Jan 10, 2011

The Community Care Endowment Fund and Income Inequality in Singapore

An email from a reader:
    Hi Mr Wang,

    I’m a student who have been reading your blog for the past two years. Recently, I've been reading online blog entries on income inequality in sg and it’s true that there are many elderly cleaners and tissue paper sellers around today especially when I’m dining at Bedok Hawker Centre.

    But with existing schemes like Comcare, Workfare and Public Assistance Scheme to help the needy, I really don’t understand why it’s not helping this bad situation that has been ongoing for years. Why are these cleaners not going for workfare? Are they not informed or are they not eligible? I thought the govt has been pumping in $ for workfare all this while?

    ("The Community Care Endowment Fund, or ComCare for short, represents the Government’s commitment to do more for needy Singaporeans. Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans, and the government has been progressively topping up the Endowment Fund which now stands at $800 million." taken from MCYS News Dec 3 2010)

    I dunno much about this but is 800 million too little to provide safety net for the society? So what's the solution to the unequal income distribution in Singapore?
Firstly, I should say that I have not looked closely at Comcare, and do not know the details of its schemes. But we can do some quick back-of-the-envelope calculations, based on this paragraph:
"The Community Care Endowment Fund, or ComCare for short, represents the Government’s commitment to do more for needy Singaporeans. Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans, and the government has been progressively topping up the Endowment Fund which now stands at $800 million."
Firstly, $800 million is the amount set aside to help needy Singaporeans. But this is not money that has actually been disbursed yet. When will this money be disbursed, and under what circumstances, and in what amounts, and over what period of time? Your guess is as good as mine.

The amount that has actually been disbursed is $200,000,000. This amount was disbursed over five years. That money went to a total of 160,000 needy Singaporeans.

We don't know how long, on average, each Singaporean stayed on the ComCare scheme. For example, some may have received ComCare assistance for a year, while others may have received it for the past five years. Let's say that on average, ComCare recipents received help for 2.5 years.

Then, according to this reader's calculations (thank you), each person received an average amount of $1,250 per year, or about $104 per month.

This will be roughly enough to buy one packet of chicken rice ($3) per day, with a few coins left over for spare change. It does not sound like much of a safety net to me. But form your own opinion .......

31 comments:

Anonymous said...

The amount that has actually been disbursed is $200,000,000. This amount was disbursed over five years. So the average amount disbursed per year is $40,000,000.

That money went to 160,000 needy Singaporeans. So from 2005 to 2010, the average ComCare amount that each of the needy Singaporeans received was $40 million divided by 160,000, that is to say, $250.


Er, since you've already calculated $40 million as the the average amount disbursed per year, doesn't that mean the needy will get $250 ($40 million divided by 160,000) per year?

Gilbert Koh aka Mr Wang said...
This comment has been removed by the author.
Anonymous said...

To the concerned student:

In order to qualify for Workfare, the elderly person would have to work (hence the name WORKfare). So this scheme is not something that would relieve them of those kinds of work. Maybe they can work less hours that's all.

The old people on public assistance (PA) are probably/mostly out of sight as they stay in their rental one-room flat most of the time. PA used to be $260 a month before 2009. Now its $360. Of which, part of it would go to flat rental and utilities. So left $5 to $8 a day. Enough for 2 meals at a hawker centre I suppose.

As for comcare, it is an umbrella term for all the assistance schemes given out by mcys, of which PA is one of it. So the large number you quoted already include PA. (I like this line a lot - "Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans". They emphasized on the most important element of who launches it rather than it is tax payers' money. Well done, someone should poach that corp comm officer)

How to solve income inequality?
If anyone can come up with an answer that everyone is happy with, the Noble prize is waiting. Asking your dad if he would like to pay more taxes might enlighten you somewhat. No free lunch in this world. In order to do good, someone has to sacrifice. Are you willing to give up your iphone or whether your neighbour is willing to drive a Honda rather than a Lexus?

You might want to chat to some of the elderly to know more rather than asking people to do your homework. Lots of these cleaners work for contractors that bid for cleaning contracts on a annual basis. So these people try to win the contract by bidding lower every year and then hire back the same workers but offer them lesser pay every year. Otherwise how to make profit?

