Saturday, February 18, 2012

Budget Tweaks : Small fixes for big problems....

UPDATE: A number of readers have correctly pointed out that the curbs on foreign workers and wage subsidy will have a positive impact. The question is how big this impact is. To put things in perspective, there are 350,000 older workers who will qualify for the wage subsidy, If you net off the increase employer contribution, companies will get roughly an extra $1000 per worker per year.for each aged worker they hire. This translate to roughly $80 subsidy per month per worker. This is no silver bullet but we should appreciate the small step in the right direction. However, given the severity of structural unemployment we are seeing these days, these small steps are a long way from solving this problem.

This blog was started in 2005 to explain and  highlight the key problems in our society. After 7 years, this blog is still up and I'm still know why? The same problems that I wrote about 7 years ago did not disappear and actually got bigger as time passes. I wrote about the problems with public transport 7 years ago and the problems persisted until the trans broke down late last year. I wrote about the negative impact of the high cost of housing 7 years ago and property prices have more than doubled since. I wrote about the inadequacy of CPF for retirement, the rising inequality, the falling worker productivity, rising medical costs and the impact of the huge foreign influx years know what?.After looking at the 2012 Budget and the PAP approach to solving these problems, I think I will still be writing about how things are getting worse in 2020.

Despite all this talk about building a "fair and inclusive" society, what the PAP govt is trying to do is obvious - they are preserving as much of the current system as possible and fixing the most obvious severe symptoms and hope that Singaporeans will accept the system. When they talk about a "fair and inclusive" society, they are not talking about changing the 3rd world wage structure, we have today but offering selective assistance to the lowest wage earnings. Its about tackling the symptoms not fixing the root of the problem.  Recent statistics show that wage growth for the top 20% income bracket has again risen much faster than the bottom 20% in 2011..and the trend of rising income gap continues.

The mainstream media cheered the move by PAP govt to increase CPF contribution of  older workers and their employers as a major step to "flatten the wage scales and improve the employment of older workers"[Link]. If you read the reports, you get the impression that this is a bold new move by the govt to improve the employment situation for older workers. Tharman warns that the govt "cannot make this major move in one step".  So we all get this impression that the govt is doing something brave and new.......

So older workers are big winners? Really?

Actually the PAP govt lowered the CPF contribution rate in 2003 arguing that:

"Why is there a need for lower contribution rates for older workers aged 50-55?

Older workers are at greater risk of losing their jobs. One reason for this is that our seniority-based wage structure results in older workers being paid more than younger workers. The wage differential is sometimes larger than the productivity differential, leading to companies retrenching older workers first when their business comes under pressure." - CPF Board FAQ [Link]
So the govt cut older workers' CPF contribution in 2003 to improve their employment and now it wants to raise the contribution also to improve their employment. So its a 2-step backwards, 1-step forwards "cha-cha" dance with a little bit of twist. When they cut CPF contribution they cut only the employers' contribution for workers turning 50 but when they increase the contribution, they raise both the employer and employee contribution - now older workers will have less disposable income. When they cut your employers' CPF contribution they are helping you and you're a winner...when they increase  the CPF contribution, they are also helping you and you're again a winner. You can't lose with this type of govt!

So the major move in a budget that sets out to build a an inclusive society and a stronger Singapore is one that merely restores what was already there in 2003. You call this progress? As for the other little tweaks in the budgets, they only look good only through the colored lens of the mainstream media.  Medishield premiums have been increase to pass more financial burden of higher medical cost to all of us. Curbs on foreign workers like higher levies to tighten the inflows are a mere patch on a problem that has already grown so large I'm not sure were can even solve it given the economy is now so dependent and addicted to the foreign inflow.

The steps taken are not even going to make a slight dent on big problems our society faces. 7 years from now I will still be writing about how the problems have worsened .....along the way, more people are going to give up on the PAP if they have not already done so.


Anonymous said...

Prata party doing flip flop on policies.

