Oct 30, 2012

The National Cost of Growing Old .... Is Perhaps Not That Large

Greying population could 'cost Govt S$13b more by 2025'
by Teo Xuanwei 
SINGAPORE - By 2025, public services for what will be a greyer Singapore could cost the Government S$79 billion, or S$13 billion more than what it spends today, according to a new report released by global management consultancy Accenture. 
Even as the Government has highlighted the effects of the dramatic demographic shift in the coming years, including higher social spending, this is the first time an estimate of the cost has been worked out. 
According to Accenture's report, which covers 10 countries, the increased spending in public services - defence and public safety, education, housing and healthcare - will come up to the same percentage of gross domestic product (GDP) in 2025 as it stood last year at 12 per cent. 

The less-informed reader might feel scared. "Oh my goodness," he will say, "How can Singapore afford all these costs?"

There are many possible ways. For example, as senior citizens form an increasing proportion of the population, younger people form a decreasing proportion. In other words, there will be fewer young people for the government to look after. Increased expenditure on the old can be offset by decreased expenditure on the young. For example, if Singapore has fewer young people, government expenditure on education must logically decrease.

Also, fiscal spending isn't necessarily a bad thing (although the PAP will never be heard to tell you that). Government spending on areas such as geriatric healthcare must surely create jobs and stimulate economic growth to some extent. For example, there will be more jobs for nurses, doctors and other people who run and manage hospitals and old folks homes.