Deputy Prime Minister Teo Chee Hean (who is also the minister in charge of population policies) had said in parliament, that, “higher spending on pro-parenthood policies does not necessarily lead to more births.”
Channel NewsAsia had reported on Mr Teo’s speech here.
Dear Mr Teo, this is what I think.
Let’s look at some of Mr Teo’s arguments and analyse them.
Singapore’s Taxes are Low – An Age-Old Argument that Might Not Stand Its Ground
Mr Teo had said that the personal income tax rates in the Nordic countries range from 29% to 63%, compared to Singapore’s personal income tax rates between 3.5% and 20%. However, what Mr Teo does not mention is the following:
- It is important to note that the taxes collected by the Nordic governments are also used to pay the social welfare benefits of it citizens after they retire. In Singapore, our taxes do not account for that. Instead, the Singapore government has created the Central Provident Fund (CPF), where the money (for retirement) is channelled. If you look at the money collected from CPF, it stands at nearly S$190 billion in 2010. In comparison, the tax revenue collected by the Singapore government is around S$50 billion. The CPF monies collected are nearly 4 times higher than our taxes. If we perform a simple extrapolation, what this suggests is that if we want to look at the taxes collected by the Nordic countries with Singapore with a fair comparison, a comparative tax rate would suggest that Singapore’s tax rate should stand at between 14% to 80% (multiplication of current tax rate roughly by 4).
- What Mr Teo had also not said was that Singapore has one of the world’s highest reserves at more than S$300 billion (US$225 billion) and the world’s highest reserves per capita. Singapore also has a highest surplus per capita than most of the other Nordic countries. In comparison, the Nordic countries have reserves which are many times smaller than Singapore’s. Finland as reserves of about US$10 billion, Sweden and Norway about US$50 billion and Denmark, US$75 billion.
- It is important to look at the amount of money collected by the Singapore government from us to look at the amount of money that the Singapore actually government gets to spend – which is a lot. If we add our CPF onto our tax (for an apple-to-apple comparison), we will see our “tax rate” would be 4 times higher than what it is officially stated. Additionally, our reserves are between 3 to more than 20 times higher than that of the Nordic countries. Mr Teo did not mention the other monies that Singapore collects from its people, which will give a clearer illustration of the wealth of the Singapore government, and how the government does indeed have the financial capability to provide further for its people, in terms of spending for “pro-parenthood policies.”
Understanding Cultural and Socio-Economic Norms – What Singapore Can Do Better?
Ironically, Mr Teo had reminded us not to look at the Nordic countries for comparison because, “pro-parenthood measures may vary across countries due to differing cultural and socio-economic norms.” However, Mr Teo did instead choose to bring out examples of Germany, Italy and the US in spite of saying so. Let’s take a look at the Nordic countries and the US to understand their “cultural and socio-economic norms” for a clearer analysis.
- Nordic countries: It has been shown that the Nordic countries have been able to adopt an efficient tax policy that redistributes wealth efficiently, but not excessively. There is also implicit trust among the people that the government can be trusted as a regulator, and not one that might be making money off its people. The Nordics, as well as the government, also prides equality, fairness and a balance in life, like the Singapore government perhaps does, but one that is beyond lip service, and one that is institutionalized in the governing structures. These are ideals and structural reforms that the Nordic countries have actually taken to ensure that “cultural and social norms” respect the rights of individuals, such that they will be motivated to undertake responsibilities for the country as well. Can this happen in Singapore? Yes, but there needs to be a fundamental shift in thinking among the government leaders to move away from an income generation-focused approach to one that looks at principled thinking and structural reform to institutionalise the principles of equality and fairness.
- United States: Mr Teo had pointed out that the US spends less on pro-parenthood policies, at 1.19% of its GDP, but has managed a higher Total Fertility Rate (TFR) of 1.93. What Mr Teo does not mention is that the United States is different “culturally and socio-economically” in the following areas:
- The US is made up of 51 different states where the TFR differs from state to state.
- As the Singapore government has usually like to suggest, and accurately so, we should compare Singapore’s TFR with that of comparable cities (instead of with whole countries) such as New York. If we look at New York, we will be able to see that the new births occurs at a disproportionately higher rate among Asians, and if assumed to be mainly migrants, would suggest that the TFR was boosted by the migrant population, and not the local population. Thus it would be assumed that the TFR of the local population in New York would be quite similar to that of Singapore, if we account for a city in similar stature to Singapore, in terms of inflow and outflow of migrants and connectivity to the world.
