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MORE SUPPORT FOR THE LOWER-INCOME
70. Now let me address some of the main issues in turn.
71. First, the issues concerning the lower-income group. Let me say that inclusive growth is not a new focus in the Budget, as Mr Faishal Ibrahim had pointed out, and Mr Lim Biow Chuan just a short while ago had emphasized.
How Government Efforts Add Up For Them
72. We made major moves in the last 5 years, major interventions – Comcare; Workfare in 2007; enhancing housing subsidies very substantially. I would like to assure Mr Gerald Giam, who might not have caught up with all the developments, that our enhanced housing grants for lower income families are such that a family with a monthly income of as low as $1,000 can now purchase a small flat. 98% of our younger cohorts, those who are below 35, earn at least $1,000 of income a month. A family that earns a bit more, say $1500, can purchase a medium-sized flat.
73. The housing grants that we have been giving are more aggressive than what any other Government would give. For those who really cannot afford it, we have other schemes to help them. So home ownership is a very important plank of how we are helping our low-income group, and in particular helping them to accumulate savings over time.
74. We also expanded education subsidies significantly in recent years – especially at the tertiary levels – and healthcare subsidies.
75. As a result, in the last 5 years, the transfers we provided to the low-income group – net of the taxes that they pay, which is basically GST – amounted to almost 20% of their incomes. This is a significant increase from the previous 5 years. We have made major moves, a range of interventions, to address the issue of inequality and help build an inclusive society. So this is not something that came about only post-GE 2011.
[Refer to Chart at Annex A]
76. Now, another way of expressing what we are doing, and taking into account what this year’s Budget contains, is to think of this over a lifetime. What do taxes mean, and what do transfers and benefits mean, over a lifetime for a low-income household?
77. If you add it all up together, you will find that for every dollar that the low-income household pays in taxes, they get back more than four dollars in benefits. A whole set of benefits add up to this – which includes Workfare, housing grants, and means-tested healthcare and education subsidies.
[Refer to Chart at Annex B]
78. This is a simple expression of how progressive our system is. Everyone pays some taxes, because everyone should contribute to a better Singapore. But the low income group gets back much more in targeted benefits, which support work, education, and housing. They get back four times the amount that they pay in taxes.
79. But this is also a reminder of a different point, raised by Mr Ang Hin Kee, Mr Edwin Tong and Dr Amy Khor, which is that we also need to be careful how much further we go. As Mr Ang Hin Kee and others mentioned, we have to be concerned about what too high a level of benefits will mean. It is not that people try to game the system deliberately. It is only natural human behaviour to want to stay where we are, and not upgrade, if it means losing benefits if we upgrade. Every society has found this to be a problem. As we expand benefits, more people try to stay within the group that receives the benefits, instead of upgrading beyond that threshold.
80. So we must be quite careful. To preserve that drive to do better, to learn a new skill, and to help the whole family move up. Because that drive at every level of Singapore society is what defines us. It is not just the drive among the most talented or the most well-educated, but the drive among ordinary, working Singaporeans, that has defined us. So let’s not lose that.
Focusing on Four Areas
81. This means being focused in our interventions as we go ahead. We will do much more to build an inclusive society. But let’s not try to do more across the board, and more and more every year.
82. What we will be focusing on, first, is social mobility – we are going to do more, particularly at the early stage, similar to what many MPs have spoken about.
83. Second, we must do more to help the lowest wage workers, including cleaners, the lower end of security guards, and a few other occupations. Wages have been stagnant in these occupations. So they need more help, and we must intervene on a tripartite basis to help them.
84. There are many reasons why wages are so low. The composition of some of these occupations are part of the reason. About three quarters of our cleaners in offices have very low education – primary level or lower – and most are older Singaporeans. While that does not justify such low wages, it is part of how the market works. We do need to do more to help them, and make sure they get a proper wage – enough to live on, and enough for their families to get by.
85. We will do more, together with our tripartite partners. For the cleaners in particular, MOM is working with NEA; in the case of security guards, with the Ministry of Home Affairs. We will look into improving professionalism, employment standards, and wages.
86. We will be providing more details on this later.
87. Third, we will do more for those with disabilities. Many MPs have spoken on this. Ms Denise Phua and Ms Jessica Tan had a specific suggestion about extending the Special Employment Credit (“SEC”) to people with disabilities who had not gone through our SPED schools. This is a useful suggestion. MCYS will be addressing this in the Committee of Supply.
88. There were also suggestions during the debate about extending the SEC to other groups – home-makers who reenter the workforce, ex-offenders, single mothers. I would be very careful about extending this to more and more groups, as the SEC is a major intervention in the job market.
89. And not everyone faces the same disadvantage. There are some home-makers who are not disadvantaged when they return to the workforce. So I would be very careful about extending what is a major intervention in favour of older Singaporeans to more and more groups.
90. Finally, we are expanding our support for our elderly, particularly in healthcare. We have spoken extensively about this. There were some suggestions. Dr Lily Neo had a view with regard to how much money needed to be put into CPF Life when an elderly person takes advantage of our Silver Housing Bonus or our Lease Buyback Scheme. This is a valid issue. For those, say, in their mid-70s who want to take advantage of our scheme, it may not make sense for them to top up their CPF all the way to the prevailing Minimum Sum to purchase a CPF LIFE annuity. This is something which we are studying, and we will complete our review within a couple of months.