KRI calls for universal child benefit scheme

Setting the benefit level at RM100 would require an initial investment of RM8b, while at RM150 would require RM12b

by NUR HANANI AZMAN / pic by TMR FILE

KHAZANAH Research Institute (KRI) proposed the government establish a universal child benefit (UCB) scheme for all children at RM100 to RM150 monthly to prevent the risk of any child being left behind during this important stage of cognitive, physical and social development.

From the two options, chairman Tan Sri Nor Mohamed Yakcop (picture) said setting the benefit level at RM100 would require an initial investment of RM8 billion, while setting it at RM150 would require RM12 billion.

He said this proposal has been informed in focus group discussions with the Ministry of Finance and its minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, KRI hopes that this proposal will be included in the Budget 2022.

“If this is not included in the budget, it is still okay, the conversation can go on. The whole idea is to put our proposal for discussion, get input from others, government departments and finally the product can be implemented.

“Social protection is vital for children as childhood is an inherently vulnerable stage of life, not least because children are not able to provide for themselves and are dependent on others,” he told reporters yesterday.

In 15 high-income countries, delivering universal child benefits alone led to a 5% point reduction in child poverty, on average.

By starting with initial age eligibility at 0-12 years, the UCB is expected to benefit around 6.7 million children, or 72.4% of all children.

This entails a total of 3.5 million households (41.4% of total households) that will be covered during the first year of the programme.

When full children coverage is achieved in 2027, UCB is estimated to benefit 53.1% of total households as children’s issues including education, health and nutrition are prevalent across all income groups, a universal approach for children’s social protection is necessary.

KRI research associate Puteri Marjan Megat Muzafar said currently, there are children-centric programmes such as the Bantuan Kanak-Kanak and the existing tax benefits but the current system has inefficiencies.

“The high-income earners tend to get higher tax benefits while those in the middle, who do not qualify for Bantuan Kanak-Kanak, do not have a high enough income to benefit adequately from tax reliefs.

“That is why we are proposing for everyone to be eligible, which would be a more progressive system,” she explained.

The proposed UCB serves as an important scheme in building an inclusive and comprehensive social protection system, and is a part of KRI’s report — Building Resilience: Towards Inclusive Social Protection in Malaysia.

Meanwhile, KRI senior research associate Hawati Abdul Hamid said with rising unemployment and underemployment, and other issues amid the pandemic, poverty has been exacerbated with the national poverty rate increasing from 5.6% in 2019 to 8.4% in 2020.

She said it is imperative for Malaysia to gradually move from the charity model (poverty targeting) into a more inclusive model that is forward-looking in preventing poverty and addressing vulnerability.

“Instead of targeting poverty explicitly, we should shift our policy to a life cycle approach that is embedded with poverty mitigating mechanisms.

The life cycle approach acknowledges that individuals are constantly exposed to various types of risks throughout their life span and the risks may vary from one phase of life to another.

“The risks can be idiosyncratic — occurring at an individual or community level for example work injury, death of the breadwinner and/or systematic — affecting many communities or countries for example pandemic,” she added.

External factors stemming from economic and social development such as demographic and climate changes, economic crisis and social conflicts also can result in greater insecurity and vulnerability, potentially pushing people into poverty at any phase of their lives.

While calling for a social protection floor based on the life cycle approach, KRI report proposed several policy considerations that require higher but necessary investment from the government.

It includes expanding the mandatory coverage of existing social insurance schemes for the working-age population to self-employed, non-standard and/or informal workers and those outside the official workforce such as homemakers.

“Establishing a social insurance pension for old-age to provide basic income security for the elderly, given coverage and adequacy challenges of old age savings.

“Progressive realisation of proposed policies to build institutional capacity, introduce or amend the relevant legislation, and broadening revenue base through tax reforms,” the report stated.

KRI also recommends building a national social security institution and a unified registry to administer and implement the recommended social protection floor initiatives.