Emerging Stronger, Inclusively and Sustainably
Parliamentary Speech, Fortitude Budget 2020 Debate, 5 June 2020
INTRODUCTION
Mr. Deputy Speaker, before I start, I would like to thank DPM Heng and his team at MOF for their hard work in devising a fourth budget within a space of four months! I also appreciate the sensitive consideration of naming each budget such that we are emotionally connected to each of them.
Fortitude is an excellent name for this Budget as we dig deep into courage to face the painful effects of an unfolding economic crisis. The pain is widespread. Many have reached out to me with their stories. Witnessing this suffering has compelled me to file Cuts tomorrow, so that the issues faced by struggling groups are raised to this House. Public rental households is one such group.
The number of households who have suffered complete loss of income since the beginning of April has risen sharply. Average income levels have gone into freefall. On the ground, community organisations have observed that households face mounting debt (including rent arrears). MND shared that “about 5,200 public rental households, or about 10% of all public rental households, are in rent arrears”. Around 1 in 4 such households owe more than $3,000 in rent.
As the economic impact of COVID-19 worsens, we can expect that more households residing in rental flats will struggle to pay rent. DPM said in his Ministerial Statement last week, ‘our path forward will be tough, but we will journey together’. So I would like to ask the DPM if he would consider waiving 6 months’ rent for all households residing in rental flats, except for those whose rent is already covered under financial assistance from ComCare? This will provide immediate and targeted relief that goes directly to the low-income households in need.
For context, the Government is extending $334million in rental relief for government tenants in this Budget. A further $2billion will offset SMEs’ rental costs.. A similar waiver for rental flat households would cost between $16 million and $57 million [1].
Mr. Deputy Speaker, while acute pain is undeniable and deeply felt by both citizens and migrant workers, future shocks could be more frequent and unprecedented. The World Economic Forum has called turbulence “the new normal” in its latest Global Risks Report. I will focus on the long term in this speech.
The hard work of Singaporeans and Singapore companies, as well as prudent financial management of our reserves, has allowed us to save up for this rainy day. It is only fiscally responsible for us to ensure that we spend the monies to build a stronger foundation for this new turbulent normal. This demands that we push boundaries and reimagine a social and economic structure that is more responsive, flexible, interconnected.
Mr. Deputy Speaker, let me first outline why a re-imagination and deep transformation is the only prudent way forward. I will then discuss the considerations in our current spending and planning processes that can set us on the path towards this stronger, more sustainable and more inclusive future.
B. THE NEED FOR DEEP TRANSFORMATION
DPM Heng mentioned that this Budget’s focus is to “enable our businesses and workers to adapt, transform and seize new opportunities”. Indeed, but even more so, our society and economy need a deep transformation.
The COVID-19 crisis has shown us unequivocally that human health is intrinsically linked to planetary health. Our increasing urbanisation and disruption of ecological balances increases our risks of exposures to pathogens. [2] Last year, the Clinicians for Planetary Health initiative was launched.[3] It committed to increase awareness of the severe public health impacts of environmental change.
Therefore it is safe to say that to safeguard our economic future, the balance of resources across people, planet and profit needs to be re-examined.
First, we can no longer look at our risk response in silo. Risks are multidimensional and cross-cutting, and must be addressed as such. Our healthcare system had integrated and implemented the playbook from SARS well — only 3.1% [4] of our infections were healthcare workers compared to 41% for SARS. Yet, systemic gaps in worker welfare, specifically for migrant workers, left us unprepared for the infection levels in the dormitories. The risk assessment framework should have included the adequacy of safeguards for worker health. This would have required MOH and MOM to work together.
Second, existing societal inequities create disproportionate stresses on vulnerable communities. My previous speeches provide several examples of persons with mental health conditions, lower-income households and migrant workers being disproportionately affected in terms of income loss, economic and psychological resilience. The digital divide amongst lower income families, the differently-abled and the elderly became more evident. All these could deepen social and community fault lines.
What does all this mean in terms of transformation? What society should we envision for ourselves?
I call for Singapore to move towards multi-stakeholderism. Governance-wise, this means a policy design process centred around and in collaboration with the actors with a “stake” in the outcome. Business-wise, it means considering workers, suppliers and customers equally.
Such considerations are not new. The World Economic Forum was established in 1971 to further the idea that business should serve all stakeholders. 181 CEOs of the Business Roundtable signed a statement last year, committing “to lead their companies for the benefit of all stakeholders — customers, employees, suppliers, communities and shareholders.”
Investors also value businesses that take care of its stakeholders. Workers are a major stakeholder. In April 2020, the International Corporate Governance Network (ICGN) led by investors responsible for assets of $54 trillion called for companies to “prioritize employee safety and welfare” and “take a holistic and equitable approach to capital allocation decisions, considering the workforce”. DPM Heng alluded to similar sentiments in parts of his speech [5].
C. PROMOTE SOCIAL EQUITY AND FUTURE SUSTAINABILITY BY SUPPORTING WORKERS AND REGULATING CORPORATIONS
The Government’s strategy to help Singaporeans ride through this crisis is by safeguarding jobs and income, which it is doing by supporting businesses. Across all 4 budgets, around $28 billion [6] has gone towards supporting immediate cash flow needs and overheads. This is about a third of the total budget to date. The Government has also provided support through enabling credit access and matching investments for start-ups.
Mr Deputy Speaker, I support the intention to protect jobs and income to strengthen the economic position of our individuals and households. Reducing inequality would also increase resilience across our society, especially in times of hardship, so that economic buffers and important resources do not become accessible only to the privileged few.
