Month: March 2012

Random Discourse – Incomplete Information, Statistics Massaging and Word Play

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PropertyGuru raised a furore when it released the report “HDB flats are more unaffordable than private homes”. My first comment when I saw the news on Yahoo Singapore was: “Tell me something I don’t already know.”

One might wonder how that can be true. The truth of the matter is, when you compare a person who is able to purchase a condominium with a person who purchased a HDB, it is very unlikely that the person who purchase the condominium would be taking a 30 years loan and at the end of the day end up with almost nothing as savings. On top of which, the person who purchase a condominium can be single and under 35 – while a HDB flat is out of each of singles and singles can only purchase a resale market from 35-year old onwards. Otherwise, the couples who purchase a condominium will have a combined monthly income of at least $10,000 and above.

A 4-room BTO [Build To Order] flat would be entry level for most, since it comes with a hall and 3 bedrooms and more of them are being built. At about 90sq meters, it is comfortable enough for a family of 4 (2 parents and 2 kids). After all, a 5-room or larger is basically nothing more than a 4-room with a little more space. When a 4-room costs at least $300,000 (and that is only when you are extremely lucky and the unit is at some out of the way HDB Estate) and the median income according to the HDB for 4-room flat applicants is $4,200, that simply means the price to income ratio is 71.43. Even with a $10,000 grant, the price to income ration is 69.05.

Now consider a 3-bedroom condominium. The cheapest one listed on Property Guru (at Twin Waterfalls EC, Punggol Way) is $630,000. Now consider that the minimum income of any couple able to purchase a unit will have an income of at least $10,000, the price to income ration is 63.0. Granted, it may actually cost more than listed, but I am also taking a very conservative estimate here because the median income of a condominium buyer may be even higher which will take the ratio even lower. How the HDB wants us to believe that Property Guru’s analysis is based on incomplete information is beyond me!

Here is the chart on a subsequent news report whereby the HDB refuted the analysis of PropertyGuru and argued that the report was based on “incomplete information”.

Since we are on the topic of incomplete information, lazy me did a little analysis of the figures in the chart. Again taking the 4-room flat as basis, the HDB’s chart showed that the applying couple will have a median household income of $4,200. Assuming that this is nett income, that means the couple (35-year old and below) contributes $1512 a month collectively. 10% of that downpayment would be $30,700, deducting the $10,000 grant, the couple will have to save up $20,700 which will take them about 21.4 months to save since only $966.18 goes into their ‘Ordinary Account’ [OA] in their CPF and only 100% of OA can be used to pay for the 10% down payment.

So, after emptying all of their hard earned CPF of almost two years and left with nothing, the couple still has to pay $1,049 month in installments which means they even need to come up with a cash component of $82.82 a month for the next 30 years. If they want to shorten their loan period, they will have to pay a even larger cash component. Remember, the longer the loan period simply means you are paying more to service the interest before you even start to pay off the principal sum. Really, what affordable housing? It’s nothing more than economic slavery. The better part of your useful working life is wasted paying off for a pigeon hole. If you start work at 25, you are still in debt at 50. Now who is talking about “incomplete information”?!

It really annoys me that the HDB continues to resort to such in their lame attempt to distort reality. And that’s not forgetting that part about being able to own a flat with less than $1000 of income! That’s not forgetting that they did some statistic massaging when they used “average selling price” for the flats, while they used “median household income” of applicants. A friend was sure average income is higher than median income in Singapore, and another explain that medians in general gives more balanced figures compared to averages. In other words, their objective maybe to show that it remains affordable even in a ‘worst case scenario’. But it doesn’t change the fact that if it takes almost your entire lifetime to pay for it, it is clearly not affordable!!

Now on the matter of statistics massaging, here’s another example: “180 bus trips added, services improved”. This article was posted on Today Online on Saturday morning. In the article it wrote: “Public transport operators SBS Transit and SMRT have improved 22 bus services and added 180 bus trips weekly between January and March, even as wider service improvements under the Government’s S$1.1-billion Bus Services Enhancement Programme will be rolled out from the third quarter of this year.”

