SINGAPORE: Recent discourse about inequality, social mobility, higher social spending and higher taxes has generated debate in some quarters over the ideal quantum of Government transfers and social assistance, and how such funds can be disbursed effectively.
Some analysts argue that low-income families should receive more social assistance with fewer conditions so that they can more successfully break out of poverty and their children can thrive to experience greater social mobility.
Others suggest that what we have today is sufficient and raise the issue of whether we’re willing to deal with the trade-offs of greater social spending with fewer conditions. Among the trade-offs – higher taxes.
Whatever one’s stance on the issue, few would disagree government transfers, subsidies and social assistance need to reach the right people to meet their needs and improve societal outcomes in general.
Key to this is the criteria Government agencies use to determine how and how much government transfers are disbursed.
WHO IS DESERVING? WHO IS NOT?
When it comes to U-Save rebates and Service and Conservancy Charges rebates for instance, the quantum is based on housing type.
This has been a point of contention for some including Members of Parliament who have raised the issue for discussion several times over the years.
More recently, MP for Marine Parade GRC, Seah Kian Peng said in an On the Record interview that among his residents, it is an emotive issue.
“I have people telling me that just because a person lives in a three-room flat, it doesn’t mean they are poor. They can actually be very wealthy and we should scrutinise more to make sure we don’t give them rebates. Likewise, if I live in a five-room or executive flat, it doesn’t mean I’m okay.”
Mr Seah himself called this “nitpicking”. He believes in a “give and take” approach.
“It is always difficult in policy-making and it’s about striking the right balance. You also do not want to spend an inordinate amount of resources or time to administer some of these means tests to make it even more precise. I think the general levers they use - income and household type as a proxies work fairly accurately for most."
If you want it to be so precise, you need to be even more intrusive. There will be outliers here and there, but for those who are in that group who actually don’t need it, what they should do is find ways to help others.
This is the hope, but clearly there are no guarantees.
At the other end of the spectrum are others like MP and now Senior Minister of State for Law and Health, Edwin Tong, who feel means testing should be more “detailed”.
“Today, they look at your address for example and if you live in a private estate, you’re out. One may have a home that is bought in the 60s. It might be worth more now, but you can’t expect an old couple to sell their home and then live on that in a different estate, where they’re dislocated from their own friends and society.”
When I put it to him that surely the Government can’t be giving finite resources to those who own million-dollar or multi-million dollar homes at the expense of those who might not be able to afford a modest home or even a meal, he conceded this argument was “fair enough”.
But he presented other scenarios.
“But what about those who live in private estates, but are squatting with their siblings or with a friend. They may not be paying rent but they are there on goodwill and the goodwill could end at any point. So I think we should be more granular on it, go beyond just the address, go beyond just what the income is. What about those with dependants who have health problems? Their financial burden will be heavier.”
Presented with the possibility that this would mean more administrative resources being needed, he said “it’s well worth the effort” if it means getting a “fairer, better application” of “finite” funds.
Opinions clearly differ on how the system can identify people with the greatest needs and make sure fewer fall through the cracks.
THE IDEAL CRITERIA
During last year’s Committee of Supply debate, then-Senior Minister of State for Finance Indranee Rajah said that household income remains the best measure to determine who qualifies for government social assistance schemes.
She pointed out that many social assistance programmes - such as the Community Health Assist Scheme and ComCare schemes - factor gross total monthly household income or monthly household income per capita in eligibility criteria.
Those with no income are assessed on the annual value of their home.
But based on this criterion, a person who lives with wealthier family members or with a big family in one house may be excluded from schemes even though he doesn’t receive monetary assistance from them.
If household income or housing type aren’t accurate gauges, what is?
Some say why not just disburse to a segment we all agree needs help - like seniors.
Yet, in 2014, when it was announced that pioneers would not be means-tested for benefits under the Pioneer Generation Package, some MPs and members of the public took issue with it.
It had to be emphasised that the intent of the package was to honour and recognise the contributions of all pioneers in Singapore’s nation building journey, regardless of their financial status.
While this has been generally accepted as a condition of a special package for a special group, questions clearly remain about how other transfers are disbursed – even when these aren’t meant to fulfil social assistance goals.
This year, when it was announced that Singaporeans aged 21 and above will get a one-off SG Bonus of up to S$300 each based on their assessable income, some members of the public questioned why the wealthy should get anything all. Why not give those with lower incomes more instead?
CONSIDER THE TRADEOFFS TO FORMULATE A BETTER SYSTEM
With any policy, there will be trade-offs. The question is what are the most acceptable trade-offs.
By not being more precise with who gets more social transfers, is their impact merely being diffused?
Yet there are also costs to being precise. Some analysts have pointed out that those who apply for social assistance schemes are often asked overly intrusive questions to determine their eligibility.
Being more precise when it comes to means testing might, in fact, intensify this.
But, once a person’s status and needs are determined, it could mean greater leeway in terms of funds to help them break out of poverty.
However, can administrative costs and bureaucratic hurdles be kept sufficiently in check as well?
As the conversation on inequality and social mobility continues, it seems we need to go beyond whether we are willing to pay higher taxes to fund social spending, to discuss how tax payers’ contributions can be more efficiently spent.
Bharati Jagdish is the host of Channel NewsAsia's On The Record, a weekly interview with thought leaders across Singapore, and The Pulse, Channel NewsAsia’s weekly podcast that discusses the hottest issues of the week.