Budget 2014 Speech

It is important to emphasise that the Pioneer Generation Package is not a “senior citizen’s package” even though all of our pioneers are now elderly. It should not be viewed as the fulfilment of the Government’s obligations to the elderly. There is still much that needs to be done for the elderly and future elderly in Singapore, especially people with disabilities, homemakers and low income workers who will have insufficient savings when they reach retirement age.

3 March 2014

Madam Speaker,

The Workers’ Party supports the Government’s initiatives to honour the pioneer generation of Singaporeans.

In August 2011, we released a National Day statement entitled, “Honouring our First Generation”. In our statement, we said:

“(T)he Workers’ Party wishes to pay a special tribute to the first generation of Singaporeans who struggled to build our nation during the early decades of independence. They are now our parents and grandparents, uncles and aunts; the elderly cleaners; the retired civil servants and teachers; the first National Servicemen.”

“This generation embodies the true Singapore spirit—the determination to work hard, overcome the odds and carve out a better life for their children. They serve as an shining example for many future generations to follow.”

“History may only remember the kings and not the soldiers, but let us never forget the contributions of the first generation of Singaporeans. More than anyone else, they deserve to enjoy the fruits of our nation’s success.”

“The men and women in our Pioneer Generation have borne society’s burdens … They gave the best years of their lives to our nation. Our nation must now give its best in return to them.”

I think this aptly describes our respect for and gratitude to the pioneer generation of Singaporeans.

PIONEER GENERATION PACKAGE

Madam, it is important that we honour our pioneers and do so before it is too late. Last year, over 13,000 people aged 65 and over departed from us, according to the Singapore Demographic Bulletin. Last week, I met a resident who said that his 80-plus year old neighbour was very happy to learn about the Pioneer Generation Package, but sadly he passed away suddenly the next week before enjoying any of the benefits.

The subsidies for specialist outpatient clinics and polyclinic services, as well as disability assistance, will be rolled out in September 2014, and all pioneers who do not already qualify can join the Community Health Assist Scheme (CHAS) only in January 2015. The MediShield Life subsidies will be applied at the end of 2015.

The Government should expedite the roll-out of the Pioneer Generation Package benefits. For example, since CHAS is already in place, can we allow all Pioneer Generation members to immediately benefit? Although MediShield Life will only be rolled out in end-2015, the Government should start applying MediShield premium subsidies for the Pioneer Generation from this year. The elderly above age 65 are already shouldering a heavy premium burden of between $540 and $1,190 per year for just MediShield Basic.

Alternatively, the Government could consider doubling the planned additional Medisave Top-ups for Pioneer Generation members until the Pioneer Generation Package is fully rolled out, so that pioneers can start to enjoy the benefits of this package sooner. This would provide 65-year olds an additional $400 in Medisave Top-ups this year and next year, instead of $200 in each year.

The DPM said that there would be panel to assess appeals from those who marginally missed out on the precise criteria. Could the DPM share what are the guidelines the panel will be given to make their assessments? I hope the panel will err on the side of generosity, as many of those who just missed out have made significant contributions on par with pioneers. In particular, I am of the view that all those who served in the first few batches – and not just the first batch – of National Service (NS) should qualify for this package because they played an important role at a critical juncture in our nationhood.

It is important to emphasise that the Pioneer Generation Package is not a “senior citizen’s package” even though all of our pioneers are now elderly. It should not be viewed as the fulfilment of the Government’s obligations to the elderly. There is still much that needs to be done for the elderly and future elderly in Singapore, especially people with disabilities, homemakers and low income workers who will have insufficient savings when they reach retirement age.

Madam, I would now like to touch on a few other aspects of Budget 2014.

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GST

First on GST (goods and services tax). For the past six years, GST has been the second-largest contributor to government revenue, after corporate income tax. In FY2013, its contribution of $9.52 billion exceeded that of personal income tax by almost $1.9 billion. In FY2014, GST’s proportion of revenue is expected to increase to 17%, up from 16.7% last year.

It is widely recognised, even by this Government, that GST is a regressive tax, because the poor fork out a higher proportion of their income to pay GST than the rich do. The permanent GST Voucher scheme is meant to correct this regressivity.

However, GST Vouchers fully offset the GST expenses for only retiree-led households and the very low income. For other lower-income households, on average the GST Vouchers offset only about half of the GST they pay each year. Therefore, many lower income earners are still net contributors to GST.

I note that Budget 2014 provides an additional, one-off GST Voucher in the form of cash for seniors and a U-Save Special Payment. However, these are only for this year, and they still do not fully offset the GST expenses for all lower income households.