Whether there were 180 bus trips added per service, or 180 bus trips spread across 22 services, it really makes not much of a difference for us. The math is simple, if it was 180 trips per service then it’s about 1.4 extra trips every hour each day. If it was 180 trips over 22 services then it is just about 1 extra bus per service each day (probably during peak hours). It doesn’t need a rocket scientist to figure that out. If I am asked which one I would believe, I tend to believe it’s the latter since that cost less in terms of manpower and fuel consumptions and produce the same stunning statistic wizardry.

Anyway, this isn’t the first time they have done something like this. Previously, we used to be told how many train trips were added each week to ease congestion. Did anyone ever wonder why none of us were able to perceive or even feel the service improvements at all? Then again I understand that if they tell us that it’s just one trip a day we would wonder why is it even news worthy, not to mention no one will even believe there is any improvements at all!!

Here’s the best part, the article even tried to make it look greater than usual by adding this: “even as wider service improvements under the government’s S$1.1-billion Bus Services Enhancement Programme will be rolled out from the third quarter of this year.”

It is trying to have you believe that this is not the end of these so-called “improvements”. The better stuff is yet to come! However, remove that last bit and it won’t take long for anyone to discover just how uninspiring this piece of news is. Talking about which, the local main stream media [MSM] have always resorted to such word play to shift (if not manipulate) opinion. For e.g. “But only 68.1% polled agreed that it is necessary to reduce the inflow of foreign workers to spur productivity and create better jobs.”

Only 68.1%? Well, if you take away that word you will realise that more than half of the people polled wants less foreign workers in our country. But with the word ‘only’, the number now sounds a lot less significant. Read the following statements:

  – 200 soldiers committed rape after occupying the city.
  – Only 200 soldiers committed rape after occupying the city.

Notice the difference it made with just one word? In the first example, it tells us that there were 200 violations and everyone will feel some outrage. But the next statement will make the unsuspecting believe that just a small number of soldiers within an “assumed” large occupation force committed such atrocities.

The next time you see any statement with words like “even”, “only” etc, pause a little and re-read them and you will get a whole new perspective of the information you are getting.

Current Affairs – Budget Debate on Transport & Housing

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This has got to be the most talked about lately:

So I would like to assure Mr Gerald Giam, who might not have caught up with all the developments… that a family with $1,000 income can now, through our housing subsidies, purchase a small flat… – Deputy Prime Minister [DPM] Tharman Shanmugaratnam


Chart obtained from HDB website
AHG – Additional Housing Grant;
SHG – Special Housing Grant

This is not some new “Tharman-ism” or a slip of tongue. The chart on the right shows how it can be done.

If this is just solely an academic exercise to prove it can be done, it surely has achieved its objectives. Unfortunately, one question that comes to mind right away would be:How is a person who is just making $1000 going to be married in the first place?

Even if you would believe in fairy tales whereby an undergraduate would marry down, the fact would be that such a couple would then not be in the example here. That also means a person who is single is totally out of luck since singles don’t qualify for a flat until they are 35. Ironically, it is only at 35 where Workfare kicks in to compliment such a worker’s earnings and yet they are only qualified for resale, not new HDB flats.

Another blogger did a very detailed analysis, from the location and availability of these 2-room Build to Order [BTO] flats, to the possibility of raising children in such a small flat and then the financial situation of such a couple when they reach retirement age. I won’t quote or link him, since I do not agree with his liberal political views. However, I would like to point out that even if a couple managed to raise a child (like my parents did), they will only have just one child and that’s not going to do much for the Total Fertility Rate [TFR] of Singapore. My friend has asked me what value is there for a couple to own such a flat and what resale or rental value is there in getting one. We agreed there is none. This example is completely meaningless other than to show us that a couple with just a take home income of $1000 a month is still pretty much screwed whether they buy or rent a flat.

In short, this has achieve no other purpose other than making a fool out of Gerald Giam. A form of “mental masturbation”, if you will. Hopefully, it would help Mr Giam gain some invaluable experience in future parliamentary debates after this blunder and the previous one with the MX9 salary scale. A lot of those in the middle of the political divide maybe rather forgiving over the fact that the opposition generally does not have sufficient information but that does not excuse them from being more diligent, well prepared and getting their information right in the future.

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DPM Tharman said the package (S$1.1 billion for Public Transport Operators [PTO]) is a subsidy for commuters, and not a subsidy for operators.

