Same Budget. Different outcome?

March 1, 2011
Singapore Democrats

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Singapore Democrats

Albert Einstein once said: “Insanity is doing the same thing over and over again, and expecting a different outcome.” He wasn’t talking specifically about our national Budget, but he might as well have.

If one examines past Budgets from 2001 to 2010 one will see that, year in and year out, the allocation of expenditure to the various ministries have remained more or less the same.

In every Budget, the Ministry of Defence gets the most money of nearly 30% of the total national expenditure followed by the Ministry of Education. A distant third are the Ministries of Home Affairs, Health, National Development, Trade and Industry, and Transport. (See figure below) The rest take up much smaller chunks of the Budget.

 


From the figure above, it is clear that Budget 2011 is no different from the rest of the years in the past decade. It mirrors the priorities that the Government gives to the various arms of the Executive with the aim of achieving its goals for the Fiscal Year.

If one examines the percentage of funds allocated to the ministries over the years, it quickly becomes obvious that the figures remain remarkly consistent from one year to the next:

Allocation of these funds will determine how our society turns out in terms of its socio-economic situation. In view of this, let’s turn our attention to the results of these Budgets and the impact they have had on our society through the years.

First, there is the income disparity. Since 2000 the Gini coefficient has been steadily rising. (The Gini coefficient is measure of income inequality with a bigger number indicating greater inequality.) The number reached its peak of 0.489 in 2008 before dipping in 2009 to 0.471. In 2010 it is on the upward tick again at 0.472.

Second, our labour productivity has been migrating south since 2005 with 2008 registering a sharp decline. In 2009 it registered a negative 14.2%. This was the poorest performance, by far, in Asia which showed an increase of 2.4%. Even worldwide the average productivity change was only -1%.

The Government finally admitted to this problem in 2010 and formed the Economic Strategy Committee headed by Mr Tharman to tackle the problem.

The result? He came up with a Budget that was no different from the previous year. Or the one before. Or before the one before.

Third, our national birthrate has been on a slide since 2000. From 12.8 births per 1,000 population, the rate has plummeted to 8.82 in 2009. For years, if not decades, the PAP has thrown money at the problem. It has given incentives to young couples to produce more babies. Nothing worked. The more important point is that nothing in the Budgets changed to make it work.

Such a trend presents serious consequences for our nation. A shortage of citizens has significant implications for our economy and national security.

 Singapore births per 1,000 population

These three indicators form the very foundation of our economy. Income disparity, labour productivity and the national birthrate are what determines whether our economy remains viable.

If the wealth gap continues to widen, social tensions will mount and this has repercussions for the country.

Such tensions will also inevitablly lead to falling productivity. What worker feels more encouraged when she finds herself working harder and harder only to  find standards of living slipping?

This, in turn, deters younger people from starting families or wanting to have more children, forcing the Government to bring in more low-waged workers which then suppresses wage levels leading to the increase in income gap, and the vicious cycle goes on.

Given that the PAP prides itself in having a ‘helicopter vision’ for the country, it is amazing that its ministers cannot see this bigger picture and allocate our financial resouces in a manner that would reduce the wealth divide, boost productivity, and increase our fertility rate.

With Budget 2011 mimicking previous ones, however,  it looks like we are going to be getting more of the same despite all the feel good statements about change that the PAP is spouting.

Obviously, the party doesn’t have very many Einsteins within its ranks.