Singapore is the world’s third richest country, according to Forbes.
Is this cause for cheer or concern? Well, it depends on your perspective.
The economic achievements of this small city-state can be a source of national pride if you take the macroeconomic view. It shows what Singapore and Singaporeans can achieve with the right policies, despite the odds.
Most of the other rich countries on the Forbes list – Qatar, Kuwait and Brunei, for example – rely on natural resources to fill their coffers.
In contrast, Singapore generates its wealth from being plugged to the world as a technology, manufacturing and finance hub.
But there is a price to be paid for living in a wealthy global city – High prices and a wide income gap.
Indeed, Singapore has one of the highest income disparities in the developed world.
While a sustained period of strong economic growth has lifted our people from absolute poverty, it is clear that the benefits of growth have not been distributed evenly, and our high levels of income inequality have risen further.
According to Forbes, Singapore has a GDP per capita of about $71,000 Singapore dollars after adjusting for purchasing power parity.
However, our average cleaner or security guard does not earn a tiny fraction of that. The news that Singapore is the third richest country in the world would not give him much cheer.
If we continue in this trajectory, we will be an increasingly rich and unequal society with an upper class of the super-rich and an underclass. An underclass of Singaporeans stuck in low-paying jobs can only lead to more social tensions.
We see these low-paid workers at our MPS. Some are angry and hurt by the hand that life in this city has dealt them.
One security officer, aged 61, said his salary of $1,000 a month has remained stagnant for the last 20 years.
He came to see me for financial assistance to help support his family and cope with the rising cost of living. He is working on contract, which gets renewed every two years, so he dares not make a complaint against his employer.
Another resident told me he has been earning $700 a month as a cleaner for the past 10 years, also on contract, and needed help with his escalating household bills.
The squeezed middle class also feel the pressure – they compete for largely the same scarce resources as the rich: places in good schools, housing in prime areas, COE for cars.
The super-rich have contributed to inflation in the prices of some of these goods. Many of the middle-class, being better-educated, hold higher life expectations. Now, to their dismay, they find themselves struggling.
Sir, against this backdrop, I commend the Finance Minister for a Budget aimed at building a fair and inclusive society. It shows a Government keenly aware of the effects of the widening income gap, and determined to contain inequality and to sustain social mobility in each new generation.
Over the years, there have been many conscious attempts to increase wage and skill levels of our low-paid workers.
The Workfare Income Supplement scheme and the Workfare Bonus help to top up the wages, but they do not go far enough.
In my previous speeches, I have asked for a review of the qualifying criteria, the cash quantum and frequency of the Workfare pay-outs, and so, will not belabour the same points here.
But the Workfare scheme should be reviewed sooner rather than later.
The push to encourage best sourcing and productivity is another important step. But the pace of change is too painfully slow.
Sir, we have to recognise that for many families, the rising cost of living is a real concern. Not a few find themselves short of cash at the end of the month.
Their situation can easily tip over with a major life change, such as a divorce, the death of a spouse, the loss of a job, an accident, the need to cope with an illness or to care for a sickly elderly parent.
Some cannot get a loan from banks to pay off their mounting debts, given their low salaries and poor credit ratings. Those who do get bank loans get threatened with a seizure of their flats or bankruptcy when they default on the instalment payments.
Some chalk up credit card debts or turn to loan sharks out of desperation. This leads to even larger problems.
Yes, we have Comcare, Medifund and a myriad other welfare schemes, but most residents tend to seek such help only as a last resort, and by that time, their problems had reached a dire state. For some, by the time they see us at MPS, they have fallen into depression.
Such residents would find some relief in the Budget’s initiatives to uplift and support the lower- and middle-income. Of particular note is the new permanent feature in our tax system: the GST Vouchers.
Sir, in our Budget over the years, there has been increasing Government transfers to the low-income and lower-middle income. But are they enough to close the income gap? How much would be enough?
Actually, the more fundamental question is: How much income inequality can we tolerate?
What is the level of inequality that we can live with, as a society?
In Singapore, the Gini coefficient – a measure of income inequality – was found to have increased from 0.472 in 2010 to 0.473 last year. But after taking into account government taxes and transfers, the Gini coefficient for last year fell to 0.452.
But still it is high at 0.45, compared to other developed countries.
Let’s take Luxembourg, which is ranked by Forbes as the second richest country in the world. Its Gini coefficient is also about .45, but after redistribution, it fell to 0.26.
In other words, Luxembourg achieved a 0.19 point reduction in the gini coefficient following its tax and transfer policies, compared to the 0.02 point reduction in Singapore.
Luxembourg is also a more self-reliant society with a healthy domestic sector.
It respects quality plumbers, builders, and service staff. Its cleaners are paid a lot more than ours.
Or compare with Qatar, ranked the richest country, It has a gini coefficient of .45 – also about the same as Singapore. But it has a different society from ours.
