Budget 2012 debate: Day 2

Restructuring painful but critical, says Swee Say

Putting off change will lead to job losses, lower wages

By Aaron Low, The Straits Times, 1 Mar 2012

THERE is no avoiding the pain of economic change, and trying to put it off would lead to bigger problems down the road for companies and workers, said labour chief Lim Swee Say yesterday.

If Singapore did not push ahead with efforts to raise productivity, the country would lose its competitiveness, leading to lower wages and a loss of jobs.

'In this world, if we don't change, we will die,' said Mr Lim in an unscheduled speech on Day 2 of the Budget debate.

'If we don't have the means to transform the economy and lose our competitiveness, then we cannot keep our current investments.

'At the same time, we cannot attract more and better investment projects. Then, Singapore's economy will go into a downturn.'

Mr Lim, who is also a Cabinet minister, accepted that low-wage workers need the most help with the transition.

But he dismissed suggestions that the Government and unions had not done enough for them, reeling off a slew of programmes from special housing grants to the financial aid scheme ComCare.

'In 2010, we introduced the Inclusive Growth Programme,' he added. 'Today, more than 20,000 to 30,000 low-wage workers are under this programme, where they are going through job redesign and skills redevelopment.'

He also singled out small and medium-sized enterprises as needing special attention during the difficult transition. 'I think it's important for the tripartite partners to assure them that we will not neglect them,' he said.

'Their interest is also the interest of the labour movement, because they're the largest employers in Singapore as a group.'

But he also pointed out that as the economy's strength did not lie in one area or type of firm, the push for productivity must be for all sectors and firms of all sizes.

He also rebutted suggestions by some MPs that the Government has drastically tightened the flow of foreign workers, noting it is merely managing it to cap the flow at a third of the workforce.

'For the labour movement, 'Singaporeans first' does not equal 'Singaporeans only'.'

But with less manpower to go around, he urged bosses to train all workers - whether local or foreign - to make best use of them.

Said Mr Lim: 'For the foreign workers, please don't use them just because they're cheap, use them for their strengths.'

He called on firms and workers to bear with the inevitable discomfort of restructuring. 'As we go through this process, let us not try to hope for a painless process. It won't happen.'

Other MPs, such as Mr Patrick Tay (Nee Soon GRC), also urged the Government to keep at capping the flow of foreign workers, as it will make firms fitter and stronger in the long run.

Ms Indranee Rajah (Tanjong Pagar GRC) said she found it odd that people were now calling for an easing of the restrictions on foreign workers after complaining about them just last year.

She noted that the Workers' Party, which had made the inflow of foreigners an election issue, now seemed to be suggesting that curbs could be eased.

'Has anybody recalled the cry at the last general election where people said we have too many foreigners in Singapore, that our transport system and hawker centres are overcrowded?' she said.

The Government, she said, had heard the people, and responded.





S'pore not inclusive enough, say MPs

They welcome social aid but want more done to alter mindsets

By Janice Heng, The Straits Times, 1 Mar 2012

SINGAPORE aspires to be a fair and inclusive society, but the reality is still some way off, MPs said yesterday.

Many of the 31 MPs who spoke on day two of the Budget debate applauded this year's generous help for vulnerable groups but some made clear these are but first steps.

To fully realise the vision of an inclusive society, more needs to be done to change social structures and people's mindsets, they said.

Nominated MP Laurence Lien faulted Budget 2012 for failing to deal with those aspects of social change.

He was 'underwhelmed' by it as inclusiveness cannot be achieved through social policies alone, but is 'fundamentally about how our people treat one another'.

'You can give the Special Employment Credit (SEC), but employers may still refuse to hire and fit jobs to suit the disabled and senior workers,' he added in his first speech in Parliament.

The SEC is a wage subsidy for those who hire older workers and people with disabilities.

Mr Lien, chief executive of the National Volunteer and Philanthropy Centre, said he believed Singapore is 'in a social recession' - individuals are less resilient, family ties have loosened and the community is less cohesive.

He called on the Government to convene a Social Review Committee, as it would in the face of an economic recession. This committee should be co-led by the Government and civil society and be a permanent platform to forge consensus on a new social compact.

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.

Ms Ng said it was 'as if the poor and elderly are a blight on their landscape'.

Ms Tin Pei Ling (Marine Parade GRC) said such attitudes dent social resilience, which 'comes from Singaporeans having a sense of shared identity', not a society split between haves and have-nots.

Dr Lam and Ms Ng also observed that a new social compact could not be forged without consensus on issues such as the need to care for the elderly.

