Category: Singapore

Govt should take on more risk on behalf of citizens

The PAP MP’s argument that it is okay for the Government to “save more” (by collecting more premiums than necessary) but disastrous for it to pay out more, proved the central point in my speech: That the Government is reluctant to take on more risks on behalf of Singaporeans.

During the debate in Parliament on 27 May 2014 on the President’s address, I made a speech in which I criticised the Government for not taking on sufficient risks on behalf of the people, but had instead passed many risks to them. I cited the increasing of the CPF Minimum Sum, the raising of the CPF drawdown age, and the high capital adequacy ratio of the MediShield insurance scheme as examples.

PAP MP Janil Puthucheary took issue with my remark that MediShield was “collecting a lot more in premiums than it is paying out in claims”. He suggested — without mentioning me by name — that this was an example of “intellectual dishonesty” and “sound-bite politics”, paraphrasing what I said as, “Medical insurance premiums are higher than the pay-outs”.

He left out my phrase “a lot more”, which gave the impression that I thought MediShield should be making a loss by collecting less in premiums than it pays out in claims. I immediately clarified that “I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more.”

In any case, these are not simply sound-bites, but facts. Between 2001 and 2013, based on CPF Board Annual Reports, MediShield collected $3.704 billion in premiums but paid out $2.190 billion in claims — a difference of $1.514 billion. I leave it to Singaporeans to assess whether or not they consider $1.5 billion to be “a lot more” in premiums than pay-outs.

Dr Puthucheary also questioned the validity of my comparison between MediShield and Obamacare, the US Affordable Care Act, which requires all Americans to buy health insurance and mandates commercial insurers to take on more risks on behalf of their policyholders. He said that “we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States”.

In fact, Obamacare served to illustrate my point that even profit-oriented health insurers in the US are required to take on more risks on behalf of their policyholders than our MediShield, which is a social health insurance scheme. I pointed out that Obamacare mandates a loss ratio of at least 80-85%, and that insurers who do not meet this minimum must now issue rebates to policyholders. (Loss ratio = [claims paid-out] / [premiums collected] x 100%. The higher the loss ratio, the more risk on the insurer.)

MediShield’s loss ratio between 2001 and 2012 had been, on average over this period, 63% (59% if year 2013 is included). It dropped from 75% in 2012 to to a historical low of 43% in 2013. The latter figure was revealed in the latest CPF Annual Report released on 6 June (after the Parliament sitting). It is likely due to the higher premiums collected as a result of the premium hike last year.

On his last point, about what if the “supposition that we could increase pay-outs is wrong”. He cited a “worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly.”

Increasing the loss ratio to 80-85% is not going to make public healthcare financing “insolvent”. That is clearly a hyperbole (an accusation he made about me). But more importantly, wouldn’t it be better for a government to take on more risks, so as to prevent individual citizens from suffering financial ruin due to high healthcare costs?

The PAP MP’s argument that it is okay for the Government to “save more” (by collecting more premiums than necessary) but disastrous for it to pay out more, proved the central point in my speech: That the Government is reluctant to take on more risks on behalf of Singaporeans.

The MediShield Life Review Committee is expected to submit its full report to the Government this week. I hope the Committee can prove me wrong, and that the Government will show that it is willing to take on significantly more risks on behalf of its citizens. If not, this will certainly not the last time I will be raising this issue.

This is the transcript of the full exchange in Parliament:

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Mdm Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song: Thank you, Madam, I just want to clarify a point that Dr Janil said in his speech earlier on. I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more.

As a point of comparison, the US Affordable Care Act, the new ObamaCare, mandates that a minimum loss ratio of between 80% and 85%. Ours is, on average, 63% over the last 11 years, and it was 75% in 2012. So, the US Affordable Care Act mandates that the minimum loss ratio should be between 80% and 85% and that insurers who do not spend 80-85% of their premiums in healthcare costs must now issue rebates to consumers. And these are all commercial insurers. These are not social health insurers.

Mdm Speaker: Dr Puthucheary.

Dr Janil Puthucheary: Thank you, Madam. Mr Giam brings up some very good points. And if I could take them in reverse order. Firstly, we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States. So I do not think his comparison is valid.

Secondly, I am loath to use the United States as the be-all and end-all for a model of where our healthcare system should evolve to. Even the policy-makers and office holders in the United States would readily admit that the short-term electoral outlook significantly constrains their ability to take a long-term strategic vision for the healthcare system of their nation.