- Thus it is not what Mr Teo had suggested – if we compare Singapore and New York, apple to apple (no pun intended!), you will see that even if Mr Teo had wanted to suggest that a lower spending on pro-parenthood policies can be explored, his suggestion is not an accurate comparison.
- What is also not clear from Mr Teo’s speech was that even though the US spends proportionately lower on its pro-parenthood policies, this is in comparison to the Nordic countries, and Germany and Italy. Singapore spends a significantly lower proportion of our GDP – at 0.5%, as compared to all the other countries. If Mr Teo would claim that the US is able to achieve a higher TFR with a “lower” proportionate spending of its GDP on pro-parenthood policies, then Singapore will have to match up first before this claim is accurate.
Singapore Spends the Lowest Proportionate Spending on Healthcare and Pro-Parenthood Programmes
Mr Teo had also mentioned that the parenthood budget works out to about 0.5% of 2011’s GDP, with a TFR of 1.2 in the same year. What he does not state is the parenthood budget of the other countries in comparison. As I wasn’t able to locate the specific expenditure for the family planning activities for each country, I had looked at the health expenditure of these countries, as a proportion of GDP, as the health expenditure would also account for “family planning activities”.
You can see that Singapore spends the least, as a proportion of GDP, on health (and by extrapolation, family planning activities). In fact, we have one of the lowest proportionate spending on health in the world. In spite of the government’s discourse on the family as a priority, does the financial investment suggest so?
But Mr Teo, What Really is a “Supportive Environment”? Does Singapore has One? Or, Do We Not?
Mr Teo had said that creating a “supportive environment for Singaporeans to form families and raise children remains a key government priority.” Mr Teo had also said that, “there was a need to strengthen Singapore’s pro-family environment, where employers, family members and society-at-large have a part to play.”
Let’s take a look at a comparison of some statistics to see how Singapore fares in these areas, and whether Mr Teo makes sense when he says that the Singapore government has prioritised a “supportive environment” for Singaporeans to give birth.
According to Mr Teo, a “supportive environment” is the government’s priority to increase the fertility rate. However, the Singapore government is obviously not doing enough then and would have much to improve on in this area. The Nordic countries fare much better – the Nordic countries have lower average number of hours worked and better work-life balance (note refer to this link for Singapore’s average number of hours and for Singapore’s work life balance, I had used South Korea’s data for a stand-in comparison because of the lack of data and also because of the similar economic background and other available comparative data). Who is to argue that the Nordic countries have a poorer “supportive environment” then? Also, in spite of shorter working hours, the Nordics also command and enjoy a higher average salary, which adds to this more “supportive environment” as well.
In case the government rebuts to claim that shorter workers will impact on productivity, this has been shown to be unjustified. In fact, the countries with shorter working hours are actually able to have higher productivity. If you remember, the government had proposed to increase our wages by increasing productivity. I had also argued that it is unlikely that this proposal by the government will work since productivity would be unlikely to increase as quickly, because our GDP will increase at a slower rate, and decrease in some years.
Thus this is a perfect argument for the government to increase productivity by reducing the number of work hours, which will inevitably achieve the government’s aim of creating a “supportive environment”. What is there for the government to lose?
Singaporeans are Really Not Happy
The single most important thing to note here is that the Nordics are the happiest people on this planet. Singapore ranks at 81. There are numerous research studies which have explained why the Nordics are generally happier people than anyone else in the world. But for the purpose of this article, I would also argue that the ability to have work-life balance is also one that allows the Nordics to be happier (this would also be supported by available research), and this is one area that the Singapore government has not taken a proactive stance on. Our government might promote the discourse of work-life balance, but one might question if this is lip service? Work-life balance can be truly attained if the government implements structural reforms – by reducing the number of work hours, at the very least. The question is then is how serious is the government when it speaks of a “supportive environment” and “work-life balance” or will this remain as speech?
Mr Teo had also said that, “the government has been very careful in the area of maternity leave, as making more generous maternity leave provisions could adversely impact the employability of women.” Clearly, this isn’t an area of concern at all, if we look at the labour participation rate of women in these countries. In fact, what these countries have shown is that a more equitable and holistic approach towards financing pro-parenthood policies is more likely to increase the “employability of women”, rather than not. So, Mr Teo, you don’t have to worry for nothing.
Specific Proposals to the Government to Increase Singapore’s Fertility Rate
In conclusion, clearly, there are specific steps that the Singapore government can take to ensure that the fertility rate in Singapore will climb. We can look at the policies which can be implemented across the spectrum of child growth and into the workforce.
