Tom White

Increasing Welfare, Containing Entitlement

Author: Garry Rodan, Tom White
Published:

In Part One of this series, Garry Rodan introduced the Singaporean system: one where economic globalisation, authoritarianism, and state capitalism have developed side-by-side over the years. While this once delivered impressive economic growth and an improved quality of life for Singaporeans, new challenges have emerged that are prompting Singaporeans to question the ruling People’s Action Party’s core ideologies.

In this part, he looks at how the PAP’s core ideology on welfare has been challenged as concerns have mounted over retirement funds and the cost of living, and how the party has moved to address voter unhappiness while continuing to block claims that citizens can assert rights against either their government or the state.

Desmond King defines citizenship rights as “the civil, political and social rights established under the impetus of economic development”.[1] After England institutionalised civil rights and political rights in the 18th and 19th centuries respectively, T.H. Marshall contended that in the 20th century, rights to a reasonable standard of economic and social welfare should also be enshrined.[2] This view enjoyed widespread political support in England and other advanced capitalist societies, but it has been under sustained counterattack since the late 20th century, by a push to wind back the socially redistributive role of the state in favour of private markets.[3]

PAP opposition to what it terms “Western welfarism” is longstanding. The party is hostile to the idea that citizens can assert rights against governments or the state. This hostility reflects a desire to preserve a particular form of political paternalism, rather than a belief that markets are always the best allocators of resources.

Indeed, the PAP’s policies since 2011 suggest that it’s not resistant to social welfare increases, so long as social rights are not enshrined, and technocratic elite discretionary powers are not compromised. In addition, the PAP’s growth model imposes structural limits—too much redistribution would impinge on the conditions required for profitable capital accumulation.

Tom White

Previous PAP leaders explicitly sought to disabuse Singaporeans of any expectations that economic development would come with more extensive social welfare provisions. As Deputy Prime Minister S. Rajaratnam declared early in the PAP’s reign:[4]

We want to teach the people that the government is not a rich uncle… We want to dissuade people of the notion that in a good society the rich must pay for the poor. We want to reduce welfare to the minimum, restricted only to those who are handicapped or old.

The then-Prime Minister Lee Kuan Yew also asserted that: “If you bring a child into the world in the West, the state cares for him. If you bring a child into the world in Asia, that’s your personal responsibility.”[5]

Asset enhancement, retirement, and the CPF

PAP leaders were not hostile to the concept of redistribution in and of itself. But as Lee Kuan Yew pointed out, the PAP government “chose to redistribute wealth by asset-enhancement, not by subsidies for consumption”.[6] Key to this has been the policy enabling Singaporeans to purchase public Housing Development Board (HDB) flats by drawing on their compulsory superannuation savings in the Central Provident Fund (CPF).[7] Over time, the government opened up contributors’ access to their CPF accounts not just to finance the upgrading of housing, but also for educational purposes and healthcare insurance.[8]

Depending on housing asset inflation to supplement pensions is inherently contradictory. Such inflation contributes to rising living costs and therefore downward pressure on living standards—voters reacted against this in 2006 and 2011. Similarly, high migration levels boost property values and CPF coffers, but are also unpopular. The extent and effectiveness of government subsidies, especially in housing, has also increasingly been brought into question, not least by the PAP’s party-political opponents.[9]

Moreover, although employees and employers generate contributions to CPF savings, the PAP state exercises control over people’s access to those funds and how they are invested.[10] This control has become increasingly controversial, as public anxieties mount about how real asset enhancement is, and whether savings will be adequate for retirement needs.

In particular, CPF returns are low, at 2.5% per annum on an ordinary account. This has been below inflation in some years: in 2011 and 2012, inflation was 5.2% and 4.6% respectively. Moreover, the use of these accounts for various non-retirement purposes further diminished the nest eggs for low-income Singaporeans in particular. As early as 1994, economist Mukul Asher predicted that a crisis was looming for retirees with limited funds.[11] For at least the next decade, the government was relatively unconcerned, as it assumed that appreciation of the value of HDB flats would effectively bolster savings.[12]

Tom White

The early decades of Singapore’s economic development saw upward social mobility, and not too many Singaporeans had put their lifelong CPF contributions to the test in retirement yet. Thus, the paucity of state-funded welfare presented no serious political problems for the PAP.