A Bangladeshi is willing to take the job for $400, so why should they pay an elderly $600? So who benefits from the pro-business policies?

So some people would suggest higher corporate tax rather than personal income tax, but others would say businesses would not base here then. (Your turn to find out what are the tax rates for different countries) And thus no jobs for everyone. How true is that or how stretched is that logic is up to your own research and opinions.

Some people then suggested minimum wage for Singapore but there are differing views on it. What differing views? You should do some of your homework on your own right? Google it. As Mr Wang says, form your own opinion. Read around, and not just the local media. Find out what other countries are doing. To paint a better picture of SG, one would compare SG with a developing country. To form an uglier picture of SG, read up on what the Scandinavian countries are doing.

Harold Lasswell said: "Politics is who gets what, when, and how." He forgot to mention the "who pays what, when, and how."

Anonymous said...

hi mr wang,

ur calculation has one obvious flaw.

u stated: Let's say that on average, ComCare recipents received help for for 2.5 years

however, by dividing $40m/160K ..u r essentially saying that yearly there's 160K, since $40m is average yearly figure


i also dunno much about comcare. and i'll take whatever assumption
u make is a reasonable one ..then the correct calculation of ur assupmtions:

$200m for 5 years => $40m/yr

160K total, each 2.5yrs => very very simplistic (and i mean, very very simple) illustration for this ..is 2 batch of 80K people, i.e. first 80K for first 2.5yrs ..and next 80K for next 2.5 yrs (no same person in both batch).
SO, average per year is 80K/2.5 = 32K.

each person per year gets: $40m/32K = $1,250
..or about $100 per month.

---

however, i think .. 2.5yrs (ur estimation) sounds rather too long.

Gilbert Koh aka Mr Wang said...

Ah, okay ...

I will edit my post.

Anonymous said...

Cont..

You might want to chat to some of elderly to know more. Lots of these cleaners work for contractors that bid for cleaning contracts on a annual basis. So these people try to win the contract by bidding lower every year and then hire back the same workers but offer them lesser pay every year. Otherwise how to make profit?

A Bangladeshi is willing to take the job for $400, so why should they pay an elderly $600? So who benefits from the pro-business policies?

So some people would suggest higher corporate tax rather than personal income tax, but others would say businesses would not base here then. (Your turn to find out what are the tax rates for different countries) And then without the foreign companies, everyone would be jobless. How true or stretched is the logic is up to your research and opinion.

Some people then suggested minimum wage for Singapore but there are differing views on it. What differing views? You should do some of your homework on your own right? Google it. As Mr Wang says, form your own opinion. Read around, and not just the local media. Find out what other countries are doing. To paint a better picture of SG, one would compare SG with a developing country. To form an uglier picture of SG, read up on what the Scandinavian countries are doing.

Harold Lasswell said: "Politics is who gets what, when, and how." He forgot to mention the "who pays what, when, and how."

Anonymous said...

(I'm too Lor sor and had to break up the comment, but my top half keep disappearing. This should come before the 442pm comment)


To the concerned student:

In order to qualify for Workfare, the elderly person would have to work (hence the name WORKfare). So this scheme is not something that would relieve them of those kinds of work. Maybe they can work less hours that's all.

The old people on public assistance (PA) are probably/mostly out of sight as they stay in their rental one-room flat most of the time. PA used to be $260 a month before 2009. Now its $360. Of which, part of it would go to flat rental and utilities. So left $5 to $8 a day. Enough for 2 meals at a hawker centre I suppose.

As for comcare, it is an umbrella term for all the assistance schemes given out by mcys, of which PA is one of it. So the large number you quoted already includes that. (I like this line a lot - "Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans". They emphasized on the most important element of who launches it rather than it is tax payers' money. Well done, someone should hire that corp comm officer)

How to solve income inequality? If anyone can come up with an answer that everyone is happy with, the Noble prize is waiting. Asking your dad if he would like to pay more taxes might enlighten you somewhat. No free lunch in this world. In order to do good, someone has to sacrifice. Are you willing to give up your iphone or whether your neighbour is willing to drive a Honda rather than a Lexus?

Anonymous said...

