(This post was originally posted here).
This post is inspired by a fellow blogger Jack who is my army bunkmate. Since he invited me to discuss our views on Facebook, I’ll do just so and write another article as well. In fact, this post is a response to his pro-PAP stance adopted in his post. Let me declare it right now, I’m a pro-opposition supporter, hence don’t be surprised if the stance of this article is slanted in that direction as much as his is towards the PAP. If you have not already read his article, please do so here before reading mine. Although, there is no harm vice versa.
To simplify things and to enable you to compare our arguments smoothly, I shall follow the same format and topic order as him. Which are:
Policies to discuss
Housing ( very long section, skip if u think this may make you stop reading my post altogether)
Grow and share
Minimum Wage/workfare ( Renamed from policies for the poor, middle class and senior citizens)
What we stand to lose/gain combined with How we should restructure our thinking and mental paradigm
Its a well known issue that housing prices have been skyrocketing of late. Whether online or to the newspapers, many people have expressed displeasure at the limited actions or lack of of the government in ensuring affordable housing. What I differ from him, is how do we go about ensuring Singaporeans can afford a new roof over their heads.
The primary group who is most affected by escalating housing prices are the first time house buyers. The Workers Party proposal (see pg39 of WP manifesto) is to peg the prices of new HDB flats to the median incomes of Singaporeans subject to strict criteria. SDP argues that flats should be sold at near cost price with small adjustments allowed for varying demand. Jack goes with the view that supply and demand should be allowed to do its work and manipulating housing prices is distorting the market, raising people’s incomes should be the way to go (my personal paraphrasing).
In my view, WP’s proposal raises more questions then it solves like how much to peg at for each house type and what about location, valuation etc. SDP one is a little less radical (one of the rare cases) and is the one that gets my support . Before I start, lets state the root causes.
1. More foreigners buying properties
2. Supply of HDB flats not keeping up with demand
3. Should public housing for new buyers be defined as a merit good deserving the need for manipulation at a greater level
and more.. Since I have never bought a HDB flats before, I can only argue in macro, abstract terms. (Jack’s article is no different in this aspect)
The issue of foreigners will be covered in the next section. That leaves supply and levels of government manipulation.
The government should build more flats. Restart building of one, two and three room flats if not already done so. Since land is an issue, build taller and underground if need be. Since I don’t have figures (and no time to research) , I shall not expand this further. I shall spend more time below since Jack devoted his energies there as well.
Merit Good (how much manipulation if any)
Actually, there is no such thing as a free market. Whether its housing, medical care or cars, restrictions are put in place by the government to manipulate demand and supply. Its a fallacy to think that a free market works wonders without consequences. To buy HDB flats, one has to be >35 years if still single, not have >$8000 combined family income and not having owned another HDB flat etc. (Correct me if I get this wrong) COE supply directly controls supply of new cars. (Jack is contradicting himself since he finds arguments against it absurd). Medical care in polyclinics and govt hospitals are subsidised. These are examples of the government not playing by the rules of the free market because there is a genuine need to intervene for the good of the people.
This is the one point where I greatly differ from him. I personally see public housing for first time buyers as a merit good deserving of manipulation on the SDP level to ensure affordability. In Singapore’s case, the supplier of new flats is the HDB (aka the government). It dictates how many it wants to build, the prices it wants to set. This should not be a typical private company with a profit motive. This is a govt entity selling an essential merit good that you have to buy for a roof over your heads.
Intervening does make it seem more socialist and less capitalist. But there is no such thing as a perfect capitalist society model one can point to, not the US or Switzerland. Unfortunately, there isn’t a case of unshackled capitalism except in Economics textbooks. I dispense with all that fanciful quotes Jack uses and go straight to the point. What is wrong with giving this particular group of first time buyers a helping hand in purchasing their first home?
Since I can’t find WP’s strict criteria in their manifesto, I shall add my own to supplement theirs. My control measures are to prevent misuse (like property flipping), speculation and market segmentation to distinguish from the resale market. Unlike him, I believe this measures will actually be limited. In addition to the current rules, I can suggest these points for the opposition to add to their manifestos.
1. Change the minimum occupancy period of subsidised flats from 5 to 10 years (to weed out those who intend to flip)
2. Restrict the number of permanent residents allowed to purchase these flats. (Needed because of liberal PR policies)
3. Allow people to rent out HDB flats after half their loan has been paid up. To ease rental prices and provide owners with a passive income.
