Tracking the poor without using a poverty line

By Radha Basu, The Sunday Times, 5 Oct 2014

Ms Peh Kim Choo, director of the Hua Mei Centre for Successful Ageing, works with older folk, many of whom are poor. She would like to know how much income an older person requires to meet his daily needs for food, clothing, shelter and care.

Knowing that is essential in drawing up estimates for costs of care in a rapidly ageing society, she says. Her centre provides both home and community care for older folk.

Chief executive Catherine Loh from the Community Foundation of Singapore, who administers charitable funds for philanthropists, would welcome more data on the demography and geographic locations of Singapore's poorest households.

Two reports released by the Government in recent weeks - the five-yearly Household Expenditure Survey and the ComCare Annual Report - have provided some useful data on low-income families.

But neither is designed to provide a complete picture of the numbers of poorer households in our midst. Thus, despite more than 350 pages of publicly released information, because of the way the data is collected, many of Ms Peh's and Ms Loh's questions remain unanswered.

The Household Expenditure Survey, released by the Department of Statistics, shows that there were 66,000 households living in one- and two-room Housing Board flats in 2012/2013, up from 48,000 five years earlier. The majority of them don't own their homes, but rent from the HDB at subsidised rates. Overall, incomes for those living in one- and two-room flats have grown substantially over the past decade (see chart) and have outpaced expenditure.

Significantly, while assessing income, the survey considers work, as well as non-work sources such as regular social assistance payments from the Government, Central Provident Fund payouts for retirees and so on.

The latest ComCare report, released by the Ministry of Social and Family Development, provides data on those who receive help from the Government's ComCare fund, set up in 2005 to provide financial assistance to needy families. A total of 72,000 Singaporeans and their families were helped under various ComCare schemes in the last financial year, the report said.

So, where are the crucial gaps in information on the poor?

Let's consider the Household Expenditure Survey first. Its data on one- and two-room households is a useful proxy indicator of lower-income families. Yet, this group comprises not just families who rent flats and have no assets, but also those who do own their flats.

Around 19,000 households living in one- and two-room flats have no working member, but there is no specific data on how much this group earns. We also don't know the income from all sources of the nearly 120,000 households in the bottom 10 per cent of the income scale. Data from the bottom fifth, however, is available - and it shows that these approximately 238,000 households spend more than they earn (see chart).

This appears to be sobering news, but retiree households form nearly a quarter of this group. Some could be financing their expenditure through irregular income such as proceeds from property sales and capital gains from investment. Many in the bottom fifth could also be living in four-room or bigger flats. Are they really poor? If so, could they sell their flats and downgrade? Or, are they simply folk who, despite not much regular income, have enough assets and savings to live comfortably?

We just don't know for sure.

Similarly, the ComCare report, on its part, tracks the number of beneficiaries under four different schemes for lower-income families. One family could have received help from more than one scheme, so there is double counting involved. So, what is the exact number of households or individuals helped by ComCare?

Again, we don't know for sure.

In order to track low-income households, many developed countries have a "poverty line", which is an income threshold below which an individual or household is considered poor.

The Singapore Government has rejected calls for a poverty line, saying this may not fully reflect the severity and complexity of issues faced by the poor and may also result in those above the line missing out on assistance. But it is possible to track the numbers and demographic profile of the poor without setting an official poverty line.

Canada, which, like Singapore, has high levels of human development, has been doing so for years. Its government has also long rejected having a single poverty line for the same reasons as Singapore. Yet, it has at least three distinct indexes to shed light on Canada's poor.

The first, the Low Income Cut Off, tracks income thresholds below which a family will likely devote a larger share of its income on basic necessities such as food and clothes.

The second, the Low Income Measure, counts individuals who earn less than 50 per cent of the country's median income.

The third, the Market Basket Measure, calculates the cost of a specified mix of goods and services a family would need to achieve what the country considers a basic standard of living.

Each measure is adjusted for family size and geographic location, since costs of living are generally higher in cities and larger families may be more vulnerable. The data collected is released every year.

Canada also tracks the demographic profiles of low-income individuals, rather than households. Data on individuals is more precise.

These, it says, enable policymakers and social workers, among others, to better craft schemes to help the worst-off and gauge their effectiveness. The information also helps flag demographic shifts in the profiles of the poor and pinpoint new areas of need. In the 1970s, for instance, the elderly were the most economically vulnerable community in Canada. In more recent years, single-parent families and single, working-age adults have emerged as concerns.

In recent years, Singapore has begun sharing more fruits of its economic success with the old and the poor. Government transfers to the needy have increased. Eligibility criteria are now more generous. There are many more schemes to help the poor.

But are they working well? Are there new demographic drifts we need to be aware of? And, most importantly, how many families are still struggling to make ends meet despite all the help available?

More clarity on the needs, numbers and profiles of poorer households may help to better gauge the effectiveness of help schemes. It could also lead to a more targeted and efficient use of charity dollars in new areas of need.

Above all, it could galvanise the majority of better-off Singaporeans to become champion changemakers who believe in doing their bit to improve the lives of the few who are poor in what remains one of the richest nations in the world.

Singapore may not need a single poverty line, but as society ages and income gaps widen, it needs more information on the poor, for sure.