lower income Singaporeans
and middle-income Singaporeans. To add up what we have been doing
in the last five years, plus this year’s budget,
we are now providing them support over their lifetimes, that will be 2.5 times more than it was a decade ago. So it is a major shift.
Let me illustrate what this means for a typical low-income couple, a couple
at the 10th percentile of our income ladder, through the major
episodes of their life. First, the couple buys a home of their own.
Nowhere else in the world will a couple at the 10th percentile be able to buy a home of their own
the way we do in Singapore. They receive $60,000 in housing grants
to buy a BTO 2-room flat, with payments only from their CPF. Nothing from their take-home pay.
Later on, if they upgrade to a new 3-room flat, they receive an additional
$15,000 in Step-Up CPF Housing Grant.
Every step of their children’s education will be heavily subsidised.
Childcare fees will typically be just $3 a month.
Then, through their children’s school years and if they go on
to polytechnic, for example, financial assistance will cover 75% of their fees,
of their total fees, through school and including ITE and polytechnic. If they go on to university, they get further support. Workfare tops up their pay by up to 30%.
And if they face set-backs along the way, such as losing a
job, ComCare will help. As the couple gets older, healthcare needs become more important.
They will get subsidies of 70% to 80%, whether in
in-patient or outpatient treatments, and for long-term care.
And if they still have difficulty with their healthcare bills, Medifund will help. Taking these episodes in their life together,
the couple will receive significant help from the Government.
Government transfers (net of the taxes they pay) will in fact exceed
their lifetime incomes. However, what is critical is not just how
much we spend and redistribute resources, but how we do so.
Our approach to uplifting the poor and levelling up society can only succeed if
it supports a culture of personal responsibility —
the desire to learn a new skill and work for a better living, and to
make the effort to look after our own families. We know this from
the evidence of half a century of major social interventions around the world,
such as in the United States and the European nations.
We cannot leave people to face life’s uncertainties on their own.
That is not our approach. But as we strengthen our social support
and safety nets, our whole approach must be to encourage a compact
between personal and collective responsibility, where each reinforces the other.
It is the best way to sustain a vibrant and equitable society,
where everyone plays a role in making
Singapore a better place.

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