(I was too lor sor and had to cut up my comment. The top part keeps on disappearing. This part should come before the 442pm comment)

To the concerned student:

In order to qualify for Workfare, the elderly person would have to work (hence the name WORKfare). So this scheme is not something that would relieve them of those kinds of work. Maybe they can work less hours that's all.

The old people on public assistance (PA) are probably/mostly out of sight as they stay in their rental one-room flat most of the time. PA used to be $260 a month before 2009. Now its $360. Of which, part of it would go to flat rental and utilities. So left $5 to $8 a day. Enough for 2 meals at a hawker centre I suppose.

As for comcare, it is an umbrella term for all the assistance schemes given out by mcys, of which PA is one of it. So the large number you quoted already includes that. (I like this line a lot - "Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans". They emphasized on the most important element of who launches it rather than it is tax payers' money. Well done, someone should hire that corp comm officer)

How to solve income inequality? If anyone can come up with an answer that everyone is happy with, the Noble prize is waiting. Asking your dad if he would like to pay more taxes might enlighten you somewhat. No free lunch in this world. In order to do good, someone has to sacrifice. Are you willing to give up your iphone or whether your neighbour is willing to drive a Honda rather than a Lexus?

Kaffein said...

To anon who wrote:
"No free lunch in this world. In order to do good, someone has to sacrifice. Are you willing to give up your iphone or whether your neighbour is willing to drive a Honda rather than a Lexus?"

Kaffein:
This is what the government wants you to believe. The truth is one don't need to give up a lot of things. If you delve deeply, Singaporeans do pay quite a high tax including CPF. To me, it is a form of tax in which it gets wiped out when I buy a home. But that's a different topic altogether.

That said, I don't see 'free lunches' being an issue in Australia. People pay very high taxes there and yes, I am one of them. I do know what I am talking about. And there are ways to get tax rebates.

Yet while living there, I don't see companies pulling out of Australia because of the high tax. Nor do I see people emigrating from Australia? Quite the contrary, I see more coming in by the droves in spite of the high taxes. So something is fundamentally flawed with the propaganda we have been given by the local media.

Somehow the people living in Australia know that the high taxes are for the general good of the people. Surpluses often translate into giving back to the people. And people do try to live within their means. I agree there will always be those free-riders in Australia but in my experience living there, (it may come as a surprise that) people generally try to get a decent living.

The not-too-long-ago calamities of the Black Saturday and the recent floods in Queensland saw Australians helping out, not only with monetary means but also volunteering themselves for causes. I fondly remember the company I was working for encouraged us to take a few days off to help rebuild homes lost in the Black Saturday fire.

It is a sad and unfortunate thing in Singapore that such volunteering acts are often spent in my own time and not part of a company's social outreach. That is the 'no free lunch' mentality for many of us we taught in our growing years. I am #1, and I should only help when it benefits me.

Seriously I did not need give up my mobile phone or luxurious car. It is affordable. And when I say it is affordable, it is affordable. :P

Cheers,
Kaffein

Fox said...

If each person gets about $1250 per year, does it mean that a family of four in need get about $5000 per year?

Amused said...

A couple points -

""The Community Care Endowment Fund, or ComCare for short, represents the Government’s commitment to do more for needy Singaporeans. Since the launch in 2005 by the Prime Minister, it has disbursed more than $200 million to help 160,000 needy Singaporeans, and the government has been progressively topping up the Endowment Fund which now stands at $800 million."

This is the marketing "spin" part. They should really release the average and medium receipts per person per year, (this tells you the ugly truth) number of people helped per year (this tells you if the situation is getting worse.) Are these numbers published? This is something for a good reporter to pursue.

It will also be interesting to know if they use up the extra monies that they collected from GST to help the poor.

Alan Wong said...

Remember our PAP leaders often say that no one will be left out if they really need help. All they need to do is to know where to ask for it.

I happened to witness one incident at one of our public hospitals where an elderly woman's son says he is unemployed and asked whether the hospital can hold on to the bill as he is applying for aid. All I can see was the nurse was getting rather impatient and insisted that he pay for the bill instead as a long queue was already forming.

