Wednesday 29 February 2012

Budget 2012 debate: Day 1

Ease pain of economic makeover, urge MPs
Inclusive Budget lauded, but concerns raised about impact on SMEs
By Lydia Lim, The Straits Times, 29 Feb 2012

THE pace of economic restructuring and the pain it will inflict on local companies and low-skilled workers emerged as a key theme of the first day of Parliament's debate yesterday on the Government's Budget.

The 25 Members of Parliament (MPs) who spoke gave their support to the Government's broad push to raise productivity. While generally supporting the long-term gains that the Budget measures would bring, they voiced concerns about the short-term pain.

Seven MPs questioned the lack of measures to help small and medium-sized enterprises (SMEs) cope with rising costs, even as foreign worker inflows are further reduced.

Veteran People's Action Party (PAP) member Inderjit Singh (Ang Mo Kio GRC) was the most hard-hitting. He rapped the Government for expecting SMEs to become more productive overnight, and for allowing industrial rents to shoot up. He called on the Government to do a thorough review of ways to cut business costs.

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Mr Zaqy Mohamad (Chua Chu Kang GRC) warned of the impact on workers if SMEs fail or are forced to relocate because of cost pressures and tight labour supply.

SMEs provide jobs for 63 per cent of the workforce.

Nominated MP and president of the Singapore Chinese Chamber of Commerce and Industry Teo Siong Seng said his fear is that the pain of restructuring will lead to fewer SMEs and fewer people who want to become entrepreneurs.

This year's Budget contains generous incentives for SMEs to invest in equipment and training to raise productivity, but lacks measures to help them cut costs.

It also cuts the share of foreign workers that companies in manufacturing and services can employ for every Singaporean worker, even as the labour market remains tight.

During yesterday's debate, MPs also spoke up for older, low-skilled workers who risk being left behind as the economy restructures.

They accept that at the national level, productivity-driven growth - based on higher skills and use of technology - is the sustainable way to raise incomes.

But Mr Zainudin Nordin (Bishan-Toa Payoh GRC) feared that individual workers who are older and stuck 'in the lowest rungs of our workforce' will not benefit from such growth.

Restructuring also involves reducing reliance on cheap foreign labour, which could in turn raise costs for consumers.

Tampines GRC MP Baey Yam Keng urged Singaporeans to accept having to pay more, and to take comfort in knowing that the shift means more jobs at decent pay for their fellow Singaporeans.

Far less controversial were the Budget measures to enhance support for the lower-income, the elderly and disabled.

Even the five opposition members who spoke yesterday welcomed the Government's move to increase social spending, though they said it could still do more.

Workers' Party (WP) chairman Sylvia Lim qualified her support by saying that after years of driving growth without sufficient attention on the poor, elderly and disabled, 'the Finance Minister course- corrected' this year.

After Mr Chen Show Mao (Aljunied GRC) said the Government could do more in areas like health and education, Mr Vikram Nair (Sembawang GRC) rose to ask how the WP proposed to fund these additional programmes. Would it raise taxes, dip into the reserves or run a budget deficit, he asked.

Mr Chen replied that the WP would not run a deficit, but would look for revenues and investment gains to pay for the additional spending.

The Budget debate continues today.

CPF savings 'may not be enough for old age'
MPs call for rise in contribution rates for all over long term
By Rachel Chang, The Straits Times, 29 Feb 2012

SINGAPOREANS may not have enough Central Provident Fund (CPF) savings for their retirement, MPs warned yesterday.

About a quarter of the parliamentarians who spoke on the first day of the Budget debate flagged this issue, saying the Government should relook how CPF funds can be boosted.

Three said the elderly and low-wage workers have worryingly meagre CPF savings. Three others insisted that CPF contribution rates must rise for all Singaporeans over the long term.

Said Mr Zainudin Nordin (Bishan-Toa Payoh GRC): 'Having more resources upon retirement would mean that workers will be less reliant on the Government for their needs later in life.'

