TR EMERITUS

Press release from Reform Party by Kenneth Jeyaretnam, 4 March 2010 (Published here with the kind permission of Reform Party's Secretary General Kenneth Jeyaretnam) Temasek Review (TR) published an article (“YPAP activists attack Reform Party’s proposal to privatize Temasek and GIC as “squandering” Singaporeans’ future away”) responding to earlier comments by a group of YP activists from the North (Singapore) here. The YP activists are conspicuously silent on whom they are responding to, but as TR says their comments appear to be aimed at our proposals. While grateful to TR for defending the Reform Party’s response to Budget 2010 (the link is here ), I thought it was appropriate to respond directly so as to clear up any misunderstandings. Taking the YP points in order: 1.“Minimum Wage-why isn’t this in Budget 2010?” The YP article says that it was not made clear whether the minimum wage proposal would apply to everyone or just to Singaporean workers. To clear up any misunderstanding let me make clear that the minimum wage would apply to all workers, Singaporean and foreign. However the Reform Party would propose to exempt certain sectors of the economy where Singaporeans do not compete with foreign workers, such as domestic workers and also possibly the construction industry. We also might propose to have lower minimums for younger (17-24) workers as well as for older workers (above 55). As to the level of the minimum wage that would have to be set in accordance with the economic circumstances and employment levels at the time. It would have the dual objectives of encouraging employers to use labour more efficiently and of preventing further erosion of the living standards of our low wage workers through undercutting by the import of cheap foreign labour. The Reform Party has suggested an initial figure in the range of $5-8 per hour. The YP is criticizing our proposals precisely for doing their job of raising productivity and promoting higher value-added activities. By raising the cost of labour businesses will either have to use labour more efficiently or if they are unable to do so consider relocating that activity. If it’s a low-skilled low wage activity which is presently done by foreign workers then its relocation should not represent a loss of jobs for Singaporean workers. International trade theory says that countries benefit from specializing in industries and services where they have a comparative advantage rather than undertaking the full range themselves. The Reform Party wants Singapore to specialize in higher value-added, higher productivity activities which is ultimately the only way to achieve higher incomes. As for the YP’s point about disadvantaging charities and social enterprises, we could exempt them from having to comply with the minimum wage provided they were undertaking non-commercial activities. Lastly obviously a minimum wage on its own would do nothing to help retrain or equip the workforce with new skills. However the Reform Party has said repeatedly that Singapore needs to spend more on education and training and we would more than match the government’s proposals in this regard. 2.“Shouldn’t we reduce taxes and fees on the less well-off?” The YP say that Singapore has a progressive tax system so that the rich pay more in tax. Singapore’s direct taxes may be mildly progressive at lower levels of income. However many of the reliefs such as Qualifying Child Relief (QCR) and Working Mother’s Child Relief (WMCR) disproportionately benefit the better-off. The WMCR gives a huge tax break to higher-earning women who have more than one child and very little to those on low incomes. It also represents a substantial loss of tax revenue that has to be made up elsewhere so general tax rates have to be higher than necessary.  In addition the Parenthood Tax Rebate (PTR) is of much greater value to those who pay sufficient tax to be able to utilize it immediately. These kinds of tax breaks go against all the objectives of social policy which should be to help those who need it most. The Reform Party would restructure the system to one of cash grants or child benefit so that all mothers received the same amounts irrespective of income. The Reform Party would also look at reducing GST, which is probably regressive in its impact since low-income families spend most of their income and therefore GST is likely to be a higher proportion of it.  We could also exempt certain categories of goods from GST like food that represent a higher proportion of expenditure for the less well-off. We would also abolish charges for education from pre-school to secondary level or provide credits through the tax system which could be withdrawn from those on higher incomes. The Reform Party would want to keep the current low overall tax rates (or even reduce them) to encourage enterprise and investment while broadening the tax base by abolishing wasteful and unnecessary subsidies that disproportionately benefit the better off. 3."We should privatise Temasek and GIC and give the equity to Singapore citizens." The YP accuse us of wanting to squander Singapore’s reserves and leave us defenceless. This is based on a misunderstanding of our proposals or a basic lack of knowledge of the meaning of equity. The Reform Party has said that one option of ensuring that Temasek and GIC directly benefited Singaporeans would be to give Singapore citizens (who had either been born here or been citizens for a certain length of time, say ten years) equity in our sovereign wealth funds. This would occur as a result of a process of privatization and the listing of the shares on the stock exchange. As everyone knows, shares can be traded without requiring the liquidation of the underlying assets and this is one of the fundamental innovations of a capitalist economy. Just because shares in Singapore Airlines or General Electric of the US can be traded does not meant that the company itself has to be liquidated. A market listing would put a valuation on Temasek and GIC and put an onus on both companies to be more transparent and accountable. In addition it would put greater pressure on management to perform or risk a shareholder revolt and their ousting. A Reform Party government could retain a “golden share” so as to prevent a foreign takeover of those assets deemed strategic. Control over sufficient reserves to defend Singapore’s currency would be retained by the Monetary Authority of Singapore. 4."Can't we get the private sector to do low cost housing? We can just give away the land for low-cost housing." The Reform Party has never said the land should be given away for low-cost housing. We have said that the HDB’s home-building programme and planning for a rapidly increasing population has been grossly inadequate over the last ten years which has resulted in a big jump in the prices of HDB property. Since the government owns 79% of the land it should have taken steps to release more land for public housing. The Reform Party would take steps to do this and to inject more competition into the provision of low-cost housing by allowing the private sector to compete with HDB to a much greater extent than hitherto. Competition usually leads to higher quality or lower prices with unchanged quality so we do not understand why the YP talk about a race to the bottom by allowing the private sector to provide more low-cost housing. In any case building inspectors and regulations are there to provide security on these points and Singapore is already well provided for in this regard. Whether property prices fall or not will be determined by the substitutability between low-cost and other types of housing and by the size of new building relative to the total housing stock. Since the former is fairly small relative to the latter the effects should be small on overall prices and the aim is to slow the rate of increase and provide more affordable housing for the less well-off and first-time buyers rather than cause an absolute decline In any case the benefits to Singaporeans from ever higher property prices are to a large extent illusory since unless they are able to trade down to a smaller property they will not realize any benefit when they come to sell and have to buy another property.   Related articles: 1. Reform Party: A complacent Budget 2. Kenneth Jeyaretnam demolishes Finance Minister Tharman 3. YPAP activists attack Reform Party's proposals  Read More →