Now go and form your opinion as to whether our Govt is really sincere in helping our under privileged people. In fact from what I have gathered so far, they actually put in obstacles to discourage too many people from depending on the Govt for any form of assistance.

On the other hand, compare this with the ease of how many of our privileged sons and daughters of Ministers and top professionals have managed to secure scholarships. Are they the kind of desperate parents who needs financial assistance from our Govt ?

Yes, indeed. Go and form your opinion on how does our PAP Govt fare in terms of meritocracy and equality.

Raelynn said...

dear Kaffine, i would like to correct you that CPF is not a tax but a mandatory savings program. Economically, it is a good idea. it's just unfortunate that a fabulous idea was implemented terribly.

Anonymous said...

160k helped over 5 years is likely the cumulative figure over 5 years. So at any one time, there are probably 10k-20k people receiving aid.

statscholar said...

Since the govt is not about to reach into its pocket to help the poor and miserable, an alternative would be to hike GST to 8% and distribute the additional $1 billion to needy Singaporeans. ($1 billion is $25,000 a year for 40,000 people).

Anonymous said...

"Raelynn said...
dear Kaffine, i would like to correct you that CPF is not a tax but a mandatory savings program. Economically, it is a good idea. it's just unfortunate that a fabulous idea was implemented terribly. "

January 11, 2011 10:07 AM

Raelyn

What they are trying to sell you is CPF is a mandatory saving plan. Just like you can stick cat whiskers on a dog and call it a cat.

The difference between saving and tax is: you own the saving and can decide how to use it and you know your interest returns.

Do you have the right to decide how to use your CPF? Do you have a the right to withdraw your "savings" if
a) the government change the CPF rate to 1% tomorrow?
b) change the withdrawal age to 120 years old tomorrow?
c) Set the minimum sum to USD500million?
d) Legislate a law for all citizens to buy insurance that will give them free outpatient clinic once a year but at a premium of $100,000 a year?

Absolutely nothing. If you open a saving accounts, they cant change the term of deposit midstream unless you agree or you can sue them. CPF is not a savings because you have less right to them than the government.

When you cede so much rights, the government owns it more than you do. Thus, I would think tax is more apt a description.

The government call NS a duty. I call it compensated slavery. Its all how you brand it.

Roy

Anonymous said...

"....about $104 per month.

This will be roughly enough to buy one packet of chicken rice ($3) per day, with a few coins left over for spare change. It does not sound like much of a safety net to me."
Mr Wang

That's why one cannot totally rely on Comcare, unlike welfare benefits in Western countries.

It is designed to temporarily and partially, not FULLY, help one to have a decent meal and living. One needs to help themselves too. Or else who want to help themselves, right or not?

Of course the best is not to need Comcare, be proud to be so and have self dignity by all means.

Many, I believe the majority, have achieved this so it is not that difficult.

Anonymous said...

Not that difficult?

Try googling to see the old news articles, to get a sense of some of the kinds of people who receive Comcare assistance.

When you are a 75-year-old grandmother supporting a 50-year-old mentally ill son, let's see whether you will say that "it's not that difficult".

ser guan said...

If there are no Singapore elderly cleaners,
a) there will be foreign cleaners
b) we will need to clean up our tables after we dine.
c) we will have young cleaners such as students

Even if the governement pay them $800 per month and it is adequate for 3 meals. Some may choose to work for small luxuries such as mobile phones, better meals , electronics etc.

So, there is nothing wrong for some elderly to be cleaners. If our student need to be a cleaner after graduation, then there is something wrong about Singapore.

Kaffein said...

@Raelynn who wrote:
"dear Kaffine, i would like to correct you that CPF is not a tax but a mandatory savings program. Economically, it is a good idea. it's just unfortunate that a fabulous idea was implemented terribly. "

I was just about to reply you when I read Roy's reply. He has the same thoughts as I do. The fact is you have been 'hoodwinked' to think it's a savings plan. It was never a good savings plan to begin with because it does not grow with the inflation and global markets.

How can it be a savings plan when you don't even know the details of it, the policies surrounding it and you can't withdraw the amount at your whims. That is NOT a savings plan. Rather it is a kind of tax to me.

