TR EMERITUS

Dear Mr Tharman,   I refer to your Budget speech as reported by Straits Times on 6 Mar 2010.   You highlighted the impressive growth in Singaporeans' incomes from 2005 to 2008.  But the explosion in HDB and property prices from 2006 to 2009 is even more impressive.  Thus, Singaporeans who bought their first homes during this bubbly period would have found their income growth more than wiped out by the spike in property prices.  While their income growth is measured in terms of hundreds of dollars, the extra burden they have to pay for inflated property prices is measured in terms of hundreds of thousands of dollars.  It will take perhaps 20 years for the extra income to pay for the extra increase in housing prices.  Any Singaporean caught in this situation would rather have given up the income increase in exchange for a reversion to old property prices.   Thus, while you happily trumpet the 20% growth in median income over the last decade, do not forget the concomittant increase of nearly 30% in our property prices as well.  Furthermore, your use of resident unemployment rate obfuscates the real matter of concern which is that of Singaporean unemployment rate.   You said it was necessary for businesses to obtain more workers in the second half of the decade so that they could expand quickly to take advantage of the favourable external environment.  However, why didn't the government adopt the productivity initiatives it is taking now in the first half of the decade so that by the time the favourable second half of the decade came, businesses could expand just as quickly albeit with much less workers?   Even if we were to contend that there is a need to obtain more workers, where is the evidence of the plans to accommodate those extra workers?  The frantic building of more infrastructure, more accommodation and sudden rule changes appear knee jerk in reaction to the sudden massive influx with no evidence of forward, methodical planning.  MM Lee's proud assertion of a forward looking government is sadly missing.   You said it is important for us to capture significant opportunities that do not come every year.  That makes us look like primitive hunter gatherers who make the best of whatever comes our way but who have yet to discover agriculture and animal husbandry as the means to secure a steadier supply of food.   Therefore, despite your claim that our strategy is not wrong headed, many things have indeed gone wrong with our strategy which necessitates the changes we are embarking on now.   You said we needed those workers to build properties, flats, MRTs, and to serve as nurses and bus drivers.  But had we embarked on the productivity ethos much earlier, we may not have needed so many workers as we have now and consequently we may not have needed to build that many properties, flats, MRTs or have so many nurses and bus drivers as we are having now.   You said Singapore cannot grow slowly to reduce inequality.  But the issue at hand isn't about growing slowly but how we grow.  Clearly, our tectonic shift towards productivity growth isn't about slow growth.  Yet it is fundamentally different from growth by simply adding more people.  The question really is which method is more desirable and will reduce inequality more?  It seems that our primitive pursuit of growth at all costs hasn't been the wisest of strategies and that we have not been doing what is best to reduce inequality.     Thank you     Ng Kok Lim  Read More →