But lastly, I would like to make one point, which is that what if he is wrong? What if Mr Giam’s supposition that we could increase pay-outs is wrong? And we should compare that to what if the current situation is the wrong decision? If the current situation where, as he puts it, the pay-outs are far less than the premiums collected, that is the wrong decision. We save a little bit too much. If he is wrong, and we pay out more, if we pay out more and he is wrong, what is the worst case scenario? The worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly.

This has happened in many other countries. The intellectually honest thing to do is to compare risks versus risks, benefits versus benefits, and worst-case scenarios against worst-case scenarios – not to cherry-pick the benefits of your proposal against the potential risks of the proposal in front of you. Thank you, Madam, for your indulgence.

Mr Gerald Giam Yean Song: Madam, I am glad he made that clarification. In fact, I cited ObamaCare precisely because of the US health system and the trouble that it is in today, and the fact that it is a commercial insurance scheme rather than a social insurance scheme. In fact, a social insurance scheme should have a much higher loss ratio than a commercial insurance scheme because commercial insurance wants to make money, whereas the Government is not in the business of making money. In fact, MediShield is supposed to be a not-for-profit insurance scheme.

Secondly, he asked about the grave scenario if pay-outs become more than the premiums collected. Now, in the case of medical insurance, it is relatively easy to be able to project what are the likely pay-outs to be and compared to, let us, say, earthquake insurance or something that has a much low frequency compared to health insurance, where you are able to see the trend and the cost of medical expenses over the years and be able to project what the pay-outs should be.

So, the question is: if it comes to the point where, because of the miscalculations, we aim for a 90% or 80% medical loss ratio but, for some reason, there is SARS that year or something like that happens, then we have a situation where the Government would have to step in to subsidise a bit more of the cost and the premiums can rise behind the increase in cost, not before you know that the costs are going to increase, then you raise the premiums.

Mdm Speaker: Dr Puthucheary.

Dr Janil Puthucheary: Madam, because we are talking about a social public good, it is therefore incumbent that we take a longer term, prudent approach, past one electoral cycle. I am glad that Mr Giam feels that medical expenditure is predictable. I and my professional colleagues would completely disagree. There is a lot of uncertainty about how costs will rise.

Myself and my brothers and sisters in the healthcare profession are part of that problem because we keep researching and coming up with all kinds of ways to spend the Health Minister’s money. Lastly, the example of SARS is a great example. It is precisely because of the prudent, conservative, risk-averse approach that we take on a day-to-day basis that when something like SARS comes along, the Government is able to step in and do what needs to be done.

Mdm Speaker: Minister Gan Kim Yong.

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Source: Singapore Parliament Reports (Hansard)

Managing risks, incentivising hard work and constructive politics (Debate on President’s address)

Robust debates which focus on the issues and problems at hand, and where alternative solutions are proposed and properly considered, can help shape better policies, which will benefit Singaporeans. But when debates start getting personal and descend into unnecessary political attacks, they risk losing focus from the bread-and-butter issues that citizens are concerned about. This sort of politics can cause our people to become cynical about the political process, and erodes their respect for politicians of all parties.

Speech delivered in Parliament on 27 May 2014

Madam Speaker,

I would like to focus on three areas in my response to the President’s address: Managing risks, incentivising hard work and constructive politics.

Managing risks

First, on managing risks. We face numerous risks in the course of our lives, or what the President called “the vicissitudes of life”. We could lose our job and suffer a drastic drop in income; we could fall seriously ill or get into an accident, and have difficulty affording the medical treatment; or we may retire but find we do not have enough to live our golden years with peace of mind.

This Government has been an excellent risk manager – it has been very good at managing its own risks, but less so the risks faced by our citizens. It pegs the CPF Minimum Sum amount to inflation, but does not do the same for CPF LIFE annuity payouts to the elderly. It raises the CPF drawdown age, which helps preserve the value of CPF balances, but leaves many retirees struggling to make ends meet, despite decades of contributions to CPF.

Even a risk sharing scheme like MediShield, which is supposed to be a form of social health insurance, is run more on commercial than social principles. The MediShield Fund had a capital adequacy ratio of 161% in 2012, which is more than 40% higher than what the Monetary Authority of Singapore (MAS) expects commercial insurance funds to hold. The loss ratio of MediShield averaged just 63% from 2001 to 2012. This means that it is collecting a lot more in premiums than it is paying out in claims.

In the past two decades, this Government has “marketised” many public services like transport and healthcare, transferring risks from the Government to service providers, which can easily pass them on to customers because of their near monopoly positions.