Finance Minister Tharman Shanmugaratnam announced in his Budget statement last week that to boost the retirement savings of older workers, employers' CPF contribution rates for those aged between 50 and 65 would rise by up to 2.5 percentage points.

While praising the move, MPs suggested that it did not go far enough.

Ms Jessica Tan (East Coast GRC) wants the rise in contribution rates to also apply to workers above age 65. Older workers may be physically slower, she said, but competence often turns on knowledge and experience too.

Mr Zainudin suggested the Government raise the interest rates that CPF funds accrue. A rate of 2.5 per cent - what the CPF currently pays on funds in the Ordinary Account - will grow a $1,000 balance into $2,098 over 30 years. If the rate went up to 5 per cent, for example, it would grow to $4,322.

A higher interest rate would give older workers the means to a comfortable retirement, he added.

A CPF system less strictly tied to days spent at work was Non-Constituency MP Lina Chiam's wish.

In some countries, women can get 'pension credits' when they are on maternity leave, in recognition of their role as caregivers. The CPF model should be similarly evolved to build a better social safety net for women, she said.

Going one step further was Nominated MP Mary Liew, who said a Ministry of Health report in 1984 noted the Government's desire to ultimately raise the CPF contribution rate to 50 per cent, while delaying the age at which workers can withdraw those funds to 65.

The rate is currently 36 per cent, and the withdrawal age is 55.

She cited Lee Kuan Yew School of Public Policy economist Hui Weng Tat, who had produced figures showing that the current CPF contribution rate will not yield sufficient retirement funds - even before Singaporeans drain their accounts to pay for property purchases. He said 42 per cent would be a more sustainable figure.

Ms Liew also noted that when CPF contribution rates were slashed - as they were during economic crises in 1986, 1999 and 2003 - close to a decade passed before they were restored.

For a 30-year-old who earned $1,000 a month in 1985, this meant foregoing $30,000, excluding wage cuts and interest. 'This $30,000 would have meant a lot to our low-wage workers,' she said. 'The workers are the elderly of today, and because of their sacrifice, we have progressed as a nation to where we are today.'

Calling for the Government to review what a reasonable CPF rate would be for Singaporeans to retire with dignity, she concluded on a note of appeal: 'Please, no more CPF cuts!'

Health care: How much is enough?
MPs clash over how much should be spent on health, and how
By Robin Chan, The Straits Times, 29 Feb 2012

WHEN it comes to the issue of health-care spending, the opposition and the MPs of the ruling People's Action Party (PAP) do not see eye to eye.

Although government health-care spending will double in the next five years to $8 billion, the Workers' Party's Ms Sylvia Lim (Aljunied GRC) is not impressed. She noted that it is just a small slice of Singapore's gross domestic product. It is also below the world average, she said, pointing to World Health Organisation figures.

'Singapore's government expenditure on health care is about 1.6 per cent of GDP, nearly four times lower than the 6.1 per cent global average in 2009,' she said yesterday during the Budget debate.

But for PAP MP Hri Kumar Nair (Bishan-Toa Payoh GRC), what is more important is the quality of health care rather than the amount spent. 'Anyone can, without much effort, think of something we can spend more money on... but our resources are not unlimited. It should not be how much we spend, but really the outcome we achieve.'

Yesterday was the first day of the parliamentary debate on the new Budget, which has allocated $4.7 billion to health care, including hiring more workers and increasing subsidies for immediate and long-term care.

While Ms Lim welcomed the higher spending each year, she pointed to how health-care cost is a major preoccupation of many. 'Affordable health care is at the top of the minds of our seniors, especially those in the lower- to middle-income groups. This Budget acknowledges affordable long-term care is the Government's responsibility, but we must do more.'

Ms Lim called on the Government to consider expanding ElderShield insurance to help pay for stepped-down care at community hospitals for recovering patients.

Mr Nair, in arguing for quality care, pointed to the United States and Europe. The US spends 18 per cent of its GDP on health care, almost double the 9 to 10 per cent spent by European countries. Still, Europeans have longer life spans and better infant mortality rates. 'The real challenge is about getting our spending priorities right. And to be smart about how we spend, where we spend, why we spend, so we can make a real difference to the lives of as many Singaporeans as possible.'