That raised a chuckle when I first heard it. The state of our public transport has gone so far down that few (if not nobody) believes that anything other than a radical change will work in improving it. Even when not all of that S$1.1 billion came from commuters using public transport, taking the money pooled from the people and then telling them that this is a subsidy for them sounds like a mockery of their collective intelligence. Neither will it convince commuters by telling them they would have to pay more in the future if the PTOs are to do this on their own. The fact is, when the fare system changed to distance based, some 33% of commuters suffered a fare increase according to the Public Transport Council [PTC]. I am one of the unfortunate 33% who did not benefit, and in my case that increment was 7% even when the statistics showed that fares went up by a mere 0.3% since 2006.

Next, some gripes about the bus service. Frankly, throwing money at a problem isn’t going to solve it unless someone listens to the feedback. While adding the number of buses may address the long standing complaint that the bus frequency sucks, it does nothing address the commuting experience which can be rather frustrating and also the routes of some services which completely blow our mind away. Just try taking some buses like service no. 2, 51, 154, 167, 174 196 and 197 from end to end when bored. While the route they take would help a commuter know Singapore’s road and estates a lot better, they are a unpalatable alternative to the MRT. Who would spend up to 2 hours on a bus while it takes 45 minutes on the MRT? (For reference: 2 hours can take a person about 1/3 of the way from Singapore to Genting in Malaysia, if I am not wrong.)

Even the current Express Services are an utter sham. Take for example Bus Service 502. It makes no sense for it to prowl Jurong East and West Avenue 1 again when those stops are already covered by the feeders! (In fact, it makes no sense at all that some of the inter-HDB estate services like 157 and 198 to go by those routes as well.) When commuters are charged by distance then it makes sense for them to take the feeders to the interchanges to catch an Express Bus (or an inter-estate one) since that doesn’t actually add to their cost. Meanwhile, commuters paid a premium for a so-call “Express Service” which can take an agonising 20 minutes before it hits the expressway in the morning. That’s not forgetting morning traffic! Is it a wonder why all of the pressures are put on the MRT system?

Anyway, S$280 million goes into buying 550 buses according to what I have read. That’s about S$510,000 a piece, while the remainder of the money is to cover the net operating cost for the next 10 years. These buses are so expensive that it makes me think they are armored and made of titanium. Perhaps it also includes a S$100,000 COE. It remained to be seen how this S$1.1 billion is going to help improve bus frequencies. If these 550 new buses are going to be like the current ones with almost half the seats removed (like those SBS Transit bought recently), it would be about as meaningless as increasing train frequency only to bring the entire system crashing down completely later. The reason being that the system is still being run with commuters as just mere numbers and not human beings. Clearly, frustration with the system will not improve if the commuting experience remains as bad. In short, someone should look into what the minimum comfort level expected in public transports as well. Unfortunately, I don’t think anyone would want to spend money on that unless I first figure out how to pay for it and what returns there will be. Even Nigerial Scams are better than what I am suggesting, right?

Anyway, some of us surmised that the SBS Transit buses were bought with the bad habits of Singapore commuters in mind. Since most commuters simply refused to move to the back, then it is only logical to have more standing space in the front to fit more commuters per bus – a typical Singaporean line of thought. My personal opinion is, put the seats back and bring back the buses with doors at both ends which have been completely phased out.

Thus, my point is simple. If the government wants to call this a “subsidy for commuters” because that “subsidy” will result in an overall improvement in the comfort and commuting experience of the bus service, I will be fine with it. But if the S$1.1 billion is nothing more than a cosmetic effort so that the government can argue it has done something, then I will be exceptionally upset. Meantime, please do something for our polytechnic students. I would say the government have no sense of proportion if it hassles over a mere S$28-million in revenue a year for the PTOs to give polytechnic students fare concessions. That is not even 1% of their annual combined revenue, because the PTOs annual combined revenue is almost 3-billion according to their annual reports. On top of which, they can always raise fares and when has that ever been denied?

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Before I end, here’s something that’s not really related to the above. My simple understanding is that the word ‘even’ makes something better or worse than it already is. Here are some examples:

“Even cats are not as cute as your baby!” would indicate that the baby is so extraordinarily cute.

“Even a moron is not that stupid!” would indicate that whatever is being referred to is utterly stupid.

“He even stopped at the red light.” would indicate that this person normally doesn’t stop at the red light and that by doing so, something out of place has happened.

Need I say more about “even the Nigerian Scheme…”?