There are negative consequences for transferring too much risk to citizens. If Singaporeans face very high uncertainties in their lives, they will be less willing to start a business or volunteer their time to help others. Their minds will be so preoccupied with survival, that they find it hard to engage in innovative, creative or compassionate thinking. Instead, they will be under tremendous stress, worrying about how to cope with the rising cost of living and the increasing responsibilities of work and family.

In my maiden speech at the opening of the first session of Parliament in October 2011, I criticised the regressive transfer of risks from government to citizens over the previous decade. I am glad that in the last two-and-a-half years, there has been a shift in mindset and policy, and the Government is starting to bear a larger share of risks.

The HDB says it has de-linked BTO (Built-to-Order) flat prices from resale market valuations. The LTA has just announced that public bus services will undergo a nationalisation of their infrastructure and operating assets, with operations contracted out to private operators under stricter service standards. Changes are underway in healthcare to distribute more risks through universal insurance.

These are moves in the right direction. However, it is not time to declare victory yet. While flat prices have moderated, they come from a very high base and prices are still high relative to incomes of young home-buyers. We have yet to see whether service quality will improve under the new bus contracting model and whether fares will continue to rise as the same rate as now.

While everyone will soon have health insurance, is the risk simply being distributed among all Singaporeans? Will the Government take on some of the risk by subsidising premiums and removing some claim limits, as I proposed in my adjournment motion on healthcare financing last November? I look forward to some good news in this respect when the MediShield Life committee announces its recommendations.

There are other related issues like the increasing cost of living, the adequacy of CPF for retirement, healthcare affordability and job security that continue to cause Singaporeans a great deal of worry. The Government will do well to pay closer attention to these issues in its remaining term.

Incentivising hard work

Next, on incentivising hard work and productive activity.

In Singapore, almost all government financial assistance is strictly means-tested and time bound. Most Members would have seen cases at their Meet-the-People sessions where a struggling resident with a family to support is given a small amount in financial assistance – sometimes as little as $50 a month – by the community development council (CDC) and has to repeatedly appeal through the MP for it to be renewed every few months.

I presume the purpose of this is to motivate such residents to work harder and reduce their reliance on government handouts. However, in many of these cases, the resident is already working as hard as she can, but her income is simply not enough to maintain her children and elderly parents, while paying off utilities bills, service and conservancy charges and medical expenses, just to name a few.

The Government cannot expect that, by making them jump through hoops to receive financial assistance, they will suddenly be able to pull themselves up by their bootstraps, especially when incomes at the lower end are not rising at a fast enough rate. Some struggling families need to be given financial assistance on a longer term basis, until their circumstances change, for example, when their siblings or children graduate from school and start working.

We must always incentivise hard work and productive contributions to our economy and society. However, these incentives should not be only focused on welfare recipients.

We must be on guard against rent-seeking behaviour, particularly in major industries that have an impact on our economy. The Economist magazine defines rent-seeking as cutting oneself a bigger slice of the cake rather than working to make the cake bigger. In other words, trying to make more money without producing more for customers.

Rent-seeking may or may not be illegal. Some examples of rent-seeking include forming cartels, or lobbying for changes in regulations that benefit one’s own company at the expense of customers. Rent-seeking can impose large costs on our economy without creating any value. It insults our sense of what is fair, and goes against the values of meritocracy and hard work that we expect people to put in before getting rewarded.

The Economist has developed what it calls a “crony-capitalism index”, which ranks countries according to billionaire wealth earned as a proportion of the overall economy, in sectors that are vulnerable to monopoly, or that involve licensing or heavy state involvement. Singapore ranks poorly on this index. We are ranked 5th among the 23 countries that were surveyed in 2007 and 2014.

The Economist identifies several industrial sectors that are prone to rent-seeking behaviour, including casinos, real estate and construction. We should be on higher guard against the risk of rent-seeking behaviour in these sectors.

Madam, as social spending increases, the Government has said that it will need to develop other revenue streams to make up for future budget shortfalls.

We should continue to keep taxes low for income derived from engaging in value-adding activities which bring technological advancement and create good jobs for Singaporeans. This rewards hard work and incentivises productive activity and entrepreneurship.

However, if there is a need to raise more revenue to make up for future budget shortfalls, the Government should look first to increasing the Net Investment Returns Contribution or taxes on profits derived from economically non-productive activities. These should be done before considering raises to the GST or personal income taxes for middle-income earners.

Constructive politics

For my last point, I want to respond to what the President said in his address about constructive politics.

He said that “it is crucial to maintain constructive politics that puts our nation and our people first”. He acknowledged that “politics lives off robust debate and passionate argument” and that “we should continue to have vigorous debates on the challenges facing our nation” as this is important so as to “have the best ideas and best leadership for Singapore”.