For Dr Chia Shi-Lu (Tanjong Pagar GRC), the challenge lies in tempering the cost-benefit deliberations with a heavy dose of humanity. A bad knee is not a life-threatening illness, yet many elderly folk today choose to spend on costly knee replacement surgery to stay active.

'(It) harks back to the root of what we feel is quality health care and the quality of the way in which we grow old. These are difficult questions we have to answer,' he said. 'We as a society will have to... come to an agreement on what all these things mean to us. We certainly have to consider all the costs and benefits and these deliberations should be tempered by a very large dose of humanity.'

Govt course-corrected but can do more: WP
By Janice Heng, The Straits Times, 29 Feb 2012

WORKERS' Party (WP) MPs yesterday described the Budget as one in which the Government has 'course-corrected', but they argued that more could still be done.

Ms Sylvia Lim (Aljunied GRC) charged that for a long time, the People's Action Party Government drove growth without paying enough attention to the effects of increasing income inequality, especially among the poor, elderly and disabled.

'In this Budget, the Finance Minister course-corrected to ensure that our poor, elderly and disabled are not stuck in isolated pockets of poverty in our island of prosperity,' she said.

Yet the WP believes more can be done, she added. For instance, Budget 2012 'acknowledges that affordable long-term care is the Government's responsibility'.

But the Government could also ensure that long-term care subsidies take medical inflation into account, and improve insurance coverage for long-term care, suggested Ms Lim.

During the first day of the Budget debate, other WP MPs approved of the shift in course and echoed the call to do more.

Non-Constituency MP Yee Jenn Jong welcomed 'the noticeable shift from previous Budgets, which concentrated mostly on economic growth, towards more social programmes'.

Mr Chen Show Mao (Aljunied GRC) said the party was 'glad that the Government has heeded the call of many Singaporeans for more inclusive growth'.

But he too argued that more could be done. For a start, vulnerable groups - the elderly, the disabled and the poor - should not be seen as social 'challenges', but as opportunities to invest in human capital.

'We should not see social outlays only as spending to be minimised over the short term, but also as investments to be optimised for our long-term benefit,' he said.

The Government should seek such opportunities, just as it seeks investments that have economic returns, he added.

This prompted PAP MP Vikram Nair (Sembawang GRC) to rise to ask how the WP planned to fund its proposals to 'do more'.

'Is it planning to raise taxes or eat into reserves to pay for all these additional programmes?' he asked.

Mr Chen replied that investments would yield economic and social returns.

When Mr Nair pressed further, the WP MP said that his party was not proposing that the Government run a deficit.

'But we can look at the numbers, both on the revenue side and how much we hope to make in terms of investments, to come to a solution,' he said.

Associate Professor Muhammad Faishal Ibrahim (Nee Soon GRC) rejected the WP argument that the Government had 'course-corrected', saying that previous Budgets had also been inclusive.

'Sandwiched' middle class needs help too
By Tessa Wong, The Straits Times, 29 Feb 2012

WHILE taking care of the poor and less fortunate, the Government should also look out for the 'sandwiched' middle class, said several MPs.

Many in this group, they pointed out, miss out on the benefits given to lower-income workers and poorer Singaporeans, but face similar stresses from stagnant wages and rising costs of living.

'We cannot ignore that they too need options to enjoy a decent standard of living in Singapore,' noted Mr Zaqy Mohamad (Chua Chu Kang GRC).

Subsidies for housing, skills training, education and other living costs are generally tied to salary levels, so higher-educated, middle-income workers - including those in the group known as professionals, managers, executives and technicians - usually enjoy less of the benefits.

This, said Nominated MP Eugene Tan, has caused many in this group to experience 'middle- class anxiety'.

In the past decade, he noted, the Government focused on helping the poor as their jobs were outsourced. This year's Budget, too, seeks to provide a leg-up for those in the bottom 20th per cent.

