THE Workfare bonus for low-income workers will become a permanent feature of Singapore's social safety net, starting with a three-year run.
It will be reviewed and adjusted after that, but the scheme is here to stay, Prime Minister Lee Hsien Loong said yesterday.
'Workfare is going to be the fourth pillar of our social safety net,' he said, pledging a significant commitment to extend permanent help for the low-income group.
It will join the Central Provident Fund, the 3Ms of healthcare (Medicare, MediShield and Medifund), and the home ownership scheme, in undergirding the web of aid programmes here.
'So it's a critical part of our system, and it will ensure that we will systematically support and protect low-income Singaporeans,' said PM Lee at a People's Action Party event.
Party cadres hailed it as a fundamental shift in government thinking, one that acknowledges that there will be those who need continuing help even as the economy as a whole does well.
PM Lee, secretary-general of the ruling PAP, was speaking to 1,000 cadres at the 29th Ordinary Party Conference which elected the party's central executive committee.
In his speech, delivered in Malay, Mandarin and English, he also touched on external relations and the PAP's values.
The Workfare announcement comes a month after PM Lee's pledge at the opening of Parliament, to 'tilt the balance' of help towards lower-income Singaporeans affected by globalisation.
'It's a big move,' he said yesterday. 'We thought about it for a long time...but we've decided it's the right thing to do.'
He defined Workfare thus: 'For every dollar you earn through your own efforts the Government will give you something to match.'
Part of it will be in cash but most of it will be ploughed into the CPF, for housing, health care and retirement.
It would be for three years initially as the Government still needed to figure out the best way to do it, he said.
Second Finance Minister Tharman Shanmugaratnam will give the details in the Budget on Feb 15.
This year's Workfare Bonus was a one-off measure that some 330,000 low-wage, older workers received. The payout came to $150 million.
Workfare is a major reason, said PM Lee, for the impending hike in the goods and services tax (GST) from 5 to 7 per cent.
It would have been much easier for the Government to 'keep things as they are, no GST increase, everybody will be happy'.
But this was neither a responsible nor honest approach, he said.
'Better be upfront with Singaporeans, speak long-term, move now, prepare for the future and put in place a system, build up our resources, our ammunition so that when something unexpected happens, we will be able to respond quickly.'
The GST hike will add $1.5 billion to Singapore's coffers annually, said PM Lee, who is also Finance Minister.
He listed certain demands on the money - paying for Workfare, an ageing population that would also mean an increase in spending on health care and infrastructure, and investing in the future, from education to transport.
But some of the extra revenue should also be saved for 'unknown unknowns', he added. 'You may have Sars, you may have some other crisis. Better keep some of our powder dry.'
He acknowledged that the hike was unpopular, but said he was convinced it was the right thing to do, in order to help the low-income. 'We have to take the tough decisions,' he said.
At the same time, an offset package is being put together to cushion the impact. There will be something for the middle-income group and the elderly, he promised. But ultimately, more will be for the low-income, whose wages will not rise as fast.
Speaking in Mandarin, PM Lee said the poor will receive 'far more' than what they pay in higher prices. He also addressed the question posed by some on why basic items could not be exempted from the GST hike. Better-off families spend more than the poor and old, he said, and hence such a move will benefit the better-off more.
Summing up, PM Lee said he was 'confident that our policies will bear fruit'.
'It will take some years but we are heading in the right direction and this will strengthen our position. By the next election in 2011, the PAP will be ready to present its report card to Singaporeans.
'Then judge us on our performance: whether the economy has grown, whether people have better jobs, better lives, whether we live in a harmonious society.'
xueying@sph.com.sg
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