More recently, though, the rise in inequality and poverty has led many Singaporeans to conclude that the government has been uncaring and elitist. Altering that perception became a major priority for the PAP in the lead-up to the 2015 election and beyond. Consequently, the PAP began policy reform, particularly aimed at improving the lot of the least advantaged and poor. This was accompanied by an attempt to ideologically redefine the PAP alternative to “Western welfarism”.

But if change is in the air, where is it headed? Is it towards “Western welfarism lite”, or a genuine alternative approach to redressing social inequities arising from capitalist development in Singapore? Notwithstanding the 2015 election results, the basis has been laid for increased contention over the rationale for, and limits to, welfare.

Steps to the left

After the 2011 election, PAP leaders began making interesting claims about their ideological directions. In April 2013, Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, asserted that the current PAP cabinet represented a shift to the political left:

You still get diversity of views in Cabinet but the centre of gravity is left of centre. And that means the current team is very clearly focused on upgrading the lives, improving the lives of lower-income Singaporeans and of our older folk.

[13]

Tharman also highlighted that, as a result of other transfers from recent budgets, low and middle-income groups received 2.5 times the public subsidies they would have received 10 years ago.[14] This isn’t something PAP governments in the past would have boasted about.

Prime Minister Lee Hsien Loong also projected in mid-2013 that the government would “play a bigger role to build a fair and just society”, portending related changes in housing, health care and education.[15]

Tom White

Just months later, Emeritus Senior Minister Goh Chok Tong introduced the concept of “compassionate meritocracy”: a system providing equal opportunity for those who are financially disadvantaged. This, according to Goh, will ensure that Singapore’s brand of meritocracy remains compassionate, fair and inclusive for all.[16] Subsequently, at the PAP’s convention in December 2013, the party’s first resolution since 1988 was adopted, emphasising the PAP’s democratic socialist ideals and desire for an open compassionate meritocracy.[17]

Yet the PAP has also attempted to reconcile this so-called shift to the left with its traditional core values. Announcing the Pioneer Generation Package, Prime Minister Lee described the policy reforms as seeking a “dynamic balance” between free market economics and social security. Shifts would be made step-by-step, “in order to strengthen the social safety nets while doing our best to maintain that sense of initiative and personal responsibility and family responsibility”.[18]

Challenging “compassionate meritocracy”

The concept of “compassionate meritocracy” has been widely challenged or rejected in cyberspace,[19] and even in published letters to the editor in the Straits Times, such as the following:

The onus is on the state to ensure the availability of quality resources to all, regardless of socio-economic background… This has to be coupled with greater transparency, accountability and safeguards against deficiency of regulatory systems—rather than “compassionate meritocracy”. Without such safeguards, the incentives for corporate misconduct and discriminatory practices are greater, as are costs imposed on society. This does not mean that elitism should be condoned. We should be striving for a compassionate society as a whole, rather than simply a “compassionate meritocracy”.

[20]

Similarly, Tharman’s linking of old and new welfare approaches in terms of core cultural values has been contested. According to Tharman:

Policies to redistribute resources and level up the poor can only succeed and be sustained if they are designed to encourage a culture of personal responsibility—in the family, in education and at work—and if they promote collective responsibility among everyone, to improve the lives of others and the community we live in.[21]

In response, Workers’ Party (WP) member and sociologist at the National University of Singapore, Daniel Goh, likened this to the earlier PAP discourse of “Asian values”, arguing that, this time around, the pitch is against the new perceived threat of the culture of entitlement. He argued: “The trouble with Asian values and, now, social culture is that they distract us from the underlying cause—unbridled capitalism—of the problems of individualism and inequality, and place the blame wholly on individual psychology”.[22]

More social welfare… but not too much

Recent national budgets and 2015 election commitments demonstrated that the PAP government is prepared to increase funds directly and indirectly towards social welfare, including for some of Singapore’s lowest paid.[23] Yet by any international comparison this spending remains modest,[24] despite the strength of the national budget and the city-state’s considerable financial reserves.[25]

Consequently, in 2015, opposition parties criticised what they saw as inadequate policies to redress poverty and inequality. WP leader Low Thia Khiang argued that the centrepiece of the government’s redistributive reform, its S$8 billion Pioneer Generation Package, was insufficient.[26] Singaporeans First secretary-general, Tan Jee Say[27] also contended that the Prime Minister’s new policy announcements “just scratch the surface” of providing the safety nets needed. Leading opposition parties called for a minimum wage, which the PAP rejected.

