Monday, March 25, 2013

Healthcare & Fertility Policy Options

I have attended the forum on Population White Paper organized by Transitioning.Org yesterday. There are some interesting perspectives and policy proposals made. 

The first one is Universal Healthcare Insurance proposed by Associate Professor Paul. This one is no stranger to me as I have written similar Universal Healthcare Insurance policy although the mechanism is quite different from his proposal. (Mine was modeled along the Canadian/Taiwanese model where Government, Employers and Individuals would take co-responsibility of the insurance scheme.) The most important point raised is that we should empower private GP to play a more important role in our National Healthcare. By implementing a Universal Healthcare Insurance system, people who visit private GPs will also be covered by this insurance scheme. This would mean that there is no necessity for us to build too many Polyclinics (PAP wanted to build 12 more polyclinics and 4 hospitals... I really wonder where they are going to get enough doctors to run them... foreign doctors again?) anymore and recommendation made by private GP should get the same treatment as those fro government polyclinics. 

The second proposal on raising Fertility rate was made by Mr Tan Kin Lian. He proposed that we should do away with that ineffective baby bonus scheme. Instead, we should provide $500 per month to each baby, up to 3 per household, until they are 12 years old. This will give incentive to some mothers to have more babies as this will help to reduce their financial burden drastically if they so decide to have 2 or 3 babies. Based on 30,000 babies per year, the total cost to the government will be about $2.16B per year. Even if we are successful in raising the number of babies to 50,000, the total handout would not be more than $3.6 Billion per year. This amount is manageable in Singapore's context and it would definitely give Singaporeans the confidence to have more babies as most of the cost of taking care of the children in their formative years would be financed by this scheme. 

I believe that PAP government could well afford to finance this scheme and it is just a matter of political will in implementing it. The present "Baby Bonus" scheme has failed miserably because it doesn't provide longer term financial support for Singaporeans in coping with the high cost of child bearing. Imagine that if you are to have 3 children under the age of 12, you will have government financial support of $1500 in total. This is a substantial amount of money that could help the family effectively.

I have thought of such scheme before, providing direct financial support to families with children but I couldn't decide on the numbers and mechanism. Mr Tan Kin Lian has provided a good insight of a possible mechanism for such scheme and it is reasonably within the means of the PAP government to finance it. 

These are the two policy options which interest me greatly as they are quite similar to my previous thoughts on the issues. I hope there would be more discussion and debates on these issues.

Goh Meng Seng

Saturday, March 23, 2013

Don't lose sight of the fundamentals of a Nation - Singaporeans First

Are slogans like "Singapore for Singaporeans" and "Singaporeans First" really Xenophobic?

We have to go back to basics. A country will always give FIRST Priority in taking care of of its citizens, its people. Else it will be no different from a hotel or any private entity that only concerns in making money and serving whoever their clients or guests.

Having said that, there is a clear thin line of being Xenophobic vs Nationalistic. We are not asking everyone to be nasty to anyone who are foreign. But we are just merely saying, no matter how many foreigners we invite AS A COUNTRY to live and work on our land, the motive will always be in the interests of the citizens!

If getting foreigners to work in Singapore really benefits Singaporeans as a whole, providing opportunities for Singaporeans at large, then we will welcome them. We should not be shy or hypocrites to deny that the motive of any policy is to take care of Singaporeans first.

As economic theory always dictates, there will always be a diminishing marginal utility in having too much of anything. Apparently, Singaporeans at large are feeling the pain and pinch of the diminishing marginal utility of having MORE foreigners working on our land. As I have stated earlier, if calling for government to put Singaporeans' interests as their TOP Priority is Xenophobic, then what do you call foreigners discriminating our citizens in the employment?

We should not put a blind eye to the fact that tensions have been raised by some bad practices executed by our foreign guests working here. We should not put a blind eye to the fact that having foreigners working here aren't really putting more jobs to Singaporeans but in fact, turning into displacement of Singaporeans from worthy employment and pushing our citizens into underemployment.

While there are people who will cry, in the name of anti-Xenophobia, to undermine the movement for us to reclaim our very basic right as a citizen on this land, I believe more people are more objective and rational in seeing the impact and the truth of the imbalance brought upon us by the "Free for All" mentality in PAP's FT policy.

Make no mistake about it. There is absolutely nothing wrong to call for "Singaporean First" or "Singapore for Singaporeans" in today's context where the overwhelming problems brought by the liberal FT policy have really blinded us from the fundamental role of the Nation's government. It is not fault of the foreigners working here that they are brought onto our land but the fault lies solely on the PAP government. These slogans are called to remind the government of the day what their basic fundamental roles are... their TOP Priority should lies with taking care of the citizens' interests at large, not just some MNCs or business interests only. It is definitely not the priority of providing jobs and employment for citizens of other nations.