I agree with the President on these points. My reason for entering politics was to contribute towards shaping better public policies that benefit my fellow citizens and help Singapore progress. I trust that this was also what motivated all members of this House to enter the political arena.

Robust debates which focus on the issues and problems at hand, and where alternative solutions are proposed and properly considered, can help shape better policies, which will benefit Singaporeans. But when debates start getting personal and descend into unnecessary political attacks, they risk losing focus from the bread-and-butter issues that citizens are concerned about. This sort of politics can cause our people to become cynical about the political process, and erodes their respect for politicians of all parties. We must not let our politics descend to this level because that will weaken Singapore.

Having said that, we must not presume that vigorous and passionate debates will lead to gridlock and paralysis. We should not sacrifice quality for efficiency. As the wise adage goes, “legislate in haste, repent at leisure”.

It is unproductive to rush through new policies, only to have it cause pain and unhappiness for the people, and have to reverse it later. It would be much better to have a proper and informed debate both inside and outside this House, make adjustments in response to feedback from MPs and the public, then roll out better schemes for Singaporeans.

I will continue to join my Workers’ Party colleagues to contribute constructively to debates on issues that matter to Singaporeans. If we assess that a policy will go against Singaporeans’ interests, we will oppose it and where possible, propose alternatives. If the policy is good for our country, we will support the Government for the benefit of our people. This is how we play the role of a constructive opposition.

Madam, I support the motion to thank the President.

GST offsets for low-income households

It is surprising to learn that GST Vouchers offset on average only half of the GST that the lowest 20% of households earn. This was not the understanding and the impression that I had when the GST Voucher scheme was launched several years ago. I thought it was meant to fully offset the GST paid by the poor.

I asked the Minister for Finance this question in Parliament on 14 April 2014.

The permanent GST Voucher scheme was introduced in 2012 to help lower- and middle-income households with their expenses, in particular, what they pay in GST. It was an acknowledgement that the GST is an inherently regressive tax, because lower-income earners on average pay a far higher percentage of their incomes in GST than higher-income earners do.

It is surprising to learn that GST Vouchers offset on average only half of the GST that the lowest 20% of households earn. This was not the understanding and the impression that I had when the GST Voucher scheme was launched several years ago. I thought it was meant to fully offset the GST paid by the poor.

Mrs Josephine Teo, the Senior Minister of State for Finance, told me that the GST that lower-income households pay is “more than offset” by the other benefits they receive from the Government, like childcare subsidies, financial assistance for education, Workfare, housing grants and healthcare subsidies. I feel we should not be conflating the GST Voucher scheme with other government assistance schemes for low-income households, as those schemes should exist whether or not we have the GST.

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Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) on average, what percentage of GST paid by the lowest 20% of households (by income) is offset by all forms of GST Vouchers last year; and (b) whether the Government will consider fully offsetting the GST paid by all households in the lowest quintile even in years when there are no one-off Special Payments made.

Mrs Josephine Teo (for the Deputy Prime Minister and Minister for Finance): Mdm Speaker, in 2013, for the lowest 20% of households by income, on average about half of their GST paid would have been offset by the regular GST Voucher. If we include the one-off GST Voucher Special Payment announced in Budget 2013, the benefits from the GST Voucher would have covered over 90% of their GST paid.

However, the GST Voucher scheme is not the only offset for the GST paid by lower-income households. The GST Voucher is part of a progressive system of taxes and benefits, that ensures that lower-income households get back far more benefits than the taxes they pay, including GST. These include childcare subsidies and financial assistance from school to tertiary education, Workfare, special and additional housing grants, and healthcare subsidies. The GST that they pay is hence far more than offset by the benefits they receive.

Mr Gerald Giam Yean Song (Non-Constituency Member): Madam, I thank the Senior Minister of State for the reply. I would like to clarify: what is the Government’s philosophy behind the GST Voucher Scheme? Is it meant to offset the taxes that are paid by the lower- income through GST? Or is it meant to just partially offset it? I understand the Senior Minister of State’s point that there are other vouchers and other subsidy schemes that would help to offset the cost of living, but specifically for the GST, does the Government see it necessary to fully offset the GST paid by the lower- income, in recognition of the fact that it is a regressive tax? Because that was the understanding and the impression that I had when the GST Voucher Scheme was launched.

