February 24, 2017

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FINALLY, the PUB has given some answers on the cost of producing water. What was so difficult about that? Does it think that big words such as “resilience”, “sustainability” and “water security” are enough to move people to accept a 30 per cent hike in water price? Or is it waiting for the Committee of Supply debate on the budget of the Ministry of Environment and Water Resources to unveil the figures? In this day and age, it’s not good to let speculation and discontent fester, simply because they can be spread so much faster via the Internet.

So what do we know now? In response to queries from the MSM, it said that in 2000, it cost $0.5 billion to operate the water system. In 2015, it was $1.3 billion. The money was spent on NEWater production, desalination, used water collection and treatment, and the maintenance of the island-wide network of water pipelines, among others. It did not say which contributed the most to rising cost, although one guess would be desalination plants.

PUB also said that from 2000 to 2015, it invested $7 billion in water infrastructure, and it expects to spend another $4 billion on such infrastructure from this year to 2021. What water infrastructure? Presumably the NEWater and desalination plants that are in the pipeline.

ST reported that besides the cost of producing water, it’s also getting more difficult to distribute water. PUB, for instance, can no longer just dig trenches to lay water pipes underground because the country is so built-up. It has to use pipe-jacking, a more expensive method which involves assembling pipes into shafts and then pushing them into position with a hydraulic jack.

In our heart of hearts, we probably know that it’s time for a rise in water prices, especially since it was last raised 17 years ago. The question is why now and why this much? Minister of State for Finance Lawrence Wong said there is never a good time for water price rises, which is true.

But a hiatus of 17 years?

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CIMB economist Song Seng Wun said at a forum yesterday that the fact that “we are finally charging a bit more for water after 17 years reflects that somebody forgot it hasn’t been done yet”.

Going by what experts say, the 30 per cent rise isn’t good enough. It should be way higher, like doubled. Say this to the people though. At forums on the Budget statement yesterday, the water price was a key issue, which is probably to the G’s chagrin since it wants to bill the Budget as a tool to shift the economy into high gear.

Although the argument is about water security (read: what if we get no more water from up north?), the price rise is also to add to the G’s coffers, which is increasingly under strain.

Now before you get your hackles up because the G is “rich”, consider what the experts have to say about the Budget.

Maybank Kim Eng economist Chua Hak Bin was reported in ST as noting that despite projecting a small overall fiscal surplus of $1.91 billion for the 2017 financial year, the G is looking at a primary deficit of $5.62 billion, worse than it was during the 2009 financial crisis.

A primary fiscal deficit does not take into account investment contributions from GIC or Temasek Holdings, and broadly implies that tax revenues are not keeping up with government spending.

He might as well add we can always tweak the formula on investment contributions, but that would be cheating, won’t it?

Economists are asking for more transparency in accounting and even the setting up of an independent agency to look at the effectiveness of G spending.

They have a point: We’ve seen so many announcements about millions and even billions on this or that G scheme over the years but what have they resulted in so far?

Finance Minister Heng Swee Keat made no bones about the need to raise revenues, especially since he has ordered G agencies to trim their budgets. So far, he has only talked about making non-GST registered companies which do cross-border businesses here pay the tax. That means the likes of Taobao and Amazon and e-retailers.

But if the G wants to persuade people to part with more money, it has to do better at telling people what things cost. It can start with this: What in heaven’s name is “long-run marginal cost of water supply”, the formula which underpins water prices?

 

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by Wan Ting Koh

SO THE Republic of Singapore Navy’s (RSN’s) naval facility will soon be named after a ship. More precisely, it will go by the name of a ship – the Republic of Singapore Ship (RSS) Singapura – which will come before its original name, Changi Naval Base. Instead of Changi Naval Base, you’ll have to say this mouthful: RSS Singapura – Changi Naval Base.

But for all the grandiosity of a name change – an initiative meant to commemorate the RSN’s 50th anniversary – netizens and forum writers have split into three camps: with those who support the new name due to the naval base’s history, those who don’t, and those who think it’s a waste of time.

The RSS Singapura is one of the RSN’s first vessels and was one of the three ships the Singapore Naval Volunteer Force (SNVF) started with. The other two were the RSS Panglima and the RSS Bedok. The SNVF was the predecessor of the RSN and was formed from the Singapore division of the Royal Malaysian Naval Volunteer Reserve in 1966, months after Singapore’s separation from Malaysia.

