In his book Gray Dawn, Peter Peterson suggested that feasible strategies to combat an aging population with fewer offspring include: (1) extending the age of retirement, (2) enhancing the labor participation ratio, (3) raising more children with production capacity, (4) emphasizing filial responsibility, (5) giving senior citizens allowances to cover their basic needs, (6) requiring all to save for old age, and (7) facing the issue and starting the necessary reforms as soon as possible. According to recent data, Taiwan's birth rate is dropping faster than the government's estimates. Progress in medical technologies, the implementation of the national health insurance program, and senior citizens'welfare subsidies altogether will help people live longer than expected. In ten years the population of Taiwan will cease to grow.
It will reach a peak at around 22.5 million and then begin to decline. If that is what happens, the economy will suffer a blow. The severity of the problem has not been recognized. The trend may eventually lead to annihilation of Taiwan as a nation. The number of senior citizens will continue to rise. Their voting power means that politicians have continued to increase their benefits. In a way, senior citizens are squeezing out youth via their votes. If future social welfare programs continue to be senior-citizen-oriented, the birth rate will only continue to plunge. In response to the demographic crisis, the government needs to take the following measures immediately: 1. Include barrenness in the national health insurance policy. Initially we can set a cap of NT$100,000 for each female patient. 2. Double childbirth payments in insurance policies for people in the military, government, or in education and for laborers and farmers. The cost of these two measures will be undertaken by the insurants. When necessary, insurance premiums may be raised. Social insurance has the effect of cross-generation assistance. Raising more productive children will contribute greatly to the sustainable operation of social insurance. 3. Entitle children of middle- and low-income households, such as those of military/government/education personnel, to full government subsidies to cover their tuition, lunch expenses, and health insurance premiums. The number of new born babies in 1981 was over 410,000. In 2003, this number dropped by 50 percent to 220,000. The Ministry of Education should allocate funds from its budget to cover this expenditure. This measure would help close the income gap, promote social justice, and cause social brackets to shift. 4. Make the tax deduction for supporting children aged ten and under the same as for supporting parents aged 70 and over. Raise the deduction from over NT$70,000 to over NT$110,000. The expenditure can be covered by an increase in sales tax. Items 1 and 3 above involve tangible payments beneficial to those who give birth to or raise children. Children are the direct beneficiaries. Parents cannot direct the funds toward other purposes. Items 2 and 4 rectify current social welfare programs that favor senior citizens. They also enhance young people's willingness to have children. 5. Entitle middle- and low-income households to subsidies for children. Based on current demographic changes, we urge the government and all political parties to be mindful of the well-being of the entire nation and stop increasing senior citizen allowances and loosening requirements for entitlement to senior citizen allowances and senior farmer subsidies. If the government has any extra financial resources, it should entitle middle- and low-income households to children's subsidies. The affluence-exclusion clause we adopted for the senior citizen allowance may be applicable here. Children of families with a household net worth less than NT$5 million and annual household income less than NT$500,000 will receive NT$3,000 each month. Many advanced countries have done this. The government can require parents to spend the allowance on supporting and educating their children. As the number of newborns is decreasing yearly and the number of senior citizens is rapidly increasing, we estimate the budget preparation required for issuing children's subsidies will be far less than that required for issuing the senior citizen allowance. The future of the nation is in the hands of our children, who will one day undertake and repay the government's debt. If we give underprivileged children a hand now and give them a chance to receive proper education, we can enhance their productivity and strengthen their ability to support senior citizens and sustain the government's financial burdens. We need to do so to be in line with the principle of cross-generation fairness and responsibility.