Mrs Josephine Teo: Mdm Speaker, I thank the Member for his question. The GST Voucher Scheme is a permanent scheme. When the scheme was introduced, the idea was to ensure that even for lower- income households where they paid GST, there would be some form of permanent support for these households. But it does exist as part of a broader set of benefits that are provided to different households. And it is within this context that the GST Voucher Scheme is designed. So we look at the benefits that are provided to households holistically and provide the support where it is most meaningful to them. If I could also share and remind the Members of the House, in every Budget, the support measures that are provided to lower- income households have been strengthened in many different regards. It could be in education; it could be in childcare; it could be in healthcare; it could also be in housing. So we have to look at all of these in totality.

Source: Singapore Parliament Reports (Hansard)

Interview with Straits Times on public transport woes

The Straits Times did an interview with me last week about the performance of public transport since the last General Election, quotes of which were published on Saturday’s (3 May 2014) Insight article, “On track to solve public transport woes?”. Below is the full transcript of the interview.

The Straits Times did an interview with me last week about the performance of public transport since the last General Election, quotes of which were published on Saturday’s (3 May 2014) Insight article, “On track to solve public transport woes?”. Below is the full transcript of the interview.

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[Straits Times] In terms of train reliability, the disruptions in December 2011 were probably the turning point for the worse. 2012 saw the number of train delays hit a high, and according to LTA stats the number of delays and withdrawals came down last year. Some measures the Govt has implemented to tackle this include setting up joint teams with the operators post COI, and raising the maximum fine this year. What is your sense of rail reliability since 2011? Has the situation improved, stagnated or deteriorated, and why?

[Gerald] The number of delays lasting longer than 5 minutes may have come down last year, but this was from a high base of 396 in 2012 and 393 in 2011. The number of delays in 2013 was still higher than in 2010 and 2009. So I think it is still too early to declare victory.

Furthermore, I have often experienced trains stopping many times for less than 5 minutes along the way, resulting in the overall journey being significantly delayed. This has also been the experience of other commuters I have spoken to. Sometimes the statistics that the Government looks at don’t tell the whole story.

[Straits Times] Looking ahead, what needs to be done in to improve train reliability further?

[Gerald] It is usually cheaper to maintain a machine regularly than to replace a machine that has broken down because of poor maintenance. Our MRT system has suffered for years of under-investment in maintenance. It will take a massive re-investment in maintenance to restore reliability to acceptable levels. Beyond maintenance, technology and infrastructure needs to be upgraded to keep up with population and commuter growth. For example, I believe the multiple short delays during trips that I mentioned earlier are often due to the signalling system not being able to accommodate shorter headways (the distance or time between trains).

[Straits Times] In terms of crowding, have trains become even more packed since 2011? Any feedback you have gotten from commuters or residents about this issue?

[Gerald] I find that the train frequency during peak hours has increased slightly, but trains are often still not arriving fast enough to clear the continuous stream of people who are entering the station platforms. Once there is even a slight delay, the platforms would be overflowing with people. While MRT operators may have increased train frequency, there are also more commuters due to continued population increases. It is meaningless to tell commuters that trains are now arriving every 2 minutes instead of every 5 minutes, when they needs to wait for 3 full trains to pass by before being able to board a train.

[Straits Times] Some measures to ease train overcrowding include travel demand management schemes such as free travel and Insinc, as well as introducing express/parallel bus services under the BSEP. To what extent do you think these have been effective? And do you think the overcrowding situation will ease when the Downtown and Thomson lines open a few years down the road?

[Gerald] If we can find a way to spread out the commuter load away from peak hours, that would help ease peak hour overcrowding. However, I don’t think free travel or other incentives will make a significant impact. These will only work if most commuters have flexible working hours, which is clearly not the case now. More employer mindsets need to change to allow for more flexible working hours and telecommuting.

We also need to develop more alternative city centres so that commuters do not all head in the same direction at the same time, as this causes additional strain on the public transport network.

I hope overcrowding will ease with the opening of new lines, but keep in mind there will also be more commuters in the coming years because of an increasing population. Furthermore, many of the new lines are serving areas which previously had no easy access to MRTs. I think the main benefit of these new lines would be an increasing mode-share of commuters taking the MRT. It may not translate to less crowded trains along the existing lines.

[Straits Times] Do you think bus services have improved overall since the BSEP was rolled out, and to what extent? Why or why not?

[Gerald] I understand there has been an improvement in bus frequency along routes benefiting from BSEP, with some services seeing waiting times of 30 minutes reduced to 10 minutes. With $1.1 billion of taxpayer money poured into this programme, plus another $1 billion or so on the way (with BSEP 2), I think this is the least that commuters can expect.

[Straits Times] Are there any problematic routes you know of – whether in terms of being too crowded/very long waiting time/bunching – that need to be addressed?