Senior Parliamentary Secretary (Foreign Affairs, Community Development, Youth and Sports) Sam Tan warned that decades of affluence may have spawned an epidemic of narcissism and a sense of entitlement.

He was also concerned about how to keep politics a 'civil, informed and fair' way to make decisions.

He backed calls for a youth Parliament to expose young people to the policy process. Helping younger Singaporeans to understand what made the country tick was not something that should be left to chance, he said.

The worry for Minister of State for Health Amy Khor is that, despite large increases in government social spending in recent years, Singapore's income gap remains among the highest in the world.

That points to 'deepening and chronic income divisions that need urgent attention', she said.

But in assessing the Budget and the state of Singapore society, MPs also saw reasons for cheer.

Minister of State for Community Development, Youth and Sports Halimah Yacob said the approach of forging inclusiveness through employment is the right one.

She praised measures such as the SEC and higher Central Provident Fund contributions for older workers.

'The Budget aims at boosting employment, and therefore, help our elderly and disabled achieve independence and a greater sense of self worth, which no amount of social assistance can provide,' she told the House.

Dr Khor related how a constituent's tip-off to grassroots volunteers ensured government help reached a family of four blind siblings.

In summing up the social accounts for Budget 2012, Dr Khor said the bottom line is that all must play their part to help realise its goal of a fair and inclusive Singapore.

'While the Government has done more, and no doubt, will continue to do so in the years ahead, the problems have to be collectively owned and comprehensively tackled. They will require a total response from everyone,' she said.

Growing income gap an urgent concern
By Rachel Chang, The Straits Times, 1 Mar 2012

AN INCOME gap that shows no sign of narrowing - and is instead widening - was an urgent source of concern for Ms Irene Ng (Tampines GRC) and Dr Amy Khor (Hong Kah North) yesterday in Parliament.

Both pointed to the fact that Singapore's Gini coefficient, a measure of income inequality, is one of the highest in the world. Last year, it stood at 0.473 - up slightly from 0.472 the previous year, though it declines to 0.45 after accounting for transfers and taxes.

The country's overall wealth - and its many millionaires - is a far cry from what those at the bottom face in their struggle to make ends meet, they said.

'If we continue in this trajectory, we will be an increasingly rich and unequal society with an upper class of the super-rich, and an underclass,' said Ms Ng. 'An underclass of Singaporeans stuck in low-paying jobs can only lead to more social tensions.'

Dr Khor noted that the rise in social spending from $13 billion in 2006 to $21.5 billion last year has had little effect on the income gap, nor succeeded in reversing its upward trajectory.

Ms Ng noted that Luxembourg, the European country that is the second- richest in the world, has a similarly high Gini coefficient.

But after redistribution efforts, it falls to 0.26. That is, government transfers and taxes reduce it by 0.19 points; in Singapore, the reduction is 0.02.

She noted that Luxembourg is a more 'self-reliant' society, where quality plumbers, builders and service staff are respected and highly paid.

There is a need for consensus among all Singaporeans regarding how much inequality they will stand, and what inclusiveness really means. But this has not been reached, she said.

The angry reaction of some to housing the lower-income earners in rental blocks in their estates, or locating an eldercare centre at their void decks, sends the message that 'the poor and the elderly are a blight on the landscape'.

'We need to create a social ethos where we behave as citizens committed to building a society we can be proud of, and less as consumers out to squeeze the most out of every deal for oneself,' urged Ms Ng.

The income gap problem cannot be solved by the Government alone, concurred Dr Khor.

'While it has done more, and will continue to do so in the years ahead, the problems have to be collectively owned and comprehensively tackled,' she said. 'They will require a total response from everyone.'

She added: '(Members of) the community must look out for one another, and the able must stoop to help the less able.'

This year's Budget is special, says WP's Low
Major shift from focus on economy to the people, Workers' Party chief notes
By Andrea Ong, The Straits Times, 1 Mar 2012

WORKERS' Party (WP) chief Low Thia Khiang yesterday described this year's Budget as 'special', saying that the Government had taken a big step towards a 'First World social safety net'.

Playing on the WP's election slogan, 'Towards a First World Parliament', he also made the observation that the Bud-get marked the first major shift in the Government's mindset that he had seen in his 21 years as an MP.

'In my memory, the focus of every previous Budget was on the economy,' he said in Mandarin.

But in this first Budget after last May's watershed general election, he noted the greater focus on helping the less well-off, such as low-wage workers and the elderly, even if it meant slower growth.

'The Government is therefore making a formal statement after much reflection after the 2011 elections,' said Mr Low. 'I think this is a pro-people Budget.'

