COST OF LIVING CRISIS: That this House calls on the Government to review its policies so as to lower cost of living pressures on Singaporeans and their families.
Mr Speaker Sir,
The Progress Singapore Party (PSP) supports the motion moved by the Honourable Leader of the Opposition and Member Louis Chua, which calls on the Government to review its policies so as to lower cost of living pressures on Singaporeans and their families.
It is especially apt to describe the ongoing inflationary pressures faced by Singaporeans as a “Crisis”. Since the COVID-19 pandemic, when many Singaporeans are still struggling financially, the cost of almost everything in Singapore has increased substantially.
In contrast, the Government does not seem to be too concerned about this crisis and continues to add oil to the fire.
The GST hike confirmed in Budget 2022 was one of the factors that accelerated the pace of inflation as businesses took the opportunity to raise prices far more than the GST and other cost increases.
Food prices have surged because NTUC Fairprice stood by instead of doing more. I still remember in the early 1970s, I used to queue up at the community centre with my mother to buy heavily discounted basic foodstuff and necessities supplied by NTUC.
Today NTUC Fairprice’s prices are not even the lowest in the market. It is commonly known that lower prices can be found at Sheng Siong Supermarket instead.
It appears that the role of NTUC and by implication that of the Government has changed drastically over the last few decades. NTUC Fairprice no longer serves as the anchor for price stability.
The Government instead of being the independent referee and price stabilizer in the economy has become a profit-seeker in direct competition with the private sector.
In many sectors, the Government is the “market-maker” and has influenced the price levels in those sectors. The most obvious and problematic one being the property market.
Hence the current cost of living crisis faced by the Singaporeans is not entirely due to the global supply chain disruptions arising from the Covid pandemic and the war in Ukraine.
The Covid pandemic has exposed the fact that Singaporeans have little cash savings to weather financial emergencies. The events after the pandemic have only exacerbated the situation that Singaporeans have been subject to by the Government over the recent decades.
Singaporeans have been worried about the cost of living for many years, because they feel that their wages have not kept up with the cost of the goods and services that they need to lead a meaningful life in Singapore.
CDC vouchers, GST vouchers, S&CC rebates, etc. can be very helpful for Singaporeans in the short-term, but these handouts do not solve the fundamental structural issues that are at the heart of the rising cost of living in Singapore.
To help Singaporeans get out of this cost of living crisis, PSP believes that we will need to nudge the Government to change its two favourite financial management approaches namely the “Pay-and-Pay” and “A Chicken Wing for A Whole Chicken” approaches.
The Government’s approaches may have served us well in the early days of nation-building when the public finances were tight and the wages were rising fast.
However they may not be appropriate in today’s context when wages are not rising as fast as the cost of living. It is especially worrying if more and more middle-class Singaporeans cannot keep up with their standard of living.
Pay and Pay
First, let’s talk about “Pay and Pay”.
Many Singaporeans often jokingly refer to PAP as the “Pay and Pay” party because it seems to run Singapore like a company and operates like a profit-seeker.
The PSP has spoken many times in this House that this Government has ample fiscal resources and yet it has always tried to justify increasing taxes and fees for public services whenever possible.
PSP has objected many times to the increase in GST from 7% to 9%. It is unnecessary, untimely, and uncompassionate.
While the working class will get GST vouchers, the middle class will have to pay an additional $1.2 billion in GST per year after the 2% GST hike and may have to pay even more taxes because of the GST vouchers.
The increase in GST is unnecessary because our fiscal position is strong as there is room to use more of the NIRC or Net Investment Return Contribution for current spending instead of tucking the bulk of it into long term endowment and trust funds.
While we agree that public services like electricity, water, public transport and so on should be operated efficiently, the ultimate objective should be to maximise long term social benefits and not short term profits.
When Singaporeans are faced with intense inflationary pressures at the moment the Government could have delayed the fee increases in the public services for three to five years for example.
This is especially so when the Government is expected to reap billions of windfall revenues from inflation, additional buyer stamp duty and COE in FY2023 apart from the fiscal buffer we have from the NIRC.
The Government should price public services based on long term considerations to provide stability to Singaporeans’ livelihoods which will increase long term social benefits.
Our fiscal resources have been hoarded away in the reserves, supposedly for the sake of the future generation, but this is to the detriment of the present generation, who are facing the heavy and unnecessary burden of higher taxation and rising cost of living.
We urgently need a review of how our fiscal resources, including our reserves, are being used before we contemplate raising taxes on the people.
The Reserves and Budget should serve Singaporeans, and not the other way round.
