By Chua Mui Hoong
The Straits Times, Dec 8, 2006
WHEN I was growing up, ice cream was a luxury. A fruity stick cost about 10 cents, and buying one required a hard decision.
In my teens, the occasional tub of Magnolia or Wall's ice cream was a treat.
Then I started work. Soon, I discovered the Haagen-Dazs and Ben & Jerry's varieties of ice cream, and then local gourmet ice creams, Italian gelatos and the like.
These days, I don't waste my ice-cream quota on plain vanilla from Wall's. When I do indulge, I go for Ben & Jerry's, or the rich creaminess of flavours from places like The Daily Scoop (whose chendol flavour inspired this column).
Doesn't matter that a tub of Wall's costs a few dollars, and the branded ones I favour cost at least three times as much. At my age (and weight), eating ice cream involves a strategic decision: Go only for the most delicious; mediocre ice cream isn't worth getting fat for.
But I know that even though I may spend more on ice cream today than in the past, it's because I choose the pricier stuff nowadays - not because the cost of ice cream has gone up.
But when people complain about the cost of living going up, I sometimes wonder if they're feeling the pinch because the cost of basic stuff, like rice, school fees and transport, has gone up - or because they're just choosing dearer items to spend on.
As Singapore gears up to help the low- and middle-income in the wake of a rise in goods and services tax, the issue becomes more pertinent.
President SR Nathan, delivering the address to open the new Parliament session last month, spoke of the need to forge a new social compact. Prime Minister Lee Hsien Loong returned to the same theme a week later, when he said globalisation risked straining the social compact, and there was a need to do more to help the low-income group.
My sense is that few Singaporeans would disagree with the move to do more to help the bottom 20 per cent of households, whose incomes have stagnated or even fallen over the years.
The central plank of the Government's assistance for the bottom 20 per cent is Workfare, a major experiment in welfare for Singapore.
At its heart, this is a permanent income support system to prop up the incomes of those whose own honest labour cannot earn them a decent living wage.
The emphasis now is on the employed: Those aged 40 and above, who earn $1,500 or below a month, will get a Workfare Bonus from the Government.
But already, calls are coming in to expand Workfare to include more groups. How about those who can't find jobs, ask some analysts.
How about me, asks the man earning $2,000 who has to support a family of four. Don't I deserve Workfare as much as the person earning $1,500 with no dependants?
Each appeal has its merits. Should the state use taxpayers' money to meet those demands?
Already, MPs are sympathetic to the calls.
Last year, Mr Sin Boon Ann asked rhetorically: 'Should a middle-class family with young children attending enrichment classes now be required to stop these classes immediately simply because both parents are out of a job and are seeking public support?'
Last month, new MP Lim Wee Kiak spoke up for families 'in the gap'. Even families with a maid and a car could need help, he said, since a maid may be necessary if both parents are working, and a car allows the parents to ferry children to and from a caregiver's home.
Should ballet classes, cars and domestic help be considered 'necessities' which the Government should help fund for the middle-income group?
I don't think there is justification to do so. At the same time, I do have some sympathy for the plight of what I call the 2k families: those earning around $2,000, who could do with some help.
Part of the confusion has come about because of a lack of clarity over what exactly is meant by 'middle-income'.
Where should the new cut-off be?
One possibility is to redefine the meaning of the 'low-income' needing help, to go beyond the traditional cut-off of the bottom 20 per cent of all households, to include those up to the 30th percentile, who also saw incomes stagnate over the years.
This would bring the cut-off from the current $1,500 to about $2,000.
Doing so, however, is not the same as saying the middle-income or middle-class should also be helped.
The 'middle-income' should, strictly speaking, refer to those households with working adults whose earnings fall around the 40th to 60th percentile of incomes.
Last year, that group of households had income from work amounting to $4,400 to $5,220 - not exactly a paltry sum, although it is true that a family with two school-going kids attending tuition and enrichment classes, with a maid and car, would still struggle financially. Should the state therefore step in to help them afford the trappings of a middle-class life?
As Singapore starts to consider how to help the 'middle-income', it is prudent for us all as a society to think about just how we want to redistribute income.
Should Singapore focus its income redistribution efforts tightly on those at the bottom 20 to 30 per cent - and risk growing disenchantment among the middle-income group?
Or do Singaporeans want to become like those northern European states where incomes are flatly distributed (with a large middle class, and a narrow range between the top and bottom income), but where taxes are high and unemployment relatively high?
Or perhaps Singapore should aim for something in between: a society that subsidises not only the bottom 20 to 30 per cent with some form of income support, but also helps those in the 40th to 60th percentiles afford the trappings of a middle-class life, like ballet classes, a car and a maid.
This last option will require more government spending than is currently available. My own sense is that at some point, the taxpaying class (the top 25 per cent) will revolt at the prospect of their hard-earned money going to pay for someone else's car/maid/ballet lessons.
Each choice of welfare policy entails trade-offs.
With the seminal Workfare Bonus now a permanent feature of the social safety net here, the Government has made clear its commitment to redistribute income in a long-term, direct way to low-income households.
But as pressure mounts for the avalanche of aid to be extended to the middle-income, Singaporeans and the Government alike should pause and ponder: Just where should the line be drawn? Who should be helped, by how much, to do what?
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