Looking after the welfare of its citizens is the duty of any government worth its salt, but unbridled welfarism is another thing altogether.

The three things that seem to be of importance in a welfare state are welfare benefits, a minimum wage and free universal health care.

At the moment, the Government's approach here to help those going through hard times, as well as low-income workers, has been the Workfare scheme and food vouchers, among others. This is the right approach and seems to be helping responsible people tide through difficult economic periods.

The use of food vouchers and handouts are of great value, but these may not be long-term solutions.

Nor is releasing CPF funds for extra expenditure in this regard. Similarly, a minimum wage may not be the answer. Both such measures are potentially inflationary. This is not what we need if difficult economic times are ahead.

One of the arguments used for a minimum wage is that it allows people to go off welfare as it will provide them a minimum income above what they may receive under welfare.

But this simply begs the issue as to why people must be encouraged to go off welfare by paying them a certain income, if they had opted for welfare out of lack of responsibility in the first place. Increasingly, being in this rut seems to be the case for welfare states.

This is quite separate from those who are genuinely looking for work and are on Workfare for the duration as in the case of Singapore. This is not welfarism, this is looking after a citizen's welfare. As are food vouchers for low-income people.

Then there is free universal healthcare which sounds good, seems feasible and viable until it is practised over the long term. The motive for it is laudable, but in the long run, is it as sustainable a system as it is touted to be?

If Singapore opts for a welfare system where one can easily make welfare claims, demand a minimum wage and claim the right to free universal healthcare, then the question that needs to be asked is: who pays for all this?

Do we really need a hefty rise in taxes? Are those who promote such measures aware of what kind of taxes may be needed for this?

Imagine a situation where for every dollar lost, you lose a hundred cents, but for every dollar gained you earn only 60 cents because the other 40 has gone for taxes.

Many countries that have easy welfare, minimum wages and free healthcare have rather high taxes.

And anyone who operates in a high tax environment can tell you what a disincentive it is for business and the individual.

The lack of productivity that tends to follow from this leads one to, well, eventually lean on welfare. This can lead to an expensive vicious cycle.

But what about all those government reserves that Singapore can dip into to finance all this?

But what happens when all this money floods the system? An excess of money in this respect could lead to devaluation of the Singapore dollar and inflation. In a worst-case scenario, there could even be a run against the Singapore dollar.

The current problem with the credit crisis in the banking industry today and further creation of dollars in the US to work round this only point to the distinct possibility of a serious devaluation ahead for the US dollar. The US is a great debtor nation and issuing more money to try and work round these issues gives rise to the question: How valuable is the US dollar, really?

Some countries which use the US dollar as a reserve currency are already reconsidering whether they should continue to do so. This is generally the price to pay for a floating fiat currency.

So in response to all this, I am making three suggestions. There are many options that would be relevant, but these three would make us examine where Singapore goes from here beyond what is necessary in food vouchers and handouts.

First, do a serious study into making a move back to the gold standard. All currencies are now backed by growth, assets, currencies, perhaps some gold, guarantees and perceptions of guarantees that are subject to severe change when international and domestic situations are disrupted. Too much depends on what seems to be the increasingly unreliable US dollar as a world currency unit.

The US only went off the gold standard in 1971, thanks to then President Nixon.

Gold is money. Everything else is a 'wannabe'.

Historically, all unpleasant situations that have resulted from the vagaries of floating currencies have gravitated back to the stability of gold-backed currencies. There are workable options out there on what a gold standard would mean today. A proper and effective move back to a gold standard would also mean in effect stable money and low taxes.

Second, a serious look at the creation of social businesses here. This has already been under way in Singapore but an enhancement of this would be useful. These are self-sustaining enterprises that would target providing necessities for low-wage earners, and could also involve hiring the needy and long-term unemployed.

Third, a serious look at the age-old and time-tested practice of barter. More media coverage has been given lately of barter exchanges being set up here and elsewhere. With barter, businesses find it easier to save on cost, produce a sustainable enterprise and transfer lower prices to customers. This is not an attempt to evade taxes, but to create productive and innovative methods for enterprise.

Similarly, groups of people have set up barter sites that allow them to trade, with the use of virtual or barter currencies, items they want or need. This is also known as Local Exchange Trading Systems which are practised around the world. The barter currency created is a complementary community currency to be used in conjuntion with the national currency. It also promotes goodwill.

These are not original ideas. But we can always look at what worked in the past, to see how it may be still relevant for the present, and so continue to ensure our success in the future.

Sanjay Perera