Budget 2013 Debate: Day 1

MPs zoom in on Wage Credit Scheme
By Aaron Low, The Straits Times, 6 Mar 2013

THE centrepiece of the Government's three-year help package for companies came under close scrutiny yesterday, as Parliament began the first day of the annual Budget debate.

Several MPs welcomed it but just as many asked if the new $3.6 billion scheme was too generous by subsidising companies.

Under the Wage Credit Scheme, the Government co-funds 40 per cent of wage increases for Singaporean workers earning up to $4,000 in gross monthly wages for the next three years.

Minister of State for Health and Manpower Amy Khor and Ms Foo Mee Har (West Coast GRC) noted that the scheme will help companies with business costs, which will be helpful for firms as they face rising wage costs in a tight labour market.

But Mr Zainal Sapari (Pasir Ris-Punggol GRC) questioned if the scheme will be used by "companies to increase their profit bottom lines by using it to subsidise their usual wage increases".

Others such as Nominated MP Laurence Lien and Non-Constituency MP Gerald Giam argued there was no direct link between the Wage Credit Scheme and raising productivity, which has been lagging for years.

"The deadweight loss of this expensive exercise is enormous, unless the main objective all along is to find some innovative way to give monies back to companies," said Mr Lien.

But most of the 27 MPs who spoke yesterday welcomed the Budget delivered by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Monday last week.

Any criticism was mild, with the opposition Workers' Party MPs praising some aspects of it, but indicating some new schemes could have gone further. Party chairman Sylvia Lim (Aljunied GRC), for example, called for more progressive taxes beyond what was announced. She wants the introduction of a 25 per cent tax rate for those earning over $1 million a year.

Other MPs also raised concerns about giving more help to the low-wage workers and the elderly but noted the Budget was both progressive and targeted at the same time. They also offered suggestions on how to further improve the new schemes.

Dr Janil Puthucheary (Pasir Ris-Punggol GRC) suggested making public transport free for off-peak travel to help ease congestion on trains and buses.

NMP R. Dhinakaran asked for a more calibrated approach to reducing dependency ratios for foreign workers, noting that the retail sector is being hit hard.

Dr Khor agreed there are risks with restructuring but reminded that the move is crucial if Singapore is to make the leap to the new economy. "The steps we are taking, of moving the entire economy up the productivity ladder away from over-reliance on foreign workers, can be risky but are imperative."

The debate continues today.

Wage Credit Scheme hailed as innovative
But some query if productivity will improve and worry about wage war
By Goh Chin Lian, The Straits Times, 6 Mar 2013

AS THE new Wage Credit Scheme pays for only part of a Singaporean worker's pay rise, Minister of State Amy Khor is confident it will spur productivity.

"The fundamental premise of productivity improvements and gains sharing is not compromised as the employer still has to bear the remaining 60 per cent," said Dr Khor, whose portfolio includes Health and Manpower.

The scheme should be seen in tandem with the tightening of foreign worker intake and enhanced incentives to nudge companies to raise productivity, she added.

Her remarks came after Nominated MP Laurence Lien and Non-Constituency MP Gerald

Giam expressed doubts about the scheme's ability to boost productivity.

Mr Lien argued that as the pay rises are not tied to productivity growth, they would end up as an expensive exercise in subsidising companies.

The $3.6 billion scheme is the centrepiece of a $5.9 billion programme to spur businesses to upgrade, create better jobs and raise wages, while using fewer foreign workers.

About a dozen MPs spoke on this new government aid, which will subsidise 40 per cent of the pay rise of Singaporean workers earning up to $4,000. The subsidy is for three years.

Nearly every MP hailed it, saying it is generous and innovative, and will ensure Singaporean workers keep their jobs while giving companies time to restructure with less foreign manpower.

But they were also worried that the benefits may not flow to all workers and, particularly, small businesses. Some were anxious that the scheme may spark a wage war among employers, adding to inflationary pressures.

But Ms Jessica Tan (East Coast GRC), the first to speak in the debate, lauded it for raising wages without companies having to bear the full cost.

"Many have asked what happens after three years... (companies) must upgrade, otherwise with wage increases they will not be able to sustain the additional costs", said Ms Tan, who chairs the Government Parliamentary Committee for Finance and Trade and Industry.

Senior Minister of State Heng Chee How, who is NTUC deputy secretary-general, pledged that the labour movement will help companies transform themselves.

But Mr Giam was sceptical that the scheme can spur productivity changes, especially in small and medium-sized enterprises (SMEs).

