This is an excerpt from a speech by the Deputy Prime Minister and Finance Minister on Aug 14 at the Economic Society of Singapore SG50 Distinguished Lecture.
In the first part of his speech, reprinted on Monday, he spoke about Singapore's unique way of lifting up the masses while moderating inequality and keeping social mobility high.
In this segment, Mr Tharman highlights the need for Singapore to be both more inclusive and more innovative.
Two things matter greatly in our next phase of development. We have to make Singapore an innovative society. And we must continue to build an inclusive society. They go hand in hand.
We must be an innovative society to keep earning our place in the world and to raise standards of living for all Singaporeans. We have to move from value-adding in global markets to value-creation - through our own firms, with more brands of their own, as well as with multinationals based here, creating value in Singapore, in every field - developing new, cost-effective medical treatments, creating new products or apps, or finding new ways to reach customers.
An innovative society starts from young, of course. But we must resist the thought that we have to add something more in education to develop the innovative spirit. It is more a matter of taking things out of education than putting things in.
That's a more difficult task.
We have to take calculated but bold steps over time to provide more space for young people to explore as they grow up, and develop the originality of mind that comes from exploring things on their own.
And we must ensure too that they have enough time to interact with their fellow students, on the playing field, in dance, in adventure - every form of interaction.
The interactions when people are young matter not just for an inclusive society. They also matter for an innovative society. The world of innovation is not just about the brightest sparks but also about teams. In many international rankings of innovation, Switzerland tops the US. It doesn't have Silicon Valley, but it's a society where everyone is continuously improving, every worker is treated with respect, and the whole team becomes that much more innovative and competitive.
It's also not just about the first 18 or 22 years of education, but learning through life. That's why SkillsFuture is a major social and economic investment in our future. We will invest in every Singaporean, so we all keep improving through life, keep learning something about ourselves we didn't know, a strength, an interest. And keep expanding our potential together. We are going to provide the resources, all around the island, to make this happen.
Making ours an inclusive society is a major goal. Step by step, for young Singaporeans, for working adults, for our Pioneers and the seniors of the future, we've been introducing changes over the last decade. They amount to a significant shift when you add them up.
ENSURING BIRTH IS NOT DESTINY
For our young, we start off with the advantage of a public school system where high average performance is not just due to a segment of top performers. Our Normal Tech students perform far better than their counterparts internationally.
But we have to do more to keep social mobility going. The challenge as we've seen in the advanced societies is in sustaining mobility, beyond the first waves that are achieved through meritocracy.
Meritocracy is fair, but it will not on its own ensure we keep up social mobility. We therefore have to find every way to help kids who start with less, so that birth is never destiny.
Since 2006, we've been enhancing support for those with a weaker start. More specialists, smaller classes, more activities outside class to build confidence and perseverance. We now spend 50 per cent more on the kids who have a weak start in learning than the average student in our primary schools.
We are also intervening earlier. We've made preschools more affordable, and are introducing many more, near the home. We are improving the quality of the preschool experience, which helps especially for those who come from lower-income homes. And as we go forward, we have to pay more attention to the initial years of life, before preschool.
The studies on children's development show that these first few years are critical. No country has found a good way to intervene in these very early years without intruding into parenting decisions. We must try different ways - to help both parent and child - through both government and local community initiatives.
In higher education, we've expanded subsidised places and have introduced a diversity of pathways. They cater to different interests, and open up strong, skills-based routes to advancement, including applied university programmes. This diversity makes for both an innovative and inclusive Singapore.
TEMPERING WORK INEQUALITIES
What about workforce inequalities? Fortunately, income growth for the lowest two quintiles (bottom 40 per cent on the income ladder) has been the most rapid in the last five years.
But we have also put Workfare to work. We piloted it in 2006, made it a permanent scheme in 2007, and have enhanced it twice since. Low-income Singaporean workers now get up to 30 per cent more in their wages through Government top-ups.
Our cleaners had been stuck with very low pay levels for some years. Besides helping them with Workfare, we are helping them see higher pay through the Progressive Wage Model (PWM). Already, the median pay of a resident cleaner has risen from $820 to $1,000. Security guards will be on their own PWM in future.
We must also make sure Singaporean PMEs get a fair deal. The tripartite Fair Consideration Framework is being enhanced to ensure that Singaporeans have a full and fair chance in the job market. They have to be at the core in every sector, and have opportunities for development so that they are part of the best global teams.
WHY NEIGHBOURHOODS MATTER
Home ownership for all is a key priority. We have moderated the property market cycle. But we have also delinked our Housing Board Build-to- Order (BTO) prices from the market cycle, to ensure homes remain affordable.
