SPEECH BY LAURENCE LIEN, NOMINATED MEMBER OF PARLIAMENT BUDGET DEBATE 2014, SINGAPORE PARLIAMENT, 3 MARCH 2014
Madam Speaker,
In my last budget debate, I would like to thank the Deputy Prime Minister and Finance Minister not just for a thoughtful budget speech, but also for being a champion of inclusiveness. Many of the new social initiatives introduced in the past few years would not have seen the light of these chambers without his support.Madam Speaker,
I would also like to thank him for listening. Last year, I asked that the minimum wage be considered for certain vocations, as a first step. This year, the progressive wage model is being mandated as licensing conditions for cleaning and security companies.
Two years ago, I asked for a Social Review Committee to create a new shared vision and new social compact. We then had ‘Our Singapore Conversation’. I also said that Singaporeans were not pooling healthcare risks enough and too much of healthcare spending was out-of-pocket from the patients. DPM then agreed that we have to think about increasing the scope for risk-pooling, and today I am glad we have the review of Medishield Life.
Certainly, I am not so deluded as to think that any of these initiatives were adopted just because of what I said; or that DPM is the only one listening. The important thing is that we are moving together in the right direction.
Every generation is a pioneer generation
At this year’s budget, one large step we are taking together is the Pioneer Generation Package, whose generosity no one outside government could anticipate. No one also seems to be questioning whether that generation deserves it. They do, for reasons we have heard and I will not repeat. I would just like to add one reason. That generation lived through periods of high personal tax rates, of up to 55%, and accumulated large budget surpluses. These went into our national reserves; and I find it fitting that it is the returns on investing these reserves that make it possible for us to afford the $8b. May be the only quibble left is, why did it take so long?
My grandfather was part of that pioneer generation. This year is the 10th Anniversary of his passing on. I only recently had a chance to read through the transcripts of 13 hours of oral history he provided to the National Archives in the 80s. I marvel at the mentality of his generation. How they were ever ready to serve the community to initiate, support and get things done. How they were creative, tenacious and self-sacrificing all at the same time. Where is that pioneering spirit today?
In family advisory work, there is always a concern for wealthy families that they would be unable to preserve human, intellectual and financial capital over generations. Hence, we have sayings like, “rice paddy to rice paddy in three generations”, and many other proverbs in different cultures. The first generation creates the wealth, the second generation maintains the status quo, and the third generation spends …. and spends, leading to decay.
These concerns apply to a nation like ours too, as we have developed so fast. When we look at inequality, we often focus on the issue of poverty, which I also have a strong interest in. We sometimes forget to think about the dangers of excess wealth, and its potential impact, like the collective loss of drive and the lack of boldness to try new things.
What would be a way out? Let me borrow an idea from James E Hughes Jr, who has advised families for decades. One way to approach this is to remind every generation that it is the first generation. Every generation is the pioneer generation of their age. Each generation must see itself as having the same power of creativity and the same capacity to energise itself, generate new progress, and establish its own identity.
Getting our social fundamentals right first
For every generation to think and behave this way, I believe we must first get our social fundamentals right. I believe we are no longer in the era where economics leads the social. The old narrative is that we need to take care of the economics first, because jobs is the best social welfare, that if we are economically weak, we won’t be able to afford our social programmes, and that if social safety nets become a hammock, we erode the work ethic.
I don’t disagree with these points. But I disagree with the notion that economic health consistently trumps social health. They are both equally important, and are inextricably linked. Their relationship is circular, not linear. In the first place, is not the end of job and wealth creation social – to provide for our loved ones and to meet human needs and aspirations?
Establishing a new social compact, adopting appropriate social safety nets, enhancing social trust and reducing social inequities do not just create the political environment in which sound economic policies can be implemented, but they also directly create the conditions for sustainable economic and corporate success.
Seen in this light, the need to manage high costs downwards for citizens, for example, is not about satisfying citizen cravings for more welfare and subsidies. It is about establishing a firm base that allows a significant majority of Singaporeans to transcend being caught up in survival-thinking that lends to discouragement and to hostile behaviour. Lower costs go towards providing the minimally acceptable conditions for the lower income to get by. But it also helps to improve the hygiene factors so that more would be willing to steer themselves from the well-trodden path to start up and create something new.