He said it is skewed towards helping multinational corporations and government-linked companies that are profitable and already plan to raise wages, while companies facing a squeeze in profits are unlikely to raise wages even with the scheme.

Ms Foo Mee Har (West Coast GRC), on the other hand, feared it could delay the closure of uncompetitive companies with "an undeserved cost subsidy from the Government".

Labour MPs also sought assurances that low-wage workers will gain from the scheme and wage increases will not be one-off.

Mr Zainal Sapari (Pasir Ris-Punggol GRC) urged the Government to lead by example in giving higher performance bonus rates to low-wage workers in the civil service.

Nominated MP and unionist Mary Liew asked the Government to insist that wage increases be a combination of built-in and variable increases.

The prospect of wage inflation was raised by Ms Foo and Nominated MP Ramasamy Dhinakaran.

They worried that the scheme may fuel a wage war among employers to attract new staff or retain old ones in a labour market hungry for workers.

Agreeing, Ms Khor said the Government should still monitor the scheme's outcome and include business groups when reaching out to SMEs. To help SMEs with cash flow, she said the Government may consider giving wage credits to companies half-yearly instead of annually.

Good to tighten EP rules but don't overdo it: MPs
By Yasmine Yahya, The Straits Times, 6 Mar 2013

SEVERAL MPs approved of the Government's move to prioritise Singaporean professionals, but warned that Singapore must not go too far and hinder companies' ability to hire top-quality talent.

In his Budget speech last week, Finance Minister Tharman Shanmugaratnam said the Government will further tighten Employment Pass (EP) criteria and that the Ministry of Manpower (MOM) is looking to put in place a framework to ensure that firms give fair consideration to Singaporeans in their hiring practices.

Mr Desmond Lee (Jurong GRC) welcomed the move, saying during the Budget debate yesterday that there are plenty of high-quality Singapore graduates and diploma-holders to take up such jobs.

Mr Lim Biow Chuan (Mountbatten) suggested that firms wishing to employ foreigners on the EP or S Pass must first prove that they advertised but could not find a suitable Singaporean for the job.

Ms Foo Mee Har (West Coast GRC) agreed, adding that for industries where there are few qualified Singaporeans, MOM could consider making it obligatory for firms to invest in the training and development of Singaporeans to fill future openings.

Ms Jessica Tan (East Coast GRC) suggested that the Government could encourage companies to hire locals by giving them subsidies so that they can send the recruits for skills training.

"Economics will encourage employers to hire Singaporeans who are then more eligible, as they pick up requisite skills and be more effective in the various job opportunities available," she said.

But the MPs also noted that balance is key. Mr Patrick Tay (Nee Soon GRC) said implementing a quota for foreign professionals, managers and executives (PMEs) in certain industries could help.

"Framed too tight, companies will find the hiring process too onerous and cumbersome. On the other hand, if framed too loosely, concerns of local PMEs are not addressed and solved," he said.

"Hence... there is the need to also examine the merits of a quantitative approach such as imposing a dependency ratio ceiling on foreign PMEs."

Mr Lim also urged the Government to rethink the strict quotas on lower-skilled foreign workers, which he said are affecting many firms' chances of survival.

"Too tight a squeeze on the labour market may result in higher costs for everyone. It may also affect the financial viability of our SMEs and other small businesses," he said. "If we are able to strike the right balance, then more Singaporeans will be able to have suitable employment opportunities and less resentment towards the foreign workforce."

Low productivity 'will hurt wages'
No longer viable to rely on cheap foreign labour, says Heng Chee How
By Goh Chin Lian, The Straits Times, 6 Mar 2013

SINGAPORE needs to tackle its low productivity rate or risk it being a drag on the wages of Singaporeans, said Senior Minister of State in the Prime Minister's Office Heng Chee How.

Mr Heng, who is NTUC deputy secretary-general, warned that it was no longer viable for the economy to grow by doing more of the same - namely, relying on a free flow of cheap foreign labour.

"If we do that, the pay of our low-wage workers will never go up, and our middle-income PMEs (professionals, managers and executives) will also face less than fair competition from a too-easy influx of foreign manpower," he cautioned. Mr Heng was among more than a dozen MPs who stressed that Singapore must get its productivity up.

Ms Foo Mee Har (West Coast GRC) suggested that firms focus on improving staff welfare as a key part of any productivity drive, saying studies have found happy employees the most productive.