But even as he lauded the change he saw, Mr Low singled out Singaporean workers as a group that could do with more help.

He feared that many local small and medium-sized enterprises (SMEs) would not survive the Government's push to restructure the economy and improve productivity.

The government strategy to raise productivity is to control the foreign worker supply and offer aid to coax SMEs to change the way they run their businesses.

Mr Low, however, wondered if vulnerable SMEs could truly benefit from the help schemes.

He noted that some SMEs only made enough profits to cover their living expenses. He feared many small businessmen would end up unemployed.

'I'm worried that restructuring will become a process of the big fish eating the small fish, with the Government becoming an accomplice of this big eating the small process.'

Urging caution, he reiterated a point made by his fellow WP MP Chen Show Mao the day before, calling for targeted measures to manage the foreigners. The foreign worker quotas and levies, he said, are 'blunt policy tools' that do not differentiate the needs of various industries.

Mr Low also suggested fine-tuning the inflow of foreign workers to wean companies off this dependency.

Cap the number of permanent residency applications at 30,000 a year, and control the pool of Employment Pass holders, he said.

The Budget measures he liked include the doubling of the health-care budget over the next five years to $8 billion and extending of subsidies to the lower middle-income group.

While more could be done for the elderly, said Mr Low, 'at least in basic social welfare and medical care, the Government has seen the problem and has made a big step forward, a step closer to a First World social safety net'.

People's Action Party MP Low Yen Ling (Chua Chu Kang GRC), however, refuted his claim of a shift away from the economy, saying it was 'too radical'.

Citing her days at the Economic Development Board, she said Singapore, as a small nation, still had to focus on the economy to improve people's lives.

The plight of SMEs was also raised by Non-Constituency MP Gerald Giam. He proposed an SME scholarship programme, with costs shared by the Government and business groups, to help address SMEs' manpower shortage.

Mr Giam also wants the Government to watch the growing income gap.

Tears welled up in his eyes, he said, when Deputy Prime Minister Tharman Shanmugaratnam screened a video while delivering the Budget Statement two weeks ago. In the video, 11-year-old Tan Ai Li, from a low-income family, spoke about her dream of buying a house for her parents when she grows up.

'It pains me to think that given our widening income gap, increasing inflation and slowing social mobility, many little children like her will find it hard to afford an HDB flat of their own, much less a house for their parents,' he said.

His speech drew rebuttals from at least four PAP MPs, including labour chief Lim Swee Say, who pointed to existing schemes to help SMEs attract talent.

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.

Mr Giam replied that it was 'self-evident'. When Dr Janil pressed for further evidence, he then cited a 'body of research' on slowing social mobility in Singapore. He alluded to a Finance Ministry study saying that mobility was high for Singaporeans born in the 1970s, but not necessarily for later generations.

Vikram Nair: Show me the money, Chen Show Mao

By Rachel Chang, The Straits Times, 1 Mar 2012

PAP MP Vikram Nair (Sembawang GRC) was almost unrelenting yesterday in his attack of Workers' Party MP Chen Show Mao (Aljunied GRC).

He accused Mr Chen - as well as other WP MPs - of scoring political points by repeatedly asking the Government to do more for vulnerable groups without acknowledging what had already been done.

Mr Chen also did not have a plan on how to pay for the extra spending he desired, Mr Nair said.

''Let's do more, let's spend more,' (they say), and, of course, they never talk of where this money is going to come from,' he added.

Pointing out that spending must be funded either through a budget deficit or by raising taxes, he said 'the people have to pay the price at some point'.

The previous day, Mr Chen had urged the Government not to look at social spending as a one-way outflow of resources, but an investment in human capital which will yield returns in 'unlocking' economic, social and cultural value among Singaporeans.

Yesterday, Mr Nair said Mr Chen implied that the PAP Government had not done enough for vulnerable groups, or that it cared less about them. He found this 'hurtful'.

'I think many of us here have been working year in, year out, helping the vulnerable groups, and it is pretty hurtful coming from Mr Chen because he might have held this belief for a long time, but he came back only quite recently to help in this,' he said.

He decried the vagueness in Mr Chen's assertion that investing in human capital would yield returns, adding that he is 'not as smart as Mr Chen, so I must press him for a few more details to understand how this self-funding investment works'.

Likening it to a Nigerian scam e-mail where recipients are urged to transfer funds in return for a pay-off later, he said Mr Chen had promised something 'even better, because you don't have to put in any money at all, and you get more than money in return'.

Mr Nair also took aim at Mr Chen's suggestion for a refinement of the quotas on foreign workers. He retorted that it was ironic for 'a man who spent more than half his life abroad and came back to Singapore shortly before the elections' to say there are too many foreign workers here.

