PM: Nordic model won't work for growth in
S'pore
Differences in culture, society mean
outcomes unlikely to be the same
By LESLIE KOH
ASSISTANT POLITICAL
EDITOR
AS PUBLIC debate continues over what growth policies Singapore
should pursue, one model that keeps coming up is the
Scandinavian example.
Economists and social experts have repeatedly cited the
Nordic experience, noting how egalitarian systems and pro-family
policies have helped countries like like Norway and Sweden achieve
high growth, high birth rates and generous welfare, all at the same
time.
Last night, however, Prime Minister Lee Hsien Loong
explained why Singapore could not do the same thing.
Basic differences in culture, society and environment, he
said, made it difficult for the Republic to achieve the same
outcomes.
"There is indeed much we can and should learn from the
Scandinavian societies, such as their pro-family policies and their
success in nurturing global companies," he said.
"But there are basic differences between Singapore and
Scandinavia, in our strategic situations and our approaches to
growth and equity."
Essentially, it came down to one fundamental choice: Low
taxes and targeted welfare benefits - as Singapore has - or high
taxes and comprehensive welfare.
"You can have one or the other, cannot mix and match,"
observed Mr Lee, at a dinner for the Economic Society of
Singapore.
Nordic nations, he noted, had natural resources, a rich
hinterland in Europe, and long histories as homogeneous societies
which were willing to pay high taxes for high social
protection.
"I do not believe tnat Singaporeans would he willing to
pay the taxes that Scandinavians pay, or that our economy could be
competitive at such heavy tax rates," said Mr Lee. He
acknowledged that Singapore could raise its social spending as well
as taxes "moderately" - in fact, it was exactly what the country
needed to do in the long term, with its population ageing and
health-care needs growing.
"But the limits are tighter than many people realise," he
added.
Raising income tax rates, he noted, could affect
Singapore's competitiveness in the region.
He nevertheless promised to keep strengthening social
safety nets here, but also warned that this would cost more - and
ultimately, mean higher taxes.
Said PM Lee: "At some point - not in this term of
government, but surely within the next 20 years - the government
will need new sources of revenue, which means raising taxes.
"I hope that when this becomes necessary, the government
of the day will have the courage to do so, and the electorate will
understand why it is in everyone's interests that we do so."
Otherwise, Mr Lee added, Singapore could face problems
seen in parts of Europe, where citizens have resisted higher taxes
but want to keep high welfare levels.
He said: "We are a long way from that, but still we must
proceed very carefully, because benefits once given can never be
taken away... Spending is popular, but raising money to pay for it
is not. One wins votes, one loses votes."
Top Of The News, The Straits Times, Saturday, June 9 2012, Pg
A10
