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Tuesday, May 03, 2011 - 23:33 SGT
Posted By: Gilbert

The Issue Issue

I was beginning to feel overawed at the task of writing about the GE, but then encountered so many thoughtful pieces on the Web (Facebook in particular) that I decided not to reinvent the wheel, or most of the wheel, anyway.


On to the original research. I've taken these issues from the various opposition parties' websites, and tried to group similar-enough points together to get a very rough indication of how popular it is in general. Categories are my own, and where an issue possibly fits multiple categories (which is quite often), I have assigned it to the one I deem best fits it.

Note that the proposals are drawn from their website only, although the parties' full manifesto may include additional points, reason being the summaries should represent their key focus. Obviously, a party may be in support/opposition to a particular proposal without mentioning it outright, so please do not take the following as an authoritative indication of the respective parties' stands.

The rightmost column indicates my personal verdict on each proposal (which may well be wrong). Green indicates general approval, orange ambivalence pending more information, and red, disapproval. Quite a few proposals are unrated, usually due to lack of detail.


CPF



Allowing people to cash out their CPF sounds all and swell, but has to be very carefully monitored lest it defeat the system. Reducing contributions would be a shift in the responsibility of saving for retirement to the citizen; note that this proposal was made by the SDP in tandem with reducing HDB prices, a huge if in itself (to be discussed later on).

The proposal to pay extra CPF dividends when government investments yield over and above the interest rate makes sense. Obviously, some buffer has to be kept to fulfil obligations in leaner times, and a slice has to go to the very intelligent fund managers (who hopefully are tasked to conservatively exceed the guaranteed CPF interest rate).

However, if things go well and global markets hit say 6%-8% per annum (i.e. any Tom Dick and Harry can reap that return with a simple index fund), the CPF dividend should rise in a timely fashion to reflect that - and with a minimum of self-congratulation about excellent fund performance and the foresight of the government, please.

On expanding the list of CPF-approved tertiary providers - there is already some indication that higher education may be the next big bubble, in particular commercial institutions of the sort that has low entry requirements, often high costs, and low return on investment. Therefore, any providers (the term itself is mildly pejorative) should be carefully screened, and only included if they are very likely to give good value for CPF.

On allowing local entrepreneurs to draw on their CPF for seed money, my opinion is no, at least while the CPF fills its current role of retirement hedge. While the suggestion is backed up by the requirement that the entrepreneur has "built up a track record", who is to impartially judge that? Someone like a bank, venture capitalists, or a relevant government agency? Well, so get the money from them instead.

Finally, on CPF Life: It is a (compulsory for those born after about 1958) scheme that provides lifelong income for the retired elderly... or does it? Apparently, the exact sum of the monthly payout somehow cannot be guaranteed, although holders do have the verbal vouching of the current Minister of Manpower that some payout will be made.

What the heck? I certainly wouldn't buy any commercial annuity (and yes, they exist) under these terms! Isn't the whole idea for the insurer (government in this case) to aggregate risks, so they don't fall to the individual, who thus has some peace of mind when planning his retirement budget?

Given that the uncertainty should be especially low in this case since an entire population is covered, couldn't some very conservative projections have been made, and some safe baseline guaranteed? Or were the calculations made and the baseline found to be so low that it is near-useless (especially after inflation) and completely unattractive? Or is this in preparation for the adjustment of annuity payouts becoming another political weapon (the next upgrading)?

CPF Life is one area where the populace can seriously demand better.


Economy



Well, let's get over the more fluffy stuff first. Everybody loves loves loves local businesses... but doesn't have any concrete plan on how to love them. Even the full WP manifesto (the most impressive of the lot) only comes up with vague general suggestions like "Government agencies should give local SMEs a fair chance", "GLCs should invest in SMEs" and "Attract more venture capital firms to Singapore".

Ditto for lessening reliance on GLCs and multinationals, prioritizing local workers, tuning quotas and having a good business environment. The sentiments may be nice, but there's simply nothing to go on.

Ah, the minimum wage. Frankly, I was kinda surprised at the vehemence with which it was belittled, by several very intelligent people I know (or have come across). I will state my opinion off the bat, and it is: it really depends. Just to be contrary, let's examine the case for a minimum wage.