[Gerald] I am not able to itemise every problematic route, but I am told that SBS services 225G and 225W from Bedok Interchange often experience very long queues, such that passengers at the back of the queue are not able to board the bus or have to squeeze themselves onto the steps of the bus entrance.

[Straits Times] Moving forward, what else needs to be done to improve the bus network? More bus priority schemes, moving more quickly to the contracts model, or even nationalization?

[Gerald] We need to prioritise the needs of public transport commuters over users of private transport. The former mayor of Bogota, Colombia once said that if all citizens are equal before the law, then “a bus with 80 passengers has a right to 80 times more road space than a car with one.”

With this in mind, I would like to see more all-day bus lanes to make bus journeys smoother and more predictable in terms of timing, even if it means taking away some road space from cars.

I think whichever public transport model we adopt must incentivise operators to place reliability, affordability and commuter comfort and convenience ahead of profits. I can’t see how this can be achieved with two operators that are profit-oriented and enjoy de facto monopolies on each of their routes. The PTOs’ profits should be used to lower fares and for maintenance and upgrades, not to distribute as dividends to shareholders. Alternatively, we should, where feasible, introduce genuine competition that will spur innovation and productivity improvements to lower costs and improve service quality. It is competition that spurs efficiency and productivity improvements, not the profit incentive as our Government leaders wrongly assume. PTOs cannot be allowed to keep their profits yet be shielded from competition, because the ones who will suffer are commuters, who come mostly from the middle and lower income groups.

Detecting aircraft that stray from flight path

I wanted to ascertain if suspicious aircraft can be effectively detected by our military radar and intercepted before they can harm our homeland. With just a tiny airspace surrounding our territory, there is little time to lose in completing the OODA loop (observe-orient-decide-act) to make the right decision in dealing with suspicious aircraft.

The startling revelation that Malaysian military radar tracked the missing MH370 flying across Peninsular Malaysia but did not sound an alarm, prompted me to ask this question of MINDEF. I wanted to ascertain if suspicious aircraft can be effectively detected by our military radar and intercepted before they can harm our homeland. With just a tiny airspace surrounding our territory, there is little time to lose in completing the OODA loop (observe-orient-decide-act) to make the right decision in dealing with suspicious aircraft. What is interesting is that these air defences were put to the test once before, although it is not clear what type of aircraft had wrongly entered our airspace.

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Mr Gerald Giam Yean Song asked the Minister for Defence whether the RSAF has measures in place to identify and be alerted to aircraft flying near Singapore which veer off their flight path so that they can be intercepted in time before they reach Singapore.

Dr Ng Eng Hen: The RSAF has a robust air defence system to monitor our skies and protect the sovereignty of Singapore’s airspace. Working closely with the Civil Aviation Authority of Singapore, the RSAF detects and identifies aircraft before they enter our airspace through its suite of radars.

If an aircraft veers off its flight path, a series of preventive measures will be triggered. First, air traffic controllers will communicate with the aircraft to verify its reason for veering off its flight path. If there are doubts regarding the intent of the aircraft or the aircraft does not adhere to air traffic control directions, RSAF fighter aircraft will be activated to intercept the aircraft. Ground-based air defence systems will also be activated.

On past occasions, the RSAF had responded swiftly to suspicious aircraft approaching our airspace. For instance, in 2008 when an unknown aircraft was detected heading towards Singapore, the RSAF activated our F-16 fighters to intercept and identify the aircraft, and the fighters escorted it till it landed.

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Source: Singapore Parliament Reports (Hansard)

Progressive Wage Model and Low Wage Workers

I asked the Acting Manpower Minister (on 14 April) how his ministry planned to bridge the gap between the 110,000 workers earning less than $1,000 per month (a figure I obtained from a previous Parliamentary question) and the 80,000 workers expected to benefit from the Progressive Wage Model, which will be applied to only the cleaning, security and landscaping industries.

I asked the Acting Manpower Minister (on 14 April) how his ministry planned to bridge the gap between the 110,000 workers earning less than $1,000 per month (a figure I obtained from a previous Parliamentary question) and the 80,000 workers expected to benefit from the Progressive Wage Model, which will be applied to only the cleaning, security and landscaping industries.

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Mr Gerald Giam Yean Song asked the Acting Minister for Manpower how does the Government plan to raise the wages of local low-wage workers in industries other than cleaning, security and landscaping given that that there are around 110,000 employed residents in Singapore earning less than $1,000 per month (excluding part-time workers) and the enforcement of the Progressive Wage Model in these three industries is expected to impact only about 80,000 low-wage workers.

