Click for Full Size

Been wanting to write this post during the budget debate, but I just couldn’t find time. Anyway, I went with some friends to a ‘Coffeeshop Talk’ on the Budget organised by the Young NTUC on 26 February. This is the third time I attend such a talk, and my basic idea is to get a general idea on the basis of the government’s gahmen’s decision, regardless of whether I agree with them or not. For one of my friends, he mentioned that at the very least, we need to at least get a better understanding of what we are opposing.

The Minister of State invited to the event was Mr Lee Yi Shyan and before the Q&A session began, he explained that we should look at the Budget from 3 perspectives, namely – ‘Inside Out’ (not outside in), ‘Back to the Future’, and the International Environment.

I’ll try and explain what he meant as best as I understood it. (If there are any mistakes, that maybe because I have misunderstood what he meant.) By ‘Inside Out’, he meant that we should look at it from the planner’s (i.e. the Minister of Finance) perspective and not the man-on-the-street one. By ‘Back to the Future’, he meant that we should be mindful of the percussions of a decision made today and how it would damage the future. And lastly, by ‘International Environment’, he meant we need to be aware of what goes on around the world so we learn the lesson, and know how that will affect us.

After this, the members of the floor was asked to raise their questions. I felt that unlike the previous two session I attended, the questions this time round was more hard hitting. I didn’t take notice of all the questions, because I generally have a short attention span and I’ll let my mind drift off when the person who asks the question doesn’t get to the point after 20secs.

However, I did catch the first question, which comes in several parts (and also contain some of the things I probably would have asked). First of all, the minister was asked why the 0.5% CPF increment goes into the Special Account [SA] and not the Ordinary Account [OA] which would allow Singaporeans to use it on servicing their housing loans. He was also asked about the foreign workers levy which doesn’t do much to limit S-Pass and Employment Pass category, and thus is doing nothing to secure the jobs of PMETs (Professionals, Managers, Executives and Technicians).

From what I understand from the minister’s answer, the 0.5% was meant to increase the workers’ savings for his old age, since the SA earns higher interest. The main objective is to build the workers’ independence so they would not rely on the gahmen. (In my personal opinion, I would consider it a monetary tightening measure, since it would take money out of the circulation. 0.5% isn’t a lot of money for each worker, since it is just $15 for someone earning $3000 a month. But on a conservative estimate of a 1.7 million workforce in Singapore and $10 a person, that would roughly be S$ 204 million a year. While I maybe wrong, that would do something to curb inflation. But I would applaud the gahmen on the way they packaged it to be something primarily for the benefit of the people.)

As for the matter of the levy with regard to S-Pass and Employer Pass holders, the minister said the Ministry of Manpower will take that into consideration in the future. Personally I doubt it would ever happen since the minister reminded everyone present that the objective of raising the levy is not to force companies to substitute foreign workers with locals, nor to give our workers an easier time. The gahmen is concerned that any form of ’employment protectionism’ would create is a workforce that would become complacent and subsequently too expensive to be employed, or lacking the skills relevant to the ever changing economy. Thus, it hopes that companies would raise productivity and the workers would improve on skill (which is in line with the S$3.4 billion spent on the second part of the budget.)

One of the hosts from the NTUC raised the point that from what he has gathered while speaking to some people, they are concerned that if the gahmen raises the levy, bosses may be forced to maintain their costs by firing the Singaporean. The minister then reminded us that there is a dependency ration which will prevent Singaporeans from being retrenched. (My personal opinion is that all of this sounds reasonable, yet I have so far failed to find articles telling us in what specific industries are we lacking in manpower that foreigners need to be employed as far as PMETs are concerned. The matter is, as long as we continue to hear of friends who remained unemployed while jobs they are qualified for are taken up by foreigners, it will be difficult to erase the perception that there are too many foreigners and not enough is done to curb them.)

The other question raised was that the ‘goodies’ given out is not enough to fight inflation and price increments. The minister mentioned that inflation is not as bad and cited examples of some items in supermarkets in which prices has not gone up but has become cheaper. I would say I strongly disagree with that, since prices at the supermarket would mean we are expected to buy these items and cook and eat at home to keep costs low. It definitely does not align with the fact that prices can go up 50cents to a dollar in hawker centers which would translate into 10% ~ 25% price increments! Case in point, my favorite pork rib prawn noodle stall at Amoy Street Hawker Centre has raised the base price from $3 to $4 a bowl.

Of course, there were another matter also touched on, something about raising the fertility rate which I lost interest on completely because of the way the questioner raised his question. Come on, just keep it simple, silly alright? I clearly don’t like people to rant on and on about something I already know before the question is asked.

Either way I did catch part of the answer in which it seems like the gahmen is in the opinion that the cost of living is not what that is the main obstacle to couples having children (or even getting married). But rather, they are more interested in their material pursuits over their love of children. It was mentioned (I can’t remember who said it) that though some Scandinavian countries have a high TFR (Total Fertility Rate), the taxation level of those countries are high to allow free education etc for a child. The gahmen believes we would object to that kind of tax burden to solve the TFR issue, not to mention that Singapore’s unique position makes it difficult for such policies. Something which I don’t necessary disagree with, since I don’t want to be caught in situation where taxes needs to be increased further because the gahmen needs more money.

At this point I believed Josephine Teo mentioned that perhaps we should take our eyes off our material pursuits and look at the other things, such as appreciation of arts etc because the museums have remained empty in spite of the low entry costs. In my opinion, that would like ‘quenching one’s thirst by looking at plums’ (望梅止渴) because clearly we need to ensure our material needs are satisfied before we can move to the other levels of Maslow Hierarchy of Needs. It would be absurd for anyone who is struggling to keep their own personal budget balanced to contemplate what she suggested.

My overall impression of this entire talk is that the gahmen seems to be more concerned with the future consequences of their actions today. That is perhaps what sets them apart from the opposition which is focused on the here and now.

Aside from the talk, I object to the gahmen’s argument that reducing GST would be more beneficial to the rich than to the poor even when I can agree that the GST collected as a rich man’s single purchase of some items would at times be more than what a poor person would pay in an entire year. If I had gotten my facts right, the gahmen tells us that 16% of total GST comes from the rich. But what about the other 84%? How much of that 84% is made up of other commercial activities, or more ominously… from the poor? Was there a breakdown of that 84% which I missed out?

It is ludicrous that the gahmen argues against removal of GST on necessities. One of the example cited is that while clothing is a necessity, a rich man buying a branded piece of garment would thus be spared from GST. I find it ridiculous that our million dollar mini$ter$ would not be able to come up with a list of items classified as luxuries. Meantime, I read on the papers that someone suggested that if the gahmen finds that it is difficult to reduce GST because it would be difficult to isolate luxury items from necessities, then it should consider a rebate of GST for those people whose earning are below a certain level. I personally think that is a great idea and it’s high time the gahmen stop giving excuses and do something about the infernal GST.