A Chicken Wing for A Whole Chicken
More discerning Singaporeans have pointed out long ago that the PAP Government likes to give Singaporeans “a chicken wing and then take back a whole chicken”.
Essentially what it means is the Government is a shrewd financial manager who gives out occasional short term handouts but committing Singaporeans to long term payment schemes that require them to pay out consistently over the long term. The total long term pay-outs will be much larger than the total short term handouts.
Take public housing as an example.
For every BTO flat sold, the buyer will have to pay hundreds of thousands for the land cost and have to take a housing loan to service it. If that loan is serviced for 25 years, the buyer’s CPF balance could be reduced by as much as half a million dollars.
In exchange, the Government would sweeten the deal by giving out CPF housing grants of $30,000 to $60,000 through the HDB.
It begs the question: why can’t the Government waive the land cost so that Singaporeans can keep the half a million dollars in their CPF account for retirement instead.
This is exactly what the PSP has proposed in the Affordable Homes Scheme which waives land cost for owner-occupiers of HDB flats.
It is obvious that in this way, the Singaporeans’ financial position will be significantly improved and that will yield a lot of social benefits.
For Medishield and Careshield, the Government has also been accumulating large surpluses ahead of actual expenditures. If premiums can be reduced, Singaporeans will have more balances in their Medisave accounts to earn more interest while they are young.
PSP has proposed for the Government to pay for the Medishield and Careshield premiums altogether and establish a Universal Health Scheme for Singaporeans.
It is not an overstatement to say that the “A Chicken Wing for A Whole Chicken” approach is the main cause of financial anxiety for Singaporeans.
At the launch of the Forward Singapore Festival, DPM Lawrence Wong said that Singaporeans today “no longer talk so much about the five Cs”. He said that Singaporeans still want a good material life but the Singapore Dream is also about finding fulfilment, meaning and purpose.
PSP wholeheartedly agrees that there is more to life than material success and consumption. I have also spoken about self-fulfilment and “ikigai” which is purpose in Japanese in the public.
But we believe that Singaporeans are no longer talking so much about the five Cs because the structural issues in our economy and the cost-of-living crisis have now made the five Cs completely unattainable for many middle-class Singaporeans even if they are frugal and work hard.
Today, condo and car are unaffordable on a middle-class salary. Fewer and fewer households are owning cars. Yesterday, the Acting Minister of Transport confirmed that the car-ownership has dropped to 33% today from 40% in 2013. Even motorcycles feel out of reach for many Singaporeans.
It is well-known that country club membership fees have soared because of the influx of wealthy foreigners. Cash is tight because of inflationary pressures. Of the five Cs, credit card is the most attainable. But the credit card has fallen into a necessity to facilitate buy now, pay later when cash is tight.
Singaporeans are talking less about the five Cs not because they don’t want it anymore, but because for many Singaporeans today, it really can only be a dream.
An urgent reset of our policies is needed to address the structural issues that our economy faces. Singaporeans must have more to look forward to than a rising cost of living. Economic growth must lead to rising real incomes and better lives for everyone and not just a select few.
We must help Singaporeans to improve their long-term financial well-being so that they will have the savings to withstand emergencies like the Covid-19 pandemic. The financial leeway will also allow Singaporeans to have the freedom to develop their potential which will be beneficial to our economy in the long term.
Over the last three years, my primary focus in this House is to speak on policies to improve the financial well-being of Singaporeans. Today I will put all these into an Integrated Cost of Living Relief Package with the following 5 measures.
- First and foremost, reduce GST to 7% to clearly demonstrate the Government’s determination to dampen the inflationary psychology.
- Increase the immediate relief package from the current $1.1 billion to $5 billion to include financial help for the middle class and SMEs. This will also be a much needed spending boost for the nascent post-Covid recovery.
- Introduce the Affordable Homes Scheme and Millennial Apartments Scheme to make HDB flats more affordable, strengthen retirement adequacy and offer more choices to young Singaporeans.
- Introduce a Universal Health Scheme for Singaporeans essentially based on the Government paying the MediShield and CareShield premiums for Singaporeans.
- Introduce a Minimum Living Wage to give Singaporean workers a minimum take home pay of $1,800 a month.
The objective of the Integrated Cost of Living Relief Package is to provide a robust and substantive response to relieve the financial stress of the Singaporeans, both immediate and long term.
PSP has also estimated that it is manageable with the fiscal resources we have currently.
We hope the Government will make improving the financial position of Singaporeans the cornerstone of our new social compact.
For Country For People. Thank you.