Drawing upon an example of not being able to hire a worker worth $4/hour (in marginal productivity) when the minimum wage is $5/hour: a question may be asked - will the $4/hour worker actually be paid the $4/hour he is "worth"?

Well, it would depend on the supply of similarly (un)skilled workers. If enough workers willing to take $2/hour or less can be found (who may be foreigners for whom it is a good wage to remit back home, or perhaps chaps desperate for cash, not uncommon with low income individuals), then workers worth about $4/hour will be paid $2/hour at most instead.

Also, it may be argued that not having a minimum wage actually artificially dumps costs from the employer onto the government (and thus general public), if the concept that the employer should be responsible for employees' wellbeing is accepted (see: Wal-Mart and its workers' healthcare).

A minimum wage can possibly be beneficial then, if:
  1. A significant proportion of unskilled workers are paid below their actual productivity value, and there are sizable search inefficiencies (elderly/uneducated workers tending to accept a lower wage in hope of perceived job security)
  2. There is little pressure on employers of such workers to pay them closer to their actual value, despite the lack of any overt collusion, since the unskilled workers are basically interchangable, and they can employ any required number of them at the lower wage
  3. The unskilled jobs are generally unsuitable for automation/replacement with capital (e.g. food court workers, until plate-clearing robots are invented)
[Other pros and cons on Wikipedia. Strangely, the above points were not made there]

Continuing with the above example, a minimum wage of $3/hour would represent a transfer of $1/hour of the employer's economic rent to the employee, who remains employed since he was worth $4/hour after all.

It may be argued that if unskilled workers collectively end up earning about $2/hour each, then that is ipso facto what they are worth, and if they are unhappy they can move elsewhere. Given that the minimum wage is mentioned mostly with relation to the needy elderly, this is morally a no-go (well, except Johor Baru, but it's almost Singapore anyway).

So, back to Singapore's situation - do these conditions apply to us? This is where the foreign worker policy has a significant effect. If, for some reason, no foreigners were available to be construction workers and general labourers etc, what would this mostly-unskilled labour be worth? I would gather, rather higher than the present market rate. Of course, some of our industries would certainly become badly uncompetitive, so this drastic measure is not quite feasible.

But a question to avowed libertarians would be, why not simply open the floodgates and allow the divine free market to sort everything out, then? Just allow foreign workers to enter as they please, and if they don't make enough money, they will automatically leave by Smith's Invisible Hand. I hope that even professed laissez-faire diehards can see why this is a bad idea.

It is highly possible, even likely, that locals as a whole benefit from the right number and distribution of foreigners. I cannot however accept at face value sweeping assertions like "large number of foreign workers suggests such (net consumer goods) savings to be very high". Well, let's just remove all restrictions on foreign workers and see if our companies employ yet more of them then - answer: yes, they will. So why not maximize our savings that way?

Then, if we can accept that some measure of control over the labour supply is optimal, it makes little sense to blithely reject a minimum wage out of hand as though it were received wisdom (in Economics, it is almost a rule that if a Nobel laureate supports a stand, another laureate can be found who opposes it), espcially as empirical studies on it have found that its effect on employment levels is not even certain.

In practice, however, I would say that even in the unlikely event that a minimum wage is introduced, it would have less impact on the needy elderly than hoped for by its proponents. For a start, it would not affect those elderly who work as independent contractors (e.g. scavenging empty cans and newspapers). Also, many of them likely work informally, and may be hesitant to press for their rights.


Decorative Budget Graph
(Source: TradingEconomics.com; Government of Singapore)


On the GST issue, it is tied up heavily with the overall Budget. If the citizenry wants benefits, they have to be paid for somehow - and the GST is one of the key taps (which has increased from S$6.17 billion in 2007, the year of the GST hike to 7%, steadily to an estimate of S$8.44 billion in 2011). It is definitely good policy for governments not being able to easily draw upon past reserves (though it would be greatly appreciated if the people could have an idea of exactly what our reserves are, thank you very much - analogy: you've been depositing regularly into a bank... which says it doesn't know quite how much there is, but it's in safe hands!).