The RSS Singapura, a 1,890-ton ship, was assigned to the SNVF as a training vessel after the split. It was not always a training vessel though. The RSS Singapura was a former Japanese-owned minelayer known as Wakataka. It was turned over to the British Royal Navy as a prize of war in 1947 and it was eventually assigned to the SNVF.

The ship was berthed at Telok Ayer Basin and the SNVF used it as its headquarters from 1966 to 1968. At one point, it almost became a floating night club and restaurant, according to a 1967 report.

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As for the 86 hectares naval base, its groundbreaking ceremony was officiated by then Minister for Education and Second Minister for Defence Mr Teo Chee Hean in January 1998. During his speech, Mr Teo said that the location of the base at the eastern end of Singapore would enhance the protection of Singapore’s waters, together with the Tuas Naval Base at the western end. Changi Naval Base was officially opened in 2004 and is located a 15-minute drive away from the Changi Airport.

An ST article quoted a former naval volunteer reserve officer expressing his approval of the name change. Mr Adrian Villanueva, 77, a business consultant who got married on the RSS Singapura, said that the new name was “excellent for a naval base”. “The RSS Singapura was used as a headquarters and for training, and for functions to host dignitaries and naval officers,” he added.

However, not all were keen on the new name, which would take effect from May 15.

In a Feb 18 forum letter, Dr Sunny Koh flagged two problems – the confusing focus of the new name and its lack of practicality.

He wrote that the new name might shift attention from the base itself to the ship, creating a clash between the two words, “Singapura” and “Changi”. He added: “If so, this will force a contest between two historically powerful words, and not everyone will agree that the ship triumphs over the base.”

He said that the name will be shortened to either “RSS Singapura” or “Changi Naval Base” by people who refer to it in everyday situations. Not to mention that the abbreviation RSSSCNB would be “unwieldy”.

Dr Koh also questioned how the ship is related to the naval base. The RSS Singapura was berthed at Telok Ayer Basin and used by the SNVF as its headquarters from 1966 to 1968, he said, but the naval base was only officially opened in 2004.

However, Mr Villanueva disagreed with him. In a forum letter published on Feb 22, he wrote that the new name is in line with naval tradition where bases are named after ships. He raised several examples: The barracks at the Royal Navy Base in Sembawang were named after HMS Terror in 1945; the Royal Malaysian Navy Base in Woodlands was known as KD Malaya; and the RSN’s training school in Changi was named RSS Panglima in 2006.

He said: “Dr Sunny Goh seems to lack knowledge of historical naval tradition in naming ships and naval establishments.”

Mr Villanueva said that the RSS Singapura had a connection to the naval base too. According to him, after RSS Singapura was scrapped in 1968, the SNVF relocated to Pulau Blakang Mati (now known as Sentosa), where the RSN was established. RSN eventually moved to Changi Naval Base.

Said Mr Villanueva: “The name RSS Singapura should be contained in the naval base’s name, in line with naval tradition and as befitting our guardians of the seas.”

Online, the announced name change resulted in three main types of reactions: those who agreed with Mr Villaneuva, those who thought a naval base ought not to be named after a ship, and those who felt the change was much ado about nothing.

Supporters of the name change, like netizen Marc Toh, said that the naming of naval shore installations after ships is a “long established Royal Navy tradition”. 

 

Another netizen, Victor Huang, said that the name would remind people of “RSN’s history and proud tradition”.

 

Others, like netizen Brenden Allan, pointed out that naval bases and ships are two different things.

 

Then, there were others who felt that the name change is pointless. Netizen Teow Loo Shuin said as much.

 

Others said it is more than pointless – it is also a waste of money.

A Hardware Zone forum user, who went by the name of fortunecat, said that money would be required to implement the new name, considering the changes needed for signboards and documents.

screenshot of forum post

Even if the name change is making the news, at least RSS Singapura isn’t creating the waves that swept over another name which made headlines last week. (Hint: It was an exhibition about the Japanese Occupation.)

 

Featured image by Sean Chong.

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by Elvin Ong

THE Committee on the Future Economy (CFE) report was released on February 9, 2017. It will serve as the guiding document for Singapore’s economic restructuring and growth over the next five to 10 years. Many commentators have since provided excellent analyses of the report, including former Member of Parliament Mr Inderjit Singh, research fellows at the Lee Kuan Yew School of Public Policy (LKYSPP) Mr Adrian Kuah and Mr Hawyee Auyong, LKYSPP don Mr Donald Low, as well as Business Times associate editor Mr Vikram Khanna.