'However, we should pay just as much attention to the threat to wages that the sandwiched middle-class Singaporean faces,' said Professor Tan. 'This group of workers still have their jobs but their wages are stagnant relative to the rising costs of living and tax burdens.'

Ms Jessica Tan (East Coast GRC) said such concerns were raised when she met Singaporeans at public dialogues. Some participants told the chairman of the government parliamentary committee for finance, trade and industry that the Budget was 'not as inclusive', although the Government is aiming to achieve this in its latest proposal.

The Budget, they said, did not address some segments, such as the middle class and singles, who needed help to cope with rising costs of living.

But Ms Tan acknowledged that the Budget did try to broaden the reach of some help schemes.

For example, Singaporeans living in lower-end private properties will be eligible for the GST Voucher Scheme, which gives payouts to the less well-off to help them offset the goods and services tax they pay on their bills. It covers a large proportion of those earning up to $24,000, older Singaporeans and HDB dwellers.

Tax rich more to fund social spending
By Janice Heng, The Straits Times, 29 Feb 2012

THE rich in Singapore were eyed by Ms Denise Phua (Moulmein-Kallang GRC) yesterday as a possible source of funds to pay for increased social spending.

Make them pay more income tax, she suggested, pointing out that the rate for top earners is 'way below' those in countries such as the Nordic nations, Australia, New Zealand, China and the United States.

It is 20 per cent for those making more than $320,000 a year in Singapore, while in the other countries, the rates range from 30 per cent to 50 per cent, she said.

Noting that Singapore reportedly has the highest proportion of millionaires in the world, she said: 'Perhaps those who are most blessed can be persuaded to bear more responsibility for the society in which they live.'

She urged the Government to consider getting the top earners, who have benefited from the country's solid infrastructure, growth policies and public goods, 'to bear some of the responsibility of funding the transfers to the poor and needy in society'.

Ms Phua, with Mr Zainudin Nordin (Bishan-Toa Payoh GRC), also urged the Government to relook its Budget allocation, in the face of social needs.

Mr Zainudin said Budget discussions should take 'the overall macro perspective of how we can improve the lives of Singaporeans'.

'For example, if buying one less jet fighter means we can help hundreds of poor families take the step out of the poverty trap, is it worth the sacrifice to our national defence?' he asked.

Similarly, building one fewer national park could help hundreds of poor students learn work-life skills, he added.

Ms Phua's focus on a possible review, however, is on one area: defence.

Defence usually receives the largest share of government spending, she noted. This year, it comes close to a quarter of the Budget.

While acknowledging that Singapore's security is crucial, she urged the Government to study the optimal resources to be expended on defence versus other social needs.

Such a study should consider the changing nature of warfare and balance it with the social needs of a maturing Singapore, she said.

Restructuring drives up SMEs' costs
Thousands of jobs may be lost if firms relocate or close down: Zaqy

By Aaron Low, The Straits Times, 29 Feb 2012

THE Government's push to restructure the economy is worrying some MPs, who yesterday warned that the pace of change is resulting in unsustainable cost increases for local firms.

And if these rapidly rising short-term costs are not kept in check, the economy could be hurt in the longer run, they said.

The Government has embarked on a major drive to raise productivity of the economy by between 2 per cent and 3 per cent a year for the next decade. At the same time, it is tightening its foreign worker policy by making it more expensive and more difficult to hire foreign manpower.

These policies are driving costs up and making firms, especially small and me-dium-sized enterprises (SMEs), less competitive, said MPs.

And should these SMEs - which account for more than half of the jobs in the economy - end up closing down or moving out, thousands of jobs could be lost, said Mr Zaqy Mohamad (Chua Chu Kang GRC).

'It is quite another thing to count the thousands of Singaporean jobs likely to be lost should these SMEs fail or move overseas to operate their businesses because they cannot be competitive here due to high costs,' he said.

MPs said the drive for productivity is a good long-term strategy, but they wanted the Government to help firms adapt to the changes in the short term.