However, by all indications, Singapore already has reserves ("hundreds of billions of dollars") adequate for us to ride out anything but a near end-of-world scenario (like a Third World War), but in such an eventuality the bulk of our reserves may be destroyed or not be honoured anyway. It is not like our reserves are being eaten away by inflation, thanks to the good work of Temasek and GIC; we have been roughly in balance for the last decade of so (N.B. see page 39 of the 2009 Budget Highlights) (N.N.B. depending on the definition of revenue)

[N.B. On Temasek, I think they've gotten the short end of the stick over paper losses during the 2008 Global Financial Crisis - though, as can be seen, they are ready enough to blame reductions in portfolio value on external events, while gains are not marked with labels like "General Rebound in Global Economy" or "Injection From Singapore Government"]

Given our sensible financial prudence, cutting GST would necessitate making up the shortfall elsewhere. Opponents might however point out that GST hikes themselves were plugging the gaps left by the reduction of the top income tax bracket from 22% to 17% in six years, together with reductions in corporate tax and somewhat out of the blue, abolition of estate duty (formerly 5% on the first S$12 million after deductibles, then 10% after that - it was 60% before 1984!) in 2008. This has nothing to do with the perceived decrease in social mobility, of course...


I reserve the right to one low blow per blog post


Whichever way one slices it, it seems like the trend is towards squeezing the poor to pander to the rich (in relative terms - it could certainly be argued that the poor were too fat and entitled in the first place), so that wealth may "trickle down".

I seriously hope it works.

It is especially difficult to make predictions without extensive analysis with regards to the economy, thus all the verdicts in orange. Increasing the statutory retirement age does at least feel especially fair at face value - if the best realistic plan for the future is for citizens to work forever, at least give them the assurance that they can keep their jobs.


Education



It may seem strange that I am against the reduction of class sizes, but the objection here that it is less immediately practical than most other suggestions by the Opposition (which is saying something).

Personally, the most important objection is that teaching is more a calling than a profession, and I suspect that doubling the number of teachers will cause a reduction in motivation and quality that overrides any gains in reduced class sizes, which in any case may not be a silver bullet; some students (e.g. me) might be happy enough for others to suck up the teacher's attention (it's quite possible that smaller class sizes are especially valuable for students with behavioural issues).

Assuming that enough dedicated primary/secondary school teachers can be found (probably not), I would upgrade the verdict from Red to Orange - sure, give it a spin, just don't expect too much, all the more so if educational attainment remains largely a relative competition, which it sadly seems to be.

This goes hand in hand with the proposals about our universities (and the wider economy). I'm certainly for expanding university enrolment... if standards can be maintained. It is probably far easier to set up new universities or expand current ones than to implement the reduction of class size plan, in fact. The trouble comes if a new university is created but becomes known as "second-rate", and its graduates end up discovering that employers don't rate their degrees, and they may have been better off getting a foot in the door through other methods.

One common complaint is that students who are rejected from local universities nevertheless get accepted by reasonably reputable (or better) universities overseas. It is probably worthwhile to do a study on how often this happens, perhaps by encouraging locals admitted to, say, a top-50 ranked school in the USA but none of NUS/NTU/SMU to report this discrepancy (especially whether it has to do with the specific course desired).

As for priority admission for citizens: certainly, no citizen should be denied admission in favour of an equally qualified foreign student, simply for the sake of diversity. I can get behind that. However, current official policy gives up some locals (about 20%) for rather more qualified foreigners (this can be debated, of course) for diversity and quality - which is alright too (while it has been said that they don't deprive locals of places, realistically I think it is more accurate to say that they do, since let's face it, capacity is mostly fixed and a bum in the seat is a bum whether local or foreign, but in exchange for a better university).

On tuition grants, I feel that fees are already pretty low. The bursaries might be better publicized, though - it seems that there's no shortage at all.

Subsidizing pre-primary education... why not? The costs are about S$100 a month at PCF Kindergartens, and there aren't enough kiddies around. While it can be argued that the Baby Bonus is comprehensive enough... nah, it probably isn't. As an added incentive, the kids will get to know the PAP early.