Here, I share my approach in my reading of the report. First, I read the report against the grain and in between the lines to assess whether and how the thinking behind the CFE has changed as compared to past committees. Second, I approach my analysis from the perspective of the political economy of advanced capitalist societies. This perspective privileges institutional analysis – in particular, the relationship between social-welfare policies, the structure of the labour market and overall inequality.

 

Positive changes

I found at least three positive changes from past committee-lead attempts to provide new directions for Singapore’s economy.

First, in Prime Minister Mr Lee Hsien Loong’s reply letter to thank the CFE for its work, he noted that: “We will take a hard-headed, pragmatic approach. When results are promising, we will vigorously pursue them. When a scheme does not look like it is going anywhere, we must have the courage to cut losses.” Similarly, on page 15, the report suggested that the government “will take an adaptive approach, continuing strategies which are successful, discontinuing those which are not, and making major changes where necessary.”

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These statements are particularly noteworthy. As I have examined elsewhere, billions of dollars have been poured into various schemes such as the Productivity and Innovation Credit with negligible impact. Instead of improving productivity, they have been subjected to systematic abuse.

Moving forward, the Singapore government can and should grow its capabilities to implement and monitor the results of its various schemes more rigorously. This means civil servants having the wherewithal to admit that they were wrong in pursuing certain policies, and to shut down programs if they fall short of their targets or are not in the public’s interest. Clinging on to sacred cows to “save face” should no longer be tolerated.

Second, throughout the report, the CFE emphasized that there was no one-size-fits-all solution to economic restructuring. Instead unique solutions will have to be tailored to various industries to help firms to restructure and upgrade, such as the Industrial Transformation Programs for the various sectors already identified.

Such a recognition is consistent with recent plans, and is a decisive break from the past. Silver bullets and grand schemes such as tax incentives that apply to all individuals and companies no longer work. A sectoral approach that identifies the specific needs of an industry and its unique solutions for different firms reduces deadweight loss, enhances monitoring and compliance, and builds solidarity.

Third, on pages 4 and 15, the report emphasised that the 7 strategies articulated in the CFE report are mutually reinforcing. Each strategy complements one another in the overall pursuit of restructuring, just like how different pieces of a jigsaw puzzle come together to form a nice picture.

This is also a refreshing perspective that is different from past committee reports. For far too long, haphazard public policies proposed and implemented have been orthogonal with one another, generating conflicting incentives for firms and individuals to restructure and upgrade. It is imperative that both macro- and micro-economic policies pull everyone in the same direction moving forward. Of course, the devil lies in the details. Claiming that the strategies are mutually reinforcing does not necessarily mean that they will be mutually reinforcing.

 

Understandable silences?

Many commentators were understandably surprised that the report was silent on a whole host of issues. Macroeconomic assessments, social policy, and foreign talent were conspicuously absent from the report. Why did the CFE, billed as one of the most inclusive committees ever, keep silent on these important topics?

Therein lies the clue. I think that the report was silent on these issues precisely because the CFE was so inclusive. Ironically, the more inclusive the process, the greater the struggle for the prioritisation of different ideas, the greater the impulse to find the “lowest common denominator” areas of agreement and to pave over the differences among competing groups. If we see the report as the outcome of a three-way fight of ideas between the government, the private sector, and workers, the result was a draw. What we have is an apolitical report that suppresses and avoids all the most important political questions.

Take tax policy for example – one of the most politically sensitive issues for the Singapore government. Three paragraphs on page 63 of the CFE report is all there is to say for it. The conclusion is that Singapore tax system must remain both “broad-based, progressive and fair” as well as “competitive and pro-growth.” It does not say how we should proceed if these two principles are in conflict with each other.

 

The politics moving forward

Singapore’s Budget for 2017 has been unveiled on 20 February. Analysts will have to examine it closely for clues on how the government has decided on the treacherous politics of Singapore’s future economy. Two political problems, both related to skills upgrading, are most pressing – the question of foreign manpower, and social security.

On the question of foreign manpower, the key political problem is the trade-off between the desire to keep Singapore open to foreign talent (CFE Strategy 1) and the need to build up Singapore’s pool of deep skills with good jobs and good wages for locals (CFE Strategy 2). This is a vexing issue for both entry level jobs, and senior management roles.

