(Delivered in Parliament on 28 Feb 2018)
INEQUALITY OR SOLIDARITY?
I will focus my speech on Inequality.
INEQUALITY AND ITS COSTS
This Budget has as its third plank the fostering of a Caring and Cohesive Society. The concept of Care and Cohesion, though not new, is timely, given the current public discussion of a Class Divide in Singapore.
The recent Study on Social Capital by the Institute of Policy Studies confirms what we already anecdotally knew. It found, for instance, that on average, Singaporeans who live in public housing have fewer than one friend who lives in private housing. It found that people who study in elite schools also tend to be less close to those in non-elite schools, and vice versa. Earlier the Member Mr Ganesh Rajaram shared his experience coming from a non-elite background and entering an elite JC.
This Budget explicitly highlights inequality and social mobility as a concern (para A11). We also see some measures in this Budget in the direction of mitigating the Class Divide. For instance, tax measures such as raising the top marginal Buyer’s Stamp Duty (BSD) rate by 1% for residential properties valued at above $1 million are geared towards requiring the better off to pay more taxes. Another long standing policy to mitigate inequality is that government transfers are generally weighted in favour of those who live in lower cost housing or have lower income, such as the GST vouchers and Service & Conservancy Charge rebates.
But for all these moves made now and over the years, how well are we doing to reduce inequality, and how much do we really know about the inequality that exists in Singapore? What else do we need to look at, or change?
Discussions on the status of inequality have tended to focus on numerical data such as the Gini Coefficient, which measures income inequality. Our Gini Coefficient in 2017 stood at 0.459 before government transfers and 0.402 after transfers, which is improved from 2013 (Source: SingStat). Nevertheless, PM Lee acknowledged in January 2018 that our Gini Coefficient was still higher than that of many developed countries. If one looks at household income from work, in 2017, the household income for the top 10% is more than $13,000 ($13,215) per person per month, while that for the 20th percentile at the lower end is about $1,000 ($1,093) per person per month; 12 times more unequal. Our national GDP per capita last year was nearly $80,000 ($79,697), which means that national GPD when averaged out is $80,000 per person per year.
However, when we look at median income, or the half-way point for households, Department of Statistics data shows that for 2017, the median income per household per person was only $32,400, based on median monthly income per household member of $2,699. All these point to high levels of income inequality. The Department of Statistics data on Key Household Income Trends indicated that in 2017, there was a slower pace of income growth for the bottom 50% of households, showing a widening income gap.
Beyond numbers, it is also necessary to dig deep into the daily lives of poor Singaporeans, and evaluate the reasons why they do not seem to be able to catch up with the rest of society.
In her recent book, This Is What Inequality Looks Like (2018), sociologist Prof Teo You Yenn shares powerful stories from her years of field work with families living in HDB rental housing. She writes:
“I saw how tough it is for them trying to balance wage work and care responsibilities. By hearing their stories about jobs, I saw how hard they have to work and how little they get in return for their labour. By asking them about their children, I saw how much their kids struggle in school and how worried parents are that they will eventually have difficult lives. By listening to them talk about their crises, I heard about their feelings of humiliation trying to access social assistance. In paying attention to their everyday experiences, I saw how little dignity they are accorded in our society.”
What Prof Teo observed resonates with what we see. While better-off Singaporeans plan for family holidays with their children, poorer parents feel demoralised that they cannot afford to buy needed items that their children ask for. While better off parents are busy at weekends sending children from one enrichment activity to another, poorer parents spend weekends working and worrying about their unsupervised children falling into bad company. Many of our lower income residents work hard, and even work 2 jobs, but may still be unable to pay their bills. Richer children are served and even spoilt by domestic help; poorer children shoulder responsibilities like caring for younger siblings and even being spokesmen for their parents who do not speak English.
In a Parliamentary answer in February this year, PM Lee emphasized that “every citizen, no matter what his social background is, must have the opportunity to do better and move up in society, based on his efforts and talent. Nobody should feel that his social position is fixed based on his parents’ income level or position in life.”