Written by Our Correspondent Contrary to recent media reports that Singaporeans are "happy" with the latest Budget announcements to "decrease" Singapore's over-reliance on foreign workers and to boost labor productivity, it appeared that the sentiment on the ground is quite different. A Singaporean by the name of Gilbert Goh set up an online petition to call on employers to give priorities to Singaporeans "We urge all employers in Singapore to consider employing Singaporeans first before cheaper and younger foreigners. The recent high influx of foreigner workers in our midst have cause many local workers to be sidelined and unemployed. Some have also took the extreme measure of ending their own lives as they don't see a quick end to the problem. If you agree with us, do support this petition so that we can rally together and provide hope to our fellow Singaporeans. Employ Singaporeans First!" [Source: Employ Singaporeans first petition] More than 200 Singaporeans have signed the petition so far with many of them venting their frustrations and anger against the PAP's "Foreign Talent policy" for the predicament they are in. Peter L wrote: "The unbridled inflood of foreign workers in all these years has not really benefitted Singapore Citizen workers. The direct beneficiaries are the big bosses and ministers due to their pay scheme. What direct benefits do ordinary Singapore Citizens have? But the huge number of foreigners have created problems for Singapore Citizens in terms of higher prices, more expensive and shortages of housing, crowded hospitals, public transports, other public amenities, fewer job opportunities, just to name a few. Seriously, does the government seriously think that competing based on cheap, cheap inferior labour is going to be Singapore's long term economic strategy? FOR THE RECORD, Singapore Citizens are NOT against foreigners. We welcome rich foreign investors, very smart foreign professionals, very diligent foreign blue collar workers/ hard labourers (who do jobs that Singaporeans shun). What we are against are those mediocre foreigners who are doing jobs that Singapore Citizens themselves can do." In 2003, Prime Minister Lee Hsien Loong announced an ambitious plan to increase Singapore's population to 6.5 million people via immigration. All of sudden, the floodgates were flung open without any warning and Singapore became swarmed by foreigners from all over the world. Due to the PAP's liberal immigration and pro-foreigner policies, foreigners now make up 36 percent of Singapore's population, up from 14 percent in 1990. Of the remaining 64 percent who are citizens, an increasing number are born overseas. In other countries, the governments protect the jobs of locals, but in Singapore, citizens are expected to compete with the cheaper foreign workers on equal terms while remaining "cheaper, better and faster" at the same time. Norman Tan sounded visibly frustrated: "Please name another country in the world in which the ministers are the best paid, citizens need to serve NS, but jobs, scholarships and other goodies literally reserved foreigners? It's time for the Foreigners' Action Party to be taken down and taken to justice." Au Kah Kay added: "Offer a pay that is commensurate with the cost and standard of living in Singapore. Many employers offer a salary so low that an ordinary Singaporean is unable to survive on such a salary. Singapore is a First World country. But its wages are far from being First World." According to a comprehensive UBS report last year, Singaporeans have the lowest wages and domestic purchasing power among the Asian Tigers. It has a standard of living comparable to Russia rather than Switzerland though it has one of the highest GDP per capita in the world. The study was dismissed by PAP MP Halimah Yacob in Parliament recently as being "inaccurate". She did not substantiate her claims with any evidence. MC wants the government to scrap S and Q1 passes for foreign workers: "Jobs for citizens. Pay citizens a salary which we can live on. We will never be able to compete on lower salaries with the foreigners. Scrap S and Q1 passes, be more stringent with the P2 passes. Give citizens a lifeline first - don't treat them like stepchildren." Starter puts it succinctly: "For this excerise, we need to start from ourselves first. We need to vote against PAP, boycott and show it to the foreigners right to their face that we are not happy wit them. If not, whatever we say or do, it's going to be pointless." Singaporeans should not have place any hopes on the PAP to rectify the situation. In an interview with National Geographic magazine in January this year, PAP's octogenarian leader Lee Kuan Yew admitted that it is a "good thing" that Singapore has welcomed so many Chinese immigrants (from mainland China) as they are more "hard-driving" and "hard-striving" than locals. He added that if Singaporeans do not have "the spurs stuck in their hides", it is their problem (and not the problem of the PAP). The continued import of foreigners is crucial not only to keep Singapore's GDP growth figures impressive of which a percentage of the PAP ministers' multi-million salaries depend on, but to shore up the PAP's flagging support base in order to perpetuate its political hegemony forever. The immigrants tend to vote for the incumbent government and without increasing their numbers in the electorate, the PAP will probably lose power in a decade's time. The next general election is the last chance for Singaporeans to reclaim ownership of their nation. There is no point pleading with the PAP or providing feedback to it. As Minister Lim Swee Say said himself - they are DEAF to all criticisms. Unless Singaporeans vote out the PAP, they will soon be relegated to second class minorities within their own country of birth with the males having to serve two years of National Service to protect the lives and wealth of the self-serving elites, new citizens and foreigners.   The UBS Series: >> Part 1: Singapore has lowest wages and domestic purchasing power among Asian Tigers >> Part 2: Moving towards a Russian standard of living >> Part 3: Why Singaporeans are paupers in a first world economy  Read More →

Associated Press, 15 march 2010 The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration. It's time to start cashing them in. For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year. Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more. Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices. Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come. Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits. "This is not just a wake-up call, this is it. We're here," said Mary Johnson, a policy analyst with The Senior Citizens League, an advocacy group. "We are not going to be able to put it off any more." For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit. Remember Al Gore's "lockbox," the one he was going to use to protect Social Security? The former vice president talked about it so much during the 2000 presidential campaign that he was parodied on "Saturday Night Live." Gore lost the election and never got his lockbox. But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form. They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War. One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market. More than 52 million people receive old age or disability benefits from Social Security. The average benefit for retirees is a little under $1,200 a month. Disabled workers get an average of $1,100 a month. Social Security is financed by payroll taxes — employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67. Social Security's financial problems have been looming for years as the nation's 78 million baby boomers approached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program. The recession is making things worse, at least in the short term. Tax receipts are down from the loss of more than 8 million jobs, and applications for early retirement benefits have spiked from older workers who were laid off and forced to retire. Stephen C. Goss, chief actuary for the Social Security Administration, says the crisis has been years in the making. "If this helps get people to look more seriously at that in the nearer term, that's probably a good thing. But it's only really a punctuation mark on the fact that we have longer-term financial issues that need to be addressed." In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016. For the budget year that ends in September, Social Security is projected to collect $677 million in taxes and spend $706 million on benefits and expenses. Social Security will also collect about $120 billion in interest on the trust funds, according to the CBO projections, meaning its overall balance sheet will continue to grow. The interest, however, is paid by the government, adding even more to the budget deficit. While Congress must shore up the program, action is unlikely this year, said Rep. Earl Pomeroy, D-N.D., who just took over last week as chairman of the House subcommittee that oversees Social Security. "The issues required to address the long-term solvency needs of Social Security can be done in a careful, thoughtful and orderly way and they don't need to be done in the next few months," Pomeroy said. The national debt — the amount of money the government owes its creditors — is about $12.5 trillion, or nearly $42,000 for every man, woman and child in the country. About $8 trillion has been borrowed in public debt markets, much of it from foreign creditors. The rest came from various government trust funds, including retirement funds for civil servants and the military. About $2.5 trillion is owed to Social Security. Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare. "Those bonds are protected by the full faith and credit of the United States of America," Kennelly said. "They're as solid as what we owe China and Japan." - AP  Read More →