At the entry level, if firms can easily hire an engineer with “deep skills” for cheap from overseas, why would they bother to recruit and train locals? There is also no incentive for firms to participate in the numerous on-the-job training programmes with our institutes of higher learning. The rewards of a fully trained and competent Singaporean worker take months and years to realise, while the benefits of a highly skilled foreign worker are instantaneous.

At the senior management level, why would Singaporean workers care to upgrade their skills, if they know that they will not be rewarded with higher wages or promotions by their employers who can easily import senior management from overseas? It is not that Singaporeans workers do not care to engage in life-long learning. It is that they are systematically dis-incentivised from doing so.

For social security, the trade-off is between the desire to keep spending on social policy low, and the related costs and risks needed to build up deep skills. Learning deep skills is an expensive and risky pursuit. Who is going to pay for the learning process? What if companies close due to a global economic downturn, and workers with deep skills who lose their jobs are too expensive to re-hire? Who pays for prolonged unemployment? Furthermore, if workers with deep skills in one industry need to change their vocations to another industry, who pays for the re-training? These are just a small sample of the tough questions that require decisive political answers.

 

Conclusion

I do not think that we should despair at the lack of new ideas or unaddressed questions in the CFE report. To be sure, it may genuinely reflect the limits of top-down thinking among our top policy-makers as many commentators have alleged. But I would also suggest that it reveals the stalemate between competing groups who have varied interests and preferences, and the government’s reluctance to politicise the report and upset these groups.

Moving forward, it is inevitable that the government will have to confront, rather than sidestep, the political questions that over-shadow the economic restructuring process. Some questions, such as social spending, will be easier to tackle because of the fiscal headroom that the government has. Others, like the foreigner-local workforce ratio, will be unavoidable. How the government decides will be a function of the need to appease the demands of local and foreign capital, versus the countervailing pressures from the mass electorate in future general elections.

 

Mr Elvin Ong is a PhD candidate in Political Science at Emory University.

 

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Hyundai replaces Yeo's as S.league sponsor for 2017 season
Hyundai replaces Yeo's as S.league sponsor for 2017 season

by Daniel Yap

AFTER a run of 13 years, food and beverage maker Yeo’s will no longer be sponsoring the S. League.

The company confirmed in a statement it would pull out of supporting the 2017 season after weeks of back-and-forth, including reports of Yeo’s desire for a five-year plan for the league, and the league’s lack of such a plan.

New sponsor Hyundai will step in to take Yeo’s place, while co-sponsor Great Eastern has already confirmed its support for the 2017 season. Komoco Motors, the local dealer for Hyundai, with its Chairman Mr Teo Hock Seng has been a long-time patron of Singapore football. Mr Teo was the former chairman of Tampines Rovers FC.

The two-year deal means that the league will now be called the Great Eastern-Hyundai S. League. And after much hand-wringing about long delays in jersey printing due to the late sponsor announcements, the league will kick off this Sunday (Feb 26) at 6pm at the National Stadium with the Great Eastern Community Shield match between defending league champions Albirex Niigata FC (S) and Tampines Rovers FC.

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The S. League is in a bit of a leadership pickle now that CEO Mr Lim Chin has resigned, leaving the reins to director of operations Mr Kok Wai Leong in the interim. The Football Association of Singapore (FAS), which runs the league, is also facing its first open elections in the wake of reports of under-spending on grassroots football, a FIFA order to end political nominees sitting on the council and hold fair elections, and a lack of confidence in the current leadership.

Tote Board funding for the FAS has also now been given to statutory board Sport Singapore to administer, another sign that confidence in FAS management is less than complete. It used to be disbursed directly to the FAS, although it is not unusual for Sport Singapore to administer funds to national sports associations.

Hyundai’s sponsorship also means that chances are now slim that Mr Teo might run for the hot seat of FAS President. Mr Lim Kia Tong, current President of the FAS Provisional Council, former Woodlands Wellington General Manager Mr R Vengadasalam and Hougang United Chairman Mr Bill Ng are rumoured to be in the running for the FAS top spot.

 

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Black watch showing 8.30.

YOU’D think these were graduates from two different countries, so starkly different were the headlines about the 2016 graduate employment survey in Singapore’s main English dailies. ST decided to lead with how “most grads find jobs in 6 months” and the “new high” starting median salary of $3,360, while TODAY highlighted the 2.9 per cent drop in the number of graduates who found permanent jobs within six months of graduation, the lowest ever for the survey.

Another sobering statistic that TODAY noted was that the rate of salary increase has slowed from 3 per cent last year to 1.8 per cent.