Can we say that the lot of our poorer fellow Singaporeans is due to their lack of ambition or talent? Or does the system itself inadvertently make it difficult for them to succeed, and thus perpetuate inequality? Do government policies support poor families with adequate and sustainable care for children? Does our education system penalise those who did not have a leg-up in pre-school? Do housing policies unjustly discriminate against those whose marriages failed? How have children been impacted by their parents’ circumstances, and were they supported or facilitated to break out of the poverty trap? Earlier the Member Mr Rajaram shared his own experience with social mobility. I do not know how old he is by based on his physical appearance, he could be born in the 1960s to 1970s. I think we can all accept that there was wide social mobility for persons born during that period. But the question is, moving forward, is it now more difficult to break out of certain social classes? These are serious questions that merit serious study.
To get answers to these critical questions, it is important to do longitudinal studies to track the fate of families over time. In 2013, the government told Parliament it intends to do longitudinal studies. What has the government done since then? Has the government, for example, started commissioning independent studies on social mobility, using longitudinal data? The government has noted in the past that we must not allow an underclass to form and so the government has to show commitment to this goal.
I should add here that where there is lack of social mobility, it is not only the poorer families that are stressed. Even those higher up the income chain, including the middle-class, have the stress of ensuring that they retain their current positions or climb up. The competition in the education system is high. Just look at the money spent on private tuition and other enrichment classes, which in turns adds to the economic stress that families face.
Why is it so important to show commitment to the goal of reducing inequality and increasing social mobility? Because it is vital to our very existence as a Nation. How can we say these things, justice, equality, to achieve happiness prosperity and progress for the Nation, if we perpetuate a society where citizens are not equal, where some seemingly have little hope but are doomed for failure, while others zoom ahead? Will there eventually be an erosion of trust, where a class divide makes it harder for people at the bottom and middle identify with those at the top?
We fiercely guard our sovereignty and expect all Singaporeans to defend Singapore. But will the day come when Singaporeans who find Singapore a cold and cruel place have no motivation to defend it? This will be a disaster at all levels.
INEQUALITY IN HEALTHCARE
One aspect of inequality that needs to be reviewed is healthcare coverage under medical insurance. If one compares the coverage of private insurance plans with the coverage under Medishield Life, one will observe that there is significant inequality in access to healthcare that affects the poorer and older Singaporeans.
As regards insurance coverage, there are some practises in the health care industry that need looking at.
One such practice is that of some insurance policies providing full coverage for hospitalisation bills. Such insurance policies undertake to fully pay for surgeries so long as they are done as day surgeries or the patients stay at the hospital. All charges will be paid by the insurance company “as charged”. Such policies do not require the patient to pay any deductible or make any co-payment.
By contrast, Medishield Life understandably has deductibles and co-insurance to avoid over-consumption. One feature of Medishield Life, however, is that the annual deductible rises when one passes 80 years old. While the annual deductible for persons aged 80 and below is between $1,500 to $2,000, the annual deductible for those aged 81 and above is between $2,000 to $3,000. Thus, the most senior of our people, aged 81 and above, who have the least income and most health problems, have to foot bills up to this higher deductible before Medishield Life will kick in.
Has the government analysed how this increased deductible has affected the consumption and delivery of medical services to our most senior citizens? To give one specific example, operating on a trigger finger release usually costs less than $2,000, so those aged 81 and above cannot claim the expenses for the surgery, but those who are younger can claim part of the expense, as the deductible is lower for younger people. Premiums are already higher for older people; why are deductibles also higher when in general they have less financial ability to pay? Why this reverse discrimination for our oldest citizens?
Coming back to the private “as charged” insurance policies, there is another aspect that needs review. Has the government studied the effect of such full coverage on the behaviour of patients, and its implications? When a person has to undergo a minor surgery, which could be done at an outpatient clinic, does he choose instead to do it as a day surgery or an inpatient in a hospital, so as to be able to tap on the insurance policy for full coverage? Does such insurance result in some unnecessary surgeries, when more conservative treatments would suffice? Is there inefficiency and a waste of expensive resources caused by such policies? I am not suggesting that patients or the medical profession are doing anything unethical, as this behaviour is sanctioned by the regulators of the insurance industry.
It is important to review the kinds of insurance schemes in the market, so as to discourage over-consumption and inefficient use of resources. There have to be deductibles and co-payments for all medical insurance schemes. Regulators have to direct their attention to this area.\
In conclusion, I would like to emphasize that inequality is a threat to our solidarity as a Nation. We have to drill deeper into the sources of inequality, and take concrete steps to remedy it.