Debated in Parliament on 6 Feb 2013.
Debate resumed.
Mr Deputy Speaker, the Population White Paper challenges us to contemplate Singapore's future. In the projection, one thing is certain. The number of elderly citizens will rise to 900,000. But how we are going to cater to them and muster enough resources to support them is not so apparent.
An ageing population exerts a huge impact on society. Scholars use terms, such as "demographic time bomb" and "silver tsunami", to describe its ramifications. Making it worse is low fertility. Taiwanese President Ma Ying Jiu described Taiwan's "shrinking and ageing population" as a "National Security Issue".
Many European and Asian countries alike are greying like never before in human history. Japan is ageing most rapidly. Following close behind are its Asian neighbours, with about a 25-year gap, as shown in the Chart. [A slide was shown to hon Members. Please refer to Annex 3.]
This chart shows that from around 2010, Taiwan, South Korea, Singapore and China will begin this uphill trend of rapid ageing. As Japan is way ahead in
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the curve, it serves as a useful reference point for us to anticipate our problems going forward. In terms of degree of ageing, Singapore at 11.1% today is like Japan in 1984.
Many of us are familiar with large cities such as Tokyo, Osaka and Sapporo in Japan. Three years ago, however, I had the chance to visit a mid-sized city outside Nagoya called Gifu. It was home to 400,000 people. What I saw in downtown Gifu city left an impression on me. A number of shops on the main street were closed for good. Amongst those which were open, they carried mostly merchandise for the elderly.
Before long, I found out that the Gifu population had been shrinking since 1985, alongside the decline of stores and industrial enterprises. The city centre literally decanted. Families moved out. The elderly population made up one-quarter of the city's population now. Some scholars described Gifu city as a "super-ageing society".
Gifu is not alone in ageing. Across Japan's countryside, there are many such small- to medium-sized cities that have shrunk too. In Hokkaido, there is a small town called Yubari. While it has only 11,000 people today, it used to be a town of 120,000 in its heyday. Mine closure and lack of economic opportunities have forced young people and families out. Today, half of Yubari is above 65 years old and the consequences are dire.
Yubari's small working population means a measly tax base. Four years ago, the city government went bust, owing a debt of US$315 million. The city was forced to embark on an 18-year austerity drive. It retrenched half of its civil servants. "The Town Hall is like a morgue, with few lights on", The Economist declared. Public service in the city was badly affected. The public library was gone. Six primary schools merged into one. The general hospital closed down two-thirds of its facilities to save utilities. It also halved the number of ambulances and asked its elderly patients to walk to the hospital by themselves.
Yubari is hardly a picture of happiness visitors often associate with Tokyo Disney or Osaka Universal Studio. Yet, Japan is full of such Yubaris. Between 2000 and 2005, the number of people living in small towns across Japan fell by 10 million. Of the 28 million over 65 in Japan, many live alone. Young people left their parents for bigger cities looking for economic opportunities.
Low fertility and lack of immigration have caused the Japan workforce to shrink since 1996. For the 50 years after World War II, Japan went from ruins to
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riches, adding 37 million people to its labour force to a total of 87 million. Yet, in the next 40 years from 1996, Japan's population will shrink back to where it started in 1950.
A declining population and workforce mean less consumption and reduced demand for real estate as well. Land and property prices in Japan have reduced by more than half since its peak in the early 1990s, evaporating the life-long savings of many individuals and corporations. So, for many people who believe that rental and property prices will always be on the climb, think again. It can fall significantly, as in this case.
The effect of two decades of economic stagnation has led to the Waniguchi effect. Waniguchi in Japanese is crocodile's mouth. In local terms, it is buaya. It describes the soaring public expenditure coupled with a drop in tax revenue.
The Japanese government has so far resorted to domestic borrowing to finance its social expenditure. But now that its public debt has piled up to 220% of its GDP, and there are going to be fewer young people and profitable Japanese companies to tax and borrow from, how Japan continues to finance its social programmes for the elderly remains a very big question.
The next chart shows the rising social expenditure of an ageing population. [A slide was shown to hon Members. Please refer to Annex 4.] Members can roughly see the kink started to kick in from 1990, starting the steep climb. This chart shows Japan's increasing debt to GDP ratio. [A slide was shown to hon Members. Please refer to Annex 5.] It more than quadrupled from 55% in 1982 – the elderly population is like ours – to 211% in 2012.