Mr Desmond Lee (Jurong GRC) proposed identifying industry leaders to act as innovation consultants to small and medium-sized enterprises.

He cited a senior executive of a leading food and beverage company here who joined the firm when it was a small establishment. Originally from construction and manufacturing, the man designed new plant and machinery to cut reliance on unskilled labour.

Mr Lee said: "Because of this, the company trumped the competition and expanded, and is now a major player in the F&B sector."

Mr Heng said he supported the Budget's measures to transform firms, such as tightening foreign manpower inflow through lower dependency ratios and higher levies. Research showed a strong correlation among productivity, competitiveness and the long-term standard of living, he said.

He warned against chronic low productivity. "It would drain our competitive lead and eventually gnaw away our future," he said.

Mandate progressive wage model in low-wage sectors: MP
By Robin Chan, The Straits Times, 6 Mar 2013

LABOUR MP Zainal Sapari wants the Government to require companies licensed to operate in the low-wage sectors, such as cleaning, landscaping and security, to adopt the labour movement's progressive wage model.

This model sets out benchmarks for increases in the wages of workers in various sectors if they upgrade their job skills and achieve higher productivity.

That was among a series of bold measures he called for yesterday, to lift the incomes of low- wage workers.

He also wants the National Wages Council's recommendations to be made compulsory for all companies.

Last year, the council called for a minimum $50 wage increase for workers earning basic monthly salaries of up to $1,000.

Speaking on the first day of the Budget debate, Mr Zainal raised concerns that recent measures to help increase the salaries of low- income workers may still not be sufficient.

"I sometimes feel like the process of bringing about big change for low-wage workers is akin to trying to move a mountain with your bare hands," he said.

The Budget's centrepiece, the $3.6 billion Wage Credit Scheme (WCS) - which will see the Government co-paying 40 per cent of the wage increases of Singaporean workers for the next three years, up to a $4,000 gross monthly income - may not be able to help low-wage workers, he said.

That is because many companies in those sectors are operating on a salary amount that is already specified and fixed in the contract, which may run for two to three years.

There might even be an option for these contracts to be extended for another one to three years. As such, "there is little motivation for them to leverage on the WCS to increase the salary of their workers", he said.

Mr Zainal, who is the director of the unit for contract and casual workers at the National Trades Union Congress, also called for a low-wage worker centre to focus solely on their needs and change how their jobs are perceived.

More protection must also be given to low-wage workers, he said.

The Ministry of Manpower should "increase its bite" to ensure that companies comply with the Employment Act, and companies should unionise more of their low-wage workers.

The process of seeking recourse when salaries are not paid to low-wage workers must also be simplified so that enforcement can be done easily and effectively, he said.

Call for lower rentals to help SMEs
By Yasmine Yahya, The Straits Times, 6 Mar 2013

WITH many small and medium-sized enterprises (SME) struggling to stay afloat amid a labour crunch, several MPs urged the Government to do more to help lower business costs, especially in the area of rentals.

Ms Tin Pei Ling (Marine Parade GRC) said efforts to curb foreign manpower growth could bring instability to SMEs, but keeping business costs low for one to three years would help give businesses the confidence, capacity and space to restructure. This could be done through rental rebates or keeping rents steady.

She cited coffee shops as an example: "If they cannot cope, they risk passing on the cost to consumers, who are mainly the middle- and lower-income groups. Hence, rental cost can be a major driver of inflation."

Mr Lim Biow Chuan (Mountbatten) also urged the Government to consider a freeze on rents for government premises, hawker stalls and shops for the next three years.

"Why should the Government insist on maintaining an increase in rental at the expense of businesses or consumers? After all, we are already providing a three-year transition support package to businesses," he said.

"It is important that what the Government gives with one hand, it does not take away with the other hand."

Ms Jessica Tan (East Coast GRC) said there must be more measures to help businesses cut rental costs without distorting markets, but said the Corporate Income Tax rebate offered this year will help businesses cope with cost pressures.

Mr Png Eng Huat (Hougang) urged the Government to fix the stall rental of new hawker centres at $320 a month and allow Singaporeans to ballot for them.

He said he was disappointed that the first of 10 new hawker centres announced recently will be run by NTUC Foodfare, as only union members will get to benefit from the special prices and value meals.

Time to press 'reset' buttons: NMP Lien
By Robin Chan, The Straits Times, 6 Mar 2013

NOMINATED MP Laurence Lien yesterday said the Budget measures were encouraging but insufficient, and called instead for a complete reset of social and economic policies.

