Government Spending On Education And Healthcare


Is Singapore not spending enough on healthcare and education?

Every year, many governments around the world devote largest chunks of their resources to two key sectors – healthcare and education.

Just at Budget 2019, the Singapore Government announced it was setting aside $6.1 billion in a new Merdeka Generation Fund to provide greater healthcare assurance for this particular cohort. Meanwhile, CHAS – the Community Health Assist Scheme – will be extended to all Singaporeans with chronic conditions.

Meanwhile, government spending on education has increased by over 70 per cent from $7.5 billion for 2007 to an estimated $12.8 billion for 2018.

Both sectors form the basic building blocks for economic growth.

At various community dialogues conducted each year, healthcare and education were frequently brought up by residents. Many want the Government to spend more in these two areas.

What has the government spending been like? Can it spend more?

Healthcare: Preparing for an ageing population

 


 

To answer this, it would be useful to examine the impact of the government spending over the years.

As Eugene Tan, a political observer and law professor at the Singapore Management University, put it: “The quantum of government spending is one measure, but that will not paint the entire picture. Equally important are the outcomes of the government spending … which will depict a more complete picture of how effective and efficient our public spending is.”

In 2014, the Singapore Government spent slightly above 2 percent of its gross domestic product (GDP) on healthcare – a fraction of the over 6 per cent average among developed countries of the OECD, or Organisation for Economic Co-operation and Development.

 


 

Yet, Singaporeans have one of the highest life expectancy in the world.

Today, Singaporeans can expect to live beyond 80 years old, the third longest globally, thanks to the advancements in technology and medicine, as well as the country’s ever-improving living conditions.

Singapore’s achievements in healthcare have been internationally recognised. In 2014, the Economist Intelligence Unit (EIU) ranked Singapore second in the world for healthcare outcomes, while the World Health Organisation ranked Singapore’s healthcare system as the fourth-best globally in 2017.

Singapore also came in top for progress on a set of United Nations (UN) goals for sustainable development, based on health-related indicators. Singapore was ahead of all the other 187 countries studied, including the Scandinavian nations, Switzerland and Britain.

However, with rising life expectancy and falling birth rates come another challenge – an ageing population.

In 2010, there were 7.4 working adults supporting one senior aged 65 and above. By 2018, Singapore’s old-age support ratio dropped markedly to 4.8.

“By 2025, the population will start to shrink, but the old-age dependency ratio will keep rising. There is only one way public spending can go, and that is up,” said DBS senior economist Irvin Seah.

“So it is only prudent and right that the Government is already ramping up spending in various areas of healthcare, like infrastructure and headcount, instead of kicking the can down the road,” he added.

 

Chart: Government spending on education (from $7.5b to $12.8b) and healthcare (from $2.2b to $10.2b) have increased between FY2007 and FY2018.

SMU’s Eugene Tan acknowledged that many Singaporeans are concerned about the rising healthcare costs – among other price adjustments, such as the upcoming Goods and Service Tax hike – and rightly so.

“Ultimately, somebody has to pay for the rising costs and expenditures. But the real question is how to strike the right balance so that there is responsibility, equity and accountability in public spending.”

“Even if we get the Government to bear the bulk of the public spending, that money will ultimately have to come from the people. So public spending should not be viewed as the Government’s responsibility or the people’s burden,” he noted.

“Such a binary approach will do us in, in that we forget that there is joint responsibility and accountability. We have to look at it as a shared collective responsibility.”

Education: Grooming the next generation of leaders and entrepreneurs

 


 

For a country scarce in natural resource like Singapore, developing its people has been a key focus right from the start.

Singapore’s education system is considered among the best in the world today. Among residents aged 25 years and above, the mean years of schooling is 11.1 years in 2018.

Literacy rate is 97.3 per cent in 2018 for those aged 15 and older, which was well above the global literacy rate of 86.2 per cent.

Singapore consistently leads international rankings as well, including the OECD’s Programme for International Student Assessment (PISA), a test on mathematics, reading and science for students around the world. The scores, in particular, show that despite spending much lesser than most developed countries, Singaporean students are outperforming their peers overseas.

 


 

SMU’s Tan believes that the spending has generated significant returns and should be seen as an investment for Singapore’s future.

“Consistent public spending – or more accurately, investments – have enabled Singapore to have an excellent education system when measured by achievements in standardised testing, job opportunities for Singaporeans, providing for the needs of the economy, and enabling Singaporeans to learn and grow professionally and personally,” he noted.

“Collectively, the life chances and opportunities for Singaporeans are excellent.”

DBS’s Seah believes that the current focus should go beyond achieving academic excellence, to honing creative thinking and innovation skills among the younger ones – a direction in which the Government has already been progressing in.

With the population ageing and productivity growth moderating, the next stage of growth should be driven by local companies venturing overseas, he said.

“We need entrepreneurs. And we have to start by nurturing the next generation of entrepreneurs.”

“We cannot assume that those who do well academically will be better at taking care of themselves. Learning is a continuous lifelong process, and it is more than just the scores,” he added.

This mindset change will be critical for Singapore to be able to adapt to an ever-changing environment and remain relevant on the world stage.

Conclusion

Government spending on healthcare and education form significant chunks of the annual Budget, and has been increasing steadily. As a percentage of GDP, it may be lower compared to other countries. However, in terms of actual outcomes, the city-state has managed to do more with less.

The adherence to the principles of prudence and accountability has allowed Singapore to deliver highly-efficient outcomes in both healthcare and education without the need for excessive spending.