MP for Marine Parade GRC Mr Seah Kian Peng explains why the socialist social compact between the Government and Singaporeans remains strong, even as the financial principles behind the provision of public services are evolving.
Below is an abridged version of Mr Seah’s Budget debate speech delivered on Feb 22, 2023.
With all this talk about “social compact”, it may be useful to note that while the concept was born hundreds of years ago, in 17th century political philosophy, in this House, it was first used only in 1996, in a debate on the White Paper introduced by the Minister of Transport on “A World Class Land Transport System”.
Since then, it has been used in almost every Budget debate in recent years.
A social compact is essentially an exchange of promises – each of us give up our freedoms to pursue selfish interests in an unfettered way, in exchange for a stable, ordered fair society, in which all of us have an equal chance to flourish.
Budget 2023 is an inspired political statement that spells out duties for the rich, welfare for the poor and opportunities for all. In many ways, it is a decisive break from the past.
To show how, and why, let me contrast this with the political language and financial principles outlined in 1996 by the person who first used the words “social compact” – and this was by Nominated MP and economics Professor Lee Tsao Yuan.
In her speech which argued for increased subsidies for transport, she said, and I quote:
“Education, health and housing have, from the very beginning of the PAP Government, been treated differently.
To me, subsidy is not a dirty word. Making basic health, education and housing affordable is, and always has been, the social compact between this Government and the people.”
She then outlined her own ideas of four financing principles used in the provision of public services by the Government.
First, she argues, and I quote her again: “There is no such thing as a free lunch. A price tag is put on almost everything in Singapore by the Government.”
In the 1990s, where there was a wave of experiments on privatisation, this could be true. Indeed, it is still a principle of good fiscal prudence to understand the price of things.
However, Budget 2023 with its high focus on redistribution, especially for those most vulnerable among us, shows that there are free lunches for those who need them.
The second principle is: You get what you pay for.
Her example was on hospitals. And she said: “If you want the comfort and privacy of an ‘A’ class ward, well, you pay hotel prices.”
This principle certainly holds for the upper end of the market, but increasingly, not for the lower, especially in this Budget. The Assurance Package, the increases in CPF housing grants and subsidies for the elderly all show that we are not slaves to the market.
And in fact, we are going quite far in the opposite direction.
In large sectors of our economic life — in fact in the biggest ticket items — most Singaporeans get far more than what we pay for.
The third principle, Professor Lee Tsao Yuan says, applies to the provision of three public goods – health, education and housing — and is that of progressive subsidisation.
In this I would like to say that this Budget shows clearly that the progressive element — both in our tax and subsidy — remains core to our financing philosophy.
It is a political, not mere fiscal, commitment — one which goes to the provision of all Government spending, not just social spending. This is because of political origins of the PAP Government, born of our socialist beginnings — that those who have the most, should carry the heaviest tax burdens, in order to benefit those who have the least.
In general however, this year’s Budget shows that the socialist heart of policy-making is still beating strong — from housing, to workers’ welfare, to specific social groups.
The fourth financing principle of the Government outlined by Professor Lee is that all Government revenues go into a consolidated revenue account, which is that the Government does not tie revenue to specific expenditure items.
This principle remains. But since 1996, one major change is that the NIRC (Net Investment Returns Contribution) today accounts for the majority of our Government funding. And this is possible only because of the judicious and careful husbandry of public funds, and wise investments over the last 57 years.
In these years, we have resisted over-spending, maintained a strong sense of self reliance and continued giving all workers opportunities for training and progress. These were all ingredients of the current strong financial position we are at today.
Now we see more fully why this Budget is such a big step forward.
These are three big ideas that form the bones of our new social compact — a greater distribution of welfare and duties among all of us who live in this tiny island, so as to ensure new and continued opportunities for us all, that we may achieve happiness, prosperity and progress as a nation.
Cover photo credit: shawnanggg on Unsplash