The huge silver tsunami is destabilising Japan, so why does it not increase its working population to maintain a vibrant economy? The answer seems simple and yet inherently intractable: Japan could not build a consensus to allow immigration to boost their workforce.
As our own population ages, our old-age support ratio will fall drastically from the current 5.9 to 2.1 in 2030. When that happens, our young people may find the heavy burden unbearable, physically and financially. And is this sustainable? For one, Mr Deputy Speaker, the 2.1 support ratio presented here also assumes that our young ones do not leave us. But is this a valid assumption?
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In the case of Japan, after a two-decade-long recession, companies are now reluctant to hire new school leavers. Even if they do, they would only do so on a temporary or contract basis. For such "casual workers", as they call it, job benefits are minimal, training and development are spared. There is no job security, let alone career development. When the population ages, the young actually suffers more.
To make things worse, competition for talent and capital will intensify going forward. In a study by McKinsey, by 2025, 136 new cities – all from the developing world – will take their place amongst the world's leading urban centres. Many of them will be in Asia. With buoyant economic prospects, these cities will attract the young and the talented from around the region. They will compete directly against Singapore for talents and capital. We might even lose our young and the talented if our economy stagnates.
Mr Deputy Speaker, the picture of an ageing society is a sobering one. Without higher childbirths and immigration, our citizen population will start to shrink in 2025. This is just 12 years away. This is why it makes sense for the nation to maintain a sustainable and a stable Singaporean population while we are still young, and while external conditions are favourable. We have to anticipate; we have to save up; we have to prepare ourselves; we have to build ahead the physical and social infrastructure.
A country that seems to have run out of time to save is China. With 6 million people joining the pool of 100 million elderly every year, China's pension system will grow by RMB100 billion annually. Some studies estimated that China has underfunded its pension liability by as much as 150% of its GDP. Scholars described this phenomenon as "ageing before getting rich", or 未富先老.
In the community, China is beginning to see the "4-2-1" phenomenon. "4-2-1" is not a soccer formation. It is one child having to look after two parents and four grandparents. This inverted pyramid means a heavy burden for the children. When both parents and grandparents are retired, there is also the "aged caring for the aged", or 老养老 phenomenon. And this is becoming common in our communities.
Mr Deputy Speaker, coping with the silver tsunami requires a calibrated approach that strikes a balance between spending and earning, consuming and investing, catering to the present needs and saving up for the future. In Singapore, over the last five years, social spending has increased from $13
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billion in 2006 to $21.5 billion in 2011. Economists expect a further increase, from the current 14% of our GDP to as much as 25%. Are we ready for this?
At this juncture, let us take a leaf from the experiences of Taiwan. In Mandarin, please.
(In Mandarin): [Please refer to Vernacular Speech.] A Taiwanese magazine called Global Monthly Views has a recent story entitled "Who will provide for my old age when the government's retirement insurance programme goes bust". The report asserted that the Taiwanese government has created four "madnesses" because it was daring in "spending but incapable of earning".
Madness 1: steep rise in welfare spending, overtaking economic spending. Twenty years ago, Taiwan started issuing a "Senior Citizen annual grant". Then in 1995, it went on to subsidise elderly farmers. Since then, the two subsidies have been rising every year. Now, each eligible elderly will receive NT7,000 per month. It was NT5.6 billion in the beginning, now it has grown to NT50 billion. In 2002, another monthly subsidy of NT3,000 called Elderly Citizens' Welfare Living Allowance was added.
By the time one adds up military, public service and teachers' insurance, employment insurance, childcare subsidy, Taiwanese welfare has become so attractive that even European countries are going to Taiwan to learn from them. As a result, Taiwan's welfare spending has been rising steadily from 14.7% in 1982 to 28.2% in 2012. In the same period, the percentage of Taiwan's annual budget for economic development has declined from 24.9% to 14.3%. Some Taiwanese scholars are beginning to question: for an economy with per capital GDP of US$20,000, Taiwan is preoccupied with dividing the pie before growing it larger. It has fallen into the trap of "attempting to narrow the income gap without having the means to do so in the first place".
Madness 2: government's debt has been rising. The last overall budget surplus was in 1998. In recent years, all their political slogans were correct, intentions were well, but they were not backed by financial resources and execution capacity.
Madness 3: the welfare programme becomes a means for vote buying. But this generous act of the government is piling up debts for the children and grandchildren.