Can the GST Voucher scheme be enhanced so that it fully offsets the GST expenses of all lower income households, and offsets a greater proportion of GST expenses for middle income households?

This will better ensure that the GST Voucher scheme fully corrects the regressive nature of GST and makes it more progressive.

PRODUCTIVITY-ENHANCEMENT SCHEMES

Next, on productivity enhancement schemes and their outcomes. Before I continue, I wish to declare that I work in the IT industry and in the SME sector.

I agree with the Government’s intent to raise productivity in our companies, increase technology adoption and reduce reliance on manpower.

In his 2010 budget statement, the Finance Minister said that the “key goal” of the Government was to grow productivity by 2 to 3% per year, or 30% cumulatively, over the next 10 years to 2020. He said this will allow Singapore to maintain an economic growth rate of 3-5% a year, even with slower growth in our work force. The DPM reiterated in this year’s budget statement that raising productivity is “at the centre” of the Government’s economic agenda.

How have we progressed so far in achieving this key national goal? In 2011, labour productivity growth was 2% over the year before. In 2012, it dropped by 2%. Last year, it was flat – there was no overall growth from the year before.

The DPM acknowledged that while productivity has increased by 11% since economic restructuring began four years ago, this was entirely due to the strong cyclical recovery in 2010, with little improvement since. At this rate, is the Government going to be able to meet the targeted 30% cumulative productivity growth by 2020?

In the last four years, hundreds of millions of taxpayer dollars have been transferred to businesses through various grants and tax credits for productivity-enhancing schemes. The schemes introduced in this year’s Budget are mostly enhancements or extensions of existing schemes. Given the disappointing overall productivity growth for the past 3 years, I think we need to examine these schemes to see what adjustments need to be made to produce more positive outcomes.

ICT FOR PRODUCTIVITY AND GROWTH

Budget 2014 will include a major effort to scale up the use of ICT (infocomm technologies) by SMEs. The DPM said the Government will give a stronger push to the piloting and scaling-up of ICT solutions that can help to transform whole sectors, through the ICT for Productivity and Growth (IPG) programme.

Under one of the initiatives in the IPG programme, the IDA (Infocomm Development Authority) will pre-qualify eligible vendors and their solutions. SMEs need not apply to IDA for the subsidy; they can approach the pre-qualified vendors, and IDA will reimburse the vendors directly. These apply only to sectoral solutions currently supported under IDA’s iSPRINT programme.

How will the Government ensure that IDA uses a fair and objective method, and that its officers have sufficient industry experience and competencies to select the right vendors and solutions? This is critical because SMEs will be limited to these vendors and solutions – for better or for worse – if they want to tap on the IPG fund. In this respect, wouldn’t it be more appropriate to allow SMEs to choose the best vendor and solution that meets their unique business needs, rather than restrict them to a pre-qualified list from the government?

Under the current iSprint scheme, SMEs need to wait for several months for grant approval from IDA, and I am told that IDA asks SMEs many questions before approving the grant. I presume this is to ensure that SMEs and vendors do not abuse the grants. There is also a lengthy business proposal that must be submitted to justify the funding. After evaluation, IDA may decide that the “qualifying costs” for the grant will be lower than the actual implementation cost of the system, hence lowering the overall grant disbursed.

As a result, many SMEs may find that it is not worth the time and effort to apply for such funding, and this will result in a lower adoption of productivity-enhancing technology in SMEs. Only 500 SMEs have benefited from funding for sector-specific proven solutions so far under the iSprint scheme, out of over 154,000 SMEs in Singapore. This stands in great contrast to the Productivity and Innovation Credit (PIC) scheme, which does not require such a lengthy and onerous application process to obtain funding. Is it no wonder that the PIC has proven to be much more popular with SMEs? Over 80,400s SMEs tapped on the PIC scheme in the last two years.

I hope agencies can adopt a more streamlined approach when evaluating and approving technology grants for productivity enhancement. This will be a key success factor for IDA if it is to reach its target of another 10,000 SMEs over the next three years.

If the concern is that some SMEs and IT vendors will abuse the grants, then audits could be conducted after project implementation and penalties could be put in place to deter such behaviour, rather than to weigh down all SMEs because of the actions of a few black sheep.

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Madam Speaker, I have more to say on other aspects of Budget 2014, including defence expenditure, the prudent use of NSmen resources, MediShield Life, healthcare financing, and helping more Singaporeans to enter work force. I will elaborate further on these during the COS (Committee of Supply) debate later this week and next week.

