Leong Sze Hian, Andrew Loh

The latest slew of measures by the Government to encourage Singaporeans to have babies is welcome. Deputy Prime Minister Wong Kan Seng, who made the announcements, hopes to create a “family-friendly” environment so that our birth rate will increase beyond the current 1.29. The replacement level is 2.1.

You can read about the measures in the Straits Times here.

They include bigger tax breaks, more protection for pregnant women in employment (a concern of many finally addressed), more childcare centres in the heartlands and longer maternity leave. It is obvious that the Government has been thinking long and hard about the issue and should be applauded for coming up with the measures.

However, one wonders if enhancements to the same incentives will work.

A different approach

Whilst the new incentives will surely increase the current procreation rate, I think it may not achieve the desired goal of increasing the procreation rate back to 2.1, which is the population replacement ratio.

I suggest a different approach to procreation, which may not cost the Government any additional funding.

From a statistical perspective, lower-educated women and lower-income households have always, and even now, tend to have higher procreation rates than higher-educated women and higher-income households.

Therefore, the new, and past incremental enhancements to various similar incentives, which may be skewed towards encouraging more educated and higher-income women to have children, may not be very effective.

For example, tax rebates of up to $70,000 can only be used by couples who pay tax, and about 70 per cent of workers hardly pay any income tax. The third and now fourth month’s maternity leave paid by the Government may utilise more state funding to those who need it least, and these people are also thus consequently not incentivised by the incentive. To illustrate this, a mother earning $20,000 a month will cost the Government $40,000, whereas one earning $800 will cost it $1,600. For someone earning $20,000, the incentives may not be necessary or attractive and thus may not be as motivated as those earning less. I suggest that the current funding for maternity leave be divided by the total number of babies born in a year, such that the payout will be a fixed amount, regardless of the mother’s income.

Make incentives education and income neutral

I believe one of the main reasons for the success of the Nordic countries is that incentives are neutral, and not dependent on the women or family’s income or education.

Another example is the baby matching grants. Some lower-income families may not have the money to contribute in order to continuously receive matching grants.

Last year’s slight increase in procreation to 1.29 may be due to the increase in the percentage of babies borne by foreign mothers to 35 per cent. If we take into account permanent resident (PR) mums, the procreation rate of Singaporeans may be even lower.

Anecdotally, it appears to suggest that foreign and PR mums are more likely to be stay-at-home mums, relative to Singaporean mums.

Discriminatory?

In this connection, I understand that none of the new enhanced incentives may apply to stay-at-home mums.

Further, it seems that the new slew of measures include one which may be perceived as discriminatory to Singaporeans. As TOC reader gtiong pointed out, and stated on the ecitizen website :

The amount of benefits that a child who converts to Singapore citizenship will obtain will be pro-rated according to the date of conversion.

This means that Singaporeans like gtiong, whose baby will be born in December 2008 while the new measures will only kick in in January 2009, will miss out on the incentives – unless they are pro-rated like those for ‘converted-to-Singaporeans” babies currently.

Housing policy

Perhaps one area which the Government should look at more closely is its housing policies.

One of the reasons why couples may not want to have babies may be because of the daunting prospect that they’d be taking care of the new-borns themselves. Of course, as parents, that is how it should be. Nonetheless, any kind of support is welcome. Would it thus be possible to further tailor our housing policies to encourage families to live together?

Presently, the Housing and Development Board (HDB) gives housing grants to those who live near their parents, even for singles. In March this year, it announced a new “higher-tier” Singles Grant of $20,000 for singles who buy a HDB resale flat in order to live with their parents. According to the Straits Times, the subsidy is “to encourage children to look after their parents while helping them get a bit further up the property ladder.”

Could a similar grant be implemented – that is, a grant for couples who choose to have babies and live with their parents? This is to encourage parents to live with their children who wish to have kids and to provide the couple a certain level of security and support for when they consider having children. After all, if using grants to encourage singles to take care of their parents can be implemented, why not a grant to encourage families to live together, on the condition that the younger couple have children within a year or two, say?

In order to allow the couple to have their independence, such a policy should stipulate that the parents can after, say, six years apply for a new HDB flat on their own with enhanced Government subsidies, leaving the new parents to go back to their own lives. The subsidies can then be the reward for the grandparents for helping their children care for the babies. (The PM said in his National Day Rally speech that the first six years of a child’s life are the most important and many parents would agree.) Perhaps we should look at having and caring for children as being more than a couple’s job. We should take a broader view of it being a family endeavour — that it takes a village to raise a kid, so to speak.

Learning from history

Historically, measures like the graduate mother and HOPE schemes may have not been very successful, because they may be relying on the wrong rationale — that we should encourage more educated women to have children, and less educated women less — through measures such as the ligation incentives under the HOPE scheme.

The above suggestions may seem like a radical change to our procreation policies, but they do not cost the Government more, as they simply shift the balance to equalising incentives to become education and income neutral.

In our view, unless we encourage those who statistically, traditionally and historically, produce more children, i.e. the lower-educated, lower-income and stay-at-home mums, and broaden the view of what it takes nowadays to have and care for children, incremental enhancements to the same incentives may not produce the quantum leap required to bring the procreation rate back to 2.1.

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Picture from Channel NewsAsia

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