We can't go back to the old days. In the early 1980s, which was when the parents of today's young couples bought their first flat, a 4-room flat was $55,000. But, remember, the median household income was just $990 then (compared to $7,320 last year). Incomes have in fact grown a little faster than prices since 1980 - taking the average prices in the latest BTO launches in May, for example.
What we will ensure, through regular review of our housing grants, is that young couples, both lower- and middle-income, can purchase their homes. Since 2012, more than 1,800 low-income households, with incomes of $1,000 or less, have taken advantage of our $60,000 grants to own a 2-room BTO flat. We have sized the grants to ensure that they can pay down the loan from their CPF savings. It is better than using their cash incomes to pay for rentals, and at the same time gives them an asset that can appreciate.
Home ownership goes hand in hand with Workfare, the Progressive Wage Model, a more progressive CPF and our other schemes to uplift their lifetime incomes, which we must keep working at. However, it doesn't just help them financially. It gives them real pride to own their own home.
But social equity is not just about individual home ownership. It's about shared ownership of the neighbourhoods, which are probably the most unique feature of Singapore's landscape. The playgrounds and parks, the rivers and lakes, the hawker centres, the whole neighbourhood. Even in the first Budget speech in 1965, when it was all about economic survival, Mr Lim Kim San found space in the Budget for 10 more playgrounds. That thinking started early.
Shared neighbourhoods are not in the Gini coefficient, but they are part of social equity. And very importantly, we've avoided the segregated cities that we see in so many parts of the world.
It's not just about Baltimore and Paris where we've seen riots.
It's about the quiet discrimination that exists when you live in segregated neighbourhoods, and the different aspirations that are bred over time. We have disadvantaged families, but we must never have disadvantaged neighbourhoods, where social problems get more knotty, and solutions more difficult.
ASSURING OUR SENIORS
We are doing more to provide assurance to older Singaporeans. We have enhanced the Central Provident Fund system, and made it more progressive. It's not just the guaranteed 3.5 per cent interest rate on the Ordinary Account (OA) for most individuals, or 5 per cent on the Special Account.
It is also the regular infusions of Workfare, the NS Home (National Service Housing, Medical and Education) Award and the housing grant that is put in the OA. If you take it all together, a young low-income worker today would get a 6.5 per cent per annum return on his OA. By the time he is 65, he would have received about 40 per cent of his total CPF savings from the Government.
Besides the special package of benefits to honour the Pioneers, we have increased healthcare subsidies and introduced MediShield Life to help lower-and middle-income Singaporeans across the system, from general practitioners to the hospitals and specialist clinics to the step-down care institutions.
And we've introduced Silver Support, an important new pillar in our social security system.
We are in essence tempering inequalities throughout our adult lives - during the working years through Workfare, and now in our senior years through Silver Support.
When you add it all up, the changes that we've put into place in the last 10 years amount to a significant increase in support for the low-income group. In 2005, it was already quite significant - government transfers to the low-income group, after subtracting all the taxes they pay, effectively doubled their income. By 2010, it had increased by another third. And Government support has moved up further in the last five years. (See Chart.)
I recognise of course that there is some political cunning in saying that this all came about because of GE 2011. I'm sorry, it didn't. The world did not start in 2011.
We made very clear our intentions and motivations well before 2011, made clear that it was a multi-year strategy, and step by step, starting with the kids, through working life, and into the senior years, we have been moving towards a more inclusive society. We intend to continue on this journey, learning from experience and improving where we can.
But this is a far more important agenda than a reaction to 2011.
CULTURE OF RESPONSIBILITY
We've got to do more to give everyone a fair deal in life, but do it in a way that gives everyone the pride of contributing in their own way. No government can have a hands-off strategy, where people are left to fend for themselves.
Neither should we have handouts all along the way, because that just takes the dignity out of people.
Let's instead keep providing hand-ups, especially for those who start with less, helping them develop their strengths and have a real chance of doing well.
Empower people, and enable them to earn their own success.
We've got to make sure too that this doesn't end up the way it has in many other advanced societies, where it becomes a contract between me and the government - "I pay these taxes, I want this much back in benefits".
Civic society is far weaker today in almost every advanced country compared to a few decades ago. We've got to keep a culture of responsibility across our society: individual responsibility, government responsibility, but also a civic culture where we all feel involved and take the initiatives as individuals, voluntary bodies and as businesses.
And we should never lose our Singapore culture, of thinking about our children and grandchildren. As the Chinese saying puts it: the ancestors plant the trees, the next generation enjoys the shade (Chinese characters ).
But it's not just for one generation. We've got to keep planting trees for the next generation, and know too that each generation will enjoy the shade as they grow old.
Let's keep that culture in Singapore. Not making the short-term political calculation as to what's best, but always looking out for the opportunities beyond today. That's how we got to where we are, a society that has transformed itself for the better, for all its citizens, and that's the way we go forward.
This article was first published on August 19, 2015.
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