Tackling income inequality should be Govt’s top priority

Our national productivity drive needs to start from the top. We currently have three very senior ministers advising the PM, three ministers in the Prime Minister’s Office—two of them without any portfolio—nine ministers of state and six parliamentary secretaries, most of whom are drawing multi-million dollar salaries. Does the prime minister of such a small country really need so many advisers and ministers assisting him?

This is my response to the Finance Minister’s Budget 2010 speech.

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Income inequality is one of the biggest challenges our nation faces. The median household income in 2009 was only 71 per cent of the average income, down from 74 per cent in 1999 [see note 1]. This means that the few very high income earners are pulling up the average, while the large number of lower income earners are pulling down the median. The share of wages in GDP has declined from 47 per cent in 2001 to 41 per cent in 2006 [see note 2]. The Gini coefficient–a measure of income inequality–rose from 0.436 in 1990 to 0.478 in 2009, indicating a widening income gap.

Increasing income inequality has been shown to coincide with higher divorce rates [see note 3] and crime rates [see note 4], particularly property crime. Singapore’s wealthy elites can no longer afford to simply turn a blind eye to the plight of the poor, thinking it will not affect them–because it will, eventually.

Reducing income inequality should be the top priority of the government. This government needs to pay more than just lip service to the goal of ensuring that all Singaporeans benefit from economic growth.

Continue reading “Tackling income inequality should be Govt’s top priority”

Sylvia Lim asks for transparency in electoral boundaries report

The government must know that Singaporeans are skeptical about the re-drawing of electoral boundaries. It would be an improvement to have advanced notice and some transparency in this process.

This is a “cut” (a short Parliamentary speech) by Workers’ Party chairman Sylvia Lim during the Committee of Supplies debate in Parliament yesterday on the budget allocation for the Prime Minister’s Office.

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PMO – Electoral Boundaries Review Committee Report

In countries like the UK, electoral boundary revisions are carried out by an independent Boundary Commission under the charge of a High Court Judge. Proposed boundary changes are also open to public scrutiny and objection.  In Singapore, however, the boundary revisions are done by a committee chaired by the Cabinet Secretary, reporting to the PM.  Sir, despite my belief that the PMO should not be in charge of the boundary review, the focus of my cut is how the current process may be improved for transparency and accountability.

I would like to touch on two points: first, the timing of the release of the report; second, the contents of the report.

Continue reading “Sylvia Lim asks for transparency in electoral boundaries report”

My thoughts on early elections

The Sage of Singapore has spoken:

He (MM Lee) said there would be ‘no purpose’ in holding an election in Singapore before 2011, but the timing of a poll will depend on the health of the global economy.

Actually I agree with him.

Amidst all the speculation in the media and blogosphere that elections are coming, I can’t fathom why the PAP government would want to call early elections.

I think public opinion and confidence in the government is currently at an all time low. While “low” is not low compared to countries like Japan, where the prime minister’s approval ratings are in the teens, it is still too low to win as convincingly as the last time round.

Let’s face it: Whether elections are held tomorrow, next year or in January 2012, the PAP is going to win an outright majority. The question is by how much and whether they will lose any more seats in the next election.

But common wisdom states that the best time (for the PAP) to hold an election is at the start of a recession, or towards the tail end of one. MM Lee, and even his son the PM, has said that 2009 could see an 8% contraction in the economy. This would be an appalling performance, and more so if our economy contracts more than our neighbours and competitors.

The 2009 Budget contains billions of benefits for companies, but just peanuts for Singaporeans. That’s not a recipe for electoral success, since companies don’t vote.

Of course the PAP is free to act on its hubris and call for elections nonetheless. We’ll see what dent the opposition can make on the ballot box.

Greater transparency needed for Presidential decisions

On Tuesday, Singaporeans witnessed for the first time a sitting President publicly justifying a decision he made.

President S R Nathan explained to Singaporeans why he consented to the Government’s $4.9 billion draw on the national reserves — another first in the history of this country. In the process he revealed that it took him not 11 days, but just one day to approve the draw from the time he received the proposal in writing from the Government.

The President said that he “responded after clinically examining the proposal”. Yet TODAY reported that he had already made up his mind when he received the proposal from the Finance Minister on Jan 20th — just two days before the Budget was presented in Parliament. Given that it takes much longer than two days to write a 60-page Budget speech with six annexes, let alone draft detailed policies on the use of the drawn reserves, it is not unreasonable to conclude that the decision was a done deal long before the proposal was submitted to the President — perhaps even before the Prime Minister “informally sounded him out” nine days before that.