Currently, quotas are differentiated broadly by industries. Mr Chen suggested tighter quotas for high-end sectors such as finance and aerospace, where Singaporeans desire jobs, while clusters like public health care, where foreign manpower is urgently needed, be treated more liberally.

The idea was also criticised by PAP MP Indranee Rajah (Tanjong Pagar GRC), who said that this was contrary to the WP's assertion during last May's General Election that there are too many foreign workers.

'It also runs counter to what we are trying to achieve for low-income workers,' she said. 'We want them to be fully employed. If you have less stringent manpower policies for those sectors, then what happens to Singaporeans there?'

After Mr Nair's speech, Mr Chen rose to thank him 'for such a close reading of my speech'.

He pointed out that Government revenue is not earmarked for specific programmes or areas of spending. So, any discussion of how the WP's suggestions should be funded 'would of necessity entail a discussion of total Government revenue and spending'.

When discussing such spending, the possible benefits - not just economic, but social and cultural too - should be taken into account, he added.

Separately, Minister of State Amy Khor (Hong Kah North) refuted the assertion WP chairman Sylvia Lim (Aljunied GRC) made the day before that the Government is 'course-correcting' in this Budget.

Ms Lim said the PAP Government had, for a long time, drove growth without paying enough attention to the effects of increasing income inequality.

Ms Khor denied that was the case, arguing that social spending had always been emphasised: 'This is not a course correction. It is the reinforcement of an existing policy.'

What happens to low-income Singaporean workers?
The Straits Times, 1 Mar 2012

'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?

Bolder steps needed to boost low-wage workers' pay

Award contracts based on good practices, not lowest prices, say MPs

By Leonard Lim, The Straits Times, 1 Mar 2012

THE Government should take bolder steps in boosting the pay of low-wage workers - by leading by example, said MPs yesterday.

Three MPs urged the Government to lead the charge in best sourcing - awarding contracts to firms with good employment practices rather than the lowest prices - and thus ensure cleaners, security guards and other low-wage workers are paid fairly.

'Bolder' steps rather than the moral suasion and social transfers of the past were required, said Mr Zainal Sapari (Pasir Ris-Punggol GRC).

Take for instance the salaries of school cleaners - which have stagnated at $700 for many years, said labour MP Yeo Guat Kwang.

'This is not fair to the workers. Public agencies should walk the talk and take the lead,' said Mr Yeo (Ang Mo Kio GRC).

The point was also taken up by Mr Ang Wei Neng (Jurong GRC), when he spoke about doing more to coax Singaporeans to take up low-paying service jobs previously filled by foreigners.

'The government agencies, as the largest consumer of services, could take the lead to pay the increased costs for outsourced services such as cleaning, security and construction, provided that the increases are due to the higher cost of paying Singaporean workers,' he said.

Mr Zainal noted that the Government has pledged to take the lead in practising best sourcing in the civil service, but he added: 'I would like to call for the Government to do more to ensure best sourcing will gain traction in the private sector as well.'

The practice of cheap sourcing encourages service providers to push down their prices so that they can put up low bids that will win the tender, he said.

This keeps workers' wages low, he added, calling it a 'gross injustice' and 'slavery of the poor' that must stop.

'Without many of us realising it, we are underpaying for the cost of many essential services such as cleaning, security and transport, and have caused the salaries earned by these workers to remain low,' he said.

He cited the example of a typical local town council cleaner, who earns $1,000 monthly for working eight hours daily. He must usually clean one HDB block in two hours, which translates to about $10 to clean a block in two hours.

When Mr Zainal asked his residents how much they expected to be paid for such work, they quoted him rates of between $50 and $300.

'I am not calling for them to be paid this amount, but let us pay them according to the job worth which has been partly depressed by the cheaper foreign labour,' he said, peppering his speech with sayings by Confucius and Mahatma Gandhi on poverty.

Labour chief and Minister in the Prime Minister's Office Lim Swee Say weighed in on the debate as well, but pointed out that it is not just the Government who can help the low-income group.

He said: 'Talk is not good enough; we need action. And action doesn't have to come from the minister, the ministry, the MP and so on.

'I believe that everyone of us in our daily life, if we pay enough attention to them, I think every one of us can do our part to help them.'

Non-working mothers 'valuable resource'
By Daryl Chin, The Straits Times, 1 Mar 2012

A SINGLE mother, who has to stay in to take care of her child and frail parents, runs a catering business from home to support the family.

When the authorities catch wind of her activities - illegal because a licence is required, her sole source of income is lost.

