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.