While we are not ANTI-FOREIGNERS as in personal hatred against them, but we are definitely against the PAP government's liberal FT policy and their intent to continue to import even more foreigners onto this tiny little island without putting our citizens' interests as their top priority. They have basically lost sight of their basic fundamental understanding of the role in taking care of Singaporeans FIRST.

Goh Meng Seng

Do you really understand what Xenophobia is?

Do you really understand what Xenophobia is?

I believe many of those people who keep accusing others, especially those activists and participants of the 6.9 protest, as "Xenophobic" don't really understand or experience Xenophobia before.

I will tell you what slogan will be considered as "Xenophobic" : eg. "Go Home FTs!" "Get Lost FTs!" or any slogans targeted at foreigners in Singapore... that's Xenophobia. All these aren't new because it had happened all around the world before, be it in Australia, Europe, Japan, Korea, US, China or even Hong Kong. Nothing new, really.

Singaporeans are very mild and well behave in nature. We seldom take to the street for anything unrelated to monetary interests. But when we do take to the street to protest for something like this, it means that we are really pissed off. But yet, I believe in most of my Singaporean brothers and sisters that we do not translate this anger upon foreigners. Our anger is targeted solely on PAP government's liberal FT policy that is now doing more harm than good to us. Worse, their insistence of pushing forward to a totally unrealistic figures of 6.9 million population by importing more FTs in spite of the present uneasy shrinking living space has really added oil to the fire of anger.

Our anger is targeted at PAP government, not FT. Although there are really some cultural behaviors and insensitivities of these foreigners to our way of life are making us frustrated at times, but we are still treating them decently as another human beings.

Thus we should reject anyone who tries to label us as Xenophobic because we are not. Calling for "Singaporean First" isn't Xenophobic but a timely reminder call to PAP government to get to the basics of how a Nation should treat its citizens.

Goh Meng Seng

Thursday, March 21, 2013

Budget 2013 Point 2 - Wage Credit & Productivity

I was waiting for the Parliamentary Debate on the Budget (they call it "Committee of Supply") to end before writing this point 2 because I don't want to be seen as "snatching" topics from the opposition MPs in parliament.

Unfortunately, none of the opposition MPs in parliament has raised this issue about Wage Credit and Productivity. Other opposition parties like SDP didn't touch on Wage Credit as well. I was pretty disappointed.

I got to know about NSP post-debate forum in which they released their paper on budget. I decided to wait for them to have a say on the budget.

I attended NSP forum and I was pleasantly surprised that they have proposed to do away with the Wage Credit scheme. Although their reasoning is quite different from mine but at the very least, they dare to pin point at the "populist" move of extending the Wage Credit scheme beyond necessity.

Wage Credit scheme came about after 2008 financial crisis. Just one day before the release of Budget Statement for 2009, I wrote an article on Budget for Crisis of Confidence. In this article, I explain that we need wage subsidy during that crisis period to cushion the impact of the financial crisis. Indeed, for the Budget 2009, PAP came up with the similar idea Wage Credit (subsidy seems to be a dirty word to them!). However, Wage Credit or Subsidy, is supposedly meant to be a Crisis Management Fiscal Tool. It is not meant to be a long term fiscal policy as this would create undesirable distortions to the wage pricing mechanism for the labour market.

We are not facing any imminent crisis now and there are absolutely no reasons for the government to continue to use Wage Credit in its fiscal plans. This may have long term repercussions when the system sunk into over-reliance on such measures. If there is going to be another financial or economic crisis, Wage Credit's effect may just diminish when we really need it as the pricing mechanism for labour has been overly distorted for a long period of time.

It is just like taking anti-biotic. If you abuse anti-biotic for unnecessary usage, you may find it ineffective after a while and you will be in deep trouble later on!

On the other hand, providing Wage Credit to increase wages for workers to increase producivity WILL NOT WORK at all! Such move is based on totally flawed and overly simplistic premise that when wage increase, productivity will increase automatically!

Productivity don't just increase when you give your workers more salary. You may increase your employees' salaries AFTER productivity increase i.e. company make more money. Or that, when you feel the pinch of higher wages due to market forces, you will try to increase the productivity of your employees by changing work flows or investing in more capital goods and machinery. But Wage Credit DISTORTS the wage mechanism and the business owners WON'T feel the full pinch of wage increase, thus, why would they invest in more capital goods to increase productivity?