All in all, it’s a slower year for graduates, with SMU leading NUS and NTU in terms of median salary and employability. SIT and SUTD conduct their surveys in February and March.

So what’s all this say in the context of Singapore’s ongoing SkillsFuture initiative? It seems that relevant coursework and experience win out for grads, and university rankings don’t mean very much to employers.

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The tension between Malaysia and North Korea over the assassination of Kim Jong Nam is escalating. KL has named a North Korean diplomat as someone they sought to question for the case, but the North Korean Embassy refused, citing diplomatic privilege.

Another North Korean who works for North Korean national carrier Air Koryo is also being sought for questioning. KL has threatened to issue arrest warrants for the duo, but a warrant is unlikely to be effective in securing the diplomat. Four other North Korean suspects and one North Korean person of interest remain at large.

The embassy also made a startling demand for all suspects to be released, including the “innocent females”. Apart from the two women, a Malaysian man and a North Korean man are being held in remand for the killing.

And then, someone tried to break into the morgue in KL, where Mr Kim’s body lay. Who did it? KL police simply said, “We know who you are. There is no need for me to tell you.”

Someone’s done a smear job on Sam’s Early Learning Centre, it seems. Photos of the centre and its students posted on Chinese social media service WeChat seem to have been taken out of context, and surprise checks and interviews by the Early Childhood Development Agency have turned up no issues at the centre.

Who could have done the deed? Centre director Mrs Samia El-Ibiary says it was the work of a disgruntled former employee who has since returned to China. The WeChat post claimed there was abuse, neglect and waste at the centre.

Where do you go if you want to buy a ship? How about Taobao? Singapore-flagged crude oil tanker Varada Blessing, of late owned by Singapore firm Varada One, was sold for $16.7 million after 19 bids were made by six parties. The Varada Blessing had fallen into an “admiralty dispute” and was then auctioned off. These are bad times for oil tankers, and Taobao is gaining popularity as a place to offload toxic assets. So… does that Taobao purchase come with free shipping?

 

Featured image from TMG file.

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by Daniel Yap

TWO op-eds on tobacco in the run-up to Budget 2017 caught my eye.

The first is one by the economist Mr Donald Low in the Business Times on Feb 17, calling for a “grand bargain” – an exchange of cigarettes for reduced-risk tobacco products.

The second is by Dr Chia Kee Seng, professor and dean at the Saw Swee Hock School of Public Health, National University of Singapore, and Dr Kenneth Warner, Avedis Donabedian Distinguished University Professor of Public Health at the Michigan School of Public Health, University of Michigan, published in Straits Times (ST) on Feb 18.

The two doctors called for an end to the scourge of smoking, pitching once again the G’s already-proposed measures of age limits, flavour bans and packaging changes as the way forward. These ideas are already being implemented by other nations.

Both pieces agree on this point – courageous action must be taken to mitigate the high cost of tobacco on our society. But do Singapore’s policymakers have the courage to save lives?

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Singapore’s tobacco policy of ever-higher taxation, bans and graphic marketing has not put a significant dent in the smoker population in Singapore over the last decade. Smoking prevalence has hovered between 12 and 16 per cent, with male smoker prevalence around 25 per cent.

One should note first that in Singapore, one-fourth of those below 18, the current legal age, had already tried smoking. It stands to reason that more laws will not stop this segment of curious youth from engaging in risky, illegal behaviour. And with the youth segment being the true “gateway” to smoking (a huge majority of smokers get hooked before the age of 21), it seems that more laws alone are unlikely to put a significant dent in the smoking rate.

The Health Ministry has set an ambitious target of 10 per cent smoking prevalence by 2020. It is admirable, maybe even attainable, but it is a big reach nonetheless. Dr Chia and Dr Warner pointed to New Zealand, Finland, Canada, Sweden and France as countries that have set a goal for a smoke-free society in eight to 23 years.

What is notable is that these countries, and many others at the forefront of the anti-smoking movement, allow reduced-risk tobacco products as a way for smokers to either quit or at least reduce the cost of smoking to society.

Singapore remains stubbornly behind the times in this area, maintaining a ban against reduced-risk products and constantly citing worry about a “gateway effect” where e-cigarettes, snus (chewing tobacco popular in Sweden and Finland), and heat-not-burn products would lead youth and non-smokers to pick up smoking.

Studies in the United Kingdom (UK) over the last few years, however, have shown that the gate swings almost uniformly in one direction: helping smokers quit (and typically become e-cigarette smokers) rather than enticing youth or non-smokers to “upgrade” to smoking. You can find the Department of Health’s findings published here.