The PAP’s resounding 2015 electoral victory suggests that the more modest social welfare and redistributive programmes were sufficient for the time being to win the debate. Significantly, though, post-election surveys by Singapore’s Institute of Policy Studies led its analysts to conclude that by far the greatest swing back to the PAP came from middle- to higher-income voters. These Singaporeans would have to pay higher taxes to help sustain the more substantive redistribution advocated by opposition parties, a point Finance Minister Tharman Shanmugaratnam highlighted during the election campaign. “There’s no system in the world where you can give everyone something without taxing people, and especially the middle-income group,” said Tharman,[28] adding that “we must make sure that our system is never one where we place a high burden on the middle income group”.

Clearly, the new ideological concept of “compassionate meritocracy” resonates more closely with the material interests of the middle class than those of the working class. Whether this new ideological construct becomes widely internalised by voters, or enjoys more selective but electorally strategic appeal, remains to be seen.

Tom White

Inequality has continued to be a thorny issue for the PAP despite their 2015 victory: in 2018, critiques of meritocracy and the welfare system took centre stage in public and media discussion, with sociologist Teo You Yenn’s book This Is What Inequality Looks Like spending the year on best-seller lists and occasioning substantial debate.

Ideally, the PAP would like to win back more votes from working-class Singaporeans that have gone to opposition parties in the last decade. It has recently begun drawing more on the surpluses from GLCs towards that end. But the state has for a long time assiduously sought to block claims about citizenship rights that can be demanded of the state; it remains determined against such notions.

In the next article, Rodan will look at the issue of accountability in Singapore politics, and instances in which it’s scrutinised.