At the Budget debate yesterday, Madam Halimah Yacob (Jurong GRC) called for a relaxing of the rules, describing non-working mothers as a 'valuable resource'.

Madam Halimah said she had encountered such cases recently, while attending a dialogue attended by more than 300 women.

Many of these women were from low-income families, and had set up home-based catering services as they could not afford the time away from home, nor the cost of running commercial cooking facilities. They had recently received warning letters.

Under the law, no one is allowed to sell food to the public without a licence, and those who apply need to keep to stringent requirements such as having a minimum kitchen size and a good ventilation system.

Madam Halimah said many of the women understood this, and were willing to take measures to absorb grease and cooking fumes within their homes.'The spirit of this Budget is to build an inclusive society and a stronger Singapore. It is in this context that we should view the appeal from our needy women to allow them to operate home-based kitchens.'

More options for women to work from home, as well as better flexibility in work hours, were also key points made by Dr Fatimah Lateef (Marine Parade GRC).

Women hold only 8 per cent of all the boardroom positions in listed companies here, she said. This was because women are typically the ones making career adjustments when family responsibilities like taking care of children and parents present themselves.

She urged the Government to think of more ways of attracting them back into the workforce, saying: 'They can be the answer to our challenge.'

SPEECH OF THE DAY

Best or worst of both worlds?

Dr Janil Puthucheary, an MP for Pasir Ris-Punggol GRC, spoke about combining socialist and capitalist approaches in policymaking. He focused in particular on public transport. Here is an edited excerpt:

THERE has been a lot of thought and discussion about whether this Budget represents a fundamental shift in the philosophy and ideology of the Government. The question as to whether this signifies a 'shift to the left' has been brought up.

Our Government has generally considered itself as taking a centrist approach, reaching out to all citizens, but the external perception of both the party and the majority of our society has been that we are moderately conservative and pragmatic.

People assume we swing to the right because of our macro-economic policies. However, in truth, we have adopted a mixed stance depending on the needs of our nation. There are many examples where our social policies have been developed from leftist ideas that were appropriate for our society, especially in helping the most vulnerable.

One of the new policies that demonstrates a shift to the left is the announcement that the Government will be spending $1.1 billion on buses.

The overall approach of our public transport system has been to incentivise private companies to make a profit within a tightly regulated market. As private entities, should it not be the responsibility of the companies to manage their operating and manpower costs?

Why is there a need for the Government to fund publicly listed companies like SMRT and SBS Transit which, at the end of the day, are accountable to their shareholders? Can the public be assured that the funds will go to benefit the citizens and not the shareholders?

How far will we go in providing government support to transport operators? If the taxi industry suffers, will the Government provide funding for it as well? What will happen in the future as our MRT network expands in rail length as well as cross-connectivity?

If the increased competition from the MRT, combined with further manpower shortages, worsens the situation of the bus companies five or 10 years from now, will the Government 'bail out' the public transport operators?

Is this just the start of a creeping nationalisation? If so, why not nationalise properly and reap the full benefits instead of suffering the worst of both worlds?

Some of the factors in support of the nationalisation of public transport are that it can potentially bring about lower fares and better performance in terms of availability. Factors that argue against it include a greater inefficiency, a dependant mindset amongst transport operators, and that it is very, very expensive both in the first instance and in terms of ongoing expenditure.

However, if we consider this to be a public good, might we not accept some degree of inefficiency as a fair price to pay for the continued provision of an essential service? If there is always going to be a bus service available for the citizens, sometimes, a particular bus will operate at sub-optimal efficiency.

If nationalisation is too expensive and too inefficient, then why not privatise properly?

Both SMRT and SBS Transit have posted operating losses, mostly due to increase in staff and fuel costs. If they were both truly private entities, they would be able to respond based on market demand.

If a service was under-subscribed or unprofitable, they can cease to offer it, thus releasing resources and assets for use where they are needed.

So while our public transport operators are private entities, they operate under significant constraints and burdens that reduce their flexibility and their ability to optimise operations in response to market forces.

We are neither properly privatised nor adequately nationalised. In the past, this hybridised model has been held up as an exemplar of what was possible with good governance. It may represent the best of both worlds, but has recently been interpreted as the worst of both models. Can the House and the public be assured that this hybridisation continues to be the best way forward for Singapore?

Despite my comments and criticisms, I remain a fan of our public transport system. Our system does its job and does it well. It's safe, clean and reliable.

Nevertheless, we have to consider deeply where we want to go from here. What is the impact of the decision to invest $1.1 billion in the bus companies? Is it a significant shift and does it reflect the start of a fundamental change?