 

Taking on some risks for greater good

That’s where Mr Low’s “grand bargain” comes in.

Based on the UK research, would it not be more prudent to lift the ban on reduced-risk products while at the same time clamping down on smoking tobacco? No doubt e-cigarettes are harmful to health, but this is a risk mitigation situation, much like how the G wants gamblers to put their money with well-regulated casinos or with entities like Singapore Pools and Singapore Turf Club, which will redistribute to social causes.

We must remember why we want to bring the smoking rate down: the health and social costs of smoking are high. If there is a way to reduce the costs by allowing alternative products, why not? Reduced-risk products can continue to be regulated and taxed as cigarettes currently are. And with alternatives in place, we can look to the other side of the “grand bargain” – cutting down on smoking, perhaps even to the point of banning it altogether.

It seems that harsher laws against smoking would be most effective in tandem with the availability of alternative tobacco or nicotine products, with a complete smoking ban as the end game.

Perhaps Singapore can lead the world in this area as well, and become a smoke-free nation by 2030? What will it cost us? Likely nothing more than converting smokers to lower-risk non-smoking tobacco and nicotine products. Courageous policy-making like this, I think, is the best care that this nation can provide for the long-term health of its smokers – and non-smokers too.

 

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by Daniel Yap

MY BIGGEST disappointment with the 2017 budget is not just how “same old” it is, it’s how nothing is being done to overhaul the Baby Bonus Scheme. A same old budget would be fine if things were all working out, but that’s not what Singapore is looking at in the next 10 years.

Taking a page from the “same old” Committee for the Future Economy report is not going to cut it with yet-unsolved issues still staring us in the face. Healthcare costs are rising and will continue to rise. Labour supply is tight.

All talk about a budget for Singapore’s long-term future is rubbish without a clear action plan for Singapore’s dismal total fertility rate, which fell to a pathetic 1.20 in 2016 from an equally low 1.24 in 2015. All this while, we have been rah-rah-ing about a spike in births (although not the birth rate) during the SG50 jubilee year.

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A low birth rate has negative repercussions on a host of national issues: labour supply, immigration, national identity, the ageing population, healthcare, and economic growth, to name a few. Why then is Budget 2017 providing no new ideas for this? Why aren’t we focused on changing up the Marriage and Parenthood Package and Baby Bonus Scheme since it clearly isn’t having the effect we need it to have?

PM Lee has talked about ruthlessly discarding ideas that aren’t working, and after 16 years, haven’t we realised that this is not going the way we want it to?

Has Singapore simply given up? Are we not spending more to highlight the importance of a healthy birth rate?

Or has the G made some quiet internal calculation and realised that it is cheaper to naturalise citizens from abroad, making other nations pay for child-raising, and then Singapore picks the best and reaps the benefits of their productive adult years, leaving only their silver years for the state to pay for?

It is a shrewd but cold way of thinking about it, and a fantastic way to balance the budget – don’t spend on trying to fix what you’re already horrible at. Just work on the economy and on what attracts new citizens, like security and HDB grants. Cover up Singapore’s weak spots by leveraging on its strong points (attractive to migrants). Never mind if the end result is a bit of a Frankenstein’s monster, right?

Suggestions, anyone?

But what’s the point of a get-by city where the future belongs to someone else’s children? Let’s not treat the situation lightly. Falling birth rates reflect entrenched attitudes that will take Herculean efforts to move. Where are the Herculean ideas?

Here’s one idea: give each Singaporean child a living wage (sometimes called a child benefit or allowance). Say, $500 a month from birth to 18 years (then the boys can start living off their NS allowance). And 20 per cent goes into CPF (because we’re Singaporean like that). Inflation-pegged increases kick in every two years. Two kids could buy you a 2-room HDB flat. At age 18, they would have $27,000 in CPF to pay for university or a house.

It’s a Singaporean version of what some other states are doing – countries like Sweden and Finland have a state child allowance (about S$170 for Sweden, plus a bonus for larger families; Finland pays a child allowance of S$140-250 depending on birth order; Ireland has a child benefit of just over S$200 per child, with a multiplier applied for multiple births). Total fertility rates there hover around 1.8 and 2.0; a healthy situation once you factor in some immigration.

