Budget 2012 Debate

Dear Dr Janil Puthucheary,

I refer to your questions to Mr Gerald Giam during Budget 2012 debate [1]. Mr Giam’s claim that future generations would find it hard to keep up with the cost of living is not speculation but based on fact. Mr Tharman showed that medium income has risen 3.2% per year over the last five years or 17.1% in total over five years. But HDB resale prices have risen 83.8% over the last five years. Since new flat prices are pegged to resale flat prices, new flat prices would have risen by a similar amount. So a couple setting up a family now would have a harder time compared to five years ago. At the rate housing prices are climbing, future generations would indeed find it hard to keep up with cost of living.

Dear Ms Low Yen Ling,

I refer to your reply to Mr Low Thia Khiang during Budget 2012 debate [2]. Mr Low’s view is not narrow but well substantiated. He said that the government has decided to wean our industries off cheap labour, a process that may even affect economic growth. It is therefore true that there is a fundamental paradigm shift from economic growth at all costs to improving people’s lives. Also, having worked in EDB for 10 years, I presume you have read Dr Goh Keng Swee’s works. Dr Goh said that one important factor for our success is our superb central geographical location with a natural harbour between the South China Sea and the Straits of Malacca [3]. So we are not just a little red dot with no natural resources. Our location itself is an immense source of wealth that has given rise to our entrepot trade which stands at three times our GDP today. Also, can you explain why Hong Kong, a similarly small dot with no natural resources can create wealth for people to live well without much of an economic policy?

Dear Mr Sam Tan,

I applaud your call to expose students to politics and policy making [4]. It would be good to expose students to the Economist Intelligence Unit’s Democracy Index which lists Singapore as a hybrid regime between flawed democracy and authoritarian regime. Students should also be exposed to the Freedom House which categorises us as a partly free country and Reporters Without Borders’ Press Freedom Index which ranks Singapore 135th in the world for press freedom. Students should also learn that our policy making, as far as Dr Goh Keng Swee is concerned, is really a continuation of our colonial traditions of free trade and free enterprise [5].

Dear Dr Lam Pin Min,

You brought up the difficult issue of ‘not in my backyard attitude’ amongst some Singaporeans towards facilities for the old and poor [6]. If our leaders can lead by example by siting some of these facilities in their own backyards, it would send a very strong signal to Singaporeans that there are no privileged backyards in Singapore.

Dear Mr Liang Eng Hwa,

You said we can’t count on the EU for bailout like the Greeks could [7]. During the 1997 Asian Financial Crisis, the IMF and other financial institutions offered $58.4 billion to bail out South Korea [8]. Therefore, even though we can’t count on EU bailout, we probably can, not that we should, count on IMF bailout.

Your worry that the current full employment situation will lead to a zero-sum game where companies poach from one another to push up wages is not unfounded [9]. But if we follow Mr Chen’s advice of favouring Singaporeans for high end jobs while allowing more leeway for foreigners at low end jobs, there will be no labour shortage but a shift for Singaporeans up the employment chain. So even though it is zero-sum, the outflow in high wage foreigners will be replaced by Singaporeans moving up the employment chain while the vacancies left by Singaporeans moving up the chain can be filled by the inflow of low wage foreign workers. In this way, the numbers remain unchanged and won’t lead to unhealthy wage bids.

Dear Ms Indranee Rajah,

I refer to your comments on the WP’s suggestion for refinement of foreign worker dependency ratios [10]. There is no contradiction between the call for fewer foreigners during the general election and the call for less stringent foreign manpower policies to keep the cost of social services low. As much as possible all sectors should have fewer foreigners. But depending on the sector, some sectors can be more stringently fewer, other sectors can be less stringently fewer. It also doesn’t run counter to what we want to achieve for low-income workers. If there is a sector where low income Singaporeans don’t want to go into, what is the point of becoming more stringent? In other words, we should not be blindly stringent across the board but should take into consideration what Singaporeans want. Mr Tharman’s decision to reduce the foreign worker dependency ratio for manufacturing and services but not for construction suggests this precisely.

[1] Straits Times, 1 Mar 2012, “This year’s Budget is special, says WP’s Low”

Dr Janil Puthucheary (Pasir Ris-Punggol GRC) also took him to task over his claim that future generations would find it hard to keep up with the cost of living and asked if it was based on data or speculation.