Lye Khuen Way said...

Yes Lucky, you cannot be furthur from the Hard Truths. Am afraid you will be writing many many years to come, unless we have a change in government along the way....
Again, I wonder aloud, whether any senior Public Servants and Ministers/ MOS read your blog for feedback or not.
My guess ? They just laugh off whatever they read as they have no plan to improve. Why bother, they argue.
In fact, I would even say for some issues, we have already pass the point of no-return !

Anonymous said...

Lucky wrote:"negative impact of the high cost of housing 7 years ago and property prices have more than doubled since."

Now, we have to highlight here that the Singapore housing's policy has led to something undesirable happening on the ground.

Malaysian citizens who are Singapore Permanent Residents have bought HDB flats from the open market.

Malaysian citizens who are Singapore Permanent Residents also work in Singapore.

Some of them rent out the whole flat without any official approval. They also bought another house in Johor and stay in Johor.

They commute to work in Singapore everyday and travel back to Johor to stay.

How can these Malaysia Citizens who are Singapore Permanent Residents take advantage of Singapore HDB policy at the expense of Singapore Citizens who have difficulty to buy the sky high price HDB flats?

Next, these Malaysia Citizens who are Singapore Permanent Residents have to go through Immigration custom everyday morning and evening. So, immigration custom has the data and information of list of Malaysia Citizens who are Singapore Permanent Residents who commute to Singapore to work and leave Singapore at particular time of the day.

Combining data from immigration and HDB which has list of HDB flats owned by Malaysia Citizens who are Singapore Permanent Residents, it is easily to narrow down who are the culprits who own HDB flats but do not stay in the flats and instead stay in Johor everyday.

With information, it is easy for HDB to take action against Malaysia Citizens who are Singapore Permanent Residents who rent out HDB flats without official approval so as to fraud against HDB policy.

Steve Wu said...


I have similar concerns. I thought to share my comment at another blog dated 12 Feb 2012.

Lee Hsien Loong,

National Productivity across many sectors are at levels not befitting a developed country. My example today: old fashioned pilings have disappeared for many years, only to be common sight at many construction sites today. This is merely symbolic of the plight in many industries.

Challenges are addressed by uncritical minds who mistaken cheaper and lesser skills for innovation. This is in stark contrast with the recent example seen in the still recovering US economy through innovation, driven in large part by the tech sector. You should be reminded that Singapore ought to build companies like Apple and not Foxconn (for reasons too long to get into). GLC/TLC mentality should be checked at the doors.

Your current policies and your continued insistence that the policies persist ensure that not only that the problems do not go away, they shall worsen in time to come. By then, Singaporeans shall pay an even dearer price.

Now it is the time to fix the problems FOR REAL, not merely to manage expectations. Is it not obvious that you have already squandered the opportunity to make Singapore what it should have been instead of what it is now?

Anonymous said...

"The same problems that I wrote about 7 years ago did not disappear and actually got bigger as time passes."
Lucky Tan

But at least 60% still voted PAP even if the problems got bigger.

So 7 years later, Lucky will continue to blog and criticise but least 60% will most likely continue to vote PAP. Maybe even into the next millenium.

If I were PAP, just get this right and everything will be OK.

Lucky Tan, you are a good and intelligent man. But I think you need to change your method and do more than just blogging.

Anonymous said...

The reality is there is no better alternative to the PAP.

Maybe Lucky Tan should analyse why is it so and how to create a better alternative. Maybe Lucky can even be part of it.

Anonymous said...

I read the budget on the newspaper today and find that nothing has changed!

You are absolutely right! Damn!

Anonymous said...

Lucky, I for one has given up since 2001. Before that I was the strong pap supporter and then I try to make sure that all my family and extended family voted for pap

Anonymous said...

They call it budget with a heart!

Sorry to say this (I actually like Tharman but this is nothing personal) but it feels more like Budget with a Hole-in-the-Heart. Nice try, Gillian.