Mr Inderjit Singh (Ang Mo Kio GRC) said: 'Just like the vulnerable in society who need help, similarly our SMEs are badly affected by the double whammy of the rapid costs increases and a tight labour market due to the Government's restructuring efforts.'

MPs also urged that more attention be paid to rising non-wage costs, such as industrial rents. Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Mr Gan Thiam Poh (Pasir Ris-Punggol GRC) called for JTC to return to its original role of being an industrial landlord.

JTC has been slowly divesting of its industrial land to private-sector landlords, including real estate investment trusts, which are profit-driven, said Nominated MP Teo Siong Seng.

Noting that firms are complaining of rents jacked up by as much as 40 per cent by such landlords, Mr Singh said: 'This is clearly an industrial policy gone wrong. We should never allow industrial land to be used for investors.'

Mr Liang and Mr Gan both wanted JTC to control industrial rent hikes while Mr Teo wanted it to provide industrial land directly to SMEs.

At the same time, firms were grappling with other non-wage costs such as higher transport costs and rising government fees and charges, said MPs.

Said Mr Liang: 'We have to be mindful during this adjustment phase not to allow non-wage operating costs to rise beyond control as costs are always more sticky on the downside.'

He also flagged inflationary risks from a potential oil-supply shock from political troubles in the Middle East.

And while the strong Singdollar helps to buffer some of these inflationary effects, it is also affecting exporters' competitiveness, he noted.

The Government needs to tackle these issues urgently, said Mr Singh, who asked for a 'thorough cost reduction review exercise'.

And if nothing is done to check these escalating costs, Mr Zaqy and Mr Liang warned of Singapore losing its competitiveness, leading to a hollowing out of the economy in the long term.

Said Mr Liang: 'If the cost pressures and tight labour supply hit every aspect of the economy with no corresponding improvements in productivity or local labour participation, we could see a major exodus of companies.'

Latest foreign worker policies may be too harsh
By Yasmine Yahya, The Straits Times, 29 Feb 2012

THE Government's recent moves to tighten its foreign worker policies will create undue stress on small and medium-sized enterprises (SMEs), said MPs yesterday.

While they agreed that companies here must reduce their reliance on foreign workers and improve productivity, some feared that the latest policies may be too harsh and broad and are being implemented too quickly.

Mr Chen Show Mao (Aljunied GRC) suggested refining the Manpower Ministry's segmentation of sectors for foreign worker quotas for a more targeted approach.

Currently, three broad sectors - construction, services and manufacturing - have to adhere to their own quotas.

Mr Chen said this framework is a blunt tool, and suggested dividing firms into different industry clusters instead, depending on their productivity levels.

Hence, for example, industries with high productivity and which generate good jobs for Singaporeans such as finance, aerospace, biomedical and professional services could be grouped together and attract a more stringent quota.

Less stringent quotas could apply to those sectors which are essential to Singapore's social needs, such as social services and public health care, he said.

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.

Mr Zaqy Mohamad (Chua Chu Kang GRC) raised the concern that there are different standards being applied to big and small firms. He gave the example of SMRT, which was recently found to be hiring bus drivers from China.

'This raised a perception of double standards that the productivity drive imposed on SMEs and businesses was not applied as stringently across the board.'

Public companies such as SMRT and SBS Transit should be the ones setting the standards, he said. 'The focus should be on giving local recruitment first priority and to put forth an attractive wage structure and job condition.'

Govt should relook 'instant tree' mentality
Mr Inderjit Singh, an MP for Ang Mo Kio GRC, spoke on the need to improve Singaporeans' wages and the challenges that small and medium-sized enterprises (SMEs) face. Here is an edited excerpt:

THIS year's Budget has managed to address the needs of Singaporeans most affected by the Government's past economic growth strategies - especially the older-age workers and the lower and middle-income groups. They are now assured of some form of a safety net.

However, we should also not adopt the Western-style welfare system for obvious reasons. Therefore, we must have a more permanent way of improving the wages of Singaporeans so that they can still be better off despite high costs.

