3.29 Our children embody our hopes for the future. Singapore’s birth rate is way below replacement level and falling. This is a serious problem. A declining birth rate will sap the vitality and resilience of our country.

3.30 Over the years, we have introduced many measures to encourage and support parenthood. After our first package in 1987, the total fertility rate (TFR), which reflects the number of children a woman is expected to have during her lifetime, jumped up to 1.96, as seen in the chart. This was partly because 1988 was a “Dragon” year, but the impact of the package was felt through the first half of the 1990s. Unfortunately the effect seems to have worn off over time, and the underlying trend of a falling TFR has reasserted itself. By the next “Dragon” year in 2000, the TFR had declined to 1.60. I am not sure what the next dragon will be. It may be a lizard! The Baby Bonus scheme and further generous tax incentives introduced in 2000 have failed to reverse this trend. We give out over $200 million annually in tax reliefs and rebates, and more than $100 million has been disbursed under the Baby Bonus scheme. Yet the TFR for 2003 dropped to a historic low of 1.26. This is one of the lowest birth rates in the world. Only 36,000 babies were born last year, far fewer than the 50,000 babies we need to replace ourselves.

3.31 The accelerated decline in TFR since 1998 was partly caused by economic uncertainty – these were the years of the Asian financial crisis and the two recessions. But the underlying downtrend in birth rates is real and will continue unless we take decisive steps now.

3.32 Our existing measures are not enough. We must take a more comprehensive approach to solving this problem. We must encourage young people to marry and marry earlier, and make it easier for young couples to start and raise a family. And we have to take a long-term view. The impact of our policies on birth rates may not be felt immediately, because changing attitudes, mindsets and practices takes time and patience.

3.33 We need to shift social attitudes towards having children, even while we recognise that having children is a very personal decision which couples have to make for themselves. There is no single magic solution. The approach must be both holistic and coherent, addressing parents’ concerns from childbirth through the years of bringing up their children. As these are complex issues that require thorough discussion and deliberation, the Government will study them in depth over the next few months, before deciding on the most effective set of measures. Today I shall set out the principles that will guide our thinking.

3.34 Firstly, the aim of our measures must be not just to produce more children, but to produce the next generation of Singapore citizens. We want to grow the total population of Singapore, but equally important, we also have to reproduce and maintain the core group of citizens who will build and defend our country, and without whom we would not be a nation. Thus our measures must focus on encouraging more Singapore citizen babies.

3.35 Secondly, the problem is more serious for the mothers who are more educated and earn higher incomes. The higher the woman’s career attainment, the less likely she is to get married and the fewer children she is likely to have. This is true not just of graduates, but also of women with secondary education. It is understandable because the more a woman is able to earn a living, the heavier the opportunity cost to her of having children. Therefore while our measures must cover all families, we must especially make sure that the incentives are effective for the better qualified women.

3.36 Thirdly, while encouraging procreation is critical, realistically it will be very hard to raise our TFR back to the replacement level of 2.1. Even other countries which have managed to reverse falling birth rates have not achieved replacement fertility. We therefore need to boost our population through other ways. In particular, we need to open our doors to immigrants who can contribute to Singapore. After getting them here, we need to help them settle down and integrate into our society. We need the right policies to encourage them first to become permanent residents (PRs), and then to take up citizenship. This means treating PRs and citizens differently, so that PRs have incentives to take up the privileges and responsibilities of being Singaporeans.

3.37 As for specific measures to encourage procreation, a comprehensive approach should include adequate support facilities such as infant and child care arrangements, better balance between work and family life, and of course financial help measures.

3.38 To start with, we have to consider the issue of maternity leave. We have hitherto been reluctant to increase statutory maternity leave. But many working mothers feel that the current two months is too short. A major worry of working mothers is that they will have too little time with their children, particularly in the first few months after birth which are crucial to bonding mother and child. We may need to extend the period of maternity leave, but without overburdening employers with added costs.

3.39 Next, when the mother returns to work, she will often want to put her child in affordable and reliable child care facilities. The Government already subsidises child care, but infant care is more expensive. We will therefore look into providing more financial help for infant care.

3.40 Next, we need to strike a better balance between work and family life. Many couples cite the lack of family time and flexible working arrangements as an impediment to having more children. As an employer, the Government will review civil service work arrangements, without affecting essential public services. We will set a clear example to companies of how employers can create a work environment that is supportive of families.

3.41 Finally, while families should not have babies just because of financial incentives, tax reliefs and rebates for parents and working mothers appreciably lighten the financial burden of bringing up children. We need to simplify and enhance the existing tax incentives, to make them more accessible and attractive to couples. In fact, I find them quite hard to understand too. I think my wife has figured them out.

3.42 Two civil service teams visited Europe recently to study how other countries are tackling their falling birth rates. One went to Italy, the Netherlands and France, and the other to Norway and Sweden. Norway and Sweden have one model. They are both welfare states and they have succeeded in bringing their birth rates up. Netherlands and France have succeeded in bringing their birth rates up. Italy has not. We wanted to know why one worked and the other did not. We will study the lessons drawn and come up with our own measures. As several ministries are involved, I have tasked Mr Lim Hng Kiang, Minister in the Prime Minister’s Office, to take charge and to make specific proposals. He will be assisted by an inter-ministry civil service Working Committee on Population chaired by Mr Eddie Teo, Permanent Secretary in the Prime Minister’s Office. I have asked the committee to complete its work before National Day.