Hence, I spoke at length about social health last year. Social health complements economic health; hence, we need to measure it. But we must go beyond just doing the minimum for political expediency. It’s not just getting out of the social recession I talk about two years ago.
How does taking care of social fundamentals translate into programmes? Let me touch on a few policy areas concretely.
One, healthcare. Can we set a target percentage of healthcare spending to be financed out-of-pocket by patients? This is currently more than 50% and I believe it can be halved, with significantly more coming out of insurance, whose premiums can be substantially paid for by Medisave, and state funding. Some rationing is required so that healthcare consumption is focused on treatments that are basic and essential, rather than merely good-to-have. But first we need some clarity on what constitutes basic and essential healthcare that Singaporeans should have a right of access to.
Two, housing. Over the past few years, government has been doing much to provide affordable and available homes. I would only add one suggestion: to make available housing for singles across all adult ages, either for rental or purchase. Even though I am a strong believer of the traditional family unit, I believe we should encourage our young to achieve independence and a sense of responsibility earlier. Moving out may even motivate one to excel at the things he or she is currently seeking to do, including getting married early.
Three, education. Primary and secondary education is essentially free in Singapore. Pre-school education is receiving substantially more subsidies. Can we not simply guarantee free basic education for all between 3 to 18 years? For pre-school, a universal voucher can be provided to all children, set at the median fees charged by all operators. Tertiary education fees can be chargeable in the form of a loan whose repayment is a proportion of what the graduate actually earns in the workforce. Those going into lower paid professions, like in the nonprofit sector, can receive loan forgiveness if they are unable to make full payment at the end of their loan tenure.
Four, income security. While I am a strong advocate for reducing income inequality, I am actually not a proponent for permanent financial assistance, except in cases of people being disabled and too old, and unable to work as much as they would like to. It is important to reaffirm the dignity of work as well as the dignity of the human person to be able to stand on one’s own two feet. We must move to a point where if one puts in an honest day’s hard work, one is able to earn a living wage without working overtime.
Increasingly, I believe we need regulation more than subsidies. We can afford to shift more of the additional burden to employers and consumers. We cannot risk a potential emergence of a permanent underclass. In this regard, I don’t think the right framing of the issue is whether the government is moving left enough or too much. I think the main issue is that the on-the-ground realities do not gel with the collective values today or in yesteryears.
Reviewing our fiscal position
Let me touch on the fiscal position to show how we can already afford getting our social fundamentals right.
Having used the Net Investment Returns Contribution (NIRC) formula for six years now, I think we can incorporate NIRC into our operating revenues. The NIRC has been stable as a percentage of GDP. (Although, as an aside, I note that the NIRC has decreased as a % of GDP this and last FY; isn’t the intent that it should keep pace with GDP increases each year?) Taken together, total revenue is consistently between 17-18% of GDP.
On the expenditure side, if we can continue the long term trend of reducing security and external relations expenditure to a terminal 4% of GDP and keep economic development and government administration to around 3%, social development expenditure can comfortably rise to 9% without major tax increases. We will still have a buffer of 1-2% for short-term programmes to cater to economic, financial and social exigencies.
Today, a lot of expenditure are in special transfers and topping-up endowment funds. These account for more than $45b from FY2010-FY2014, or an average of 2.6% of GDP a year. Special transfers can be reduced in the future as transitional packages get trimmed or a significant portion is turned into recurrent operating expenditure. The topping-up of endowment funds, which is a very conservative approach, can simply be ceased.
Engendering a social renaissance & new possibilities
Getting social fundamentals right is only foundational. We need to do something significantly more to get every generation thinking it is the pioneer generation. I believe, we must engender a social renaissance; my second point.
The language of a renaissance is different from the language of today. It is about restructuring, supporting, and mitigating. It is more about reinventing, empowering and unleashing.
