Sunday 18 August 2013

National Day Rally 2013: Let’s talk about these

At last year’s National Day Rally, Prime Minister Lee Hsien Loong launched a national conversation about Singapore’s future. This year, he has signalled a shift in approach that will see the Government playing a bigger role to build a fair and just society. Robin Chan and Andrea Ong highlight the big concerns in four areas where change is likely.
The Straits Times, 17 Aug 2013

HOUSING: Keeping homes affordable for all
By Robin Chan

A BUOYANT property market has seen resale Housing Board flat prices rack up double-digit percentage hikes over the past few years, and an executive condominium (EC) even hit $2 million.

It has all come to a head for the public housing market, with Singaporeans questioning whether it is still serving its social purpose, or needs to be drastically revamped.

Bank of America Merrill Lynch economist Chua Hak Bin said: "Property prices have run away from wage growth and the younger generation is having a hard time coping."

The Government has responded to keep prices for first-time buyers affordable. It has delinked Build-to-Order (BTO) flats from the market since 2011 by varying the discounts for buyers to keep prices stable, and bringing more than 110,000 new flats on stream in the next three years.

National Development Minister Khaw Boon Wan has promised to lower the prices of flats in non-mature estates to four times applicants' annual household median income - they were 5 1/2 times the annual household median income last year.

Data from the HDB website shows that last year, the median monthly household income of a four-room flat applicant was $4,100, and $5,800 for a five-room flat applicant.

This would imply target prices of $197,000 and $278,000 for four- and five-room BTO flats after housing grants. That would be less than up to $300,000 and $400,000 that BTO four-room and five-room flats have been selling for recently.

But the question is how this can be sustained in the long term.

Holland-Bukit Timah GRC MP Liang Eng Hwa said short-term concerns arising from housing imbalances in supply and demand will be addressed.

But maintaining affordability is the longer-term and more fundamental problem - that is, whether median income can keep up with the rise in asset prices.

"If we see public housing as an essential social need, then we have to delink the way we price our new BTO flats from the market, as incomes don't necessarily correlate closely with property prices," he said. "Public housing needs to stay affordable to low- and middle-income Singaporeans, regardless of property cycles."

There have been many ideas proposed, including having shorter leases, relooking the way flats are priced, or having a larger pool of rental flats. But some of these measures have implications for existing home owners, who fear that a crash in property prices will erode their hard-earned savings. Many Singaporeans continue to hope their first home can serve as an investment for them.

Government Parliamentary Committee for National Development chairman Lee Bee Wah suggested that giving more grants, especially to buyers of three-room and four-room flats, may be the more palatable way forward.

Mr Liang said to manage stability in prices, the Government could look at building a small reserve inventory of some new and resale units. These could be released to the market should prices run ahead of where the Government believes they should be. He said: "Having price stability for public housing will give first-time home buyers peace of mind. Having an inventory would also shorten waiting time for the flat."

Dr Chua said "the bottom line is that the Government will have to spend more".

More fundamental questions about public housing are being asked as society's needs evolve.

Bishan-Toa Payoh GRC MP Hri Kumar Nair said a flat should not be treated as an investment. "We need to go back to the basics of public housing. I would therefore increase the Minimum Occupation Period and bar such HDB owners from owning private property. Those who own or want to own private property do not need public housing," he said.

Centennial Asia Advisors economist Manu Bhaskaran said more rental flats should be provided to low-income families at subsidised levels. He said: "The poorer segments of our population would then not have to worry about a huge debt that they have to take on and can allocate a higher portion of their incomes on spending that would boost their kids' life chances."

EDUCATION: Primary woes over registration, PSLE
By Robin Chan

PANIC, anguish, relief and sometimes anger. These are the emotions that recur each year - during the annual Primary 1 registration season.

And as soon as it ends, students and parents of another age group face a second perennial high-stress exercise - the PSLE.

The parents and students are different each year, but they all experience the same roller coaster of emotions.

These two annual events have become symbols of an education system that many believe needs reform, as income inequality widens, social mobility slows, and aspirations evolve and alter the expectations of what an education should provide.

Increasingly more calls are being made for changes to relieve the stresses on students taking high-stakes exams, to make education opportunities equal from the time students are young, and to broaden the paths to success.