Resale flat market will remain as it is. Prices in this segment will be dictated by the usual demand and supply.
His solution of raising incomes through education is laudable. I support it. But how long will that take effect? What about those that urgently need a HDB flat? No wonder the birth rate is low as well. People are so busy working and studying for the very “quiet environment” required to make babies.
This is a typical pro-PAP stance. All foreigners or nothing. I say, I’m ok with foreigners working in Singapore. But the numbers are what everybody is at odds with. Normally, I would be inclined to agree with him that the best way to beat back their numbers is to make yourself more valuable in terms, of costs, skills/productivity, experience and work attitude, items judged in fair competition.
PROVIDED the competition is fair in the first place. I can state 3 instances I see which a typical Singaporean is disadvantaged even before capability is taken into consideration.
1. Employer/Employee CPF contributions. Assume a local and a foreigner are equally capable and applying for the same job. A situation can easily arise where the local employee can get a lower wage then a foreigner despite incurring more costs to the employer. Do the maths, its entirely possible.
2. NS obligations. Local males who are physically fit may need to serve up to 40days of NS per year against a foreigner who does not. Even if Mindef compensates the wages, somebody has to cover for his work. This is especially acute for SMEs where there may not have the spare manpower to “tank” the workload. Employ another temp staff= uncompensated costs
3. High cost of living. Most foreigners who come here are usually from less developed countries where jobs for their skill sets are not available or not at a wage they want.* They usually come alone with families living at lower cost of living back in their home countries. Unlike a Singaporean worker who has no choice but to demand relatively higher wages to support his family in high cost Singapore.
*This is my personal anecdote, if the country is well developed with jobs they want, why do they need to come here? There are few exceptions, like stem-cell researchers who come to Singapore due to political opposition back home.
With these shackles on his legs, its no surprise a typical Singaporean worker is more likely to lose the race in the job market. Example 1 and 2 are artificial constraints imposed by the government. I’m in support of the CPF scheme as it is. Reservist obligations should be sharply curtailed to 5 years or less. Instance 3 is unavoidable.
Getting better and faster is possible, but with an unfair race, it is alot more difficult for Singaporeans to compete. The only solution then is to moderate the inflow of foreigners. Restrict to those talents that one cannot find in Singapore. Allow low-skilled workers for jobs Singaporeans don’t wish to do like construction workers. Anything else, allow in only on a needs basis. With a slower influx in foreign workers, there is a also a positive side effect of slower increase in housing prices/rentals and greater easing on public transport.
Grow and share
Like Jack, I just got a couple of hundred bucks on Friday. Sure, giving so much cash is good. But only during election season? Come on…. Whether such a scheme exists or not is not really related to Singapore’s growth. I’m sure you know the real reason.
Seriously, I’m surprised the government has not done more considering the huge budget surpluses year after year. Strictly speaking, accumulating large surpluses is a contractionist fiscal policy. Surpluses are of course better than deficits. But excessive surpluses is a problem. It sucks money away from the potentially larger Singapore economy.
Jack say it may be true the fruits of economic growth has not trickled down. It is not a question of maybe, it IS true. From decade up to 2008, the Singapore’s economy doubled while the average incomes of bottom 20% has fallen by 2.7%. (See BBC).
With budget surpluses and up to $15 billion of land sales which are unaccounted for in the Budget, its a no-brainer that the government can well afford more of such grow-and-share and/or other welfare packages whether we are growing or not.
I cannot step into the casino since I have yet to reach voting age. I have visited the Marina Bay Sands though not Resorts World Sentosa yet. Beautiful places all right. My first question is what is the proportion of Singaporeans working in the IRs. The second is how much has cases of gambling related problems increased since its completion.
Otherwise, I’m ok but uneasy with the economic benefits it brings. My stand here is similar to Jack’s. I do hope my questions well be answered though.
I renamed this because Jack didn’t discuss much else except that minimum wage does not work.
In this aspect and the fact that I have no figures in hand, I will take his stand. But I do believe the discussion should not end there. Other than pure economic arguments, the government should set up a commission to research into the feasibility of a minimum wage instead of dismissing it outright. WP’s chief Low Thia Kiang suggested this in parliament but was rebuffed.