- Firstly, structural reforms need to be undertaken at the workplace to provide real incentives for parents to give birth. A child needs his/her parents the most during the early stages of growth. The government needs to allow for parents to have more months of leave to be available to the child to cater to the physical, emotional and psychological needs of the child.
- A recent survey on early-childhood education (see table above) has also ranked Singapore at 29th (out of 45 countries), in terms of whether a government provides good, inclusive early-childhood education to those aged three to six. Finland, Sweden and Norway tops the ranking and Denmark is 6th. Singapore was also ranked relatively lower for the availability, affordability and quality of childhood education. The government has to realize that taking care of a child does not simply mean giving birth to the child, full stop. If childbirth is also a matter of national security, then the government has to make significant investments across the spectrum of the development and growth of the child. If the government has created a stressful environment for Singaporeans to work in, then the government needs to compensate us accordingly. So, child care policies need to account for the child, throughout all stages of the child’s development, and this would include the child’s early childhood education (as well as other costs, such as housing costs). The government would have to provide free, or at least, heavily subsidized childhood education, if it is serious about supporting our families to have children.
- When comparing the costs of tertiary education, the Nordic governments spend a significantly higher proportion of public spending towards subsidizing for tertiary education. Tertiary education is also a key component of education of the growth of a child. If the government is serious about building the skills of its future workforce, it has to look into subsidizing further the education for tertiary students. This would, of course, also touch on aspects of equality and fairness. The government has now tended to operate on meritocracy. However, there are current discussions about how meritocracy favours the rich and well-to-do and gradually neglects those who are not as well-connected. The government has to relook its operational principles of meritocracy and look into a more balanced approach of equality, which caters to the needs of all Singaporeans, and one way of doing so would be to subsidise tertiary education further. Already, there are arguments about how university education in Singapore is priced beyond the affordability of lower income Singaporeans and revenue generation seems to be a priority, more than providing education as a basic right.
- Finally, work-life balance is a major reason that will provide Singaporeans with a further motivation as to whether to give birth or not. Work-life balance encompass various components – work hours, wages, time-off for childcare and a favourable environment that does not discriminate against employees for taking time off.
- Research has shown shorter working hours will impact positively on the work-life balance, as well as the overall well-being of people. Also, shorter work hours do not reduce productivity, but might actually increase it. There are strong justifications for the government to reduce work hours to increase the fertility rate.
- Higher wages will allow a family to be able to support a child, or children, in a financially stable environment, or a “supportive environment” as what Mr Teo would describe. The government needs to look into how wages can be incrementally increased and equitable distributed.
- Research has shown that higher leave compensation will result in higher birth rates. Not only so, the employability of the workers does not need to decrease. The government needs to look into institutionalizing more months of leave for both the mothers and the fathers to take care of the child.
- The government needs to spend proportionately and monetary more on pro-parenthood policies. Already, we are spending the least on pro-parenthood policies. An argument that expenditure on pro-parenthood policies does not work cannot factor in, until the government exacts a comparable and justifiable amount of spending on pro-parenthood policies.
- Finally, the government needs to look into strengthening anti-discrimination policies to protect the rights of mothers and fathers (and in fact, all Singaporeans and residents), and to promote a “supportive environment” among companies that will be favourable to the mothers and fathers.
In sum, the government needs to not only increase the financial incentives to encourage Singaporeans to give birth, but to also increase the provision, and accessibility and quality of services to the parents and the child across the child’s developmental stages, and to provide an adequate substitute for the parents’ work responsibilities, so that they can then be committed towards taking care of the child. Also, the government needs to relook its governing principles towards ensuring the principle of equality (and not meritocracy) can ensure that Singaporeans’ needs are equitably met, and to also undertake structural and policy reforms to reduce work hours, increase the number of leave (by months) for parents and caregivers, and increase wages to support the responsibility of childcare by parents.
Clearly, the government has, over the past decade, decide to focus on increasing migrant flow, as an easy way out, than to adopt higher financial investments and structural and policy reforms. But, if the government has chosen to adopt this mindset shift 10 years ago, wouldn’t we have gained much more headway, than where we are now – back at zero?
So, Mr Teo, What Do You Think?
These are steps that the government can take. But question is, will they? The primarily focus in Singapore is to generate wealth, almost at all costs. There is a significant disrespect that the people face when they are looked upon more as economic workers, rather than individuals in their own right. This is an argument that I have discussed many times. And I would continue to further emphasise that the government needs to relook its principles of governance, so that we take our principles of justice and equality, as enshrined in the pledge, seriously and institutionalize structural reforms to achieve these principles, not in name, but in action. This is something that the People’s Action Party needs to act on.