Such a plan will cost us $5.4 billion a year if we have 50,000 babies (right now with 30,000 babies it will cost about $3.3 billion). We’re already spending $2 billion a year on the marriage and parenthood package. The extra billions spent will have a better long-run payoff than GIC’s impressive track record (GIC contributed $15 billion to the 2016 budget).

Want to tweak it further? Consider this – those who want children will want children, and those who don’t will not be convinced. So structure benefits so that parents will plan to have three or more children (i.e. the biggest bonuses kick in at child number three).

The current Baby Bonus is trying most of all to incentivise people to have children in general, and the incremental bonus for the third child and above is small. Make it such that the first two children receive an allowance of $250 each, but the third child receives $1,000. It’s not stingy, but it will definitely tip the balance towards already-parents making the decision to have yet another kid.

What about reforming education, a major reason for people to not have kids, within the next 10 years so that we no longer feel like it’s a pressure-cooker arms-race winner-takes-all mugger-fest that then feeds into our working life?

Instead, all we are talking about now in the kopitiams is a 30 per cent water rate hike, while the G is trying to convince us that this is a budget to “secure our future”. I don’t care much for either narrative.

 

Featured image by Sean Chong.

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Black clock showing 8.30.

DON’T expect the property market to change much after Budget 2017 and in the years to come. National Development Minister Lawrence Wong cautioned that existing property curbs will “stay for some time” and that Singapore has achieved a “soft landing” for the market with its measures – just the outcome it had been looking for.

The additional CPF housing grant announced on Monday (Feb 20) is also unlikely to have a significant effect on property prices, given that it is a buyer’s market and if sellers raise prices, buyers will simply move on to a better offer elsewhere. Volumes are expected to go up.

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Now is probably not the best time to ride your soon-to-be-expensive motorcycle into Malaysia. The trip back might be extra long as newly-deployed automated MBIKE customs lanes on the Johor side have malfunctioned for the second day in a row, causing hours-long tailbacks.

The Johor Immigration Department said that the breakdowns were caused by motorcyclists tailgating and damaging the gantries. The department also said that 38 motorcyclists had been detained for going through the gantries without providing their passports to the Immigration Department.

Coldhearted – some people are going around impersonating Singapore Heart Foundation volunteers, and armed with flag day stickers too! The Heart Foundation has made a police report about the miscreants, who were operating around Bugis Junction.

Bona fide Heart Foundation fundraisers are required to carry an identification badge and a copy of the Collectors Certificate of Authority issued by the National Council of Social Service, so if you’re in doubt, ask.

Heartbreaking – the body of hiker Steward Lee, reported missing by his family on Friday, has been found hanging at the top floor of multi-storey car park Block 468A Segar Road on Monday (Feb 20) night.

A widely shared appeal for information by his sister on social media kicked off a 70-man search through Mr Lee’s favourite nature reserves on Sunday. Police have classified the case as unnatural death and are investigating.

 

Featured image from TMG file.

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by Ryan Ong

BUDGET 2017 doesn’t have much of a theme, beyond upgrade yourself really quick. There’s a huge sense of urgency in this budget, and it’s not hard to see why. The events of 2016, which range from Brexit to the election of Donald Trump to China’s growing assertiveness, won’t be good for us. And the only way forward is, ironically, to look backward:

 

New budget, old strategy

Budget 2017 is out, and it’s all about forward progress in the industry. But in another sense, it’s also about looking backward, and returning to the root of what made Singapore successful in the first place.

When Singapore (unwillingly) gained its independence in 1965, the situation it faced was quite similiar to today. There was tension in South East Asia, and a sense that the future was a total unknown. In order to run our economy, we focused on producing a highly skilled and educated workforce. Singapore powered through its first decades on the back of that principle: That the Singaporean worker was more productive, more driven, and worth a higher salary than neighbouring counterparts.

But over the last decade, we’ve begun to lose steam. Not too long ago in 2015, for example, Minister for Trade and Industry Lim Hng Kiang pointed out that some industries had to restructure quickly, as productivity goals were not being hit.

Budget 2017 seems to be going back to an old formula. In the face of growing uncertainty, all we can do is rely on the Singaporean worker being better. Better skilled, better adapted, and hopefully better paid for it. That’s not an easy thing to ask, because our success in the mid-60s can be attributed to us being South East Asia’s (arguably) best workforce at the time. But our neighbours have had a lot of time to catch up since then.

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Here are the three harsh things that the budget implies:

 

1. Get with the programme or get left behind

Over $80 million will be spent on helping on Small to Medium Enterprises (SMEs) go digital, under the Go Digital Programme.