When asked about his views on the $4 billion-plus Jobs Credit Scheme and the $5 billion-plus Special Risk-sharing Initiative, the President said that he was “not here to judge whether these schemes would ultimately work”. I am curious to find out who then is in a better position to judge, and prevent a rogue government from stealing cookies from the cookie jar?

Local dailies reported his explanations in depth, and also explained the functions of the Council of Presidential Advisors (CPA) and their responsibilities in this decision-making process. Many Singaporeans might not have been aware that the President is required to consult the CPA when making such decisions.

I think it is commendable that the President decided to explain his rationale publicly, even though he is not obliged by law to do so. Having said that, I feel there is room for our laws to be tweaked to make such transparency de jure.

Firstly, the President should be required by law to make public his reasons for approving any draw on the reserves. This should be done within one week of making the decision, and before any of the money is actually withdrawn and used.

Secondly, the CPA should also make public its recommendations to the President and their reasons for such. The individual votes of each of the council members should be transparent to Singaporeans as well, since the council makes its decisions on majority vote.

This would serve as a useful safeguard of the two-key system, particularly if the President decides to go against the advice of the CPA — which is his prerogative. The public can then decide which party it agrees with, and judge the Elected President and the Government accordingly.

Currently, according to Article 37K of the Constitution, for Supply Bills, the CPA is required to send a copy of its advice or recommendation made to the President to two individuals — the Prime Minister and the Speaker, who will present it to Parliament. I am not sure if this covers requests to draw down the reserves.

I will reserve judgment on the President’s decision until I see the effect (or non-effect) of the Jobs Credit Scheme. However, I think there is still a long way to go before we can claim that this two-key system is not one where the Government unlocks, and the other automatically follows suit, as Opposition leader Low Thia Khiang charged in Parliament.

Today the government draws down $5 billion. If in future it draws down $50 billion, or $250 billion, are Singaporeans still to expect the same degree of opacity as we have now?

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Read also President Ong’s interview with AsiaWeek – revisited, on The Online Citizen.

Parliament debates HDB rental flats, upgrading, e-engagement and Gaza crisis

PARLIAMENT on Friday [6 Feb] debated the budgets of three ministries – Foreign Affairs, National Development, and Information, Communications and the Arts.

Ministry of National Development

Mr Low Thia Khiang (WP-Hougang) queried the Minister for National Development about the recent demolition of flats on Hougang Avenue 7. He lamented that the demolition took place just seven years after Hougang Town Council used its own funds to upgrade the lifts in those flats. (Hougang, being an opposition ward, is at end of the queue for the Lift Upgrading Programme [LUP]. The LUP expenses for PAP wards are typically borne by HDB with small co-payments by the local town council and residents.)

Mr Low remarked that much of the money was wasted because of the early demolition. He said that in future, HDB should inform the Town Council earlier of its redevelopment plans, lest such waste took place again.

In her initial response, Senior Minister of State (National Development) Grace Fu, skimmed over the issue. Mr Low later pressed Ms Fu for an answer, adding that HDB ought to reimburse Hougang Town Council for the money that went to waste.

Ms Fu reiterated the Government’s earlier commitment to complete the LUP by 2014. Given the time needed to complete the works, HDB would have to make their selections and announcements of contractors by 2011.

Regarding the flat demolitions, the Senior Minister of State explained that HDB regularly reviews its land use, and that her Ministry “can’t tell seven years in advance” of redevelopment plans – “not even seven months”.Mr Masagos Zulkifli (PAP-Tampines) and Mdm Ho Geok Choo (PAP-West Coast) asked the Minister about the shortage of subsidised HDB rental flats for needy residents.

Minister for National Development Mah Bow Tan revealed that there were currently 4,550 applicants in the queue for subsidised rental flats. He said that “two-thirds of them have reasons not to be in the queue”. He cited examples of retirees who had no income but significant savings from the sale of their flats, yet qualified for rental flats. His ministry’s solution to this housing crunch would be to further tighten the eligibility criteria for rental flats.

Mdm Cynthia Phua (PAP-Aljunied) expressed dismay at this proposal, emphasising that in times of economic downturn, the Government “should have more love” instead of tightening the rental housing criteria for old folks. Mr Mah responded, saying that the purchase of a $90,000 two-room flat is “easily affordable” to someone earning $1,200. Continue reading “Parliament debates HDB rental flats, upgrading, e-engagement and Gaza crisis”