This would lead to a more vibrant and diverse society, and a more productive and entrepreneurial economy, he argued.

"I believe we need to press the social and economic 'reset' buttons," said Mr Lien, on the first day of the Budget debate.

Revisiting a speech he made a year ago, in which he warned that Singapore was in the midst of a "social recession", he said: "I don't think we are out of it."

His views, he said, are backed by the findings of a "social health project" at the National Volunteer and Philanthropy Centre, of which he is chief executive.

The study examines nine areas and has so far found Singapore to be in a negative trend in five of them: individual well-being, family, income security, health care, and housing and transport.

It is neutral in culture and values, education, and social connectedness and community cohesion, but positive only in civil and political participation, he said.

It is not an "audit on the Government", but he hopes it will get the public discussing critical social issues. He wants to develop the study into a formal index.

Mr Lien urged people to think more deeply about how to achieve their desires for a society with a vibrant and engaged community, and where diversity is valued.

Getting there may also require more spending in the social sector, which can be managed by changes to current spending and income flows. The Government should stop the top-up of endowment funds, as it is simply taking money from one pot and putting it in another, he said.

It can also increase its own productivity and cost savings, and grow the defence budget at the pace of inflation. To increase revenues, he suggested taking more of the proceeds from land lease sales, and reviewing the Net Investment Returns Contribution framework, which limits how much the Government can spend of the current reserves it invests. If that is not enough, it should raise taxes on the rich.

Singapore needs to reset its economic model by revamping the education system to encourage the young to experiment from an early age, and developing a better ecosystem for young entrepreneurs. This would help cultivate entrepreneurship and the rise of home-grown businesses.

"If we want to make a significant improvement in productivity, I believe it must also be through an entrepreneurial approach," he said.

More progressive tax, tackle inequality: Sylvia Lim

By Andrea Ong, The Straits Times, 6 Mar 2013

WORKERS' Party (WP) chairman Sylvia Lim yesterday paid a nod to the Government's move towards a more progressive tax system in this year's Budget, but said there is room to do more.

She "acknowledged" the shift, saying it is "symbolically and psychologically important" to have a system where those with more contribute more to the national coffers to help those in need.

"It signifies that Singaporeans are journeying together as one people towards the future, with the stronger helping the weaker," said Ms Lim (Aljunied GRC).

It also reduces the need to raise other taxes such as the goods and services tax which have a direct impact on the cost of living, she added.

She then laid out several proposals, including introducing more differentiation in the income tax for high-earners.

Currently, the highest tier of income tax charges 20 per cent for annual income exceeding $320,000, she noted.

This rate has not been adjusted for around a decade even though incomes at the higher end have soared, she said, adding that the bracket captures many professions, from a university professor who just qualifies for this tier to a top banker earning millions more.

Ms Lim called for more tiers for this group, from 20 per cent for those earning $320,000 to $500,000 to 25 per cent for those earning above $1 million.

This rate is still low globally while Singapore holds other incentives like low corporate tax rates, she said.

However, Minister of State Amy Khor (Hong Kah North) later warned that Singapore must be careful not to reduce its international competitiveness even as it looks into a more progressive tax system.

Mr David Ong (Jurong GRC) said later that Singapore should ideally have higher marginal taxes at the top end. However, there is the reality of Hong Kong which caps income tax at a 15 per cent effective tax rate for the highest income brackets, he said.

Hong Kong's top marginal tax rate is 17 per cent. But based on an income of US$500,000 (S$621,000), a KPMG report notes the effective tax rate for Singapore is about 16.6 per cent, higher than the 15 per cent in Hong Kong.

Mr Ong urged a careful study of any progressive taxation initiative before implementation.

Meanwhile, Ms Lim also noted the Budget's progressive shift towards taxing luxury cars and homes. But she cautioned that higher tax rates for owner-occupied homes should not unfairly penalise retirees who inherited or bought homes in good locations a long time ago.

There is another potential loophole in the new tiered tax rate for non-owner-occupied units, which is based on the property's annual value, she said.

A wealthy person could buy many mid-range properties and pay lower tax, she said. A fairer assessment would be each person's total property interest, she noted.

To drive home the importance of a progressive tax system, Ms Lim cited a study of 54 countries by University of Virginia psychologist Shigehiro Oishi which drew a link between higher progressivity in tax systems and greater subjective well-being of citizens.

The study ranked Singapore in the lower half of tax progressivity while Singaporeans' life satisfaction was lower than in several other developed countries.

