Why we need the welfare bill

A welfare bill will show Thailand cares

By Chang Noi


Should we be spending money on welfare? Thailand’s first welfare bill will come before parliament soon. It is likely to be controversial.

The bill proposes to set aside 3 billion baht from the annual budget to assist the really needy in society including the disabled, neglected children, and aged. The Ministry of Labour will oversee the use of this fund. Community organisations, NGOs and foundations will apply to the Ministry for money to supplement their own programmes.

Is this a good bill? Can we afford it? Is welfare a good idea?

In some advanced countries, welfare has become a dirty word. It is criticised as giving money to people to make them lazy. It is blamed for swelling government budgets, resulting in high taxes which discourage private enterprise. Many people in Thailand want to use these arguments against this bill.

But there are some members of our society who simply cannot help themselves. Some have been disabled but still deserve a decent livelihood. Some like the blind or abandoned kids have the potential to contribute to society if they first get a little help. The welfare scheme aims to provide basic help, as part of the society’s compassion.

Traditional society in Thailand provided this help in various ways. Families looked after their less fortunate members. Villages cared for those the family could not. Sons which the family could not afford to support were sent to be temple boys (dek wat). Families which faced hunger because of harvest failure could beg rice from other households without any social stigma.

As our society becomes more commercial and more urban, many of these traditional forms of social welfare wither away. Communities are torn apart by migration and social change. Even the family becomes less effective at looking after all its members. More and more of the less fortunate are left without a social safety net.

We can ignore such people. Or we can say: the quality of our society is measured by how we treat all its members, especially those who cannot help themselves. If economic progress and social change mean that old forms of community welfare no longer work, then the responsibility falls on government.

But will this new scheme have any impact on Thailand’s economic growth? Will it be wasteful to spend government funds on a scheme which brings no economic return?

Of course the fund needs to be managed well. Here we can study the experience of other countries. Schemes which are over-centralised tend to grow bloated, bureaucratic and uncontrollable. We should not centralise everything under the main bureaucracy. The Ministry of Labour should manage the scheme. But implementation should be dispersed to grassroots organisations in the villages and urban communities.

Overseas experience also tells us to be wary of the long-term impact on the economy. Welfare schemes can become monsters with lives of their own. We will need a research and monitoring unit which constantly calculates the costs of various welfare programmes, and their long-term impact on the economy.

But can we afford it? What impact will the bill have on the government budget?

Here the answer is very simple. The welfare fund will cost less than all the taxes the revenue department fails to collect each year because of loopholes; less than the amount the government fails to spend each year because of inefficiency; and probably no more than a tail fin on the military’s proposed communications satellite.

Since 1988, the government has been collecting more revenue than it spends. Some of this surplus is planned. Some has come about because government departments fail to spend their total allocation. The left-over is piling up as fiscal surplus. We have used some to pay off our external debts. But there is still a lot left each year. This is a waste. Would it not be better to devote some of this surplus to people who really need it?

Corporate profits taxes now yield around 150 billion baht a year. But every year, around 90 percent of all companies claim to make a loss and pay no tax at all. Given Thailand’s booming economy, do we think these losses are likely?

VAT yields almost another 150 billion. But the Revenue Department reckons it loses another 30 billion baht because of corruption over VAT rebates.

Other sales taxes including excise yield another 150 billion. But it is said that one company alone evades around a billion every year.

Just a little more efficiency by the Revenue Department could cover the costs of the welfare scheme several times over.

The budget allocation for defence is around 100 billion baht. In addition, the armed forces have proposed arms purchases totalling almost 75 billion. The largest item is the military satellite costing almost 30 billion. From experience, a significant chunk of such arms budgets (usually around 10 percent) will be paid in commission. The commission on the satellite alone could pay for one year of the welfare scheme.

Corruption costs us much more than compassion.

We can pay for the welfare bill easily just by cutting out some of the corruption, inefficiency and waste in the collection and expenditure of the government budget. At the same time we would be transferring funds from people who don’t deserve them to people who do.

Chang Noi says: support the welfare bill. It’s a measure of the quality of our society.

Source : The Nation , May 3, 1996