
Create social welfare fund from statutory deductions
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Dennis Morrison Wednesday, May 17, 2006
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| Dennis Morrison |
More than two years ago the former Leader of the Opposition, Mr Edward Seaga, brought a motion to Parliament that was meant to secure a commitment from government for a specified level of increase to the education budget within a set time frame. The motion was debated for hours, at the end of which there was a consensus about the need for reform of the education system, with priority to be given to early childhood education. It was also agreed that the allocation for the sector would be increased so that it would reach a set percentage of the budget by a specified time.
This was a historic motion, in that it was moved by the Opposition and endorsed by the government, reflecting the view of the country about the priority of education and the need to move with urgency to fix the problems in the system. Ironically, hardly anything was said about how the additional resources would be found, which is a point I raised at the time, while commending the political parties for the united stance on the issue of reform. The debate in Parliament was followed by the work of a task force appointed by Prime Minister Patterson, which had the input of the Opposition.
The transformation programme, which was presented by the task force, set out a detailed plan to which a cost was attached, and was generally accepted although there were some criticisms of the degree of importance assigned to different elements of the plan. The question of financing of the plan was subsequently examined by the Crawford Committee, but there was hardly any interest shown by commentators or the public as to how the resources were to be mobilised. In other words, we were quite willing to endorse the plan to bring about the much-needed reform, but were not prepared to consider how the bill was to be paid.
Very few people have been brave enough to put forward proposals for financing the transformation plan, and this is not surprising, considering the reactions to the ideas that have been put forward. First, no one is prepared to consider any increase in taxation for the purpose, notwithstanding the priority that they attach to it. The argument is that we are overtaxed. One suggestion that has been floating is that of rebalancing the government's allocation to the sector, such that more of this allocation would go towards early childhood, primary and secondary education, while the tertiary level would receive a lesser share. Dr Omar Davies tried to have the public debate this suggestion in the period before the last general election, but that attempt was met by a populist response from the Opposition calling for free education.
An earlier suggestion which had been made by Mr Seaga in the late 1990s was for a consolidation of the statutory deductions into a single fund, with allocation being made from that fund according to the priorities of contributors. With this sort of arrangement, additional resources would flow to education if that was the agreed priority at a point in time, while less would flow to housing, for example. Over time, as the priorities changed, allocations to the social sectors would be adjusted accordingly.
Unfortunately, the government ignored this idea, using pretty much the same argument which the current Leader of the Opposition has raised in relation to the withdrawal of funds from the National Housing Trust for the transformation programme. Worse, in the current argument, a vicarious motive has been attached to the proposal now brought by Minister Davies for consideration of the consolidation of the statutory deductions. Rather than agitating for the institution of safeguards to ensure that the resources in such a consolidated fund could not be used for purposes other than those prescribed, the impression is being given that the fund would be raided for pork-barrel purposes. This is being said in spite of the fine example of the NHT, which has operated according to the rules set down and with broad consensus.
It should be pointed out that the consolidation approach is one that has been used very successfully in Singapore for decades. Deductions are put into a social welfare fund with allocations to the respective sectors, according to agreed priorities, rather than a rigid arrangement which ignores the changing relative needs of the various sectors. The logic of this system is so clear that it is difficult to understand the irrationality which has been brought to the debate.
However, the reality is that the debt burden that the national budget is carrying and the urgency in getting to a balanced budget make it impossible for increased resources to be found for education from this source. The sensible choice is to create the social welfare fund from existing statutory deductions, with strict rules guiding the allocation process, such that clear priorities are established and the use of resources is specified by law. This is not rocket science, as the Singaporeans have demonstrated, and it ought not to be the subject of political cass-cass if we are really serious about transforming the education system.
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