In their speeches yesterday, Ms Lim and two other WP MPs also highlighted income inequality as an urgent issue to tackle.

Non-Constituency MP Gerald Giam cited economists such as Nobel laureate Joseph Stiglitz who have linked inequality to less economic growth and productivity as well as lower levels of trust in government and businesses.

Mr Giam and Mr Png Eng Huat (Hougang) welcomed the Government's recognition that meritocracy alone is not enough to ensure social mobility and called for more to be done to help low-wage workers and the unemployed.

While the cash component of the Workfare Income Supplement payout for lower-wage workers has been raised from 29 per cent to 40 per cent, Mr Png asked for it to be increased to 50 per cent.

Otherwise, any increase in a low-wage worker's take-home pay might be negated by inflation and the rise in his Central Provident Fund contribution, he said.

Mr Giam proposed a "New Hire Wage Credit" scheme, a temporary wage subsidy to help small and medium-sized enterprises hire economically inactive or jobless Singaporeans, including the elderly, disabled and housewives.

Do more for pre-school sector, govt urged
MP de Souza wants nationalisation, so that every child gets an equal start
By Leonard Lim, The Straits Times, 6 Mar 2013

THE state's role in pre-school education was raised by several MPs in Parliament yesterday, with some calling for it to expand its presence in the industry.

Dr Lim Wee Kiak (Nee Soon GRC) hoped the Ministry of Education will go beyond the initial handful of pre-schools it will be setting up in the next few years.

At the same time, he suggested that they pair up with adjacent primary schools to provide a "seamless pre-school to primary school education".

The Government's entry into the sector was disclosed by Deputy Prime Minister Tharman Shanmugaratnam in his Budget speech last week, as part of efforts to catalyse quality improvements in the industry.

Mr Tharman also announced that the Government will more than double its spending on the sector in the next five years, to more than $3 billion.

The massive investment prompted at least another eight MPs to devote time to pre-schools.

Mr Christopher de Souza (Holland-Bukit Timah GRC) urged the Government to nationalise pre-schools, so that every child starts off on an equal footing.

This issue was raised in Parliament three years ago.

Then education minister Ng Eng Hen rejected it, fearing nationalisation would lead, among other things, to an over-emphasis on academic instruction over developmental goals.

But yesterday, Mr de Souza argued that research shows a child's early years are critical to his development and progression into adulthood.

He acknowledged the reasons Dr Ng cited but these assumptions must be challenged, he said. It is time for fresh lenses to be applied if a quality pre-school education is not to be confined to just the offspring of the elite.

One way to look at his suggestion is to see pre-school education, which is for children aged around two to six, as an extension of their educative years in schools, he said.

Pre-schools are now run by a range of operators from religious organisations to private firms, each with varying curricula.

With nationalisation, the state would have greater control and regulation over the curriculum, Mr de Souza pointed out.

Teaching could be tailored so that social skills and moral values, rather than numeracy and literacy skills, are emphasised, he added.

He offered to work with the Government to "think out of the box for further pre-school permutations".

Nominated MP Janice Koh said the MOE can also take the lead in encouraging integration in these schools.

"Early exposure to world cultures and traditions will encourage our children to develop a healthy respect for contrasting views and greater empathy for those from foreign lands," she said.

Not all asked the State to do more, however. Most of the MPs hailed the increased funding to pre-schools and expansion of the Anchor Operator Scheme.

Anchor operators are required to provide good-quality, affordable services aimed at the broad majority of low- and middle-income families, in exchange for recurrent government grants to help lower operating costs.

More are set to join the current two: the PAP Community Foundation and the National Trades Union Congress' My First Skool.

"Investing in children when they are still developing helps them to unlock their potential and contribute more to our economy as productive citizens," said Mr Baey Yam Keng (Tampines GRC).

Concern about jobs and health care for the elderly
By Janice Heng, The Straits Times, 6 Mar 2013

SENIOR Minister of State Heng Chee How was among 10 MPs yesterday who spoke up for the elderly, on issues such as employment and health care.

Mr Heng, who is deputy secretary-general of the National Trades Union Congress, renewed his call for the Government to start tripartite talks on "how soon and how best" to raise the re-employment age.

He wants it extended by another two years to 67.

Now, workers are offered re-employment up to age 65 when they reach the retirement age of 62.

Mr David Ong (Jurong GRC) wants to do away with the mandatory retirement age, and called for the full restoration of employers' Central Provident Fund contribution rates for workers aged 55 and above.