The same goes for allowing free primary and secondary education. Actually, primary education is already compulsory and there are no school fees, though there are miscellaneous fees of about S$10 a month. While secondary school is not compulsory, total fees are still quite low (about S$20/month). Uniforms, textbooks, CCA fees and tuition are another thing altogether, though.

Leaving tuition aside, I feel that it is reasonable for the state to provide for things like a couple of sets of uniforms, textbooks and basic stationery for all students, without them having to plead poverty. My ballpark figure for the cost of waiving all miscellaneous fees at primary and secondary level is S$6 million a month, and if uniforms (three sets a year, S$100 total) and textbooks (say another S$100 a year) are added in, the grand total comes to about S$12 million a month, or maybe S$150 million a year. Given that the annual budget for Education is some S$8000 million, I think this is worth a good look, as I don't quite buy the "they'll only appreciate it if they pay for it" argument in this case.

On untying scholarships from specific ministries/boards, I can't see anything against it, but suspect that quite a bit of internal movement already takes place.

"Rethinking educational philosophy" (SDP: " Learning should be made an enjoyable activity where discovery of oneself and one's environment is the priority.") is kind of vague, and while I sort of agree, the suggestions are a little too broad. Perhaps I should have given an Unrated Verdict.

Primary-Secondary Integrated Programme: without convincing counterarguments, I would say no. While parents of some primary school children have occasionally made a plea for lower entrance scores for affiliated secondary schools (see SJI, just as an example), my opinion is that this should generally not be the case, especially where there is no strong cultural reason. In fact, I never quite liked the high-school-to-junior college through-train either, since it reduces mobility by making it harder for late bloomers to upgrade to better institutions.


Health



One popular suggestion was some form of co-paid universal basic healthcare (see: Obamacare), with the NSP's version having the slightly unfortunate acronym of CMI. Worth a look, if the numbers come out right. My unschooled guess is that it could get pretty expensive, especially if we continue to discover costly treatments that prolong life without restoring proper function.

The NSP brought up the topic of generic drugs as a means of lowering costs. It is quite well-known that production of drugs is actually very cheaply done, and much of the high costs goes towards defraying research expenses. Clearly there is little reason to choose a branded drug over the generic equivalent, assuming the drug patent is expired, and I would be surprised if polyclinics and hospitals did not already use them.

The tricky part comes with manufacturing generics before patent expiry, which I believe is what the proposal pertains to. I suppose that it is not illegal per se, since patents are generally governed by national laws, and countries in need of cheap treatment for their citizens have been known to reverse-engineer new drugs - which pharmaceutical companies are certainly unhappy with.

Should we go that route? Well, it may be especially sticky if we have life science research ambitions of our own, without even going into the moral aspect.

Can't find too much to say about the SDP's offerings.


Housing



The top suggestions were to increase the number of cheap rental flats, and to make construction costs transparent. Both sound good. While the expanding the Public Rental Scheme (for households with gross monthly income below S$1500) may be an admission that we haven't quite moved everybody forward, the HDB's mission was always to provide affordable housing. So provide it.

Which brings us to land and construction costs. Apparently, public housing prices are now based on what the unit is worth, not what it cost to build... but they are heavily-subsidized... and moreover the HDB is losing billions annually... but such losses are fine, while lowering prices would be robbing the reserves... but not to worry, flats are still affordable. Apa ini? My confusion reached epic levels researching this.

Alright, it is true that suddenly introducing cheaper new flats would reduce current property prices - but why were they so high in the first place? Sadly, I can see no quick fix to this whole mess, and a mess it is.

Allowing more lease buybacks, reviewing the income ceiling and prohibiting, heck, everybody - citizen or PR - from flipping flats all sound great, as does a re-emphasis on the zero-profit mission of the HDB... oh wait, they're losing money hand over fist.

Releasing more land seems as it should help, but given the strange behaviour of the local housing market, I have to reserve judgment. Abruptly banning PRs from purchasing flats is too drastic and arbitrarily unfair, however.

And one thing that always got me - you never actually own a HDB flat, due to the lease. Basically, we all rent. Which may be understandable due to the scarcity of land, but still sucks.


