I should have posted this a long time ago… since I attended this event hosted by the Young NTUC at the Wang Cafe in Basement 1 of NTUC Centre back on 05 Feb 2009. That’s like 10 days ago… and it’s a little stale to talk about the Resilience Package now.

The Guest of Honor: Mr S Iswaran, Senior Minister of State for Trade and Industry. (Also MP for West Coat GRC.)

This is the first time I had a close up with a minister. While I already had a good opinion of Mr Iswaran when he spoke up on the matter of NS dodger, the Penis Pianist Melvyn Tan, the way he handled questions at the event further reinforces it.

Mr Iswaran did not display disgust or displeasure even though I personally felt some questions were similar with earlier ones and the previous answers would have answered them to a great extent. He maintained a smile throughout the session, without a sneer on his face. This is unlike the elitist image some ministers or MPs like Mah Bow Mabok Tan, Lim HngGey Kiang, Ng Eng HenEng, Teo ‘You be grateful‘ Ho Pin or even Charles ‘You lesser mortals’ Chong have presented, even though that may not actually be who they are, or the message they tried to convey.

I noticed Mr Iswaran maintained eye contact with the audience who raised the questions, listened attentively and patiently repeat some of his earlier points without sounding like he was admonishing a child. This is very unlike Raymond Lemon Lim, and Iswaran gave me the impression he genuinely wanted to clear the doubts and engage his audience as an equal. At one point of time, he also tried to ease tensions by mentioning he’s checking whether anyone is taking off his shoes to throw at him.

I didn’t keep a record of the questions asked, so I will briefly touch on some of the topics which surfaced a few times.

GST
By the end of the session I believe most attendees understood why GST is not cut.

Going by the estimate that 1% of GST would be equal to roughly $750 million in revenue for the state, he pointed out that by cutting 2% of GST, most of that $1.5 billion will not be more than the sum of GST credits and other forms of assistance the government gahmen will be giving to Singaporeans. In fact, a larger amount of the GST credits will be actually going to those of lower income because they spent every cent they earn. Incidentally, this opinion that lower income families have low or zero savings and high spending, is also what Lin Yifu, the Chief Economist of the World Bank has once mentioned. In other words, there is no dispute that while the decision not to cut GST is probably unpopular and misunderstood by some, it is founded on sound, if not solid, economic principles.

Also on this topic, some also asked whether the gahmen has any intention to give cash vouchers like those of the Taiwanese gahmen or why the gahmen isn’t also doing that. It was pointed out that the objective of the cash vouchers in Taiwan was to encourage spending to drive domestic demand, and they can only be used for very selected purposes. On the other hand, ours is an export based economy and thus there is not much effect to issue such vouchers. On top of which, the GST credits is in itself a even more flexible than the cash vouchers as the recipient can use it any way they liked.

Jobs Credit
This is quite a novelty and I must say that some serious thinking has gone into this.

The primary reasons behind the decision to give jobs credits to the companies was because it was the fastest way to ‘pass’ money to the companies. Based on every employee that is paid CPF by a company, the company would receive the jobs credit. The main objective of course, is to encourage companies to keep their staff.

The main reason why the gahmen did not consider policies to discourage retrenchments was that such policies generally become detrimental in attracting foreign investments. This was a view that was also shared to me in a chit-chat I had with Mr. Gary F. Bell who is the best man at my friend’s wedding on Valentine’s Day. He mentioned that there is a country where the law requires that anyone retrenched be paid a full year in salary. While it becomes hell for any companies to consider retrenchments there, it also make it difficult for the country to invite investors.

Mr Iswaran and his NTUC hosts admitted that retrenchment is simply more convenient, and jobs credit does not stop companies from doing so. However, giving jobs credit would also encourage some companies to retain staff, since it will be a more sustainable solution than a retrenchment exercise. While no one could guarantee that jobs credit will prevent retrenchments, it is expected to reduce the number of employees being retrenched.

While on this topic, the matter of CPF cuts was also touched on and explained. The reason that CPF cuts is not considered this time round, was that back in 1997, it is a wage competitiveness issue and the quickest way for the gahmen to reduce wages was to cut employers contribution. On the other hand, the problem we faces today affects almost all regions and economies, cutting CPF would only goes further to hurt workers while contributing nothing much to the problems at hand.

Miscellaneous
There are also some other stuff that were brought up during the session. One of which is a survey conducted by the host and the question is: Would you pay 6% of your pay for a retrenchment insurance scheme?

The No vote outnumbered the Yes vote by a small margin of 6% (i.e. 53% – 47%). I find that understandable, since the general impression of this being a social welfare scheme instead of a personal insurance scheme. In fact, it was impressed upon the attendees that such a scheme would encourage workers to choose unemployment because of the easy money they can get out of this scheme.

While I had voted NO myself, I had a very different reason for doing so since no details of this scheme was really made clear. I would have supposed that if the attendees were told that this would be a personal insurance scheme, i.e. how much you can draw from the scheme will be equal to what you paid into it, then it might be acceptable. Anyway, we already have a mandatory personal saving scheme and it is called the CPF.

One of the audience also asked what avenue does he have if he is out of job, while he needs to juggle his bills, his housing loans, his kids educational fees, and also the fees for his retraining. Unfortunately, I could no longer remember what the full answer was to that, but I recalled certain points were made that there are definitely means for the person to seek assistance for all of the above, and some examples from the previous crisis were cited. Of course the main reason I did not record all of this was because I was getting quite… hungry.

Of course, among the questions there was also one that was quite amusing, if not funny. One person was asking why the NTUC did not consider setting up a bank to help SME.

It brought some laughter among the attendees and Josephine Teo gracefully thanked the person for his confidence in NTUC and pointed out that even if it was to be done, it would take years before a proper bank can be set up. She backed that up by referring to the time taken to set up Income Insurance, and also the Supermarkets. She then referred to the component in the Resilience Package which will stimulate lending to SMEs.

Here are some photos of the event.

Photos – Courtesy of Rachel