Main Stories, Our Columnists, Tan Kin Lian - Monday, May 25, 2009 9:00 - 97 Comments

Time for the government to re-look “no-welfare state” policy

Tan Kin Lian / Columnist

For many decades, the Singapore Government has adopted a policy of a “no welfare state”. They have extolled on the population the risk of a welfare mentality – people get lazy and expect a good life without putting in the effort.

Most of the population accepted the merits of this policy, especially during the years when the economic growth was good and jobs were plentiful.

The global financial crisis and severe economic downturn had resulted in a severe loss of employment in many countries, including Singapore. For the first time, many Singaporeans realise that it is now possible to be jobless, even if one is well educated and skilled, willing to work hard and even to accept lower pay.

Should Singapore now re-consider this “no welfare state” policy? Should some form of unemployment benefit be introduced, for people who are retrenched for no fault of their own? Should an old age pension be provided?

Survey

I responded to a request by several people to carry out a survey. 50 people responded to the survey.  The breakdown by age group is:

Less than 30	28%
31 to 50	50%
Over 50	22%

There is a good representation of people in the various age groups in this survey. The detailed  results can be found here.

Social benefits

The respondents were told that social benefits have to be paid by taxation. With this understanding, 86% said that they prefer the state to provide for the basic social benefits, such as education, health, safety.  8% prefer the state to provide these benefits at a generous level (and to levy higher taxes to pay for them). 6% prefer the state to provide as little as possible.

Types of social benefits

The respondents indicated the following level of support for each social benefit.

A score of 30% indicates that the benefit should be provided at the bare minimum, 60% indicate that it should be provided at a basic level for everyone and a score of 90% indicate that it should be provided at a generous level.

Education (up to secondary level)	78%
Health care	73%
Infrastructure	72%
Safety	72%
Law and order	72%

These above social benefits receive the highest scores. Most respondents indicate that they should be provided to every one. Some preferred them to be provided at a more generous level.

Consumer protection	66%
Economic strategy	61%
University education	61%
Old age pension	57%

The above social benefits receive a moderate level of support. The need for consumer protection (against bad practices by businesses) receives a fairly high score.

Insurance (death, disability, sickness)	49%
Unemployment benefit	46%
Investment fund	39%
Religion	23%

The above social benefits receive a lower level of support, but (apart from religion) are at a sufficiently high level to be considered.

Percentage of GDP

The respondents prefer an average of 29% of GDP to be spent by the government to provide the social benefits and other activities of the state. This is higher than the current level of 20% but is lower than 35% for many European countries and 50% for the high welfare countries (such as Denmark).

50% prefer the state to spend more on necessary social benefits (and to levy higher taxes to pay for them). 38% say that the current state spending and taxation is fine. 12% prefer the spending and taxation to be reduced.

60% say that they are willing to pay higher taxes to enjoy better welfare and social benefits (which will benefit the people at large. 40% disagree.

A larger majority, i.e. 76%, said that the state can afford to provide better social benefits with the current level of taxation, i.e. instead of accumulating surpluses in the reserves. 24% said that the state is already provided as much as can be afforded.

69% said that the spending on certain areas, such as defense, is too high and some of the budget can be diverted to provide social benefits. 31% disagreed.

Respondents’ views

Here are some additional views put forward by the respondents:

a)         Reduce the salary of ministers and top civil servants. No other countries pay more than Singapore. The money saved can be used for health and education subsidies.

b)         Spending on defense has been very high despite the fact that the ASEAN  countries have reached a high level of international relations and cooperation. Instead of spending on defense, the spending should be on diverted to improve bilateral relations through joint-venture projects.

c)         We want change and for our society to be better and united. Citizens should not have to fear for their livelihood and should feel more secure when there is social welfare net to fall back on.

My observations

Here are my observations from the survey:

a)         There is strong support for a higher level of state spending to improve social benefits and provide better security for the people. The existing spending on education, health care and infrastructure is well supported. The respondents also like to see higher spending on consumer protection, unemployment benefit, old age pension and university education.

b)         Many people are willing to pay higher taxes to enjoy better social benefits.

c)         The current level of taxation can support a higher level of social benefits by reducing the annual surplus that is put into reserves and by reducing the high expenditure in certain areas, such as defense.

Perhaps it is time for the Government to re-think its policy of “no welfare state”. Welfare can provide greater security for the people against events that are outside of their control. There is a risk of abuse of welfare benefits, but the abuse can be managed and reduced.

Many countries have addressed these challenges and found some solutions that are practical and useful. They are not perfect, but they do more good than harm.  It is time for Singapore to adopt an open approach.

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