Immigration



Rather less than I expected on this topic, with RP's proposal for new citizens/PRs to serve NS or pay a lump sum tax in lieu being the only "surprise". Problem is, allowing people to buy their way out further devalues the service, and we're having enough trouble finding worthy new citizens as it is, and I'm not sure that it's appropriate to have PRs, who are not citizens, serve NS. Also, it will be difficult to pro-rate the service period properly.

Having said that, the effect of reservist liability on employers should be seriously looked into.


National Service



The government has shown itself to be perfectly willing to shorten the NS period as technology allows, so a further reduction may be in their plans anyway. A volunteer army (sort of like the volunteer police force) is a good one - who knows, we may have a few battalions of guys who would love to march around on weekends just sitting around.

I would be slightly wary of reducing defence expenditure without going into where specific cuts would be made, or capping it at a magic number, though. Initially, I was leaning towards having conscientious objectors go protect themselves, given that even if they are so devoted to the ideal of non-violence that they really would not fight back in self-defence, they still benefit from the defence umbrella, but then I realised that we're defending a large number of people who don't participate anyway. Well, let conscientious objectors serve a longer term gardening or something. Whatever.

Oh, and no nukes. Agree totally *nod nod*


Political



Most of the stuff here should have been instituted long ago, though ironically the introduction of the Internet means that the first few points have become slightly less urgent (but still important).

I don't see why the Elections Commission should be under the Prime Minister's Office, but that would not be so bad if it declared constituency boundaries in advance, like immediately after the previous election. There is very little justification for waiting until the last minute - how much can voter composition change in five years?

Same for the GRC system and Nominated MP scheme, which gives the very unfortunate perception that the ruling party is attempting to tie its best candidates with less outstanding ones, instead of the noble objective of minority representation.

On the ISA, yes, in extraordinary times. Which is not now, sorry.

Can't see any possible objection against allowing postal votes (other than security, perhaps?), and my thinking has always been that if you're old enough to die for your country, you're old enough to vote.

Pegging the salaries of Ministers properly is enticing, but I have it on good authority that the entire pay scale of the Civil Service is linked to that of the Ministers, so it's not that straightforward (i.e. any cuts would have to be across the board).

As for removing the serial numbers on ballots - the numbers contribute unnecessarily to the persistent perception that votes are tracked (with possible repercussions). Actually, I am convinced that the vote is indeed secret, but if a better solution than serial numbers (which is simpler than say ThreeBallot) can be found, I'm all for it.


Population



While I don't think letting Dad have an additional six days off per baby would help our birth rate that much, I don't think it will hurt either. If the government is serious about fixing this, they will have to start throwing serious money around (direct payment, funding childcare leave, lowering childraising costs), as things stand. Or just act mildly surprised a decade later when the birthrate hovers around one child per couple, which is always an option.


Social Welfare



During Election season, everybody loves the needy too, but here the devil is in the details, hence the Orange Verdict for pumping more money into VWOs and medical insurance - how much of the money goes directly to the needy, and do they want the services planned for them?

As for having wage supplements being composed of more ready cash and less CPF, and the provision of pensions for longtime CPF contributors (hey, isn't that CPF Life?), I see no reason to object. It may be an appropriate time to repeat that not having a minimum guaranteed payout for CPF Life is quite unacceptable.


Transport



Extending concession passes seems like it won't make much of a dent in our system, so no reason to object. Monitor fares, sure (though I'm not expecting too much in terms of effectiveness for that and the ERP suggestion), no harm there either.

There may be a case for re-nationalizing the public transport system, and while nobody likes paying for a COE, it has allowed traffic to remain at tolerable levels. The SDP does make an interesting point that it is usage and not ownership that contributes to congestion (which is supported by the Off-Peak Car Scheme).

The general idea is that, since some areas are far more prone to congestion than others (e.g. the CBD), we should shift costs from buying and owning a car (which includes COE, road tax, registration fees, etc) to the actual usage of these roads.

This gets an Orange Verdict simply for sounding rational. My question would then be: in a COE-less world, where are all the additional parking lots gonna come from? From my observations, HDB carparks are packed enough as it is.

Selective priority to make it cheaper for families to own a first car ahead of wealthy households who are on a third or fourth sounds plausible too (bidding for quotas wasn't a true free market system to begin with), though I'm unsure how much impact this can have.



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