Mr Tan Chuan-Jin: I have talked about the need to raise the incomes of lower-wage Singaporeans for a few years now and we have been putting in place measures to do so. It requires a holistic and wide-ranging effort. As a key first step, we need to keep the economy healthy, competitive and vibrant so that a wide range of jobs is available.

Secondly, our tightened labour market helps to keep unemployment low and put some upward pressure on wages.

Thirdly, we have enhanced Workfare, which now supplements the incomes and retirement savings of more than 400,000 Singaporean workers earning less than $1,900, and encourages them to work regularly and up-skill. Through the Inclusive Growth Programme, low-wage workers benefit from companies’ productivity gains through higher wages. MOM has also raised the full-time equivalent (FTE) salary for full-time local workers from $850 to $1,000 in July 2013. The FTE salary is used to determine how many local workers a company has, as a basis to calculate the foreign worker quota that the company is entitled to. It also ensures that local workers are employed meaningfully, and are not paid token salaries just to pad the numbers.

However, it is important to also understand that raising incomes has to be based on productivity improvements, to be sustainable in the long-run. Mandating the Progressive Wage Model (PWM) to support wages at the very low end is a highly targeted intervention applied to specific sectors where there is a particular problem with the labour market, such as prevalent cheap-sourcing coupled with a lack of union representation for the workers. We are applying the PWM requirement through legislation in the Cleaning, Security and potentially the Landscape Sectors. But this legislation approach will not be appropriate for all sectors and occupations. A better approach for other sectors is NTUC’s on-going efforts to work directly with employers to develop progressive wage structures and career progression pathways for rank-and-file and even PME workers.

We also support the low-income earners through a range of other support schemes whether in the form of housing, medical and education subsidies.

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Source: Singapore Parliament Reports (Hansard)

Net Investment Returns Contribution

I asked the Finance Minister this question during the 14 April 2014 sitting of Parliament to find out if the Government had been using the full 50% of Net Investment Returns (NIR) to supplement the Budget, as is provided for in the Constitution. While it is widely assumed that 50% of the estimated long term annual returns from investing our reserves is contributed to the Budget each year, the Constitution actually allows for “up to 50%”, which means it could be less than 50%.

I asked the Finance Minister this question during the 14 April 2014 sitting of Parliament to find out if the Government had been using the full 50% of Net Investment Returns (NIR) to supplement the Budget, as is provided for in the Constitution. While it is widely assumed that 50% of the estimated long term annual returns from investing our Reserves is contributed to the Budget each year, the Constitution actually allows for “up to 50%”, which means it could be less than 50%.

Indeed, the Finance Minister revealed that the Government had in fact been using about 47% of NIR on average over the past 5 years. This works out to almost half a billion dollars less each year in the Budget than what the Constitution allowed for. However, for FY2014, the Government plans to top up the Budget with the maximum 50% of NIR.

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Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance what percentage of the Net Investment Returns (NIR) on the net assets managed by Government of Singapore Investment Corporation (GIC), Monetary Authority of Singapore (MAS) and Temasek Holdings is contributed to the Government’s Budget as Net Investment Returns Contribution (NIRC) for each of the last five years, given that NIRC comprises up to 50% of the NIR on the net assets managed by GIC and MAS and up to 50% of the investment income from the remaining assets (which includes those of Temasek Holdings).

Mr Tharman Shanmugaratnam (Deputy Prime Minister and Minister for Finance): The Net Investment Returns (NIR) framework allows the Government to tap the investment returns of our reserves for budgetary spending in a sustainable way. Under the framework, the Government can spend up to 50% of the long-term expected real return from the net assets managed by GIC and MAS, and up to 50% of the net investment income from Temasek and other assets.

The Government generally budgets to take in 50% of Net Investment Return Contribution (NIRC) at the start of each Financial Year (FY). The actual NIRC taken in at the end of the FY may vary due to changes in the fiscal position and to differences in the actual outturn for the maximum NIRC compared to what was budgeted at the estimates stage.

From FY2009 to FY2013, the actual NIRC taken in has been close to the maximum 50%, with the Government taking in on average slightly above 47% of the NIRC. We expect to take in the maximum 50% of NIRC in FY2014, in view of an expected overall budget deficit.

The NIRC has been able to supplement the Budget by $7 billion to $8 billion annually. Our approach to taking in NIRC reflects a prudent approach to fiscal spending. We should spend to achieve desired outcomes, rather than spend to the last dollar available.

