The Stewardship Mentality Singapore Needs

8/13/2019 The Stewardship Mentality Singapore Needs

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The stewardship mentality Singapore needs

has been disciplined in ensuring a balanced budget and the accumulated surplusesin good years have built up our reserves. Today, we have the opportunity and fiscal

resources to put in place programmes that will strengthen Singapore for the future.

To prepare for an ageing population, we will need to invest in new healthcare

infrastructure such as hospitals, nursing homes, day care centres, and healthcare

manpower. To maintain social mobility, we have to intervene earlier and give

children of less-advantaged backgrounds every opportunity to do well in school. To

enhance liveability, we are investing heavily in our public transport system.

As much as we should pursue opportunities to better the lives of Singaporeans, we

must also be mindful of potential pitfalls — for example, committing to expensive

programmes that are difficult to unwind when they are found to be ineffective.

As decision-makers, we are deciding on behalf of a lot of people and organisations

who are stakeholders, and we are, in that sense, “stewards”. How should we behave

as stewards?

CONSIDER THE LONG TERM

First, a stewardship mindset requires us to give careful consideration to the long-term

implications of our actions. We need to consider what they mean for Singaporeans

10, 20 and 30 years down the road. Take, for example, the design of MediShield Life,

which aims to provide hospitalisation coverage to all Singaporeans for as long as we

live.

Premiums for hospitalisation insurance typically increase with age along with

increased incidence of hospitalisation. An insurance programme that has no pre-

funding at all would offer very attractive premiums to a person in his 20s or 30s,

because very few in his age group are hospitalised.

But 30, 40 or even 50 years down the road, the premiums will escalate as the odds ofa hospitalisation episode increase. This is often a strain on retired persons and some

drop out of insurance cover at a time when they most need it.

Pre-funding allows for higher premiums to be paid when a person is younger and

likely to be working, so that the benefits he expects to receive in his senior years will

have been paid for to some extent. As a result, his premiums can level-off in his

senior years and be kept more affordable. This helps him to stay covered.

In contrast, while the lower premiums of a programme with little or no pre-funding

are attractive, we will effectively store up troubles for the future. Although thebenefits of pre-funding are not realised until many years later, a stewardship mindset



requires that we consider its benefits in the design of MediShield Life, and not avoid

the challenge of explaining the need for higher premiums during our working years.

FAVOUR THE DISADVANTAGED

A second feature of a stewardship mindset is the willingness to tilt the balance in

favour of those who are disadvantaged. Most people will not disagree that the

vulnerable groups in society need more help. Yet, not everyone accepts that theythemselves should be outside the coverage of schemes that target the less well-off.

This includes schemes to provide healthcare subsidies or education bursaries.

Most MPs have encountered residents who can be quite upset that they fall outside

a particular scheme’s coverage. Sometimes, even very wealthy people can get

upset, such as when they feel that their children “lost out” to those who got into a

special programme at school, or when they have to pay higher property taxes.

While we should refine our schemes to address feedback, a stewardship mindset

requires that we have the courage to keep tilting the balance in favour of those

who have less, even in the face of some unhappiness.

We should, at the same time, recognise those who are generous in spirit and provide

more opportunities for them to step forward to help the community, so that we are

collectively a better and more gracious society.

BEWARE QUICK FIXES

A third feature of a stewardship mindset is to favour holistic solutions over stop-gap

quick fixes.

One ongoing challenge is helping citizens cope with the costs of living. Relief

measures, such as the GST Voucher, are always helpful; in its various forms, it reaches

about 80 per cent of all households. However, the more lasting solution lies not in

increasing relief, but in helping Singaporeans stay in employment and improving

their ability to earn higher incomes.

This is why the Government has made major moves to restructure the economy andshift towards productivity-driven growth, to ensure that the economy is able tocontinue generating better-paying jobs. At the same time, we are building

significant capacity in continuing education and training to help Singaporeans stay

relevant. In Budget 2013, we introduced the Wage Credit Scheme to encourage

employers to share productivity gains through wage increases.

To provide support for low-wage workers and boost their CPF savings, the Workfare

Income Supplement is reviewed regularly and has been enhanced several times

since inception. To boost the employment prospects of seniors, the Government

enacted re-employment legislation and introduced the Seniors Employment Credit.



A stewardship mindset compels us to do not only what is expedient but to focus

squarely on addressing fundamental issues. It also emboldens us to pursue deep

transformations that a stop-gap quick-fix mindset is not interested to attempt.

BENEFITS OF PRUDENCE

The stewardship mindset came quite naturally to the pioneer generation of

Singaporeans. Aversion to wasteful spending and the willingness to save for a rainyday provided strong support for the Government’s prudent approach to fiscal

management. This has helped us to avoid the problem of public debt which beset

many Governments today.

Fiscal prudence has also enabled us to build up a healthy pool of reserves. The net

investment returns from our reserves now funds around 16 per cent of our annual

expenditure, and gives more latitude to invest in a range of social and economic

programmes that will keep Singaporeans plugged into the world of opportunity.

As we contemplate major policy moves and programmes for the future, I’m hopeful

that we can gain Singaporean’s understanding and support to keep to the

discipline of fiscal prudence. In doing so, we have the opportunity to further embed

the stewardship mindset in our national DNA, and build up our country in ways that,

hopefully, younger and even yet-to-born Singaporeans will be grateful for.

ABOUT THE AUTHOR:

Josephine Teo is Senior Minister of State (Finance and Transport). This article is basedon edited excerpts of her speech at the CPA Congress on Oct 9.

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The Stewardship Mentality Singapore Needs