Economic growth benefits all citizens

Dear Mr Tharman,

I refer to your Budget speech as reported by Straits Times on 6 Mar 2010.

You highlighted the impressive growth in Singaporeans’ incomes from 2005 to 2008. But the explosion in HDB and property prices from 2006 to 2009 is even more impressive. Thus, Singaporeans who bought their first homes during this bubbly period would have found their income growth more than wiped out by the spike in property prices. While their income growth is measured in terms of hundreds of dollars, the extra burden they have to pay for inflated property prices is measured in terms of hundreds of thousands of dollars. It will take perhaps 20 years for the extra income to pay for the extra increase in housing prices. Any Singaporean caught in this situation would rather have given up the income increase in exchange for a reversion to old property prices.

Thus, while you happily trumpet the 20% growth in median income over the last decade, do not forget the concomittant increase of nearly 30% in our property prices as well. Furthermore, your use of resident unemployment rate obfuscates the real matter of concern which is that of Singaporean unemployment rate.

You said it was necessary for businesses to obtain more workers in the second half of the decade so that they could expand quickly to take advantage of the favourable external environment. However, why didn’t the government adopt the productivity initiatives it is taking now in the first half of the decade so that by the time the favourable second half of the decade came, businesses could expand just as quickly albeit with much less workers?

Even if we were to contend that there is a need to obtain more workers, where is the evidence of the plans to accommodate those extra workers? The frantic building of more infrastructure, more accommodation and sudden rule changes appear knee jerk in reaction to the sudden massive influx with no evidence of forward, methodical planning. MM Lee’s proud assertion of a forward looking government is sadly missing.

You said it is important for us to capture significant opportunities that do not come every year. That makes us look like primitive hunter gatherers who make the best of whatever comes our way but who have yet to discover agriculture and animal husbandry as the means to a steadier supply of food.

Therefore, despite your claim that our strategy is not wrong headed, many things have indeed gone wrong with our strategy which necessitates the changes we are embarking on now.

You said we needed those workers to build properties, flats, MRTs, and to serve as nurses and bus drivers. But had we embarked on the productivity ethos much earlier, we may not have needed so many workers as we have now and consequently we may not have needed to build that many properties, flats, MRTs or have so many nurses and bus drivers as we are having now.

You said Singapore cannot grow slowly to reduce inequality. But the issue at hand isn’t about growing slowly but how we grow. Clearly, our tectonic shift towards productivity growth isn’t about slow growth. Yet it is fundamentally different from growth by simply adding more people. The question really is which method is more desirable and will reduce inequality more? It seems that our primitive pursuit of growth at all costs hasn’t been the wisest of strategies and that we have not been doing what is best to reduce inequality.