Welfare: Govt still missing the point

Two Saturdays ago, I blogged:

"After the general election (GE) in May, Malaysia was put on notice by the international rating agencies that it had to get its fiscal discipline right. Prime Minister Najib Razak responded by first cutting fuel subsidies and raising petrol prices by 10 per cent in September.

In his October Budget, Mr Najib abolished sugar subsides and pledged to cut total subsidies by 17 per cent in the financial year. The Budget did not achieve that, so most commentators expect more fuel subsidy cuts possibly in the second half of the year. Mr Najib also promised a 6 per cent goods and services tax (GST) by next April."

Indonesia too has a problem with its fuel subsidy: it’s eating up a growing share of the budget, and meanwhile Thailand has a problem with its rice subsidy for farmers. It’s so bad that there are reports that there are farmers not receiving the subsidy. The govt doesn’t have the money.

S’pore govt doesn’t have this problem: the govt doesn’t do subsidies (except in public housing, healthcare and public tpt*: though even PAP Wormtongues** like that Jason chap cannot explain where the subsidies are in healthcare and public housing: they can only repeat parrot-like the govt’s statements about the subsidies, which is there is a subsidy).

The govt claims a more focused, targeted approach in helping the needy.

But sadly in its targeted, focused approach in helping the needy, it believes in the values of Scrooge as I blogged here. I won’t go into the details on its meanness in helping poorer or older S’poreans ’cause Uncle Leong has repeatedly provided the numbers detailing its Scrooginess. But juz to remind, here is one example: Workfare is gd in principle (better than minimum wage) in my view, but too mean.

And even when it increases welfare spending by a few pennies: Acting Culture, Community and Youth Minister Lawrence Wong has cautioned against getting Singapore into debt, even as the government ramps up social assistance.

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He said state spending has to be kept sustainable to avoid passing the burden to future generations.http://www.channelnewsasia.com/news/singapore/singapore-must-be-careful/...

And despite their S$ 2.5bn++ annual contribution, manual FT workers don’t get help, when they should.

M’sia, Indonesia and Thailand have got their finances messed up because of the use of subsidies but they understand one thing: that spending on welfare is an investment in human resources. What they got wrong is welfare by way of subsidies.

Our govt has got the right idea on subsidies: they are often wasteful, always juz grow and grow, and, often, the people who don’t need them benefit the most, example middle class people and the wealthy benefit the most from any fuel subsidy, not the poor.

But it hasn’t got it: that spending on welfare can be an investment in people. This is something that developed countries, our Asean neighbours, China, India understand. But our govt doesn’t seem not to understand: it’s a Hard Truth thatwelfare spending is a waste of resources. The money could be given to Temasek and GIC to punt the markets is another Hard truth.

If the PAP wants to reconnect with the 40% of voters who voted against the PAP in the last GE, and please its base (including the 35% that “Die, die must vote PAP” , it should rethink its Hard Truth that welfare spending is consumption, not investment. However anti-PAP paper activists should be glad that the govt is unlikely to change its thinking.

As ex-scholar Donald Low put it: “What all this points to is that we really need a more robust welfare system that gives Singaporeans much greater assurance of income when they are unemployed, old or sick. The low fertility rate and the desire of even well-to-do Singaporeans to retire somewhere else are signs that the state needs to craft a new social contract with Singaporeans, that it needs to develop more mechanisms to pool risks and give Singaporeans security.

The argument that we cannot afford all these because the population is ageing is mostly a bogeyman. It is partly because we don’t have a proper welfare system that the population is ageing as rapidly as it is. This has also been the experience in much of East Asia – where the relative absence of social security led to falling fertility rates and eventually, rapid ageing.”

But anti-govt activists should be worried that he is Associate Dean (Executive Education and Research) at the Lee Kuan Yew School of Public Policy. Maybe, juz maybe, there’ll be changes in the mentality of the PAP.

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*Even the S$1.1bn spent on tpt is spare change as it’s spread out over five yrs, I think.

**Wormtongue is a minor character in The Lord of the Rings: his name describes his character.

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