We may have to move to a government-supported minimum wage system for the initial years. This will give employers time to restructure in the long term. This higher salary will also help employers manage a tightened labour market as it will help attract those Singaporeans not working due to low salaries.

We should no longer accept low wages for our workers, like the $600 our Singaporean cleaners earn, it's just not fair.

Similarly our SMEs are badly affected by the double whammy of the rapid cost increases and a tight labour market.

Today the strategy to create a productivity-led growth is not wrong but once again the Government is adopting an 'instant tree' mentality of expecting everyone to make progress overnight.

The Government should be more realistic at the pace of restructuring as in the short and medium term, we are penalising our SMEs with higher labour costs.

In the past, the Government was too liberal in our foreign worker policy and opened the gates to many to come in and now when we realise the economic and social problems that have been created, we are taking the other extreme and completely turning off the tap. This is not the right thing to do as companies take time to adjust to such changes in the labour market.

One huge concern for companies is the cost of renting or owning industrial or commercial space. In recent times, JTC has offered its industrial land to reits (real estate investment trusts) and other private developers, and these are now being rented to non-industrial tenants for higher yields including childcare centres, and even religious organisations.

This is clearly an industrial policy gone wrong. We should never allow industrial land to be used for investors. Now what has happened is that the genuine companies which need industrial land have to pay way beyond what it should be and therefore they cannot survive as they also cannot compete with similar economies such as Taiwan, Korea or Malaysia.

In theory, the measures implemented in the Budget to boost productivity may be sufficient, but in reality, many smaller companies may have trouble implementing them. They may not have the resources to focus much on productivity for now as they are fire-fighting with high costs.

The question we must ask is, why did costs in Singapore rise so rapidly, beyond the rate of growth of incomes and beyond the rate of growth of company profits?

This can be attributed to the market- driven pricing approach taken by the Government, quick to increase its various charges immediately upon a recovery from a recession. The 2008 recession, for example, was the worst for the property market where real estate prices rose because of our liberal policies on capital inflows.

The Government could have done a lot for the HDB market had it not pursued market-driven pricing. There are many hidden taxes too - GST (goods and services tax), high levies for foreign workers, COE (certificate of entitlement) and ERP (Electronic Road Pricing) charges, that add to escalating business costs.

What I am suggesting is that the Government do a thorough cost reduction review exercise. Done correctly, the Government may offset lower revenues by spending less on special transfer for the social safety nets. We do more at the beginning and not at the end of the process.

The strategy to restructure is not a bad one and it is one that would benefit Singapore and Singaporeans in the long run. However, the time horizon for this to occur needs to be reviewed.

When we talk about restructuring the economy, we will also have to restructure the way the Government contributes to cost. My fear is that the Government may be inducing a significant squeeze out of SMEs - the biggest employers in Singapore, and if we are not careful, the day MNCs move out in large numbers, we will see a vacuum and a hollowing of our economy without a strong base of home-grown companies.

Cross-party chorus to Tharman's Budget songsheet
By Chua Lee Hoong, The Straits Times, 29 Feb 2012

UNITY in diversity seemed to be the order of the day as the Budget debate kicked off yesterday. Whether Workers' Party (WP), Singapore People's Party, Nominated MPs or People's Action Party (PAP) MPs, it was hard to distinguish party lines among the 25 MPs who spoke.

The need to ensure inclusive growth and social mobility; local businesses struggling to cope with rising costs; the dangers of over-relying on foreign workers - these themes resounded in one speech after another, harmonious strains in a symphony with no conductor and no score.

Or perhaps there was a score - the Budget statement presented by Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam on Feb 17, entitled An Inclusive Society, A Stronger Singapore.

Unless you are a ruthlessly selfish cad bent on having taxpayer dollars in your own pocket, this year's Budget leaves little to quibble with in a big way. Its focus on the poor, the elderly and the disabled is everything that anyone with a social conscience could want, and MPs showed yesterday that they did not lack such a conscience.