On the contrary, if the Wage Credit is scrapped, business owners will face an increase of wage expenditures and thus, will think of ways to increase productivity and thus maintain or increase profitability!

What the government could do is to scrap the Wage Credit but at the same time, enhance soft loans or even more substantial subsidies for firms who want to engage consultants or invest in capital goods to increase their productivity. By doing so, we would provide both the push and pull factors to entice SMEs to reinvent themselves, invest in more capital goods and change work flows to increase productivity.

The continuation of Wage Credit by PAP is just a ploy to be "Populist" at best. The humiliating defeats in Punggol East has created an over-reaction from PAP to just throw out every goodies they could think of without really thinking through carefully the logic and implications of their policies.

Such moves are really undesirable for Singapore's reconstruct of our economic model. Unfortunately, those opposition MPs in parliament had also go along the tides without critically examining the negative implications of such populist moves made by PAP. Well, politically, they are also populist in thinking. This is the reason why I am totally disappointed with both PAP and opposition MPs' performance for this Budget debate.

Well, the only consolation I have is to know that NSP actually dares to address the issue of Wage Credit and propose to scrap it altogether! We may still have hope after all.

Goh Meng Seng 

Friday, March 01, 2013

Budget 2013 Point 1 - Car Loan Policy & COE Prices

I was pretty puzzled by the new measures made by PAP government with regards to the car loan policy. I couldn't really figure out exactly what they are trying to achieve.

COE prices have increased recently due to a curb on the number of COE issued. This is basically due to the corrective measures LTA has made due to the excessive number of COE issued prior to 2012. On the other hand, the demand on COE has increased due to an expanding population.

There must be an understanding that just like population, we cannot be expanding on the number of vehicles on the road forever. The primary concept of COE is to control the total number of vehicles on the road rather on the control of the prices. Is COE the best tool to control the number of vehicles on the road? It is supposedly to be so but there are other possibilities as well.

Nevertheless, if you want to control the number of COE issued, you will not be able to control the prices. That's basic economics. However, is COE bidding system efficient? I have been talking about pay-as-you-bid system vs the present system even since 1993. I shall not repeat on this again because apparently PAP won't listen and only interested in the revenue generated by this piece of paper.

I suspect PAP's recent measures on the restriction on the loans are aimed at curbing the demand of cars by the population. But look at the overall impact you will realize that this will further create a great divide between the rich and the middle-lower class.

Some may consider vehicles as "luxurious" goods and only those with money should buy it. I do not think so. Transportation needs via own vehicle is not merely "luxurious" goods like "jewelery" but may be basic needs for many people like salesman. This is especially so when our public transport system is really far from being efficient in such a small city state.

Sometimes you may wonder whether the allocation model for car ownership really makes sense when the rich could own not only one or two cars but a whole fleet of 5 to 10 within a small household while those middle lower class salesman who need their own transport vehicles are deprived of it.

Second hand car market is the only possible means for these people to fulfill their transportation needs. However, the recent measures put up by PAP government applies across the board! Why? If the aim is to reduce COE prices by curbing demand on new vehicles, why would the loan measures apply to the second hand market as well? Second hand car market is the "poor middle class people" market and most likely many people with various needs will not be able to meet the stringent loan restrictions.

Such measures are totally irrational and will further widen the wealth divide between the rich and the middle-lower class. You will see more and more rich families owning more cars which they don't really need (eg. kept in the garage most of the time) while those with real needs are deprived of it.

Curbing demand on the second hand car market really serve no purpose on the two parameters: Total number of Cars and prices of COE.... unless the PAP government is thinking of crashing the second hand car market so that more people will scrap their old car instead of selling off at second hand car market. It is only then they could increase the supply of COEs to the market and reduce prices...but wait, who will benefit? The rich!

We will end up with a totally skewed market situation where all resources will be allocated to the rich while the middle-lower class who may have even MORE VALID need of car ownership will be deprived. Such scarce resource allocation situation will only further inefficiency as well as social tension and instability due to wealth and income inequality; not only in terms of monetary terms but totally lopsided resource allocation that resulted in wastage.

PAP government is not doing anything good by applying such measures across the board. Second hand car market is the indirect means of "fair" resource allocation to the middle class who can't compete with the rich on COE bidding. I would suggest that loan requirement should be set at a max of 80% instead of 50% for second hand car market. At the very least, this will give the middle class a chance to meet their needs instead of squeezing them out of car ownership totally.

There are other issues about the COE and car ownership allocation but I would not want to comment on these for the moment. Let out MPs in parliament a chance to come up with their views, right? :)

Goh Meng Seng