Further, our government spending needs will increase over time, and the NIRC will remain an important source of revenue over the long term. It is therefore vital that we spend in a disciplined way, and ensure sustained benefits from the returns on our reserves.

Source: Singapore Parliament Reports (Hansard)

Health screening (COS – MOH)

To encourage greater adoption of health screening, I propose that all Singaporeans who reach age 40 be provided with one set of free health screening tests for common chronic conditions and cancers under HPB’s Integrated Screening Programme. This should include the cost of the doctor’s consultation.

Parliament, 12 March 2014

Madam,

Age-appropriate preventive health screenings have been recognised as a cost-effective way to identify health problems before they develop further and end up being more costly to treat.

However, many are reluctant to undergo health screenings because of the inconvenience, cost or fear that it will reveal health problems, whose treatment may be beyond their ability to pay for.

More resources should be invested in promoting regular health screening on a wider scale. High risk groups should be identified and greater efforts should be made to reach out to them.

To encourage greater adoption of health screening, I propose that all Singaporeans who reach age 40 be provided with one set of free health screening tests for common chronic conditions and cancers under HPB’s Integrated Screening Programme. This should include the cost of the doctor’s consultation.

Subsequent health screenings should be provided at subsidised rates, and patients should be allowed to use their Medisave to pay for the remaining cost.

Having more Singaporeans in high risk age groups undergo regular health screenings could reduce overall health expenditure, as diseases are detected earlier, hence requiring less costly interventions.

MediShield Life

I would like reiterate my call for premium subsidies to be extended to all vulnerable groups of Singaporeans, including elderly persons with low savings and not only members of the Pioneer Generation; people with disabilities; those who have exhausted their Medisave; and those who already qualify for government financial assistance schemes like Medifund, Public Assistance, ComCare and CHAS (Community Health Assist Scheme).

Parliament, 12 March 2014

Madam,

I would like to make a few proposals regarding MediShield Life before it is introduced next year.

First, I would like reiterate my call for premium subsidies to be extended to all vulnerable groups of Singaporeans, including elderly persons with low savings and not only members of the Pioneer Generation; people with disabilities; those who have exhausted their Medisave; and those who already qualify for government financial assistance schemes like Medifund, Public Assistance, ComCare and CHAS (Community Health Assist Scheme).

Second, can the $70,000 annual claim limit be removed for MediShield Life? For the affected policyholders, it would be financially crippling if their insurance cover were removed when they reach the claim limit, since they would already have spent a lot of their savings on the co-payments. Fewer than 0.1% of policyholders reach the policy year limits each year. Continuing to cover them should not result in significantly higher claims or premium burdens, but would provide tremendous peace of mind for them.

Third, MOH should ensure that MediShield Life does not follow the practice of some private insurers, which sometimes reduce coverage after policyholders are diagnosed with the an illness, to prevent them from claiming again if they suffer a relapse. This should also apply to the Integrated Shield Plans that ride on MediShield Life.

Fourth, can we have better coordination of MediShield Life with private and company health insurance to ensure that they do not overlap? This will avoid unnecessary premium payments, which benefit no one but the insurers.

Properly incentivising providers (COS – MOH)

Can MOH explore alternatives to the current fee-for-service payment approach? Fee-for-service payment tends to give providers a perverse incentive to boost revenue by increasing patient throughput, rather than keeping patients healthy and out of hospital.

Parliament, 12 March 2014

Madam,

Traditionally, we contain healthcare costs by curbing patients’ demand for healthcare. We do this by making patients co-pay, so that they think twice before seeing the doctor or requesting for more diagnostic tests.

However, most times it is the doctors who decide on the course of treatment for the patients. Therefore healthcare providers, not patients, drive the bulk of healthcare spending. If we want to control costs, we need more focus on the providers.

Can MOH explore alternatives to the current fee-for-service payment approach? Fee-for-service payment tends to give providers a perverse incentive to boost revenue by increasing patient throughput, rather than keeping patients healthy and out of hospital.

Instead, MOH should better incentivise providers to contain the overall growth of healthcare costs across the continuum of care – from primary to acute to step down care.

Doctors and healthcare providers should be given greater financial flexibility to redesign care delivery, so that proven and cost effective services can be reimbursed. For example, we could reward providers for efforts to enhance patients’ medication compliance, monitor patients’ weight gain or blood sugar levels in their homes, or perform follow-up consultations using web conferencing.

Second, different providers should be better integrated and made collectively responsible for providing coordinated care for patients. GPs, acute hospital specialists and step down care professionals should be rewarded for cooperating and sharing information to improve quality and control costs, not simply by the volume or class of patients they treat.