Anonymous said...

DPM/Finance Minister Tharman is better suited for the Premiership.


Anonymous said...

U r spot-on when u wrote that they are tweeking at the peripheries to induce Singaporeans to accept their system of ultra-capitalist-monopolies.
They r like those who claimed that they are kind to u after they robbed u and giving u small change to take a bus home.

Anonymous said...

Hi Mr Tan,

Just want to thank you for educating and enlightening us on the various issues confronting our people.

You have been actively doing this for so many years without recognition and rewards.

My deep appreciation country man.

Yours respectfully.

Anonymous said...

Actually it's damn shiok to see the PAPies continuing their arrogant and fuck you ways. This means that by 2020, PAP will only get 45%-55% of votes, and we may get coalition govt.

Of course many Sinkies will have to die first, physically and spiritually over the next 10 years. This is natural. To win a long war, millions of soldiers and civilians need to die and be butchered first.

Anonymous said...

Dear Lucky.
You are spot on target as usual.

When you have a brain tumour;
The Party Against People can be trusted;
to give you Panadol for the pain.

Party Against People;
is a party of our grandparents;
implementing policies from the mind of a 90 year old geriatrician.

Anonymous said...

Suggest. Do a screen shot of the FAQ from the CPF website. I'm sure it will be taken down soon.

Anonymous said...

The PAP seems to make Singapore a greater mess with time. Problems that occurs in 2005 still remains today. The public transport still remains inadequate over the years with the MRT breaking down more seriously and more often. The price of our HDB have skyrocketed emptying the CPF of Singaporeans leaving little for their retirement, defeating the original purpose of a retirement nest-egg.
The influx of massive immigrants seems to coincide with falling productivity and depressed wages for Singaporeans. The outcome of privatisation of our hospitals is rising medical costs experienced by Singaporeans. The PAP has achieved a Swiss cost of living for average Singaporeans but a Swiss standard of living for themselves.

Anonymous said...

Pray tell me what's new from "People against Party" They have been taking the whole chicken from the people and returning only chicken wings.(Not even drumstick, you know).

singapore budget hotels said...

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Anonymous said...

I see a few measures to help seniors.

Was there any significant amount budgeted for measures to increase babies for locals?

If not, the root problem of low fertility is still unsolved.

Expect the effects of an aging society to hit us as an avalanche in the next few decades.

All because those in power failed to address root causes of festering problems at an early stage.

Anonymous said...


Don't worry... even if the budget is 99% positive for Singaporeans.

They have a habit of saying 1 thing, doing another.

Anonymous said...

They impose pain over you, not to heal you but to destroy you, to crush you, because the more you are destroyed, the more easily you can be dominated -- then there
is no fear of rebellion from your side.

Raise the house of flats. Import foreigners and PRs in the thousands every month.

NS for SIngaporeans. Jobs for foreigners.

Anonymous said...

I guess they didn't want to roll out incentives for kids this year as there's going to be an overload of babies cause of the Dragon year. The hospitals are already utterly packed from what I hear.

Overall I see a lot of help for elders and the less well-off. Lucky Tan, as ever, will just jeer and make faces from the sidelines. The CPF cuts a few years back were in the face of a distressed economy and saved some jobs; now they can be restored. Sure it's not perfect but hindsight is 20/20.

I guess it's easy for Lucky Tan to critique. Easy to right? Whine and whine. The people around you must be sick of you. -LOL-

Anonymous said...

Mr Lucky. If you want Tharman to help, get another 30+ WP MPs into parliament.

So either u open ur wallet to fund the opposition cause, or ur fans open their legs for FT. It is that easy.

Anonymous said...

@Anonymous 18/2/12 21:09

If there is a dislike button here. I'm more than certain 90% of people here will think you are the sick one!

The number of people coming to site is testimony to that. If you think Lucky is sick, why read? Go read ST

Anonymous said...

