COS 2015 Debate: PMO – Parenthood Package (MP Lee Li Lian)

By MP for Punggol East SMC, Lee Li Lian
[Delivered in Committee of Supply on 10 March 2015]

The Child Development Account is part of the Baby Bonus and is a savings account where parents’ deposits are matched dollar for dollar by the Government, up to a cap ranging from $6000 to $18000, depending on the birth order of the child. [i]In 2013, parents were given 12 years to deposit up to the savings cap, when previously they only had 6 years.   Giving a longer time period to save up to the cap, while intended to be kind-heart, still does not go to the heart of the problem, that lower-income households are very much less likely to have spare funds to deposit into their CDA; a child’s educational needs has to be managed from the very start to ensure that all children have the chance to access as many opportunities as possible, not just those from higher-income households.

The suggestion to remove the matching criteria was brought up twice in this House during COS since 2013.   The reply then was, the objective of such schemes is to help parents defray some of the costs of raising a child while recognising that the primary responsibility for the care and development of a child rests with the parents.

I acknowledge and agree that the care and development of the child is the responsibility of the parents.  However a PQ reply on 7^th July 2014 showed that only 48% of the total number of CDAs in the birth cohort of 2006-2013 saved to the maximum co-savings cap.

To account for lower-income households with less disposable income available to divert into savings, I would like to recommend a system of ratio of dollar for dollar matching from the government.  Starting from a base of a monthly household income of $2000, every dollar deposited would attract 3 dollars matched from the government. The ratio of dollar for dollar would decrease as the household income raises and eventually normalise at the current rate when it hits $6000. We can follow the household incomes as set out on the ECDA childcare subsidy.

This would give even greater incentive to lower income households to save for their children’s future, encourage co-responsibility, give more targeted assistance to those in need, and ensure a levelling of opportunities available to children from lower-income households.