Lee Hsien Loong, Singapore's prime minister, speaks during the opening ceremony of the Association of Southeast Asian Nations (ASEAN) Summit in Singapore, on Saturday, April 28, 2018. The summit runs through to April 28. Photographer: Paul Miller/Bloomberg Lee Hsien Loong, prime minister of Singapore (Photo: Paul Miller/BB)

Singapore’s Prime Minister Lee Hsien Loong outlined plans to boost support on health care and public housing that he said will require “large expenditures,” putting pressure on the city state to find new sources of funding for its growing social spending.

Lee’s initiatives — detailed in his annual National Day Rally speech on Sunday — are aimed at providing financial reassurance to Singaporeans for years to come and to address locals’ concerns about rising living costs. The plans come at a time when governments around the world grapple with the challenge of losing voter support over rising income inequality.

“These are fundamental commitments by my government to you,” he said. “They are ambitious endeavors and will require large expenditures. These schemes will stretch over 50 years and more, several generations and many general elections.”

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While the economy is doing well, unemployment is relatively low and wages have increased, many Singaporeans still feel their incomes aren’t sufficient to cope with higher costs, Lee said. He cited several reasons for this, including young families spending on housing and pre-school education, medical costs for the elderly, lifestyle costs, such as travel and food, and inflation.

Here are some details from the elder care and health care plans outlined by Lee in his speech:

Elder Care

Financial support for long-term care will be extended by revamping the current ElderShield program into the CareShield Life in 2020, to cover all Singaporeans born in 1980 or later, and to increase payouts. The government will help pay for medical costs, among other initiatives, for the post-independence generation, most of whom are in their 60s.

Singapore’s ElderShield program already provides a payment of $400 per month, for up to six years, for participants who suffer a severe disability. The program defines “severe disability” as a disability that prevents an individual from performing four activities of daily living, such as eating, dressing or bathing.

CareShield Life is supposed to make payments of at least $600 per month for as long as an older person suffers a severe disability. Enrollment will be automatic for people born in 2020 or later. People born in 1979 or earlier can join the program only if they are not already severely disabled. People born from 1970 through 1979 who have ElderShield coverage and are not severely disabled will be enrolled in the new program automatically.

A description of the ElderShield program is available here.

A description of the CareShield Life program is available here.

Singapore already provides $200 per year for family caregiver training grants, and it provides $120 per month for low-income and moderate-income families that hire foreign domestic workers to care for severely disabled people at home, according to a Singapore government explanation of the country’s long-term care programs.

Health Care

Community health assist scheme will be extended to all Singaporeans with chronic conditions regardless of income and more polyclinics will be build across Singapore to improve access.

Higher Taxes

Lee said Singapore will require a “thriving economy and sound government finances” to fund the initiatives, which range from extending health care insurance to revamping public housing.

The plans may also require higher taxes, a broader tax base, or both, said Francis Tan, an economist at United Overseas Bank Ltd. in Singapore. The government will also have to welcome more immigration over the next decade to counter the low fertility rate, he said.

In order to avoid the strain on infrastructure and other services that an immigration boom to 2011 caused, the plans outlined by Lee suggest the government is trying to get ahead of a possible influx of foreign workers by putting necessary infrastructure in place first, Tan said.

“Probably there will be an increased shift in taxation toward the wealthy ones,” he said. “They will turn on the tap but not so quickly” on immigration, ahead of completion of those infrastructure projects over the next decade or so, said Tan.

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