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Oxfam’s ranking of Singapore: More important to look at outcomes when fighting inequality, says Desmond Lee

SINGAPORE — When it comes to measuring efforts to address inequality, it is “more important” to look at the outcomes that Singapore has achieved, Social and Family Development Minister Desmond Lee said. This was in response to a report that ranked Singapore among the bottom 10 countries in the world for its effort to reduce inequality.

The Commitment to Reducing Inequality Index 2018 report, done by United Kingdom-based charity organisation Oxfam, found that Singapore failed in bridging the gap between the rich and the poor because it has very low tax rates that encourage corporates and high-earning individuals to evade taxes.

The Commitment to Reducing Inequality Index 2018 report, done by United Kingdom-based charity organisation Oxfam, found that Singapore failed in bridging the gap between the rich and the poor because it has very low tax rates that encourage corporates and high-earning individuals to evade taxes.

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SINGAPORE — When it comes to measuring efforts to address inequality, it is “more important” to look at the outcomes that Singapore has achieved, Social and Family Development Minister Desmond Lee said. This was in response to a report that ranked Singapore among the bottom 10 countries in the world for its effort to reduce inequality.

The Commitment to Reducing Inequality Index 2018 report, done by United Kingdom-based charity organisation Oxfam, found that Singapore failed in bridging the gap between the rich and the poor because it has very low tax rates that encourage corporates and high-earning individuals to evade taxes. It does not have a universal minimum wage, and it has a relatively low level of public social spending in areas such as education and healthcare, Oxfam said.

In a statement on Tuesday (Oct 9), Mr Lee said that although the income tax burden on Singaporeans is low — with almost half of the population not paying any income tax — he noted that Singaporeans “benefit more than proportionately from the high quality of infrastructure and social support that the state provides”.

“The report assumes that high taxation and high public expenditure reflects commitment to combatting inequality,” Mr Lee rebutted. “We think it is more important to look at the outcomes achieved, instead. The report itself recognises this limitation.”

Oxfam acknowledged that there were limitations, saying that the index “can never substitute for context-specific knowledge and the story of each country’s path to reducing inequality, or for detailed analysis of each government’s proposals or positions”.

Still, it believes that the index provides a strong foundation to gauge a government’s commitment to tackle inequality.

Economists who spoke to TODAY said that while the Oxfam report measured government inputs relating to inequality such as social spending, it does not measure outcomes such as poverty, access to healthcare and education, and economic opportunities for the disadvantaged.

However, Mr Max Lawson, Oxfam’s head of policy on inequality, reiterated that Singapore “has a number of harmful tax practices in place, meaning that the Government is enabling corporations to dodge tax”. This, he added, is the primary reason why the country has “come a long way down the index”.

“The index measures policies in place to reduce inequality. So if a poor country is nevertheless taking clear steps to reduce inequality, they are rewarded in this index,” Mr Lawson said in response to TODAY’s queries.

“Equally, if a rich country, like Singapore, has poor policies in place, they will be marked down. These policies include spending, tax, and labour rights.”

Oxfam’s latest report showed that Singapore is ranked 149 out of 157 countries, below Bangladesh and above Laos. Its poor ranking is due to “harmful tax practices”, with Oxfam stating that though Singapore has raised personal income tax for the rich by 2 per cent, which took effect in 2016, the maximum personal income tax rate remains very low for the highest earners at 22 per cent.

SINGAPORE’S ‘REAL OUTCOMES’

Addressing the point on social spending, Mr Lee countered that when it comes to healthcare, for instance, Singapore had been ranked second and sixth in the world for its healthcare outcomes and system by the Economist Intelligence Unit and World Health Organisation respectively.

Singapore thus has a longer life expectancy at birth compared to countries such as the United States, while its infant mortality is also among the lowest in the world, he added.

On the education front, Singaporean students have consistently outperformed others in international rankings, such as the Programme for International Student Assessment (Pisa). He also noted that students from the poorest families performed significantly better than their counterparts in countries under the Organisation for Economic Cooperation and Development (OECD).

Though Singapore does not have a minimum wage, Mr Lee said “we have income support for low-income workers, generous schemes for worker upskilling and a progressive wage model for certain low-wage jobs”.

No other country “comes close” when one considers ownership of homes, with Mr Lee pointing out that 90 per cent of Singaporeans own their homes. This is also the case for the poorest 10 per cent of households, where 84 per cent also own their homes.

Mr Lee stressed that it “is to Singapore’s credit rather than discredit” that it has achieved those outcomes with lower taxes and spending compared with most countries.

“We set out to achieve real outcomes for our people — good health, education, jobs and housing — rather than satisfy a collection of ideologically driven indicators.”

DIFFERENT REALITIES FOR SINGAPORE

Economist Song Seng Wun from CIMB Private Banking agreed that Oxfam’s findings do not exactly reflect the country’s social landscape. “Are there hidden slum areas in Singapore that we didn't know about? Just look out your windows and take a look about your neigbourhood. Has inequality worsened?” he asked.

“While the index is interesting, we shouldn't take it to heart.”

Mr Song also said that because Singapore plans its spending for the long term, therefore, on an aggregate level, the level of public social spending as a percentage of total spending may be seen to be small.

Economist Walter Theseira from the Singapore University of Social Science said that the country’s poor ranking is a result of Oxfam not measuring outcomes, and this is why it scored lower than a number of other countries “where the effects of inequality on actual outcomes is worse”.

Associate Professor Theseira, who is also a Nominated Member of Parliament, said: “No low-income Singaporean would change places with low-income citizens of Indonesia and the Philippines, but those countries are ranked much higher within Asia by Oxfam.”

He noted that Oxfam also did not measure some important social inputs such as Singapore’s massive provision of public housing, which is an important leveller of social inequality.

Oxfam’s methodology, he said, is “implicitly based on the premise that the best system for fighting inequality is one where there are high and progressive taxes that fund state provision of health, education, and other social services”.

While this is not wrong in itself, it is “wrong to assert that this is the best way to fight inequality in every country and that we all should be measured by it”, he said.

There is a need “to have a better conversation about inequality” in Singapore, he added. “But it cannot be premised on research that is not well-suited for the challenges we face in Singapore, and ultimately, doesn’t produce a measure that correlates well with the living reality of Singaporeans, who know that inequality is a problem here, but is not characterised by the poverty and absolute deprivation seen in many countries of similar ‘rank’.”

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