Speech By Mrs Josephine Teo, Senior Minister of State for Finance and Transport, At The Singapore Financial Conference 2014

1 Good morning, everyone. Thank you to the NTU-IIC for inviting me again. The NTU-IIC Singapore Financial Conference has been taking place around the Budget period for the past three years.

2 Being deeply involved in the Budget preparations, it is always very interesting for me to see how the Budget evolves. Particularly for this year, in the middle of the Budget debate, I received a thank you card from a Tan family, my constituents, and I was thinking of how the Budget impacts them. But before that, let me tell you a bit more about them.

3 I met them under rather tragic circumstances, as Mr Tan’s elder brother had died in what appeared to be a suicide. My grassroots leaders came to know of the Tan family and this tragic incident, and we were very concerned with how the family was coping, so we decided to pay them a visit to see if we could offer some help.

4 Mr Tan lives in a 4-room flat with his wife, two school-going children, and his elderly parents. One of them is 75; the other is 80 years old. Mr Tan is a casual worker, and Mrs Tan has a regular job as a clerical assistant. The parents are elderly, and of course the shock of the suicide was a big blow to them. They also have a domestic helper.

5 Mr Tan highlighted to me that they were having problems with his brother’s insurance payout, as there was no named beneficiary, even though it was clear to Mr Tan and his siblings that the payout should be to the parents. So I got in touch with the insurance company’s CEO on their behalf.

6 Not long after Chinese New Year, I heard from the insurance company that they will be waiving certain requirements and will make an immediate pay out to the family. And that is why I came to receive the Thank-You card from the family.

7 I think there is a simple message in the story – that life is full of ups and downs. From time to time, some families have to cope with serious rough patches, but we hope and try our best to ensure that not too many people have to deal with this. In order for most people to be doing well, so that community resources can be focused and not too diffused, we need to have good policies.

8 And what are some examples of these policies? I shared with you earlier that Mr Tan is a casual worker, but he does have income, albeit not very regular. He is relatively low-skilled as he was born in an era when education opportunities are not the same as they are today, and as a result his pay is not very high. For hard-working individuals like Mr Tan who are willing to do their part, we have Workfare. Workfare tops up their salary, and the amount that is given each year is quite significant – Workfare benefits about 350,000 Singaporeans, and the total amount paid out is in the order of $400 million a year. In this year’s Budget, Mr Tan gets additional help. Workfare recipients will also get transport concessions, paid for by the Government. This is one of the ways in which we can support people like Mr Tan.

9 Mrs Tan shared with me that for the first time in many years, she received a double digit salary increase – a 15 per cent salary adjustment. A possible reason for this could be due to the tight labour market, and another reason is the Wage Credit Scheme (WCS) which was introduced last year. The WCS tells employers to improve productivity, and share the gains with employees through salary increases. To encourage employers to give higher salaries to their employees, the WCS helps to pay for 40 per cent of the wage increase for three years. Where the employer is concerned, the burden is lighter, and employees like Mrs Tan stand to gain. In this way, we hope that the benefits of growth can be shared, even with families like Mrs Tan’s who do not earn very much.

10 What about the two young children? Mr Tan’s son is in primary school. He is very active, but is having trouble with Math. I asked if the school was providing learning support, because schools today have Learning Support Programmes for students who find it academically more challenging. He said yes, but he thinks his son needs extra help, but tuition is too expensive. So I connected Mr Tan with community resources; for example the CDAC offers tuition classes at very affordable rates, or even free of charge if the family really cannot afford it.

11 Mr and Mrs Tan’s daughter is in kindergarten, and this year’s Budget provides higher subsidies for children who are attending kindergarten. For some families, depending on their household income, kindergarten fees have been reduced to as low as $3 a month. This is a way in which we make opportunities available to more Singaporeans.

12 In this year’s Budget, we have also made available higher subsidies for when Mr and Mrs Tan’s children go to post-secondary education, which is where you are now. Whether it is in the polytechnics, ITE or universities, subsidies have been improved. In fact, for families like Mr Tan’s whose finances are tight, sending their children for higher education will not be impossible, even if it may still be a stretch, and they will get plenty of help from the community as well. This is how we reach out to families like Mr and Mrs Tan, and help them to make progress.

13 But the biggest impact for the Tan family this year in the Budget is the Pioneer Generation Package. In fact, hundreds of thousands of families who have seniors aged 65 and above this year will benefit from the Pioneer Generation Package. Essentially, what the Pioneer Generation Package does is it gives them greater peace of mind, higher subsidies if they have to go to doctors, whether it is at polyclinics or hospitals. The Pioneer Generation Package reaches out and takes care of a concern which many seniors have – healthcare needs.

14 Given that Singapore is such a young nation of barely 50 years old, citizens like Mr Tan’s parents lived through a very different Singapore. We have had the CPF system since 1955, but life expectancy was very different then. People today expect to live to their 80s or 90s, and it’s becoming more common to hear of people who have lived past a 100 years. So the pioneer generation completely exceeded their life expectancy at birth, but at the same time, they earned much lower wages in their productive years before retirement. So there is a confluence of two forces – healthcare improvements led to them being able to live longer, but if their savings are in the previous era’s dollars, they have to stretch it out longer and it is getting harder. So we decided to honour this very special generation of pioneers through this package, focusing on healthcare – the one thing that gives them the greatest worry, and is also their greatest need.

15 The Package provides higher outpatient subsidies, additional Medisave top-ups, as well as making sure that they will be covered for MediShield Life when it is introduced next year. These are the three ways in which we will be giving the seniors and their families greater peace of mind.

16 Through the Budget, we reach out to and improve lives of Singaporeans, like Mr Tan. In fact, most benefits are delivered to them seamlessly - like Workfare, the Wage Credit Scheme, education subsidies - and they do not have to spend time studying the Budget. As a result, Mr Tan may not even notice some of the subsidies he is receiving. Many do not know that the social benefits to Singaporeans have increased significantly, and benefits over a lifetime are now 2.5 times compared to just 5 years ago.

17 I understand that you will have some wealth management financial institutions that will share with you about what is in store for you if you were to take up careers in these sectors. And I realiz ed that not so long ago, the idea of a wealth management hub in Singapore was completely unthinkable. And yet today, they are hiring and doing good business in Singapore. That is another important part of the Budget – looking into the future to see how we can create opportunities for Singaporeans like you.

18 It has taken us awhile to build up the position that we are in today - wealth management in Singapore features quite highly in worldwide rankings. It is not easy to build it up, but also easy to lose our position as there are many other competing countries.

19 For many of you, you will be making decisions – about what profession to join, or what field to take up. You will also be making decisions as to which employer you should go with, or perhaps you have already set up your own business. All employers have their good and bad points, and at the end of the day, you still have to make a decision based on what you hear, and the research you have done. Ultimately, whether you succeed depends a lot on yourself. The best of companies cannot help you do well if you are not putting in the right type of effort.

20 With growth, each individual in the company is also more likely to succeed. Without growth, even the best efforts may not yield results.

21 On this note, I wish you the very best in making your choices.