3.1 Mr Speaker, Sir, this Government’s approach has consistently been to grow the economy and ensure that all citizens enjoy the fruits of growth. As Singapore prospered, incomes went up across the board. At the same time, the Government has heavily subsidised public housing, education and basic healthcare, to ensure that even the poorest citizens get a fair start in life, and a stake in Singapore’s success.

3.2 Our Home Ownership Scheme has made Singapore a home-owning society. Even the lowest 20% of the population have substantial home equity – an average of $138,000 per household. This is no small achievement, unimaginable in any other country. Our schools and post-secondary institutions provide high quality education to all. Every student has the opportunity to do well and rise to the top, regardless of family background, and many have done so. Our healthcare system delivers good and affordable medical care to rich and poor alike.

3.3 Moving ahead, we will need to augment this broad-based approach with a more targeted one. We can be confident that our economy will do well, and that incomes of skilled and knowledge workers will continue to rise. But the incomes of unskilled workers will be under pressure. Globalisation is stretching out our income distribution. This is happening in countries all over the world, as hundreds of millions of workers from India and China enter the global workforce. It is happening even in India and China, between the cities and villages and within the cities themselves.

3.4 We can either slow down our upgrading and restructuring by erecting barriers to protect our companies and workers, or we can press on with restructuring. Slowing down is not a solution, as the economy will stagnate and incomes will fall across the board, worsening our problems. Instead we must continue restructuring, adapting to the global economy and taking full advantage of market forces to grow our own economy and generate the resources to help those affected by globalisation. But our measures to help this group must be targeted, sustainable, and supportive of our work ethic.

3.5 Let me elaborate. First, we will focus our assistance more closely on the lower-income groups, so as to make a difference to those whose needs are greatest. When there are surpluses to share, we will also give more to these groups. We have already been doing this with schemes such as the Service & Conservancy Charge (S&CC) rebates, rental rebates, and Utilities-Save rebates. But we will do more, in a more systematic way.

3.6 Second, we will design assistance measures to encourage recipients to work and get ahead through their own efforts, rather than free-ride on state support. We must avoid the pitfalls of Western-style state welfare. It is expensive, wasteful, and ultimately unsustainable. But more damagingly, it creates a mindset of entitlement and dependency, erodes the work ethic, and saps economic vitality.

3.7 Third, as we introduce new schemes, we must experiment, adapt and feel our way forward. Whatever scheme we introduce, over time people will adapt their behaviour to gain maximum advantage from it, leading to unforeseen and unintended consequences. We have seen this happen even when the amounts involved are quite modest, such as with the Economic Downturn Relief Scheme a few years ago. So, we should avoid creating permanent schemes unless we are very confident of how they will work. Instead, we should experiment with new schemes, see how they work out, and adjust and improve as we gain experience.

3.8 Fourth, we must always maintain fiscal discipline. We must ensure we have the resources to fund the schemes we introduce, and not make reckless commitments without considering how to pay for them. This prudence is what has distinguished Singapore from many other countries which spent on social programmes beyond their means, resulting in heavy debt burdens, high inflation, and loss of confidence in the currency and in the government’s economic management. We must never allow this to happen here.

3.9 Finally, we need to involve the community and grassroots network in this social effort. They know the ground well and can assess where the needs are greatest. The schemes launched under ComCare are a good example of how community leaders can help us to target and deliver assistance for the needy. ComCare supports a wide range of schemes and projects carried out by grassroots organisations and voluntary welfare organisations (VWOs), and in the year since it was launched, has helped thousands of needy households. As ComCare activities are growing, I have decided to top up the ComCare Fund by another $100 million, increasing the capital sum of the Fund from $500 million to $600 million.

3.10 Consistent with this framework, we have set up many panels and committees to brainstorm ideas on how to provide greater help to the needy and vulnerable. These include the Ministerial Committee on Low Wage Workers, the Tripartite Committee on Employability of Older Workers and the Committee on Ageing Issues, which have all published their reports. The Government accepts their recommendations and will work with all partners and stakeholders to implement them.

3.11 The most major recommendations were from the Ministerial Committee on Low Wage Workers, chaired by Minister Ng Eng Hen, which proposed a comprehensive plan to help this group of workers, comprising six pillars. The overarching principle guiding the Committee’s approach is Workfare rather than Welfare. The best way to help people is to help them to find work, so that they can take care of themselves and their families. The Government fully endorses this principle. Let me now outline the Government’s response to each of the six pillars.