About $100 million is for the Global Innovation Alliance and Leadership Development Initiative, which basically encourages Singaporeans to go abroad and work.

Some $26 million will go to the Lifelong Learning Endowment Fund and Skills Development Fund, to train workers in skills relevant to fast growing industries.

A recent comment I read on Facebook asked: Does this mean we want a painter to become a programmer? The answer is yes. Budget 2017 is part of a life raft the government is building for workers.

Remember that retrenchments were at a seven year high, within the first nine months of 2016. Many workers, whom we assumed to be highly trained, were precisely the ones who found themselves out of a job. When you have large layoffs despite a (in terms of paper qualifications) highly skilled workforce, that means workers lack relevant skills.

That’s due to the rising number of disruptive business models (e.g. Uber and its effects on the transport industry), which have forced companies to value different skill sets. It’s bad news for Singaporean workers in their 30s and 40s, who may find their qualifications – which they paid good money to learn – become useless.

Now consider the urgency with which the G is driving at this:

Budget 2017 allocates $1.4 billion to upgrading jobs and the economy. Prior to that, Budget 2016 and Budget 2015 saw the development of the SkillsFuture programme, and emphasised support for robotics and digital technologies. It’s pretty clear what the G’s rescue plan is:

They want Singaporeans to be the innovative ones who are doing the disrupting, not the ones losing jobs from the industries that are disrupted.  Singaporeans who refuse to take big risks, and won’t step out of their comfort zone to learn new skills, are shark bait. The G isn’t taking steps to protect dying industries, or playing at protectionist moves.

 

2. Businesses might pass on the water costs

Pass it on to you, the buyer, that is. The price of water is increasing by 30 per cent, starting in July 2017. It’s estimated that this will come to less less than $25 a month, for 75 per cent of businesses; although I’d contend we don’t know how many businesses there are, and 25 per cent of all businesses in the country is still a huge number of businesses.

It wouldn’t be unreasonable to guess that certain businesses – such as laundromats or restaurants – will be hit much harder by rising water costs than others. Now the purpose of the hike is to “raise awareness” of the importance of water, because without the government doing that none of us would know we’d die without it. But businesses tend to react to price hikes in two ways:

One, the G could have “raised awareness” of the importance of water, and businesses take steps to cut back. Or two, businesses could just factor the costs into their pricing. So we may see more places charging for water, higher prices at laundromats and car washes, higher costs on canned drinks, and so forth.

Now I’m not totally against the government’s intentions, by the way. I’m sure they just want us to waste less water, because over-consumption is the result of cheap supply. But it would be just as easy to set a water cap, and then impose a fine on over-consumption. And have some way to notify the household via text message when they’re nearing the water use limit.

Why punish those who have been conscientious about water use?

 

3. Carbon taxes can mean higher costs to consumers

I like to think most of you aren’t reading this from your ivory-backed chairs, while eating fried Pangolin and resting your rhinoceros-horn water on a coaster made from an endangered tortoise. Like most of you, I’m entirely for carbon taxes.

I’ll even say it’s an admirable and gutsy move: after the Trump election, I expected our pragmatic government to pivot in the other direction, and abandon environmentalism. We have financial inclination to do so, since Singapore has deep penetration into the oil and gas sector.

Nonetheless, from 2019 carbon emitters will be charged $10 to $20 per tonne of greenhouse gas. As with the water situation, businesses can go either way. Some might try to cut down on emissions, but some will try to pass on the costs to consumers. Knowing what big corporations are like, we’d better get realistic and plan to spend more.

On a related note, diesel will be taxed at 10 cents per litre. Cars pay $100 less annual diesel tax, and taxis pay $850 less. Diesel is more environmentally friendly than gasoline, so hopefully transport businesses will consider moving in this direction, rather than raising prices.

 

Budget 2017, along with the last two budgets, seem to be a polite way to remind us the clock is ticking.

Last year may have been the tipping point, in the way the global economy has changed. Stragglers who can’t adapt to the new economy are trying to fight back, by electing governments that impose protectionist measures.

But Singapore hasn’t got the luxury of doing that – we’re too small, and too vulnerable, to play the isolationist game. It’s clear we’re not catering to those who can’t adapt; that’s what all these expensive incentives are about. The clock is ticking, especially for those who refuse to re-skill and upgrade.

 

Read the first part, Economic Realities: 3 harsh takeaways from the Committee on the Future Economy, here.

 

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