Part 1 | Part 3 | Part 4

Article: Garry Rodan
Photographs: Tom White

References

[1]Desmond King, The new right: Politics, markets and citizenship (Basingstoke, UK: Macmillan Education, 1987).
[2]Thomas Marshall, Class, citizenship and social development (New York, NY: Doubleday & Co., 1964).
[3]David Harvey, A brief history of neoliberalism (Oxford: Oxford University Press, 2005).
[4]R.K. Vasil, Governing Singapore (Singapore: Eastern Universities Press Sdn Bhd, 1984).
[5]N. Macrae, “Welfare-happy West about to be confronted by own slackness”, Straits Times, 34 (12 November 1993).
[6]Noel Pearson, “Proof of welfare’s multiple failings”, Australian Online, retrieved from http://www.theaustralian.com.au/opinion/proof-of-welfares-multiple-failings/story-e6frg6zo-1226016136858?nk=48a67511cbec8ae8f85b6bffdcf3e673 (5 March 2011).
[7]Chua, 1997; Chua Beng Huat, “Navigating between limits: The future of public housing in Singapore”, Housing Studies, 29(4) (2014): 520–533.
[8]According to the government, its subsidies for housing, health and education amounted to S$3.4 billion by 1994. Warren Fernandez, “State welfarism, Singapore-style”, Sunday Times, Review, 5-6 (18 September 1994).
[9]Terence Lee, “Government to blame for Singapore’s housing woes: Opposition”, New Nation, retrieved from http://newnation.sg/2010/12/test-article/ (16 December 2010).
[10]In 2015, contributions of 20% and 17% of wages were respectively made by employees and employers for all employees aged up to 50 years with slightly different levels and variations for older Singaporeans.
[11]Fernandez, 18 September 1994.
[12]Chua, 2014, 9.
[13]“A Shift to the Left: Cabinet’s Weight of Thinking Has Moved”, Straits Times Singapolitics, retrieved from http://www.singapolitics.sg/features/shift-left-cabinets-weight-thinking-has-moved (20 April 2013).
[14]Tham Y.-C. and Min C. Y. “Middle income getting more subsidies than ever: Tharman”, Straits Times Online, retrieved from http://news.asiaone.com/news/singapore/middle-Income-getting-more-subsidies-ever-tharman (25 February 2014).
[15]Warren Fernandez, “When Singapore had a dream…”, Straits Times Online, retrieved from http://www.straitstimes.com/the-big-story/asia-report/singapore/story/when-singapore-Had-dream-20130811 (11 August 2013).
[16]Melissa Law, “We need to guard against elitism: ESM Goh”, Yahoo News, retrieved from https://sg.news.yahoo.com/we-need-to-guard-against-elitism–esm-goh-024750768.html (28 July 2013)
[17]A. Ong, “Consider what compassionate meritocracy entails”, Straits Times Singapolitics, retrieved from http://www.singapolitics.sg/news/consider-what-compassionate-Meritocracy-entails-lim-siong-guan (8 January 2014).
[18]Ibrahim Zuraidah, “More social initiatives when parliament reopens in May”, Straits Times Online, retrieved from http://www.straitstimes.com/the-big-story/parliaments-new-session/story/more-social-initiatives-when-parliament-reopens-may-pm-2 (31 March 2014).
[19]Some examples include: “Hear Ye! Hear Ye! Singaporeans Want a More Compassionate Society”, Jentrified Citizen blogsite, retrieved from http://jentrifiedcitizen.wordpress.com/2013/08/26/hear-ye-hear-ye-singaporeans-want-a-more-compassionate-society/ (26 August 2013); “Meritocracy’s Shortcomings”, Straits Times Online, retrieved from
http://thenewsynewsblog.blogspot.com.au/2011/09/meritocracys-shortcomings.html (20 September 2011).
[20]Geeva Gopalkrishnan, “Balance meritocracy with equal opportunity”, Straits Times Online, retrieved from http://www.straitstimes.com/premium/forum-letters/story/balance-meritocracy-equal-Opportunities-20140618 (18 June 2014).
[21]L. Lim, “Social culture and the welfare divide”, Straits Times Singapolitics, retrieved from http://www.singapolitics.sg/views/social-culture-and-welfare-divide (7 December 2013).
[22]Ibid.
[23]Fiona Chan, “Government’s share of social spending “set to rise””, Straits Times Online, retrieved from http://news.asiaone.com/news/singapore/government%E2%80%99s-share-social-spending-%E2%80%98set-rise%E2%80%99 (23 May 2014).
[24]“SG Spends Only 3.5% GDP on Welfare and Yet Shanmugan Says it Can’t Increase”, The Real Singapore, retrieved from http://therealsingapore.com/content/sg-spends-only-35-gdp-welfare-and-yet-shanmugam-says-it-cant-increase (12 July 2013).
[25]Singapore’s foreign reserves increased from US$98 billion in 2004 (ranked 31st globally) to US$273 billion by December 2013 (Tan, 12 August 2014).
[26]Audrey Tan, “WP: Pioneer package needs a booster”, Straits Times Online, retrieved from http://www.straitstimes.com/politics/wp-pioneer-generation-package-needs-a-
Booster (6 September 2015).
[27]Walter Sim, “Opposition takes aim at “election speech””, Straits Times Online, retrieved from http://www.straitstimes.com/politics/opposition-takes-aim-at-election-speech (25 August 2015).
[28]Ong Hwee Hwee, “GE2015: 5 things about the fourth night of election rallies on Sept 5”, Straits Times Online, retrieved from http://www.straitstimes.com/politics/ge2015-5-things-about-The-fourth-night-of-election-rallies-on-sept-5 (6 September 2015).

Garry Rodan

Garry Rodan is an Emeritus Professor of Murdoch University and an Honorary Professor of The University of Queensland. His most recent books are the sole-authored Participation without Democracy (2018) and the co-authored The Politics of Accountability in Southeast Asia (2014).

Tom White

Originally from Bradford, West Yorkshire in the north of England, Tom is currently based in Singapore where he works as a freelance photographer. His photography has been published and exhibited internationally. Editorial clients include The New York Times, The L.A. Times, The Wall Street Journal, TIME magazine, The Guardian U.K, Thompson Reuters and The European Press Photo Agency.

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