These vary from 6.5 per cent to 10.5 per cent depending on age, compared with 16 per cent for those below 50. The rates for older workers were cut in 1988.

MPs also spoke about health-care costs. Mr Heng said re-employed workers should be able to keep their existing co-payment arrangements instead of being given a new one that requires them to pay more.

Mr Desmond Lee (Jurong GRC) hoped health-care subsidies for older Singaporeans could be raised, on a means-tested basis.

And though the topping-ups of Medifund, Eldercare Fund and the Senior's Mobility and Enabling Fund in the Budget were "right steps forward", Dr Lim Wee Kiak (Nee Soon GRC) suggested even more top-ups as Singapore ages.

On Medisave, MPs urged greater flexibility. Dr Intan Azura Mokhtar (Ang Mo Kio GRC), Ms Ellen Lee (Sembawang GRC) and Dr Fatimah Lateef (Marine Parade GRC) asked if Medisave could be used for preventive care such as medical check-ups and medication for chronic illnesses like diabetes.

Ms Tin Pei Ling (Marine Parade GRC) called for a higher cap on how much Medisave can be used a year, and a lower minimum sum that must be left in the account.

On housing, she wanted the elderly to have more flexibility in paying for studio apartments, which now must be paid upfront in cash. She asked for safeguards to protect elderly singles in rental flats from unreasonable co-tenants.

Mr Gan Thiam Poh (Pasir Ris-Punggol GRC) proposed that the withdrawal age of CPF Life annuity be lowered from the current 65.

"This will help them solve some of their immediate living expense problems," he said.

Easing peak-hour crush: Why not offer free travel?

MP says this may work better than current discount for early users

By Leonard Lim, The Straits Times, 6 Mar 2013

TO SPARK a change in travel patterns, let commuters travel for free on public transport before the peak-hour crush, Mr Janil Puthucheary (Pasir Ris-Punggol GRC) suggested yesterday.

This carrot may be a better incentive than the current discount offered to MRT users to coax them to travel earlier, he told the House on the first day of the Budget debate.

"If that's too great a leap, then maybe, for example, every weekday morning, for 30 minutes or an hour, ending at 7.45am, commuters travel for free," he said.

His comments come a week after Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam touched on measures to reduce crowding on trains, during his Budget speech.

Mr Tharman said this will include "significantly enhanced" incentives for commuters who travel during the "shoulder" periods before and after the morning peak hour.

He did not give more details, but said Transport Minister Lui Tuck Yew will talk about the measures during the debate on the ministry's budget, expected to take place next week.

Yesterday, Dr Puthucheary said money being channelled to complex research studies, creating and maintaining smartphone apps or programmes with rewards and free gifts could be used for his free travel idea.

"Everyone benefits. Those who can travel earlier will enjoy free travel. Those who can't will be more comfortable," he added.

While some may see the move as a political shift to the left, he termed it as a pragmatic approach to achieve a concrete outcome - to change passengers' behaviour to ease congestion.

"We can free ourselves from the belief that nothing good can be free. This benefits Singaporeans, it can be done," he said.

Deputy Speaker Seah Kian Peng quipped later that never had he heard a speech with so many four-letter words, but "it's one four-letter word that we all love". Yes, it's "free".

Some cities have tried it. In 2008, Melbourne let passengers who arrived at their destination by 7am, from Mondays to Fridays, travel free.

Transport experts here said yesterday that dangling free travel would help ease congestion, but may not have a huge impact.

Figures support their view. Last June, Mr Lui disclosed that 3 per cent to 4 per cent of commuters who usually travel during the morning peak had shifted their journeys since train operator SMRT increased its discount from 10 cents to 30 cents in October 2011.

This translates to about 2,000 commuter trips daily.

For a greater impact, experts like Dr Park Byung Joon said offers of free travel would have to be coupled with mindset changes and a move towards flexi-work schedules.

Said Dr Park, head of SIM University's master of science programme in urban transport management: "The early travellers may get to the office by say 7.30am, but then they should be expected to leave by about 3pm or 4pm. We have to start accepting that those who arrive earlier can also leave earlier."

Church worker Joel Seah, who takes a 45-minute bus journey to work at 8.30am daily, said a free ride would not entice him to wake up earlier.

"I have a long day at work usually, so unless I can start work earlier which is unlikely, it doesn't attract me," said the 25-year-old.