Therefore, we must enact measures to protect individuals against employers who may be more interested in self-enrichment than in their workers’ rice bowls. Possible measures are curbs on layoffs, excessive executive compensation, and excessive use of share options in compensation structures that disproportionately align managers only to shareholders’ interests.
Government bailouts and support may reduce shareholders’ risk-bearing responsibilities. Safeguards against moral hazard can include: reducing dividends, restricting stock buybacks, and requiring that any M&A activity should seek to pay back the support provided, ie. a clawback.
Measuring and reporting should be used to hold companies accountable for how they have used government grants, therefore taxpayers’ monies. An example is the independent accountability and transparency board created by the Obama administration in 2009. It performed a crucial monitoring function by requiring any entity receiving contracts, grants, or loans to file quarterly reports.
We could adopt a similar mechanism to ensure that companies channel government support to those for whom it is intended. Corporate reporting requirements could compel companies to demonstrate behaviours that meet broader societal and sustainability goals.
We must also use the support packages as carrots for companies to actively enhance social equity by integrating community engagement and social responsibility into business strategy, so each can be a Company of Good — a national effort I believe DPM is familiar with. This could include an obligation to judiciously use the Business and IPC Partnership Scheme (or BIPs) to make in-kind donations to charities.
Lastly, promoting sustainable business models will be key to building a better and safer future. McKinsey noted in April that “Not only does climate action remain critical over the next decade, but investments in climate-resilient infrastructure and the transition to a lower-carbon future can drive significant near-term job creation while increasing economic and environmental resiliency.” The President of the German Parliament recently called for the stimulus plan to focus on “climate policy, digitization and innovation”.
Subsidies and support to companies accelerating climate change should come with conditions for absolute emissions reductions that enable us to accelerate our Paris Agreement commitments. As countries grapple with what green and healthy recovery looks like, measurement and accountability may again be instrumental for change. The Taskforce of Climate-related Financial Disclosures framework should be the norm. Science-based targets should form the basis of discussions on business transformations [7].
Such requirements could be considered by the Monetary Authority of Singapore as a cornerstone of future environment risk management guidelines for our financial industry.
These safeguards will require strong political will, Mr. Deputy Speaker, because they will meet with resistance. But if we want a flexible and responsive society that is able to absorb shocks and rebound from them, I believe we must recalibrate current power structures for a fairer economy that considers key stakeholders in our economic system equally. I hope DPM addresses this need for safeguards and conditions in his response.
D. INCLUSIVE PLANNING FOR FUTURE TRANSFORMATION
The Government is demonstrating its commitment to longer-term planning through the Emerging Stronger Taskforce and the Future Economy Council. I applaud the intention. However, if we are to recognise a wide range of stakeholders in our future and commit to re-imagining the way forward, changes must be made.
I’m glad to hear DPM note that the Taskforce will partner with SME owners, industry experts and trade associations as part of Emerging Stronger and his invitation for Singaporeans to participate. I would like to ask DPM if there are plans to formalise this partnership and citizen participation under this Taskforce. This is necessary to integrate meaningful and transparent input from all corners of society.
The current members of the Taskforce represent industries that we have traditionally treated as pillars of our current economic structure, the composition does not represent the true diversity of economic players in Singapore. For e.g, I am surprised by the omission of SME, minority, disability and mental health representation. Companies committed to delivering a sustainable future are also under-represented, so are women. I believe that if we sideline these views now, we are sabotaging our own futures, and those of our children’s. Can I please ask the DPM to ensure a more diverse and better representation on this Taskforce to secure a truly resilient and united future for Singapore? (Pause)
CONCLUSION
Unity, resilience, solidarity, fortitude. The names of the four extraordinary budgets this year speak to our desire as a nation to overcome this crisis together and stronger. Mr Deputy Speaker, I believe that emerging stronger means placing our people front and centre of our plans for the future. Our economic structures must be realigned to put people first so that we build back better as a wellbeing economy post COVID. It will take our collective imaginations, courage and collaboration to walk through this crisis and emerge stronger, together.
Let’s start the work for that to happen today, with fortitude. I support the Budget.
Notes:
[1]:As of March 2020, about 52,000 households currently live in rental flats under the various HDB rental schemes, of which about 50,000 households are under the Public Rental Scheme (Number and breakdown of households under Public Rental Scheme, Interim Housing Scheme and Parenthood Provisional Housing Scheme). More than half of HDB’s rental households pay basic rents, which are now set at $26 a month for a 1-room flat and $44 a month for a 2-room flat. The remaining households pay higher monthly rents based on their household incomes (Written Answer by Ministry of National Development on rentals under HDB’s Public Rental Scheme; Written Answer By Ministry Of National Development On Income Ceiling And Rents Of HDB Rental Flats). Lowest: [($26 x 26000 households x 6 months)+($75x26000x6) = $15,756,000]; Highest: [($90 x 26000x 6)+($275x26000x6) = $56,940,000].
[2]: Professor Tolu Oni, School of Public Health and Family Medicine, University of Cambridge, writing for the World Economic Forum
[3]: Over 30 signatories from medical associations and healthcare organizations worldwide.
[4]: It was reported on 5th May that 66 healthcare workers were infected. As at 5th May, Ministry of Health has recorded 1522 community cases and 580 imported cases.
[5]: DPM Heng urges companies to retain staff and support suppliers in sections B15 and E15 of his budget speech.
[6]: Based on estimated aggregate across all budgets: $23.5 billion in job support, $3.8 billion in rent relief, $0.7bn from foreign worker levy, $0.4million in corporate income tax rebate, $0.3bn in rent relief.
[7]: Companies with approved science-based targets. 3 companies in Singapore already have approved science-based targets. However, this is a far cry from Japan, which has 52 companies with approved targets, and aims for 100 companies by the end of this year.