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Madness 4: high welfare is inducing fake claims. Every interest group in Taiwan has different definitions for "low-income groups". Accommodating all, the definition has become so relaxed that it created new "low-income groups". Social and welfare spending expanded like a rising tide. An official estimated that of Taiwan's 1.22 million elderly farmers and fishermen, as much as 30% were "false claims". The benefits were too good to miss out: everyone could receive a subsidy of NT35,000 every year.
We should study Taiwan's experience seriously. Taiwan started off as one of the four dragons with good prospects. It has a well-educated workforce and several world-class industry clusters. It has a culture that embraces hard work, thrift and savings for the future. Its people are known to be self-reliant and entrepreneurial. To top it all, it has the kind of "democratic vibrancy" that some Members in this House admire. What went wrong?
The magazine summarised Taiwan's problems this way: "In the last 20 years, for every election, politicians kept topping up welfare grants and subsidy while reducing taxation. Taiwan has become a small tax revenue country but large welfare state. With less and less economic spending, how are we to develop Taiwan? Taxpayers' money has become the tool for vote buying. The welfare programme has become fake welfare (empty promises). When the country declines and goes bust, who will attend to our old age?" The magazine's comment is worth pondering. We must not repeat the ways of Taiwan.
(In English): Mr Deputy Speaker, the release of the White Paper and Land Use Plan has evoked many reactions. People are concerned with crowded buses and trains, congestions on the road and competition for housing and jobs. Their concerns are understandable and not unfounded. We do have to address these growing pains quickly, and effectively.
However, Singapore is not operating in silos. The world around us will continue to move forward regardless of Singapore's demographic and internal problems. In fact, many Asian cities will grow, attracting talents, ideas and capital from their hinterlands. It is against this dynamic and larger picture that Singapore has to define its path forward.
The experiences of other countries in coping with low fertility, ageing population and rising social expenditure are instructive. Let us learn the lessons well. At the end of the day, we are working very hard for a better Singapore, to benefit Singaporeans wholeheartedly and single-mindedly towards Vision 2030 and an inclusive Singapore. Mr Deputy Speaker, I support the White Paper with
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the amended Motion.
Mr Deputy Speaker, I join this debate because I think the White Paper on Population is probably the most important document regarding our future that we have seen since Independence. It sets out a comprehensive roadmap on what the Singapore population of the future is likely to look like. It outlines the framework for a significant shift in policy, from manpower-led growth to productivity-led growth. It spells out major boosts in marriage and procreation incentives. Finally, it details the huge investments to be made in infrastructure improvements, especially in our rail network.
Sir, there are so many bold and positive initiatives in the White Paper affecting us as Singaporeans. And, yet, I worry that we are not being fair to ourselves when public discussion and debate, even in this House, overly focus on numbers, especially the figure of 6.9.
This figure has been called many things: it is a "target", which it is definitely not; a "possibility" – yes; "projection" – also correct; a "worst case scenario" – maybe. We have been caught in a semantics trap. In other words, what was said has been taken to mean something other than what was intended. People believe what they chose to believe.
The fact is that nobody really knows for sure what our actual population will be like in 2030. Because population planning is not an exact science – it has never been. It depends on so many variables: our TFR, immigration rates, our physical constraints, which, in turn, depend on factors beyond our control: the external economy, technology changes and, most of all, our relative competitiveness and attractiveness as a city.
Twenty thirty is so many years away. Some of us will not be around by then. Anything can happen between now and then. The world will change. And Singapore will change. Frankly, right now, it is hard to convince people that the White Paper is on the right track, Our people cannot understand why we are talking about bringing in more people when, in their own day-to-day experience, they feel the squeeze on trains and buses. One resident put it to me bluntly – fix the problems first, then talk. I explained to him that the Government is doing both: fixing the short-term problems and also, at the same time, talking about
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our long-term challenges. He was not entirely convinced. Seeing is believing.
I suggest that we should deal with this issue in two parts. First, from now till 2020, concentrate on the on-going infrastructure improvements like new rail lines, bus routes, ramp up our marriage and procreation policies, strengthen integration and community bonding among citizens, old and new and PRs; while slowing down but not stopping the inflow of foreign workers to allow companies to adjust. Leave the debate on post-2020 scenarios to another date but continue to improve our infrastructure.
Second, in five years' time, review the White Paper's assumptions and estimates for post-2020. This will give everyone a clearer picture of whether our trains and buses are getting less crowded, our housing prices have stabilised, our people are having more babies, our companies are more productive and learning to cope with less foreign workers. Will these happen and, if so, by how much? It would be a much informed and meaningful debate by then. So, let us not be sidetracked by the numbers. Numbers can change, numbers are not targets. The real objective of the White Paper must be the well-being of Singaporeans – happy, confident, optimistic, hopeful now and in the future. And population is a means to that end.