SPEECH OF THE DAY: DR JANIL PUTHUCHEARY (PASIR RIS-PUNGGOL GRC). AN EXCERPT:

Is it time to ditch 'nothing is free' mantra?

ONE of Singapore's strengths has been that we do not subscribe to ideology for its own sake. Other than sticking to our core beliefs on being a meritocratic system and shaping a fair and harmonious society, we are free from dogma.

How far are we prepared to abandon dogma or ideology, in the interest of our nation? One thing we appear to be quite dogmatic about is the mantra that "nothing is free".

There is no such thing as a free lunch, there is always an element of co-payment, the risks are shared between the people and the Government or businesses and Government, and "free" has become somewhat a dirty word, especially in the provision of public services such as health care, transport and education.

The concern is that anything free is over-consumed and under-valued. The "moral hazard", the "buffet syndrome". Anything free distorts behaviour. However, this is something that the world of marketing, advertising and consumerism is very well aware of, and takes advantage of. Think of the "free gifts" offered in order to attract customers to buy something bigger or more expensive, something we really didn't need?

When ERP charges are removed from some roads, there are motorists who would rather sit through a jam using up more fuel on an ERP-free road.

Ultimately when choosing a policy tool, the outcome is the issue. An example would be the call for more health-care spending, or free health care.

Free health care sounds great, who wouldn't want all the essentials of life taken care of? Unfortunately, when we look at the health-care outcomes that matter, such as mortality and the quality of life as a senior, there is no correlation. Free health care doesn't change what really matters. Free health care achieves one significant outcome, it results in much higher state spending, which is funded by higher taxes. "There ain't no such thing as a free lunch". Free health care isn't free and isn't good for your health.

What about going in the other direction, "spend more"?

Why do other countries spend more? Is it that they achieve better health-care outcomes? Or is it that they do a less than optimal job of controlling their costs? In principle, I can't object to spending more on health care, and we may well need to. But we should be very careful about the "why" and "how".

Doing more, spending more is not automatically going to improve health.

A recent study in the United States identified the most satisfied patients as those who had the highest expenditure, and the same patients had the highest mortality. You can draw your own conclusion - spending more doesn't always mean better health.

Returning to things that are free, could that be the right policy tool? In public transport, the concept of "free" could be used as a tool for demand management. Currently on the MRT, a discount is offered to incentivise people to travel early. Instead, why not provide a window period where commuters can travel for free? If we can afford it, have all travel on public transport until the start of peak hour, free?

If that's too great a leap, then maybe for example, every weekday morning, for 30 minutes or an hour, ending at 7.45am, commuters travel for free. Will this distort behaviour?

Absolutely, that's the whole point. This will attract more people to change their travel patterns than any discount.

On the surface it may look like we would be shifting to take a more liberal, leftist approach, but in truth this would be a pragmatic, utilitarian approach to achieve a concrete outcome, in this case to change passengers' behaviour to ease congestion. The Government will still be doing what it has done all these years.

'Relook loan curbs for those who really need cars
By Leonard Lim, The Straits Times, 6 Mar 2013

SPARE a thought for those who have a pressing need for cars but have now been priced out because of new loan curbs, two MPs said yesterday.

Ms Jessica Tan (East Coast GRC) and Mr Lim Biow Chuan (Mountbatten), who termed the changes "sudden" and "drastic", highlighted the plight of those who genuinely need cars but now cannot afford them.

Ms Tan called for a relook, taking into consideration "needs- based car ownership".

This would cover families who take public transport, but would like the flexibility of a car because they have young children and elders. She used the example of a Mazda 3 or a Toyota Altis, which fall into the range of cars with open market values below $20,000, and hence will not see any increase in Additional Registration Fees, also announced last week.

But with the new financing restrictions, buyers still have to fork out $50,000 cash upfront, as such cars cost about $130,000 to $140,000 each after taxes and certificate of entitlement premiums.

Loans are now capped at 60 per cent of a car's price, and need to be serviced within five years.

Previously, buyers could take loans for up to 100 per cent of the purchase price and stretch the tenure to 10 years.

Ms Tan, who kicked off the Budget debate yesterday, made an impassioned pitch to Deputy Prime Minister Tharman Shanmugaratnam: "I will say to you that there are people who do need to own a car on a needs basis rather than for luxury."

Mr Lim said it would be better for the authorities to revert to the car loan limit of 70 or 80 per cent, which was the rule a decade ago.

He proposed that the financing limit be set at 70 per cent for all cars for a maximum of five years.