[2] Channel News Asia, 29 Feb 2012, “Budget 2012 reflects shift in govt’s mindset: Low Thia Khiang”

Ms Low said: “He had described this year’s Budget as a change in the government’s thinking and mindset. In the past, the government prioritised the economy, now it’s prioritising at the foundation of society. I think this view is little narrow. As a little red dot without natural resources, Singapore has to be concerned about the economy at all times. Having worked at EDB for 10 years, I can feel this importance. Only with an effective economic policy can a country create wealth for society and have excess to enable people to live well.”

[3] Goh Keng Swee, The Practice of Economic Growth, Page 6

[4] Straits Times, 1 Mar 2012, “S’pore not inclusive enough, say MPs”

‘Our system is such that we create a world-class education to nurture our young. But we have not made a conscious effort to expose students to how our country is run, how the civil service functions, how policies are made. More importantly, how politics is played out in our system and in other countries. We simply leave all these to chance.’

[5] Goh Keng Swee, The Practice of Economic Growth, Page 6-7

[6] Straits Times, 1 Mar 2012, “S’pore not inclusive enough, say MPs”

Dr Lam Pin Min (Sengkang West) and Ms Irene Ng (Tampines GRC) zeroed in on another area of social deficit – the ‘not in my backyard’ attitude that some had towards facilities for the old and poor. Dr Lam cited the outcry from residents in Tampines and Pasir Ris against rental flats, and those in Woodlands and Toh Yi to eldercare centres.

[7] Straits Times, 29 Feb 2012, “The Debate in 2 minutes”

LESSON FROM GREEK WOES
‘The recent second bailout for Greece cost the EU and IMF €130 billion (S$220 billion). And this may not be the last time Greece will stretch its hand. It gives us a sense of the magnitude – that if we mismanage our finances – that will be our fate. And we can’t look to EU for bailout. We can count only on our own savings to bail ourselves out.’

[8] The 1997-98 Korean Financial Crisis: Causes, Policy Response, and Lessons, Kim Kihwan, http://www.imf.org/external/np/seminars/eng/2006/cpem/pdf/kihwan.pdf

[9] Straits Times, 29 Feb 2012, Latest foreign worker policies may be too harsh

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) noted that the tightening of quotas will increase business costs as it will compel companies to pay higher salaries to local workers in order to attract them. ‘In an almost full employment situation where we are now in, local hiring may well be a zero-sum game,’ he said. ‘The most probable occurrence would be the unhealthy practice of staff poaching from each other which would just push up wages sharply higher to unsustainable levels.’ Some studies have shown that the cumulative increase in levies announced so far is expected to increase wage costs by 20 to 25 per cent, Mr Liang said.

[10] Straits Times, 1 Mar 2012, What happens to low-income Singaporean workers?

‘WP suggested having different industry clusters for dependency ratio ceilings. I noted with some interest that they suggested one cluster should perhaps be finance, aerospace, biomedical and professional services – which I would loosely term as the high-end services – and for those you can cut back on the number of foreign workers.

Then they suggested another cluster, social services, public health care and construction for public infrastructure – which I would classify as sort of middle to low end – and for those we may need less stringent foreign manpower policies to keep the costs low.

In other words, for the lower end, have more foreign labour. But that runs contrary to the call at the general election from the WP, among other opposition parties, that we must have fewer foreigners here.

It also runs counter to what we are trying to achieve for low-income workers in Singapore. We want them to be fully employed, we want them to have more jobs. If you relaxed the requirements and you have less stringent manpower policies for those sectors, then what happens to Singaporeans in those sectors?

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One Response to “Budget 2012 Debate”

  1. jax Says:

    what is very clear in the arguments put forward in parliament is that the PAP will dispute whatever the WP says. if the WP says white is white, the PAP will say, No it isn’t, OR something along the lines of, Before the GE, you said that not all things which are white are totally white.

    the WP can try and suggest ways to sharpen and improve policies, and how decisions are taken, but no matter what, the PAP will only slap these down n argue agst them. these days, with some of the most inane arguments it has trotted out in its existence.

    it would seem, therefore, that the PAP is interested more in trying to say, Look how clever we are, Look how wrong you the WP are, then in actually working out ways that would improve this country and the lives of its citizens, or do better in its policies.

    it’s determined to show that having 2 or more parties in parliament will not work – even if both agree on general principles and directions. its such a petty and pathetic route for a once rather good political party to take.

    the PAP really has to ask itself: What is more important? the party or Singapore? currently, it is irresponsibly making quite clear that only the party really matters. can such thinking or party take spore forward?

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