Let me give you a simple analogy how your CPF is 'wiped out':
I am a monopolistic seller of char kuey tiao in Singapore. I determine the number of ingredients, the cost of the ingredients and also the selling price of the dish. To eat this dish, I have made it mandatory for you to put a certain amount into my cash tin (eg $5) to cover my cost. I tell you then that it is sufficient to eat this dish.

Now you can see where it starts to get awry. Because I determine the cost of every ingredient and the price of dish and I need not tell you its cost, I can simply jack up the cost and tie it to external factors like rising food prices. You as the 'investor' have no say in it. So now I offer the dish with a cost $8.

Your money ($5) in my cash tin is virtually wiped out because you have to put in additional $3 to eat that dish. In the end I get to keep your $5 cash to cover my cost. Not only have I taken your $3 cash, I still hold your $5 in my tin. I can do all these at NO additional cost to me simply because I don't need to tell you anything. You have no choice.

In order words, CPF is 'virtual' money because it does not grow with inflation and you can't see where it is heading say in 20 years' time. The housing build costs and other factors are not transparent to any of us. No matter how much you put into CPF, by raising the cost price of HDB homes, I simply took your money away leaving you virtually with little or nothing.

I think you have been taken for a ride, Raelynn.

Cheers,
Kaffein

Anonymous said...

As they say, the devil is in the details. The record of the govt often cannot stand scrutiny. Superficially impressive figures are often trotted out to what else, impress? -the foreigners, the naive and pappy's own followers.

Raelynn said...

dear kaffeine and Roy,

which is why i said, it's the implementation, lack of transparency and accountability which failed the expectations of the people. i understand your angst (who likes being told that you can only withdraw your CPF later than you thought? and especially in light that there is increasing difficulty for older workers to remain employed and would like to leave the rat race but cannot use withdraw their CPF to use as early retirement funds)

but i beg you to distinguish between the idea of mandatory savings for retirement, housing and healthcare versus how it turned horribly wrong when it was implemented in singapore to make a fair judgement, since countries like US, Australia, France etc all have seemingly the same concept of having employers contribute a certain percentage of wages to a special account for retirement with limitations such as minimum distribution etc (bear in mind this is on top of high income tax tax for welfare that we all like to lament that singapore lacks--the welfare benefits i mean). i.e comparing what ideally should happen versus what really happened and criticise from there. kaffine, i'm sure you know what the superannuation is about since you seem to be based in Australia.

my beef with the CPF is that why something that is supposed to be simple, turns out to be so complicated with all the various new schemes and SRS and what not.

no, gentlemen, i am not hoodwinked. i just recognize that the implementation deviated too far away from what ideally should have happened to form my critiques and opinions.

Kaffein said...

@Raelynn,
Yeah, savings is good. Again S'pore government should not control it and give paltry returns.

I agree with you the initial objective of the CPF was good. It still is good but it has become a form of tax.

All that is said and shared, the question on our lips is:
At present, is it tax or savings?

I'll leave it to the readers to decide.

Kaffein

Anonymous said...

Funny! It's more like a ransom to many.

Anonymous said...

@Raelynn

I still disagree. The whole setup at the start of the CPF denys the participants of any rights to the savings.

From the word Go, the participants of CPF had no say when the rules of the saving plans changed. If they had, the CPF would not have become the animal it is today.

In other words, even from day 1, it was a tax. A dog with cat whiskers.

I do acknowledge that the thoughts and intend behind the CPF tax is good and the execution is terrible. But I maintain my stance that CPF was, is and will be a tax, no matter how well it is run. Just like a dog will be a dog even if it has cat whiskers, hell even if you teach the dog to meow and purr, it is still a dog.

Fox said...

Some clarification is in order here.

CPF can be considered an implicit tax if you take into the account the difference between the returns of the SGD-denominated Temasek Holding bonds (~4.0 percent as of Dec 2010) and the CPF ordinary account (2.5 percent). So, effectively, it is a tax of 1.5 percent on your savings (as opposed to your income). So, let's say that your CPF savings is about 3X of your annual income. Then, you pay an additional 'tax' of 4.5 percent per annum.

This tax is also somewhat regressive since poorer Singaporeans will have a higher percentage of their savings in CPF i.e. they are taxed more.

Anonymous said...

