Pioneer Generation Package will not affect future Budgets: Tharman
- POSTED: 24 Feb 2014 22:07
Beyond just a focus on the elderly, Finance Minister Tharman Shanmugaratnam said this year's Budget is for all Singaporeans. He said by setting aside money now for the Pioneer Generation Package, it is not just giving the elderly peace of mind, but also an assurance for the rest of Singapore.
SINGAPORE: Beyond just a focus on the elderly, Finance Minister Tharman Shanmugaratnam said this year's Budget is for all Singaporeans.
Speaking at Channel NewsAsia's Budget forum "Ask the Finance Minister" on Monday, he said by setting aside money now for the Pioneer Generation Package, it is not just giving the elderly peace of mind, but also assurance for the rest of Singapore.
The government has said it will set aside S$8 billion under the new Pioneer Generation Fund, aimed at recognising the contributions of first-generation Singaporeans born on or before 1949.
Mr Tharman said: "We are also telling the rest of Singapore that we're settling the funding for the pioneer generation so future Budgets are therefore freed up to cater to all Singaporeans and for future challenges -- including our future healthcare challenges -- because healthcare spending for all Singaporeans will go up over time."
The middle-income group was also not left out, said Mr Tharman.
He said the main shifts in the past three to four years have been focused on the sandwiched class.
Government transfers to this group have gone up 2.5 times over the past 10 years.
The challenge for the government, said Mr Tharman, is to ensure that the cost of living does not run ahead of incomes and to ensure that there are good jobs for citizens.
Mr Tharman added that he is also not so fixated on the Gini coefficient, which measures the income gap between the rich and the poor.
He said what is important is equity and seeing people's lives improve.
He said: "The real challenge isn't to get Gini down, but our real challenge is to uplift everyone so they can achieve their full potential and contribute to a better society. You may start off poor but we will give you ample support to do well in life and for your children to do well in life.
"So you mustn't just think about relativities but about absolutes -- people's standard of living must go up."
Mr Tharman was also asked about how long the government can keep taxes the way they are today.
In response, he said the Budget goes back to the type of society Singapore wants to be.
He said: “I think Singaporeans value work and they want us to provide encouragement for people to work. They value responsibility, being responsible for family, being responsible for society, by playing their part, and they also value fellowship.
“I think we've got to find the right balance -- a society that keeps striving, where work is valued and when someone works, we try to provide him or her with additional help, especially if they're starting off poor and we help their children.
“If someone's taking responsibility, provide them with more support because they're taking responsibility. But remember (while) the government plays a role... all of us play a role to keep up that spirit of fellowship.”
Mr Tharman also said it would be a steeper climb for Singapore in its restructuring efforts.
This is especially so when Singapore's economy is trying to move up from an upper-middle level to close to an advanced economy.
Mr Tharman added that this will not be an easy catch-up and would require a stronger push from within. This would involve building capabilities, attitudes, respect for workers and creativity.
The minister also said the next stage of productivity growth would come from the higher value-added sectors like manufacturing and services.
Mr Tharman said: “We are already seeing now that the higher-value industries in manufacturing as well as in services, for instance financial services as well as some specialised services, they are growing more rapidly.
“So in most countries the big leap in productivity comes not just from each person and each firm doing better, but from restructuring. Some are growing at the expense of others and unfortunately that is the reality of moving to the next level.
"Some will grow faster than others and some sectors will find that they have pruned down overtime and they have to be more efficient, and those that remain will be more dynamic and more profitable and pay their workers better.”