SINGAPORE - After MPs debated for three days on the 2015 Budget, Deputy Prime Minister Tharman Shanmugaratnam gave a wrap-up on Thursday that touched on many issues including social mobility, the CPF system and a new social compact.
Here are 10 major points you can take away from The Straits Times reports on his 90-minute speech:
1. Social mobility
Among young adults in their 20s and 30s, about 14 per cent of those born in the poorest 20 per cent of families end up in the top 20 per cent of income earners. This is higher than in developed countries like the United States, Britain, Canada and even the Scandinavian economies. Read more.
2. Progressive system
Singapore has a progressive system, where the higher-income households contribute the bulk of taxes, and the lower-income households receive the majority of benefits. The top 20 per cent of households pay 55 per cent of all taxes and receive 12 per cent of all benefits. The middle 20 per cent of households, who are those between the 41st and 60th percentiles, pay 11 per cent of all taxes, and receive 20 per cent of all benefits. The lowest 20 per cent of households pay about 9 per cent of all taxes, largely through GST, and receive 27 per cent of all benefits. Read more.
3. Tilt towards helping lower income
In the last five years, there has been a significant tilt towards helping the lower- and middle-income groups. Read more.
4. Support for middle-income group
There has been a significant increase in the amount of benefits that the middle-income group received over the last 10 years. Each Singaporean household now gets $1.73 in benefits for each dollar of tax they pay.
5. A stronger social compact
The key, said Mr Tharman, is not about how much we are redistributing, but how we strengthen the values of a fair and inclusive society. The social compact for the future is one where personal and collective responsibility go hand in hand. Instead of "cradle-to-grave" welfarism, Singapore's system is about empowering people and rewarding responsibility.
6. CPF melds the best of different systems
The Central Provident Fund scheme is not a perfect system, but it avoids the big disadvantages of the major schemes in the rest of the world, and it has some significant advantages.
It is fair, it is sustainable, and it takes risk away from individuals who cannot bear that risk.
The scheme is both individual and collective as it comprises the individual's savings and significant injections of government support.
The transfers that take place in the CPF are from the Government Budget. They are not transfers from one generation to the next. Read more.
7. Government Budget is in a healthy position
This year, the deficit of $6.7 billion is almost entirely due to funds set aside for future investments. It is a deficit because the Government has set aside funds earned in this term of government for the future. This includes infrastructure at Changi Airport and other endowment and trust funds. Read more.
8. Fairness and sustainability
Singapore has to sustain a fair and inclusive society for generations, not one election at a time. The Government has written rules into the Constitution to ensure there is a fair balance between current and future generations. It will not cross the "red line" of failing to balance the Budget in every five-year term of government.
In addition, the Net Investment Returns (NIR) framework limits the Government to using 50 per cent of expected long-term investment returns for current spending, while making sure at least 50 per cent are kept in reserves. Read more.
9. Taking from right and left
We should be willing to take truths from both the left and right of the political spectrum, Mr Tharman said.
Singapore cannot leave things entirely to the market and the natural workings of society, but neither can social policy interventions create a fair and cohesive society, without a culture of personal responsibility. Read more.
10. Gradual restructuring
Singapore has taken a middle path to business restructuring.
By gradually cutting foreign worker inflows and ploughing the levies back into boosting productivity, it avoids "shock treatment", and helps small and medium enterprises make the transition. Read more.