We need a more positive narrative that is grounded in optimism and trust in the people, away from one that focuses on scarcity, and our vulnerabilities and deficiencies. A one-sided negative view often induces discouragement, cynicism and disengagement.
Instead, we need to look further into the future, and start envisioning possibilities.
We talk of opportunities; but opportunities are different from possibilities. Opportunities are favourable options that come knocking; once you see them, you recognise the benefits. Possibilities are unstructured and ambiguous; they exist because of our imagination. It’s like every block of marble having a beautiful sculpture inside waiting for a sculptor to come to chip away the excess marble.
To see possibilities, we cannot afford to think in a limited way. If we think of Singapore as a sampan, we will not think of possibilities. We cannot go out to explore and conquer the world in a sampan. Since, a luxury liner may give a wrong connotation of rest and leisure, perhaps we can think of ourselves as a large exploration vessel, always seeking to be ahead of our time.
Singaporeans must build up more pride and self-confidence in ourselves. We may have one of the smallest populations in the world, ranked around 116th in population size. But we are ranked 35th in world (8th in Asia) in nominal GDP terms, and ranked 22nd in the world on military expenditure.
Yes, we have problems, and we must acknowledge them honestly and openly. But we have a lot more strengths, which we too must acknowledge thankfully and overtly, and leverage on them. If we embrace the pioneering spirit of the past, we can always be a pioneering nation of the world.
We need to move beyond co-creation, to open innovation. It requires a change in culture and disruption in mindset. It’s also more about instituting a new way of governance, rather than new programmes.
Each new generation must develop its own pioneering spirit, and its own agenda. They need to be trained as leaders and to engage one another to discuss the future. And collectively, we need to move from vertical relations to more horizontal relations. Government agencies need to genuinely empower. Benjamin Zander, a maestro conductor in his generation, reflects in his book, The Art of Possibility, that a conductor’s “true power derives from his ability to make other people powerful”. We must similarly move away from a zero-sum perspective of power.
We need to invest in individuals’ dreams, passions and journeys. We need to invest in the community. Here, people of all ages need to discuss strategic issues, and immerse themselves in the target issues so that possibilities may emerge. The end is to engender community ownership among citizens. Government too must participate, by releasing non-financial assets it controls like data, knowledge and policy insights.
What is one concrete step that we can take to further this project? We can begin by extending Our Singapore Conversation into a permanent platform, where the dialogue has purpose and meaning, where dialogue turns into activities are generative, and activities turn into an entire movement that harnesses the creative energies of the community to spawn programmes, policies, experiments, and enterprises. A renaissance indeed.
We can work towards 2015, with our 50th birthday as the backdrop, being the year where everyone works together, to not just celebrate, but also create change in all sectors. And maybe we would have arrived if this House can one day debate an item in the budget that is not for a pioneer generation of the past, but from a pioneer generation of the present. Can we imagine that possibility?
With this, I support the budget.
* Laurence Lien is an NMP and CEO of the National Volunteer & Philanthropy Centre (NVPC). Formerly the Director of Governance and Investment at the Ministry of Finance, Laurence served 14 years in the Singapore Administrative Service, rotating through different positions in the Ministries of Community Development, Youth and Sports, Home Affairs and Education.
Actively involved in the non-profit sector, Laurence is Chairman of Lien Foundation, and Deputy Chairman of Caritas Singapore Community Council. He is also the President of the Centre for Non-Profit Leadership, and Board Member of the Lien Centre for Social Innovation at the Singapore Management University. Laurence is currently also a Nominated Member of Parliament and will advocate for the social sector and civil society.
Laurence holds a Bachelor of Arts in Philosophy, Politics and Economics from Oxford University, a Masters in Business Administration from the National University of Singapore, and a Masters in Public Administration from the Harvard University’s Kennedy School of Government. In 2010, Laurence was awarded the Eisenhower Fellowship.
Laurence is the grandson of the late Lien Ying Chow, founder of Overseas Union Bank which later merged with United Overseas Bank after the Govt-linked company DBS tried to make a hostile takeover bid for OUB in 2001.