Budget 2011 - Back to Basics

Many Singaporeans are expecting "BIG ANG BAO" (Red Packets filled with money) from the government for this year's Budget because this is an "Election Year". How big is big? $1000? $2000? Some even suggested $3000!

I have no problem if such cash handouts are given with full sincerity to help Singaporeans to cope with runaway cost of living. But if this is another exercise of "Fix Opposition and buy votes", I would be very disappointed that we have not progressed nor matured at all politically.

But what matters most for Singapore at this juncture is that the ruling party has "gone astray" from basics and fundamentals of governance. When the ministers' pay is tied to some "KPI" which includes GDP growth as the main component as well as the salary scale of those top earners in Singapore, it will inevitably create the mindset of "Growth at ALL COST". The widening of Income Disparity would not be the top concern of this government because what matters most would be how much the top income earners would grow!

The appropriate way of pegging the salary of ministers would be pegging it at different percentages at different percentile of the income of Singaporeans. eg. 500% of 10th percentile + 400% of 20th percentile + X% of 30th percentile +....+5% of 90 percentile. Maybe it could also include GDP growth in per household capital instead of GDP growth alone. Only such KPI will make the ministers more focus on "Quality Balanced Growth" in GDP as well as the plight of the lower income earners!

By now, Singaporeans should realize that it is actually quite easy to push for high GDP growth. Just introduce vice like casino gambling, just increase enormous amount of foreign workers in a short time and just give huge preferential packages to foreign MNCs to set up shops here. Never mind if the MNCs are providing more QUALITY jobs for Singaporeans or not or whether casino gambling will erode work ethics and cause irreversible damage to our social fabrics or not.

The side effects of such "Growth at all cost" strategy has finally reached a boiling state. All warnings sounded previously about inflation, run away prices of HDB flats, overcrowded public transport and hospitals etc.

Some may wonder why would inflation be blamed on this "Growth at all cost" strategy? There are already analysis on the internet which touched on the impact of "non-tradable" goods and services on inflation. Non-tradable goods and services refer to things that we could not get from importation. These include land, health services, barber service, taxi service, supermarket/market etc.

The sudden rapid increase in population would have caused great demands on various goods and services, both tradable and non-tradable. Singapore could well import as many food and other products from other places to meet such demands. Most of the inflation on tradable goods are due to factors beyond the government's control. eg. Food and commodities. They could well increase the strength of Singapore dollars via foreign exchange intervention to offset most of such inflation.

But for non-tradable goods and services, there is no way we could meet the sudden increase in demand by a spur in our mismanaged population growth. Especially rental for commercial space has been pushed up significantly, worsen by the fact that retail space has been more or less monopolized by a cartel of big GLCs.

For critical services like hospital healthcare, it is really an eye opening when our restructured hospitals were so strained by the spike in demands, they are still going around the world to promote their "medical tourism"!

There a lot of problems with the economic situation in Singapore right now but the source of problem is only one: the misadventure of wrong economic direction. If we do not solve this root problem, we will be stuck with all these problems of high inflation, shortage of housing, medical care, public transport... for years to come.

It is time for the PAP government to go back to the basics. There is nothing wrong with a slower growth with higher growth in income per capital for Singaporeans. There is nothing wrong to cut down cheap foreign labour substitutes which take our jobs and suppress our wages.

It is only when the direction of Economic policy is changed, the companies in Singapore will react accordingly to raise productivity in view of higher labour cost.

It is only when PAP government review the need of the Casino resorts, we will always be threaten by the huge social impacts which these vice activities brought upon our nation.

I would like to see the PAP government address this very important issue for this coming budget instead of dealing with "ineffective medicines" to address all the ills created by their previous economic policy.

Goh Meng Seng