This debate on the White Paper is not a debate about which number is the right one. It is about the direction we want to take. The kind of Singapore we want. Is it fully open for business? Is it partially open? Or is it totally closed? It is quite clear to us that it cannot be fully opened as we were before. We are running; smack into our resource constraints and the pace of change is too fast for people to adjust. To be totally closed would be a disaster, even for a few years, as the Workers' Party had suggested. Business will close, jobs lost. Once businesses decide to leave, it is unlikely that they will come back.
We would have thrown away one of our key competitive advantages: a consistent, investor-friendly approach to business. We would very quickly wither into irrelevance. Which leaves us with the balance option: let in some foreign labour to supplement our local workforce, but not as much as before. Businesses would want more, some people would want less. The numbers can be collaborated. I support this. I say go for the maximum that our resources – land, water, energy – can support; whatever that number.
It shows that Singapore is an attractive place, a thriving, vibrant city, one where people want to come here; live and work and play. If we lose our competitiveness, we lose our verve and vitality, our cohesion and confidence.
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Not only will we not have foreigners wanting to come here, our own sons and daughters will leave for a better life. Which brings me to my other point.
In this debate, we have spent a lot of our time looking inwards; talking about our discomforts, our space. We have not asked ourselves how we are going to compete with the outside world. How we are going to earn a living to live a good life? It is almost taken for granted that the good life will continue even if growth slows. We expect new infrastructure to be rolled out even if growth slows. More houses, more rail lines. We want more subsidies for healthcare and housing. But, "please, let's have fewer foreign workers and a slower pace of life".
Where will the revenue from all these come from? I looked for some indication of this in the White Paper and I found it in small print in a footnote on page 31. It says and I quote, "Government revenue comes mostly from income taxes, consumption taxes and asset taxes all of which are dependent on economic growth". I think this should be in bold. I think it should be highlighted in a box and not put in a footnote.
How do we make a living in an increasingly competitive world? I believe size matters. I believe we need a bigger population with better educated and trained citizens, as well as talented non-residents, to supplement our home-grown talent.
I visit China regularly for business. Every time I come back from China, I get worried for Singapore. The young people are getting more and more educated. Every year, they produce more than 6 million graduates. But there are not enough good jobs for them, so they are thirsty for knowledge, they are hungry for success. They are willing to work long and hard for their rewards. I was in Tsinghua University in Beijing recently and I met with some students. I could see the drive and the tremendous energy oozing out of them. They are our competitors, not just the foreign students who are studying here. This is happening not only in major cities like Beijing and Shanghai but all across China.
According to the 2010 census, there are 18 cities in China with populations of over 6 million. They range from provincial level cities like Beijing and Shanghai to prefectural level ones like Wuhan, even Dalian and Qingdao. All of them are our potential competitors. They are attracting investments in high-tech areas like biotech, like digital animation, like optics, renewable energy. Not your traditional lower-end industries; high-tech industries.
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Closer to home, our neighbours are also doing well. Malaysia, Indonesia and Philippines have started to move. They complement us but they also compete. So, which will dominate? It really depends on us. Further afield, developments will also affect us. Will the US' new-found access to cheap energy make their manufacturing more competitive and less reliant on cheaper overseas plants? Will Europe be able to recover quickly from its economic woes? All these issues affect us profoundly. We cannot influence how they turn out but we can position ourselves so that we ride the wave with them, and not be caught in the tide and drown.
Our fundamentals have not changed. We are still a small city-state, in fact, we are a tiny city-state. We still do not have oil or gas, gold or diamonds. Our politics may have entered a "new normal" but our need to earn a living through our wits, our hard work and our need to be useful to the world – that has not changed. Sir, this White Paper is about each and every one of us, as Singaporeans living on this tiny island. It is about how we can enjoy a good life – happy and meaningful, balanced and fulfilling.
I urge my fellow Singaporeans to keep our hearts and minds open to give the Government a chance to explain its plans and time to implement them. And work together for our beloved country. The previous generation of Singaporeans overcame huge odds together to create this improbable nation which we call home. Let this generation work as one to define our country for the next lap of our journey. Sir, on this note, I fully support the amended Motion.
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PAPERCUTS