Striking a fair deal for the elderly

SINAGPORE - Thus far, the Pioneer Generation Package easily ranks as the most universally welcomed policy announcement since the 2011 General Election. Who, after all, would begrudge older Singaporeans this expression of gratitude after the sacrifices they endured in those early years of independence.

Even those not used to praising the government for generosity were probably pleasantly surprised to find out that the package would cover citizens as young as 65.

The move acknowledges that even if the idea of Singapore had been imagined by a few, it was built by many. And while the majority saw their standards of living rise, they would never enjoy the full suite of opportunities that came to later generations.

For example, among babyboomers born in the immediate post-war years, around 60 per cent never got a secondary education. Many who were academically able had to sacrifice school to help their families.

While nobody would be caught objecting to the principle of helping the elderly, we can expect the debate inside and outside of Parliament to focus on questions of adequacy and sustainability - whether it is still too little, or too much.

The package, in three parts, will give subsidies for outpatient care, annual Medisave top-ups and help pay for premiums for Medishield Life. Some 450,000 Singaporeans who are aged 65 or older this year will be covered. Based on their current life expectancy, this could mean payouts for at least the next two decades.

How much the government will spend on all this will be revealed in the Budget. But in his National Day Rally last year, the Prime Minister hinted at how generous the government was prepared to be when he told the elderly a few times: "Don't worry."

Under the current Medishield, the premium for 90-year-olds is $1,190. With enhanced benefits, the premiums for Medishield Life are likely to be higher.

But the promise to this group is that they will pay less. Assuming an average subsidy of, say $1,500-$2,000 for the 450,000 Singaporeans for all three components of the package, we could be looking at spending of nearly a billion dollars annually.

Costs could escalate if health- care consumption increases, leading to higher premiums. One way to deter unnecessary spending is to give discounts or incentives for policyholders who are more restrained in their use of medical services.

Whatever the final sums are, we are talking about a massive government injection in social spending that could exceed the Workfare Income Supplement, which costs $650 million a year, and the GST permanent vouchers, costing $680 million a year.

Already, the first wisps of cynicism are appearing over the government's motives. Is this an effort to keep members of the pioneer generation happy and grateful on their way to polling booths in coming general elections? The correct response to that has to be: so what? If elections encourage leaders to respond to people's needs, that is as it should be.

What is important is that vote buying, if you want to call it that, does not descend to the kind of pork barrel politics that plagues some democracies, where government spending is wasteful and irrational on any grounds other than as a flagrant reward for votes. Another common problem is that of powerful lobbies with excessive clout over the electoral process and, hence, policymaking.

So, the relevant question to ask is not whether the Pioneer Generation Package will benefit the People's Action Party - that political dividend is its due if it gets the policy right - but whether it makes sense in its own right.

I doubt that this scheme is a harbinger of the inter-generational wars that have visited other countries. The fear of a silver lobby having undue influence was raised as far back as 1994 by Mr Lee Kuan Yew, then Senior Minister. He floated the idea of reducing senior citizens' electoral power by giving two votes to every Singaporean parent aged 35-60.

This radical fix, he said, would prevent the agenda being seized by politicians who pander to the elderly: "You get hold of all the senior citizens' corners, in no time, you've got 20 per cent, 25 per cent of the vote! And free medical health, free this, free that."

Mr Lee's revolutionary one-young-man-two-votes idea never took off. Critics pointed out that the elderly in Singapore are very much part of the extended family structure. It was unfair to suspect that older Singaporeans would use their growing numbers to extort handouts from the state and cause their adult children to be burdened with high taxes, and compromise their grandchildren's future.

Today, around 97 per cent of the elderly live at home. Many young families take advantage of housing grants for flats close to their parents; the recent introduction of 3G flats for multigenerational families saw a strong take-up.

As long as they are embedded in the community, it is unlikely that senior citizens will be blinded by their narrow interests, and oblivious to other needs that the state must fulfil, like good schools for their grandkids, affordable housing for young couples and a healthy work-life balance for working adults.

Conversely, it is not just the elderly who will benefit from the pioneer package, but also their children who are looking after them. Security for aged parents is a major source of anxiety and uncertainty for working adults. The proposed package addresses this directly.

In addition to material help, the Pioneer Generation Package could have a powerful symbolic impact. It is a statement about the kind of society we want to be.

I hope it gets Singaporeans thinking about the responsibilities we owe to one another. Singapore is well behind other developed nations in philanthropy, and it tends to be easier to raise money for needy children than for the elderly.

Of course, when the full cost of the package is totted up, including the likely prospect of higher Medishield Life premiums, there are bound to be doubts about whether every senior citizen really needs help.

According to 2011 figures, 9.4 per cent of those aged 65 and above live in landed property compared with 6.6 per cent for the general resident population.

Even if housing type is not always a reliable surrogate measure of financial means, such visible indicators will raise questions about fairness and lead to calls for means testing.

However such technicalities are resolved, the essential merit of this massive new programme should not be lost.

The challenge, as DPM Tharman Shanmugaratnam said in a speech last year on social culture, is to "ensure a fair deal between the generations".

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