Help you? do you know that next time you have renovation, the cost will increase a lot. Because the levy increase 4 times in 6 months interval from 2011 to 2012. They give you 5 cents and take back one dollar.

Anonymous said...

But at least 60% still voted PAP even if the problems got bigger.

So 7 years later, Lucky will continue to blog and criticise but least 60% will most likely continue to vote PAP. Maybe even into the next millenium.
18/2/12 09:42

Your big boss expect you to write better than this. Your colleagues in other's blogs write much more better than you.

Kojakbt said...

Hi Lucky,

Appreciate if you could take a look at the example Tharman gave and see if you can find flaws in the argument. If you can, write an article about it... :)

But these elderly hold substantial wealth in the value of their homes, which can be unlocked.

The scheme is aimed at those aged 55 and above, who wish to sell their flat and move to a three-room or smaller unit.

Net sales proceeds will have to be pumped back into their CPF accounts, which will be matched dollar-for-dollar by the government up to S$20,000.

Of this, S$15,000 is in cash while the remaining S$5,000 goes into their CPF.

To give an example, suppose there is a retiree couple who each has S$10,000 set aside in their CPF Retirement Accounts.

They sell their three-room flat and move to a studio apartment, earning net proceeds of S$250,000.

This means they now have S$270,000 in their CPF.

Under the scheme, any amount in excess of the CPF Minimum Sum may be retained as cash.

After fulfilling the required minimum sum of S$131,000 for each person, the couple is left with S$8,000 in cash.

Together with the S$15,000 cash in Silver Housing Bonus, they get S$23,000 in total.

The remaining amount in their CPF accounts will be used to purchase a CPF Life annuity plan, which provides a lifelong monthly payout of S$1,200.

Kojakbt said...

I'm not too familiar with the CPF Life annuity plan. How does this compare, say, the elderly couple rent out one of their rooms for, say, market rate of $800 a month and they still get to keep the 3 room flat?

Also, say 20 years later, both passed away. Wouldn't this method allow them to leave behind more to their loved ones?

Anonymous said...

What they(PAP) are doing is this: if there is a problem, use 'band-aid'.It is the cheapest way of (seen to be) TRYING to solve the problem. Example...'targeted assistance' or, is it treating the symtoms rather than the cause(which would be more expensive)?
Btw, does anyone recall what the then Finance minister Richard Hsu said when he implemented GST? I am quite sure that it was different from what Tharman said the GST is used for NOW.

dream_ozn said...

I do agree with you that there are issues with the current system. However, i believe that the PAP they are doing their best and trying their best to help us solve the problems that Singaporeans have.

We have to accept that there are flaws in any legal system in the world and singapore is no exception.

If you can do a better job than what the PAP has currently given us, then why not you go up and lead the stage?

There is no one solution that fits all and there is no one solution that will make everybody happy.

Anonymous said...

the damage has been done and it's quite difficult to undo now.

Anonymous said...

@ ANON: 19/2/12 08:26
"However, i believe that the PAP they are doing their best and trying their best to help us solve the problems that Singaporeans have."

The deaf frogs finally got some spurs on their sides when Singaporeans voted out the PAP Aljunied GRC.

For more pro-people policies, keep voting Opposition.

If Tharman has come out with a more "inclusive" budget, it is only because 40% Singaporeans voted for Opposition.

Vote wisely to protect your children;
against the anti-people policies;
from the Party Against People.

Anonymous said...

LKY said we need to grow a 2nd wing (an external economy i.e. overseas investments).

Well we certainly need to also grow a 2nd wing for our internal politics.

Over-reliance on the Party Against People is bad for Singapore.
The Party Against People is politically bankrupt.
Out of ideas and ideals.
Driven only by a love for money and profit.

Their vision of Singapore is really the vision of one man.
A very old man.
Who has admitted that he does not understand the younger Singaporeans.

Anonymous said...

Anon 9:24,

My LG aircon service man does exactly that.