Cross-party support for good Budget

Among the many suggestions by MPs, three draw attention

By Chua Mui Hoong, The Straits Times, 6 Mar 2013

WHEN even opposition Members of Parliament welcome the Government's Budget, you know it is a good one that has wide support, including outside the House.

Workers' Party chairman Sylvia Lim (Aljunied GRC) welcomed the Government's commitment to review health-care financing, to raise the share borne by the Government and lower the share borne by families.

Mr Png Eng Huat (Hougang) welcomed the move to restore Central Provident Fund rates for low-wage workers, and wanted even more of the Workfare Income Supplement to be given in cash rather than CPF funds.

Non-Constituency MP Yee Jenn Jong, also from the WP, welcomed moves to help small and medium-sized enterprises.

But the WP also thought the Budget could go further in making the tax system more progressive: raise top personal income tax rate to 25 per cent for those earning over $1 million, up from the 20 per cent currently levied on those with incomes above $320,000.

Budget 2013, announced on Feb 25 by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, has been dubbed both pro-worker, for its income tax rebate and enhanced Workfare, and pro-business, for a slew of subsidies for employers to raise productivity and to fund part of their wage bill increases.

MPs yesterday cheered the Budget for its shift towards greater social spending, for positioning Singapore well for the future and for being inclusive. MPs also welcomed it as a progressive Budget that sets aside more for redistributive measures, and supported its commitment to spend a lot more on pre-school education.

With broad agreement on the fundamentals, MPs devoted their speeches to more nitty-gritty suggestions and schemes on pet causes. The mood was cordial, absent the heat in the Population White Paper debate last month. In nearly seven hours, 27 MPs spoke.

Among the many suggestions, three caught my attention.

One: More flexible use of Medisave funds, a call made by several MPs.

This account is funded by monthly contributions from employers and workers into the CPF.

Current rules permit its use mainly for hospitalisation and limited outpatient procedures like chemotherapy and radiotherapy for cancer and dialysis treatment.

This results in some patients, especially cash-strapped older ones, postponing or refusing to go for check-ups or diagnostic tests which have to be paid out of pocket. Dr Intan Azura Mokhtar (Ang Mo Kio GRC) argued that Medisave use should be allowed for regular health checks, "so that we constantly monitor our health (and) there will be little need for surgery or hospitalisation later".

There are good grounds to allow a broader use of Medisave. After all, it is an individual account, not risk-pooled like MediShield, so allowing the individual to tap more from it will not affect other people's Medisave usage.

The money is saved by the worker, and belongs to the worker, not the Government, so more discretion for the individual to use the fund is just.

Right now, a patient with, say diabetes, can tap only $400 a year from Medisave for outpatient treatment. If he does not have money for more medicine and insulin beyond that price cap, he may stop taking these, and end up in hospital with a serious illness. Then, he can use Medisave and enjoy government subsidies.

In other words, the current financing model rewards illness, not preventive care.

Medisave has become the over-protected sacred cow in health-care financing that deserves re-examining: its use should be liberalised so people can use it to keep illness at bay, not wait till they fall very ill to tap it.

Suggestion No. 2: Entrench measures to protect middle-income Singaporeans' job security from foreigners.

Labour MP Patrick Tay (Nee Soon GRC) was the most vocal on this, calling for a "labour market test" to make employers show proof that they cannot get a local worker before they are allowed to hire a foreign one.

He also suggested imposing a "dependency ratio" for professionals, managers and executives (PMEs). Such a ratio is used for foreign workers in construction and the food and beverage sectors, requiring employers to hire a certain number of Singaporeans before they are allowed one more foreign worker.

To be sure, foreigners contribute a great deal to work and life in Singapore.

But when their presence swells till it induces job and social tension in locals, it is time for moves to alleviate the anxiety.

Finally, there is the case of the $1.50 vegetarian beehoon in Jalan Bukit Merah which the WP's Mr Png said is delectable and "complete with ingredients like cabbage, mock char siew, crispy bean curd skins and condiments".

He said the stall, which has been operating for years, is able to keep prices down because of the low rent. He suggested that the Government let out stalls at low rental rates directly to stall operators, not through a social enterprise such as NTUC Foodfare, which has been tasked to run a new hawker centre coming up in Bukit Panjang.

Nine other centres will be built in the next decade. Will future centres be run by a central agency? Or is there merit in Mr Png's proposal in allowing diverse small operators leeway to experiment to make for more varied fare?

That is food for thought.