Generational packages heart-warming, but targeted aid still needed

SINGAPORE (Feb 25): The highlight of Budget 2019 is the much-anticipated $6.1 billion Merdeka Generation Package. It is targeted at about 500,000 Singaporeans born between 1950 and 1959 — mostly those who missed out on the country’s first generational package unveiled in Budget 2014. While the MGP has fewer initiatives than the $8 billion Pioneer Generation Package, it is still substantial, and is particularly focused on measures that deal with medical bills, which are expected to become more costly in Singapore.

The two packages cover almost a million people, or 30% of Singaporeans. The government has described the initiatives as a gesture of appreciation towards these members of the population who lived through tumultuous times in the early days of Singapore’s modern history. These citizens, who are now in their 60s and older, are also seen to have had fewer education and employment opportunities than the subsequent generations, and therefore tend to fall into the lower-income segments of the population.

As such, the Pioneer package, for instance, has made a difference for Singapore’s most vulnerable group — the elderly poor, many of whom depend on the subsidies — as political science researcher John Donaldson tells The Edge Singapore. But such measures are still insufficient in many ways, the Singapore Management University associate professor adds.

Indeed, in most cases, the Merdeka and Pioneer packages together offer less than a thousand dollars a year to each citizen. Still, the aid is targeted — at helping the lower-income, aged and chronically ill. Clearly, there is concern that medical expenditure has become a growing burden.

There is now also expectation among the rest of the population that they too will receive a similarly generous subsidy package when their turn comes. This raises the question of whether there will be constraints on resources for supporting the truly needy if billion-dollar packages continue to be rolled out to meet various generational needs.

To be sure, Singapore does have a range of means-tested programmes to help the needy, especially the elderly poor. The Silver Support Scheme or Comcare are key mechanisms for redistributing resources. But they are still works in progress.

The poverty rate among the working elderly rose from 13% in 1995 to 28% in 2005, then jumped to 41% in 2011, according to a paper written for the Tsao Foundation. This group requires help beyond healthcare subsidies.

The growth in the ageing population has also shone the spotlight on caregivers. While assistance — including a night respite currently being piloted — is available, some suggest that additional support such as top-ups into Central Provident Fund accounts be provided to caregivers, many of whom may not be in full-time employment as a result of their commitments.

Broad-based packages have their advantages. As sociologist Tan Ern Ser says, presenting the subsidies as a generation-wide package helps serve a broader, nation-building function by promoting a sense of national identity.

In addition, such initiatives do not require stringent means-testing, which can be administratively costly and run the risk of limiting access to people who need aid. Importantly, they carry less of a stigma as they are not regarded strictly as welfare.

There continues to be antipathy towards the notion of a welfare state here, at least in the form understood in the US, the UK and Europe. The idea of a universal basic wage, for instance, has been consistently rejected. In addition, major public services — notably transport and healthcare — are driven by private industry.

However, as the cost of living rises and the compulsory savings held in CPF accounts look increasingly insufficient to meet the needs created by a longer lifespan, the government is likely to have to step in with more, and targeted, aid in the future. Some individuals who spoke to The Edge Singapore have called for more direct cash transfers, but the government cautions against profligate public spending despite having an estimated accumulated budget surplus of $15.6 billion at the end of the 2019 fiscal year, and among the most robust reserves in the world.

For most people, support in any form is welcome. But for the most vulnerable groups, targeted aid is what will make the most difference.

Read all the Budget 2019 stories in The Edge Singapore (Issue 870), week of Feb 25) which is on sale now. Or subscribe here