Citizens make up only about 15 percent of the nation’s 1.6 million people. They live luxurious lifestyles, and enjoy the benefits of living in an oil-rich country with free electricity, health care and other perks.
The underclass is formed by the army of foreign labourers from the developing world who do whatever jobs the Qataris feel are beneath them.
But even with the country’s oil wealth distributed generously to the citizens, the country is riven with increasing tension, anger and frustration between Qataris and foreigners. In other words, rich country, rich citizens, but poor social cohesion.
In Singapore, we foresee the income gap widening. How much more government transfers each year are we prepared to make to close the gap? Where will the money come from?
We need to forge a consensus on what kind of society we want –
we say we want a fair and inclusive society. How fair? How inclusive? This is the core issue that defines the character of Singapore society.
The social compact between the Government and its people must be underpinned by this consensus. But I feel we do not yet have such a consensus.
We can sense this from the angry reactions of some segments of our society to housing the lower-income in rental bocks in their estates, or the elderly in a studio apartment block nearby or an eldercare centre at their void-deck, as if the poor and the elderly were a blight on the landscape.
We can sense this when cleaners tell us that residents continue to litter indiscriminately in the housing estates, and keep pushing them to work harder to keep the estates clean – yet would object to any raising of the conservancy charges to pay the cleaners more for their work.
We need to create a social ethos where people value self-reliance and equality, not only as ideals, but also actually practise them as a way of life.
Where we behave as citizens committed to building a society we can be proud of, and less as consumers out to squeeze the most out of every deal for oneself.
Any paradigm shift towards a more fair, inclusive and self-reliant society will require a mindset change. For this to happen, we need constructive political exchange, informed debate, and the broad participation of an active civil society as agents of positive change.
The Finance Minister is wise to say that building an inclusive society is not just about the government redistributing resources to help the poor.
As he said, it is about building a society with a spirit of responsibility and community, where people seek every opportunity to improve themselves, where the more successful step forward to help others, where citizens are empowered to bring about a better society.
Our lower-income and marginalised groups also need support and encouragement to contribute as citizens so that they do not remain at the edge of the community as passive recipients of handouts, dependent and under-valued.
Defining people as needy and trying to comprehensively fill those needs with services and handouts may not be the best way of helping them.
More can be achieved by directing investment towards citizen initiatives that build relationships which mobilise people to make a difference, thereby building bridges from the margins to the centre of community life.
On the ground, we have truly inspiring stories of ordinary citizens in control of projects and bringing about change in their lives and communities. The poor, the elderly, the disabled and other vulnerable groups are offered the opportunity to share their gifts and talents.
If I may give an example from my constituency Tampines Changkat. We run the Silver Connect programme to reach out to our vulnerable elderly and keep them engaged and active.
Under this programme, residents are trained to not only befriend the elderly and to spot signs of depression, but to also draw them out to link up with one another and to join community activities.
We provide them free medical and dental check-ups, free hair-cuts and other services. This programme is powered mainly by volunteers and grassroots leaders.
Through this programme, we discover many talents among the elderly we serve, and support them.
One of them is Ramdzan Maslam, who is 85, who lives alone in a three-room flat. He was an aircraft technician and retired in 2005. He is good at ballroom dancing and so we roped him in as a dance teacher, teaching the elderly how to rhumba, cha cha and waltz. To encourage him, I dropped in one of his classes and did the cha-cha with him. I am glad to report that the experience has not scarred him.
He is also a skilful handyman. He can fix pipes, curtain blinds, water heaters and even washing machines. So our residents call him up whenever they need such help.
Indeed, our elderly have many experiences and lessons on life to share.
Last year, we compiled some of their stories in this book, titled “I Remember”, so that the younger generation can have a glimpse of the world through their seniors’ eyes.
Such programmes are part of our ongoing efforts on the ground to build a more compassionate and caring society, across all ages and income groups.
If I may add, in my constituency, a new rental block for the poor has just gone up; and we are in the midst of constructing a studio apartment for the elderly, as well as our third eldercare centre in a void-deck.
These developments have been met largely with support from our residents. When the needy moved into the new rental block, we held a welcome party for them. At my community functions, I often commend my residents for their response which shows the strong community spirit in our neighbourhood, and their active support for our vision of a caring and compassionate society.
Sir, to return to the questions posed earlier in my speech: How inclusive a society do we want to be? How fair?
The answer comes not only from what we say, but from our collective response to developments such as rental blocks and eldercare centres in our estates, and how we treat the more vulnerable among us.
Society will always have a level of inequality but everyone plays a role in closing the gap, and we should not be satisfied with our Gini coefficient of 0.45, and our existing state of affairs.
Generating respect for all segments of society and promoting the acceptance that everyone merits a living wage and a fair share in the prosperity of this country, is everyone’s business.
Certainly, we cannot take for granted that Singapore will continue to be a rich country. Neither can we take for granted that our social cohesion will remain strong.
The Budget, which is forward-looking and compassionate, gives us some confidence for our future. On that note, I support the budget.