Indeed, in proof that if you give an inch, some want a mile, one PAP MP - Ms Denise Phua (Moulmein-Kallang GRC) - promptly pressed for more. She wanted the Special Employment Credit - the 8 per cent wage subsidy - for the elderly and the disabled to be made permanent, and for the scheme to be extended to more persons with disabilities and not just those from special education schools.

She might well have agreed with WP MP Chen Show Mao (Aljunied GRC), who said: 'We should not see social outlays only as spendings to be minimised over the short term, but also as investments to be optimised for our long-term benefit.'

Mr Chen made an interesting point about what he called 'unlocking social value' when he said: 'We should seek out such investment opportunities to realise social returns in different areas of social policy, not just social security, but also public housing, health care, education, and infrastructure and the environment.'

The concept of unlocking social value is not original, but under-emphasised in Singapore and worth greater attention in public policy.

Thus, I felt that when Mr Vikram Nair (Sembawang GRC) rose to challenge Mr Chen on what the WP proposed to 'do on the revenue side' to pay for its social outlays, he caused an unnecessary detour in the debate. For the record,

Mr Chen's reply was that the WP was not proposing a deficit but would look at the numbers closely.

Interestingly, Ms Phua offered a suggestion that put her squarely out of the PAP box and which would have been shot down robustly had it come from the WP. Singapore is reported to have the highest proportion of millionaires in the world, she said, so perhaps the Government should consider increasing its taxes on these top income earners? I can guess what Mr Tharman will say when he replies tomorrow.

On the issue of business costs, Mr Inderjit Singh (PAP, Ang Mo Kio GRC) and Mr Yee Jenn Jong (WP, Non-Constituency MP) performed the duet calling for a rethink of policy on real estate investment trusts, arguing that their proliferation had led to higher rentals for small and medium-sized enterprises (SMEs).

Mr Singh went a step further, calling for a thorough review across government agencies to see how costs - fees, taxes, levies, charges - can be reduced for SMEs.

'We must recalibrate our policies to minimise upfront costs for companies and Singaporeans and let them earn better incomes. If done correctly, the Government may offset lower revenues by spending less on special transfers for the social safety nets,' he said.

While he did not put it this way, implied in Mr Singh's point is the argument that government agencies which unlock economic value for themselves unremittingly may leave in their wake unintended social consequences, which some other arm of the Government then has to step in to deal with.

However, while these are all valid points, the debate could have benefited from more precise data. The arguments themselves are hardly new; what is needed is information that can move the Government and policymakers to embark on change.

Likewise on the issue of Singapore's reliance on foreign workers.

WP MP Sylvia Lim (Aljunied GRC) and PAP MPs Heng Chee How (Whampoa) and Ang Hin Kee (Ang Mo Kio GRC) all highlighted the need to build 'a Singaporean core' at the heart of Singapore's workforce so as to ensure that economic growth is sustainable.

Mr Heng spelt out the argument most compellingly, declaring that Singapore 'must not spin our wheels and live in the past', but must change its methods and 'climb the productivity and innovation ladder' when time still permits.

'We should put away the wishful thinking and hunker down to searching for new and smarter ways to use our manpower... and build our Singaporean Core before it is too late,' he said.

He cited a visit to Chongqing, with a population of 32 million, in inland China.

Even there, officials acknowledged to him that cheap-sourcing - getting workers from the cheapest source - is not sustainable. 'If Chongqing can take jobs from Shanghai, soon another city can take them from Chongqing,' they told him. 'The cheap-sourcing strategy is just to buy time.'

In Singapore's case, how much time is there left, before the social costs outweigh the economic gains?

In this respect, it is worth pondering a question posed by Mr Seah Kian Peng (Marine Parade GRC) in a thoughtful speech at the end of yesterday's sitting: 'Are we reaching the biophysical limits of growth and do we want to stop at a certain point?

'This is an important question because at the end of it all, we come back to the most important question - what kind of Singapore do we want?'

No comments:

Post a Comment