These are not just gripes of students and stressed-out parents. They are fundamental challenges to Singapore's long-held belief in meritocracy.

Summarising the challenges, Mr Hri Kumar Nair, MP for Bishan-Toa Payoh GRC, said: "It is very difficult and unrealistic to remove the stress and competition in the system... What we can and should do is to ensure that every child starts from about the same point so that the race is not lost even before it has begun... We must ensure as best as we can that success is dependent on hard work and application."

The Government has already taken action on many concerns over the education system in the past year. Education Minister Heng Swee Keat removed banding and ranking of secondary schools, and has pledged to "make every school a good school".

More recently, the Government has piloted five government-run pre-schools, raised funding to pre-schools and is expanding the number of anchor operators - mass market pre-schools that get government grants. Yet major concerns still remain, such as the emphasis on academic grades as the be-all and end-all of a student's success.

Said Mr Lim Biow Chuan, chairman of the government parliamentary committee for education: "The call is really for less emphasis on pure academic grades in the PSLE and other exams. Is there a better way?"

Many parents have criticised the PSLE for placing unnecessary stress on children, as it decides which secondary school they will attend. Others, however, believe it helps to build up resilience.

Prime Minister Lee Hsien Loong summed up the dilemma of the PSLE: "We don't want to have excessive pressure... But we must not compromise our strengths in developing our children and in preparing (them) for the world, which is going to be very competitive, and for (their) jobs, which will not be easy."

As he wrapped up the Our Singapore Conversation, Mr Heng indicated that there will be a change to the PSLE.

Some have also called for a review of Primary 1 registration, as they feel it benefits the wealthy and lessens mixing across social divides. Places at top schools fill up fast, with the first few phases for children of alumni, parent volunteers and those in clans, grassroots or church groups.

And the socio-economic gap is becoming accentuated.

Of the top six primary schools, only four in 10 pupils from these schools live in HDB flats - half the national average of eight in 10 pupils for all primary schools.

Mr Paul Sim wrote in The Straits Times Forum Page earlier this month that the present process, "where alumni ties and affiliations to religious associations help children gain admission to popular schools, runs contrary to the principle of meritocracy".

The challenges run deep in an education system that has, to many observers, benefited most Singaporeans and stood them in good stead in a competitive and globalised world. The goals remain the same, but the paths to get there must change.

HEALTH CARE: Lightening burden of costs for elderly
By Andrea Ong

THE twin spectres of rising medical costs and a greying population loom large on the landscape of Singapore's health care.

The cost of health care emerged as a particular area of concern for Singapore in a recent consumer trends study of 28 countries by research firm GfK.

The same worry is reflected in a report submitted by the Government Parliamentary Committee (GPC) for Health to the Ministry of Health this week. The committee called for rising costs to be managed through measures such as expanding the list of subsidised drugs and giving the public more information on private fees.

One group in particular has been singled out for attention: the "pioneer generation" of Singaporeans who may not have benefited fully from the national health-care financing schemes.

At least three ministers have signalled that the Government intends to do more to lighten the load of health-care costs for this group, in recognition of their sacrifices in the nation's younger days.

It is a welcome move for GPC chairman Lam Pin Min and member Chia Shi-Lu. Dr Chia hopes to see bigger subsidies tiered according to age and simpler delivery of measures so people do not feel "there are so many hurdles to jump and forms to fill".

Several larger issues have to be resolved, say experts such as health economist Phua Kai Hong, who sees a conflict in how the health-care sector has developed. It has to provide essential care, but in other areas, it is an industry where the market is left to set prices. The latter aspect has "crept into" the public sector, bringing costs up, he said.

The weaknesses of the existing framework, said principal consultant of Insights Health Associates Jeremy Lim, lie in the excessive use of co-payments for "virtually all health conditions" and inadequate financial protection against catastrophic illnesses. However, he stressed that any adjustment should retain positive elements like encouraging personal responsibility and prudent spending.

The GPC and Professor Phua also noted restrictions on how Medisave, the national medical savings scheme, can be used have led to the over-usage of acute care as people prefer staying in hospital - where they can use more of their Medisave - to other forms of community and step- down care.