It is not in the business of the government to make life harder than it has to be.

We hope to leave Singapore soonest possible as the situation is turning worse. The younger generation are struggling and many are avoiding marriage and the government is not worried. It has found its quick fix solutions through foreign import. Pinoys are making babies as hell and they're bringing other pinoys in. They don't mingle with singaporeans becasue they dont have to. THey have other pinoys to hang with. The same for India Indians and PRCs.

Anonymous said...

Anon 23.20 is insightful. I'm doing renovation and the costs have went up.

So we're looking at word of mouth of people who could them at a cheap price. I just learnt recently my housing agent who is a SPR malaysian got me a cheap offer of painting our living room at $300 excluding my paint and he got some bangla to do it and ripped $50 doing it from the bangla.

Welcome to Singapore. Where singaporeans matter second. I have spoken to many singaporeans between the ages of 14 to 18 years old and many of these individuals want to migrate. They know what is happening as their parents are cursing the government in particualr they couldn't retire cos CPF has no money as it has gone to the HDB flat and they're staying in 4 room flats not exactly 5 room or EAs.

Dear LT, the real issue is actually our government uses a japanese template to run the country.

As long as feudal confucianism runs singapore, forget about a better singapore. Your MRT belongs to the foreigners. Your taxis belong to the foreigners as pinoys are car-pooling everyday to work. India Indians are driving cars. All these folks are aiming to profit from singapore and leave. CPF allows any Pinoy, PRC or India INdians to leave Singapore and take out all their CPFs.

And they're laughing at Singaporeans' daftness. If you call this whining, then whine we must. We have gone the other way at this stage. We have 2 casinos. If you in the 30-39 age group are still blur, I say read more. You're so busy earning a living that you have forgotten how to live.

Other citizens are getting abetter deal than young singaporeans. There is a national identity crisis but the leaders are still concern about sustaining their million dollar lifestyles at the expense of your cpf. They suck at managing our cpf investments. They're more interested in managing their temasek holdings investments.

Singapore is plummeting and it is riding on auto-pilot mode now. In 20 years time, we will see the major collapse of Singapore.

We have a government who is living in 1955 and running singapore. And they don't want to change. In fact, they're greedy.

What kind of systems robs citizens of their memories? said...


"But these elderly hold substantial wealth in the value of their homes, which can be unlocked."

Whatever happened to the memories of growing up in the home? The PAP government can keep their bungalows? But the citizens have to downgrade and tear away their memories?

I'm fucking migrating. KNN CCB. What kind of fucking system is this?

Anonymous said...

"But these elderly hold substantial wealth in the value of their homes, which can be unlocked.", unquote.

The earlier generations of Singaporeans worked hard to own multiple properties and if not made more money to their successors. Most at least saved some for their own funeral expenses when they could not leave much for them(successors).

Today, after nearly 5 decades of talents led self rule, citizens are told to 'downgrade'. Singaporeans have to ask themselves what kind of leadership they are having all these years. Are the leaders slave- driver and blood-sucker or are they as talented and benign as they claimed to be???


jamesneo said...

Kojakbat : It will be much worse as most of the money is going back to cpf which will buy more singapore goverment securities which will benefit the GLC as they can obtain the money at low interest rate which benefit the elites( this is to ensure the ponzi cpf and government can continue to operate). What is worse is if the inflation become much worse over the next decade the money in cpf life will lose much of their purchasing power while if you still own the flat you have the option to raise the rent in line with inflation and market conditions.

If the sales of the proceeds is only total cash it will be slightly less bad as the old people can still safeguard against inflation by buying things like gold. Right now this policy is making the lifes of this people much worse in the future.

The only way the scheme will be beneficial is if the cpf life grows with inflation like an inflation linked bond else by the time you get your money in 5-10 years,an annual 5% inflation would have totally devastated your savings.

Anonymous said...


Go into politics!! No point blogging and blogging. We appeal to you to stand for election!!

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