Sustaining social mobility

By Soon Sze Meng, Published TODAY, 20 Feb 2013

The Government’s spending plans traditionally aim to sustain a strong economy and robust defence force to ensure the political goal of national survival. So far, our debt-free and future-oriented national Budgets have enabled us to thrive as a sovereign state.

Our nation was conceived when we separated from Malaysia as a result of our founding fathers’ conviction that all citizens, regardless of race, language or religion, be given equal chances to succeed. We have held to the meritocratic belief that all Singaporeans, regardless of birth, connections or wealth, should have equal opportunities even as outcomes would be unequal.

The Budget must continue to support these aims. Ensuring high social mobility means that children’s efforts and talents play a more important role in their success than their parent’s education and income levels.

The Ministry of Finance’s intergenerational income mobility study, which measured 38,500 father-son pairs for sons born between 1968 and 1978, shows evidence of lessening mobility among the poor. Anecdotal evidence suggests more Singaporeans perceive the rising tide now lifts fewer boats than it used to. This is problematic. Social cohesion will wear away when the poor believe they cannot work their way up.

THE EARLY HEAD START

How can Budget spending support intergenerational social mobility at different life stages? When young, children of poorer families are offered infant care, childcare and kindergarten fee support. The enhanced infant and childcare assistance announced last month would help ensure those from poorer families grow up in safe, learning environments. But we should also consider providing them with more structured health training assistance and support on early childhood development and nutrition

To ensure that children from poorer families start out in primary school at close to the same point as those from richer families, we could fully subsidise the monthly cost of a kindergarten education. For households with monthly incomes at or below the 20th percentile (S$3,135 in 2011), the cost is about S$100-S$150. But the current maximum assistance of S$108 a month is only available to families with monthly income below S$1,500.

The new statutory board overseeing pre-primary education plays a critical role in ensuring social mobility. The first step is to draw up pre-school education guidelines so that it can invest in levelling up the quality of pre-schools, such that the affordable ones are as competitive as those that charge more. It could also take a more interventionist approach by providing public kindergarten services at the same nominal fees as primary schools.

FULL STOMACHS AND HEADS

Once a child begins his formal education, he or she must be given sufficient resources so that hard work and academic aptitude are the key differentiators, not wealth.

Currently, the Ministry of Education’s (MOE) financial assistance scheme is made available to households with monthly income below S$2,500. The MOE should consider extending it to all households at the 20th percentile and below. We could go one step further by providing free meals to students from families in the bottom 10 per cent (household income of S$1,581 and below). We want to ensure all students can fill their stomachs even as they fill their minds.

Historically, we have invested well in our more academically-able students. We should now invest more in those who may be academically weaker due to limited family resources. The median PSLE scores of the worst and the top-performing primary schools range from 160 to 240 — a significant variance. More supplementary lessons could be provided in after-school centres in schools, for those who cannot afford private tuition.

JOBS AND HEALTH

Good jobs are as critical as education for social mobility. Comprehensive support for continual education and training (CET) is needed to help people switch jobs or improve their qualifications so that they can get better jobs.

While CET programmes receive heavy subsidies, a limited cushion of unemployment benefits would help retrenched or unemployed workers pay their bills while making the effort to upgrade themselves and rejoin the workforce. Extended hardship impacts the prospects of everyone within the breadwinner’s family.

The Budget could also support social mobility through more investment in healthcare and encouraging more donations. Major illness can quickly set back a poor family financially.

Some developed economies have a universal healthcare insurance programme which allows citizens to access community and hospital health care services at minimal cost, through progressive contributions from all working citizens. This would allow children to focus on their education or career without the burden of an ailing parent’s hospital bills.

Our social norms focus on community as a key pillar of support — so we should continue to provide 2.5 times tax deduction for donations to charities that help sustain social mobility.

MATTER OF NATIONAL SURVIVAL

The hard truth is that increased investment in social mobility will have to either take a slice out of other spending priorities, or come from increased tax revenue — the expectation is that it will be through GST.

In the belief that Singapore must offer an attractive tax regime to lure top-dollar talent and investors here, our income tax rate for the highest bracket has fallen from 26 per cent in 2002 to 20 per cent last year.

We do not impose capital gain taxes and we abolished estate taxes in 2008. The wealthy benefit from our tax regime.

But the “Singapore premium” that attracts them here — a safe, clean and conducive environment — is the result of the right set of public policies and Singaporeans’ contributions and National Service.

So when reviewing the need to expand the tax base to fund our social investments, we may want to revise the tax structure for top-income foreigners and Singaporeans.

Our country’s economy has grown because through social mobility, all Singaporeans, regardless of how much or little they start off life with, are able to contribute their talents and efforts meaningfully to her growth.

In a larger sense, social mobility is not only a matter of economic competitiveness but also of national survival. Investing in sustaining social mobility strengthens social cohesion. Social cohesion is one of the three pillars, along with a strong economy and robust defence, that will ensure our sovereignty and survival.

Soon Sze Meng holds public policy and business administration degrees and works in a multinational corporation. He is a speaker at Friday's Fulbright-SMU Policy Forum on ‘Social Mobility and Public Finance’.