The GPC is calling for the use of Medisave to be liberalised. To encourage people to stay healthy through prevention and early detection, they should be able to use Medisave for health screenings, essential dental procedures, physiotherapy and occupational therapy.

The differences in Medisave claim limits between hospitals and community care should also be removed so that it takes away the bottleneck and over-reliance on hospitals, said the GPC.

But Health Minister Gan Kim Yong has cautioned that while he is agreeable to extending Medisave, it should not be at the expense of depleting savings for future usage or for paying MediShield premiums.

For MediShield, however, the general sentiment is that there is scope for wider insurance coverage, such as removing the age limit of 90 and helping those who cannot afford the premiums to maintain their schemes.

Supporting this idea, Prof Phua said basic MediShield can be enhanced to provide compulsory coverage in catastrophic illnesses for all, moving away from integrated shield plans offered by private insurance companies which have fuelled perceptions of rising costs.

The GPC supports "front-loading", where people pay higher premiums when they are young to lighten the load on the old.

The Government has already indicated that it is increasing its expenditure on health care. It will also foot a larger portion of total health-care costs - 40 per cent, up from the current 30 per cent.

The health-care system also needs to "elder-proof" itself to ensure it is ready with facilities and networks, said observers.

Geriatrician Carol Tan-Goh from Raffles Hospital said people should be able to get subsidies for care programmes tailored to their wishes - even for home care - rather than getting the bulk of subsidies at the hospital. "Don't just put the subsidy in the most expensive place. It should follow where the patient wants to go."

JOBS: Wage, competition concerns linger
By Robin Chan

IN SPITE of measures to slow the inflow of foreign workers and tighten the criteria for visas that skilled foreigners need to work in Singapore, worries over slow wage growth and unfair competition linger.

Wages for low-income workers are still rising slower than wages at the top, widening an already large income gap.

Last year, eight in 10 unionised companies followed a National Wages Council recommendation on wage rises for workers earning up to $1,000.

But for non-unionised firms, only three in 10 gave a raise of at least $50 as recommended. Four in 10 gave none at all.

The Government has identified some of the key challenges relating to foreign competition: employers who unfairly hire people from their own country; those who overlook Singaporeans in favour of foreigners in undue haste; and qualified foreigners who are willing to work at lower wages than local fresh graduates and mid-level PMEs.

Mr Inderjit Singh, MP for Ang Mo Kio GRC, said Singaporeans understand that foreigners complement the local workforce and do some jobs locals may lack experience for, but they cannot accept jobs that Singaporeans can do well going to foreigners due to liberal visa policies in the past.

Labour MP Patrick Tay said while these labour concerns did not appear to be highlighted in Our Singapore Conversation, he hopes "there will be articulation by the Prime Minister at the National Day Rally on giving fair consideration for Singaporeans".

The Government has, in fact, indicated it is looking at a framework to ensure fair hiring and will announce more details in the coming months.

Outlining the thinking behind this, Acting Manpower Minister Tan Chuan-Jin said: "It is only fair and reasonable that foreign firms and foreigners working here bear a responsibility to the local communities.

"There must be equal opportunities for our people, whether at hiring or in advancement."

But Mr Singh warned that while a Singaporean-first employment law should be implemented, "we have to be careful not to overdo things such that companies find it too difficult to operate in Singapore".

While the tightening of foreign worker inflows may help wages of Singaporeans rise faster than they have in the last decade, at the low end, more help is still needed.

The scope of the Workfare Income Supplement Scheme, which tops up wages of low-income workers, has been expanded, but Bank of America Merrill Lynch economist Chua Hak Bin said that the Government has room to expand the scope of coverage.

A Progressive Wage Model has also been introduced by NTUC to better link wage increases to training for low-wage sectors.

The Government has also introduced a Wage Credit Scheme this year to boost productivity and wage increases.

But what the best way forward is remains contentious.

Economist and Emeritus Professor Lim Chong Yah had called for wage "shock therapy", suggesting lifting incomes at the bottom rapidly while freezing those at the top. Others believe a minimum wage needs to be adopted. Labour MP Zainal Sapari said: "We need to take more decisive action in terms of helping low-wage workers earn better wages."

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