Unlike the RP and SDP which supports the minimum wage, WP prefers to enhance the Workfare scheme which I support (See WP manifesto pg47). The cash component which is about 2/7 should be increased to about 2/3 which is around the ratio of wages less CPF. Instead of 35 years, I suggest the minimum age be reduced to 30.
If a future minimum wage study concludes that it is beneficial, then I’ll support it. Its a matter of beautiful economic theories against the practical reality. An example is the trickle-down economic theory. Basically it says tax cuts and benefits should be aimed at the rich and businesses so they would invest more and create more jobs and economic growth. It has been disproven although US politicians (especially Republican) continue to recommend it, probably because of their rich campaign donors.
Till a minimum wage study is done, my stand is along the lines of WP.
Arguments against ERP, COE aand other car related policies absurd? So he thinks these policies are all right in their current implementation?
In line with SDPs’s arguments, I support the COE fully if the other frivolous taxes line Import Duty and Additional Registration Fee (ARF) are removed. Consolidate these taxes or remove them. The COE supply alone is enough to determine the supply of new cars with or without these taxes.
Taxi driving is a job that fluctuates inversely with economic growth for obvious reasons. I agree with WP’s proposal to exempt them from ERP charges. The reason given is to encourage them to ply into CBD areas during peak hours. I would back it up by saying it gives people an alternative away from driving cars during peak hours and taxi drivers more income.
Additionally, incentives or rather, reduction of disincentives for hybrid, electric or other environmentally friendly cars should be implemented. There is a green rebate of 40% discount off ARF. If its still around, I suggest a discount of 40% of COE if SDP’s policies are fully implemented. Else, increase the discount on ARF.
Peak hour transportation grouses has grown louder over the years. I form part of the peak hour crowds that take the bus and MRT to work everyday and I can fully understand why. You cannot act gentlemanly if you want to board a crowded train. Push or you can’t board is the rule that better stay in your head. Same story for the buses. Buses have one additional rule. Attempt to estimate the final position of the bus and make your way there quickly before others do so. Those who are too late or slow in the game can only watch or join the back of the semicircle crowd in the faint hope the bus can accommodate all.
I’m sure the above scene plays out all around Singapore everyday, every peak period. Increase in population is one reason which is covered above. One of the solution is to increase number of buses and trains. Costs are an issue. High profits show that the transport companies can afford to purchase more vehicles. As to the argument of under utilisation during off-peak hours, think of a power station. A power station has to always maintain enough capacity during peak hours. During off-peak hours, excess turbines lie idle. This is an inevitable part of businesses that involve varying demand.
What we stand to lose/gain and How we should restructure our thinking and mental paradigm
I believe the PAP will continue to have a parliamentary majority on polling day. The extent of the majority is highly variable which one can only speculate till the counting is completed. It is my sincere hope to see more full opposition MPs in parliament, even better if they can grab >1/3 of the seats to prevent rubber-stamping of constitutional changes. NCMPs can be up to 9 but they are toothless if you scrutinise their powers carefully.
If the PAP maintains its current super majority or increases to full house, we will likely see not much change to the status quo. The problems stated above will likely remain or worsen.
If the opposition increases its foothold in parliament, I would expect more robust debate in parliament. Negative aspects of policies can’t be easily suppressed or swept aside. If the whip is lifted, PAP MPs with dissenting views can probably vote against a bill knowing with confidence he is not powerless in joining hands with the opposition.
Foreign politicians welcome our leaders as they see Singapore citizens as the ideal electorate. Compliant, submissive, law-abiding and the do with “no questions” asked attitude. They wonder how did the PAP do it. Politicians from China are especially interested. If not why would you think this tiny red dot gets more attention then its “novelty deserves”?
A politician campaigning for parliament is like a prospective employee going for a job interview. Some candidates have decades of experience, some may be fresh from school. Decades of track record is good, but we all have to start somewhere, someone has to take a risk with you to give you your first job. This is the only way to get the experience. If we keep demanding candidates or parties have experience and yet don’t give them a chance to get one, we will likely see the experienced candidates get more arrogant since they hold the monopoly of governance. They can hold a country hostage since they know no one else has the capabilities to run the nation. This is the real “freak election” result I’m worried about.
Make hay while the sun shines, crying when the floods come in is too late.