Written by Our Correspondent After being embarrassed in Parliament by WP MP Low Thia Kiang's demolition of the labor movement's ineptitude to help lower wage workers in Singapore, one would expect Minister Lim Swee Say and NTUC Secretary-General to come up with a robust argument to counter him. Instead, he used an unheard fable about a "kingdom of frogs" to brush aside Mr Low's criticisms. "The story goes that in a kingdom of frogs, the tallest tower in the world is built for an annual competition. And when the event is held, many aim to become the champion by making it to the top, but fail as they are discouraged by the audience, who warn that the climb is too dangerous. All except one frog who did reach the top. And when asked afterwards why he ignored the crowd, the frog said: 'I'm deaf. I can't hear them'", he said. The gist of Mr Lim's message: Despite criticisms from Mr Low, the labour movement will continue to address problems faced by low-income Singaoreans. "We never give up. We are like the little frog. We are deaf to all these criticisms. So instead of telling us that low-wage workers are having problems, why not be part of the solution?," he was quoted as saying in the Straits Times. As expected, the Straits Times tried to portray Mr Lim as the "victim" and pinning the blame on Mr Low for criticizing without offering solutions. Being paid almost $2 million dollars a year, Mr Lim ought to realize that it is the duty of MPs to ask questions and criticize if necessary in Parliament as in all modern democracies in the world. If he cannot stand the heat in the kitchen, he should get out of it! The onus is on Mr Lim to answer the questions posed by Mr Low and not to counter-challenge him to be "part of the solution". The key role of the opposition is to check on the ruling party and to hold it accountable for its words and actions and not to do offer solutions for it to govern the nation. If Mr Lim wants Mr Low to offer solutions, then he should be prepared to give Mr Low a job in NTUC or other government committees and pay him a salary commensurate with his services. Mr Lim also reminded Mr Low that "the government always paid special attention to low-income earners and had introduced programmes like Workfare to supplement their income", but the fact remains that low wage Singaporeans are still struggling due to direct competition from cheaper foreign workers. Furthermore, Mr Low did offer a solution to scrap the foreign worker levy and to refine the dependency ratio to moderate the inflow of foreign workers. Mr Lim's attitude epitomizes a wider problem pervading the entire PAP - the inability to listen to others and accept feedback and criticisms in good faith. As the recent parliamentary sessions had shown, the PAP MPs are completely out of touch with the ground. It will be apt to describe them as a "kingdom of frogs" living in their own wells.  Read More →

Written by our Correspondent In yet another sign that the ruling party is fast losing touch with the ground, another PAP MP Seah Kian Peng has spoken out forcefully in support of immigrants. Not satisfied with a mega $10 million dollar Community Integration Fund unveiled by Minister Dr Vivian Balakrishnan last year to tackle a snowballing problem that is largely its own doing - the inability of the immigrants to assimilate into Singapore society as too many of them have come within too short a period of time, Mr Seah now calls on more spending to make the newcomers feel "part of us." "First, we need to make sure that they are called new Singaporeans rather than new migrants. They are not even new migrants - they are an old hand at migrating, and want a new life. They want to settle down and to make Singapore a new home," he said during the parliamentary session yesterday. Due to the PAP's liberal immigration 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. According to figures from the Home Affairs Ministry, there were over 70,000 PRs and 20,000 new citizens in 2008. Two out of every three PR applicants are successful and there is no minimum residency period unlike in other countries. "We have not done any large scale survey, we do not know their problems but we have already gone ahead and decided that the funds will go towards organizing activities.....What we ought to do is first - find out what new Singaporeans need, and then target funding at helping them meet these needs," he added. Instead of spending precious public resources to find out what the new immigrants need, why not ask what Singaporeans really need? Why should taxpayers' monies be used to pay for a glaring mistake made by the PAP? If it had not opened the floodgates to accept so many foreigners at the same time, will we be experiencing problems in integrating them now? There are few incentives for the newcomers to fraternize and reach out to the native Singaporeans as so many of their compatriots are already in Singapore that they don't feel out of place. As a result, they tend to congregate among themselves within a closely-knitted community leading to the emergence of ethnic enclaves in the HDB heartlands. Had the PAP slowed down the intake of foreigners and exercised more discretion in the selection of those to become new citizens, we will not need to spend a single cent more on such ineffective integration policies. With elections around the corner, this may be another gimmick to woo the new citizens to the PAP's side and shore up its flagging support base. Singaporeans should send a strong message to the PAP in the next general election that they will not allow anymore public monies to be spent on the immigrants. Perhaps Mr Seah should set up a fund contributed by all PAP MPs to sponsor his own "integration" programs since he is so infatuated with the new citizens and whatever.  Read More →