From the aruguements above, CPF seems a forced saving and some call it tax, with limitation as mentioned by many.

But if say one does a modern human study of their financial habits, most ppl would be spender than saver. So taking the result as a majority to apply the rules of CPF is prudent for a govt. Giving too many rights may not be useful for the majority of a typical population, it is only useful for the few financially knowledgeable enough to invest the same sum by himself. Sometimes too many rights as we see in a lot of western countries(to counter the non obvious occurence) may not work for a country.

Raelynn said...

@ Kaffine and Roy,

thank you for your acknowledgement.

@anon January 12, 2011 4:44 PM

CPF is a forced/mandatory scheme, some call it savings, some call it tax, and the limitations in terms of when it can be withdrawn etc is aplenty. may i refer you to the CPF website www.cpf.gov.sg for more information regarding the technical details. about 3 4 years ago, before i embarked on my undergraduate study on economics, i used to think that CPF was "bad" and sheer evil. now i think of it as a great idea implemented bad.

i agree with you that people have more tendencies to spend rather than save, despite singaporeans have a much stronger culture to save than spend compared to our american counterparts.

i wonder if the ones who tend to have most voices against CPF tend to be the sandwiched-lower-middle-income class and the low income class because they have no access to the funds when they need it most. after making the contribution to CPF, paying other loans and daily necessities and emergency funds for sudden retrenchment etc, they do not have sufficient access to cash to invest in the stock market to grow their own retirement fund.

a discussion with a very rational partner enlightened me that while there are those who may complain about the mandatory CPF Life annuity program, there are those who lack the financial planning and financial savvy-ness such as the uneducated and elderly who have no children to help them plan their retirement and actually need the annuity. if the educated is already so agitated that they are being forced to opt in an annuity, the uneducated will be even more so that they are being discriminated for their lack of financial savvy-ness.

if CPF Life was not a mandatory scheme, how many will voluntarily opt in? most, imho, will optimistically think that they are better off doing their own research and put the money in the stock market, which as a result, some may make money, some may burn their fingers, or simply put the money in the biscuit tin at home (not literally, but i'm sure you get my meaning) because they like their money where they can see it (hey, who doesnt?)

the easiest way out (which out government loves to do, i.e just take the easiest way to do things), is to make it mandatory for everybody. so that everybody complains. rather than having to face upheavals over discrimination or having to deal with problems such as if anticipate wrongly and force the wrong group of people to take part in CPF.

having said that, i'm curious about the demographics of the people who comment here. because i'm wondering, usually for adults who have just started working, most of their monthly CPF contributions go towards financing their first house (usually the public housing flats by HDB, another big thread of discussion for another day), and then after spending 30 years paying off the flat, assuming that they do not sell the flat earlier to make profits and upgrade to a condominium (because it seems that a significant amount of singaporeans do not sell their flat), what happens?? they no longer have any CPF or very little CPF? i need some enlightenment here.

Anonymous said...

I think many are unable to see beyond the good that enforce saving brings. Enforced savings is good if it in structured as one and executed as one. The banks have enforced saving plans. You provide a tenure and fixed savings and promise the people a cash out and he rate of return. That is good.

BUT if the holder of your money can unilaterally change the terms of your deposit, it no longer is yours its the holders. Your money is now his unlike in a saving plan

I do not dispute that there are people who needs enforced savings. But I think CPF is not a saving plan it is a tax due to the way it is structured.

Oh by the way, I think the smokers and the gamblers needs help with managing their life too. While the government is at enforcing rules for people's own good, lets ban gambling and smoking. No? Why?

Roy

Kaffein said...

@Roy,
Very good points. It's all about $$$. Seriously do you think the government cares about health or social ills? Well it the government foots the medical bills, one can be sure smoking will be banned. Just like chewing gum once was - the cost to remove those 'graffiti' and the risk of having train doors stuck.

Heh.

Kaffein

Amused said...

Imagine you are forced to deposit 1/3 of your income with a bank, and can only withdraw it on a moving timeframe and purpose (e.g. college education) dictated by the bank. In the meantime, the bank has access to the cheap source of capital. Even if the bank will be solvent when you need the money, that is a big if, will you go for it?