Mdm Deputy Speaker,
Post-pandemic, inflation in Singapore has been much higher than it used to be. Announcements of price increases in transport fares, water and utilities came one after another. COE prices rose to record highs and GST is going to be increased by another 1% next year. Property prices and rental continued climbing. All these are adding on to the anxieties of Singaporeans over the ever-rising cost of living that seems endless.
These anxieties cannot be alleviated by the various aid packages that the Government has rolled out because while the packages are for a limited time, the cost increases are here to stay. The growing sense of insecurity or even depression for some over their declining ability to meet expenses or maintain previous lifestyles on their own income can never be addressed with government handouts.
The rising cost in Singapore is not only affecting the people, but businesses too. Whilst our low corporate tax was able to compensate for our high cost base in attracting foreign investments, this tool would no longer be available with the implementation of BEPS 2.0 which sets a minimum corporate tax rate. This adds on to the urgency to find ways of containing costs in Singapore.
One of our major cost component is cost of property.
For most of us, buying a home is the single largest expenditure of our lifetime. Hence, high residential property price has a huge impact on our cost of living. Yet, this cost is not captured in the Consumer Price Index (CPI) because the CPI does not cover property purchases. This is why PSP has proposed a scheme to exclude land cost from the price of HDB flats to make them more affordable.
In the retail sector, rental accounts for about 30% of the business costs. So for each item that we buy from a shop, about 30% of the cost goes towards paying for the rental of the shop.
Prices has been rising in food outlets like coffeeshops and food courts. Hawkers spoke of alarming increases in rents imposed by their landlords. Record prices in the transaction of such properties are cause for concern.
In 2022, following the announcement of the GST hike, the Committee Against Profiteering was reconvened to investigate feedback on unjustified price increases of products and services. I was invited by the Leader of the Opposition to be the representative of the Opposition on the committee, and having attended 2 meetings, I have learnt how limited the scope is for this committee to act against profiteering. The committee acts on complaints received from members of the public. Such complaints are mostly against retailers, especially hawkers.
At the retail level, there is much competition and so I am not surprised that investigations usually revealed that there are other reasons for the price increase. For example, the increase in price might be due to higher rents. So the hawker is not profiteering. But is the landlord profiteering? I raised this point at our last meeting and suggested the secretariat look further up the supply chain. I look forward to hearing from MTI on the progress at our next meeting.
Price Kaki, an app that compares retail prices from different sellers and seeks to prevent profiteering is also only able to check on vendors at the retail level.
Places like like Ireland, California, Canada, Scotland, Spain and China impose a cap on the rent increase each year. Austria and Germany are planning to do so as well.
Can I suggest the Fair Tenancy Industry Committee issue guidelines on the annual rent increase, similar to the way the National Wage Council issues guidelines on wage increase? The intention is not to depress prices to low levels, but to curb excesses. This can serve to stabilise the property market and pre-empt excessive rent increase. In addition, real estate agents are commonly paid a commission based on the rent and hence higher rents work to their benefit. It would therefore benefit tenants to have an alternative source of information on what constitutes a reasonable rent increase.
Another important cost component is transport cost. Record COE prices for private and commercial vehicles and even motorcycles are causing pain for both families and businesses.
We understand the need to control the vehicle population in Singapore because we are a small nation and road space is limited, but we must also recognize that mobility and the benefits it provides are essential for all and should not be the sole province of the rich.
Skyrocketing COE prices contribute to the cost-of-living crisis in many ways. If the cost of a motorcycle doubles because the price of the COE has tripled, the Grab delivery rider is going to have to be paid more for his work. The cost of shipping and delivering goods, or a ride in a private-hire vehicle, will naturally also increase.
We urge the Government to consider the following suggestions:
- Currently, passenger car and motorcycle COEs are under the zero-growth policy while COEs for commercial vehicles are allowed to grow at a rate of 0.25%. As motorcycles are increasingly used for delivery, we suggest that motorcycle COEs to also be allowed to grow at a rate of 0.25%, similar to commercial vehicles.
- Adopt a points-based system, where apart from the bidding price, we also consider other factors like nationality and needs-based factors like families with young children or persons with disability.
- Impose additional levies on multiple vehicle purchases similar to the implementation of additional buyer stamp duties on those who buy multiple residential properties. Senior Minister of State for Transport said yesterday that this would not change things much as there are not many households with multiple cars. Can the SMS show us the comparison of the number of households with multiple cars versus those with multiple properties to explain the difference in approach?
In any case, imposing levies on second and subsequent cars would either dampen demand for multiple cars and tilt the balance in favour of those buying their first cars or else raise additional revenue for Government. The most likely outcome is a combination of both. As both outcomes are desirable, I see no reason to reject this suggestion.
Another way to cope with rising cost of living is to have higher wages. Today I will focus on the training and education for higher paying jobs.
The wage gap between graduates and non-graduates has been widening significantly, suggesting that there is demand for more graduates and we should provide more University places for our students.
Take the Medical Faculty for example. The annual intake of the local medical schools is about 500. However, every year, on average, about 800 Singaporean applicants were rejected by the medical schools at NUS and NTU even though they meet the admissions criteria. Why do we not increase medical intake more aggressively? Instead, our students end up going to overseas medical schools, incurring huge expenses and we risk unnecessary brain drain when they do not return.
The traditional argument about ensuring fair share of talents in various sectors is outdated when we import foreign talents so readily. The same applies to other faculties as well where Singaporean students are keen to study and lead to good paying jobs.
Mdm Deputy Speaker,
The issue of cost of living is a complex one but one of great importance to many Singaporeans. Many suggestions have been and will be made today to address this pressing issue and improve the lives of Singaporeans. I hope the Government can keep an open mind to all suggestions and consider them seriously.
Earlier, the Honorable Member Sitoh Yih Pin commented that the reserves is for our children and our children’s children.
We should see this in the context of our TFR falling to 1.05, half the replacement rate of 2.1. The number of our children and our children’s children is halving with every generation. I think this is a good reason to review our approach towards our reserves and how much more we need to accumulate. If our TFR falls further due to cost pressures, who are we accumulating the reserves for?