By Leong Sze Hian
I refer to the
reports “MM Lee warns of dangers of slow growth if productivity
does not increase” (CNA, Feb 18) and “S’pore income gap narrows”
(ST Breaking News, Feb 19).
The former article reported MM Lee as stating that “The island
state has a growing economy, increasing real incomes, better homes
which are rising in value, and citizens are generally better
off”.
Well, the next day, we had the news that the economy contracted
and nominal and real incomes shrank.
According to an Occasional Paper released by the Singapore
Department of Statistics (DOS) on February 19, under the section
“Key Household Income Trends, 2009”, household income from work
declined in 2009. The decline in household income from work
reflected the weaker labour market conditions in 2009, which saw
higher unemployment and lower wages.
It was further stated that “Median monthly household income from
work among all resident households declined by 1.9 per
cent from $4,950 in 2008 to $4,850 in 2009. After adjusting for
consumer price inflation in 2009, median household income from work
saw a decline of 2.5 per cent”.
On the same day (Feb 19), the DOS released a report on the
Performance of the Singapore Economy for 2009, which said that
“Singapore’s economy contracted by 2.8% on a quarter-on-quarter,
seasonally adjusted basis, in 4Q2009″, and that “the economy
contracted by 2.0% in 2009”.
So, were we in a way overly optimistic when “Singapore declared
the recession (was) over in November last year”, according to the
CNA article “Singapore economy to grow up to 6.5% this year: govt”
dated 19 Feb?
It was announced by the press that “in the past few months, the
government has taken further steps to widen the differentiation
between citizens and Permanent Residents and to slow down the
inflow of foreigners”.
Furthermore, on the same day (Feb 19), it was also announced
that Polytechnic and Institute of Technical Education (ITE) fees
will be increased from April. The press reported that “The
Government decided to keep fees at the status quo last year because
of the economic recession but this year, as the economy turns, it
is timely to raise the fees” (“Fees for poly and ITE students going
up in April”, ST, Feb 19).
If we really want to widen the distinction between Singaporeans
and permanent residents (PRs) and foreigners, why can’t we just
raise fees for PRs and foreigners, instead of raising fees for
Singaporeans too?
Since we want to take on the “challenges such as increasing
productivity and raising skills across the board” and the
government has acknowledged that “every worker also has to be
re-skilled, re-trained and re-educated to achieve higher standards
of capabilities”, why are we raising vocational education fees so
soon before wage cuts are restored?
In this connection, another example is the reduction of the
subsidy by five per cent for PRs in Class C wards in hospitals from
next year, and by another five per cent the following year.
Actually, a five and 10 per cent reduction in subsidy from the
current 70 per cent subsidy, translates to a 16.7 and 33.3 per cent
increase in medical fees, respectively.
With regards to the assertion that “we always give preference to
our own citizens”, with the total increase at 100 per cent, from
the former 80 per cent subsidy to 60 per cent eventually, many
Singaporeans may bear the brunt of the increase if they have PR or
foreign spouses, dependents or employees.
So, why not increase medical fees for PRs and foreigners, but
reduce fees for Singaporeans instead of maintaining the status
quo?
So, incomes are down, GDP has contracted in the last quarter,
but fees are going up.
Let’s hope that other fees and costs will also not start to go
up, citing the reason that the economy is recovering.
Those who may suffer the most when costs go up and incomes go
down may be the poor.
On the same issue, there have been media reports that charities
need more donations.
For example, the National Kidney Foundation (NKF) had a budget
deficit of $0.9 million, its biggest shortfall in 10 years, for the
2008/2009 financial year ended in June (“NKF to dip into reserves
of $270m: Charity hit by economic downturn and drop in donations”,
ST, Nov 29, 2009).
According to its annual report for 2007/2008, the surplus was $9
million, and the surplus for 2006/2007 was $19 million.
Does this mean that the 2007/2008 net surplus of $9 million
alone, not counting the 2006/2007 surplus of about $19 million, may
be enough to cover about ten times or ten years of the current
year’s $0.9 million deficit?
There has been a significant reduction in investment income from
$11.6 million in 2006/2007 to $3.2 million in 2007/2008, and to
just $80,000 now.
What has NKF been investing in such that its investment income
can fall from $11.6 million to $80,000, a drop of more than 99 per
cent in two years?
NKF has $270 million of reserves now, compared to $262.8 million
in December 2005.
When the NKF saga broke in 2005, one of the issues which riled
Singaporeans was that it had some 30 years or so of reserves
instead of the three years that the public was led to believe.
Its 2007/2008 report states that “After adjusting for inflation,
the existing surplus fund is expected to last for only seven
years”.
Now, it says that its current reserves of $270 million can only
last for five years or so.
I am somewhat puzzled by the figures — if $262.8 million in 2005
was deemed to be about 30 years of reserves, why is it that $247
million in June 2008 was expected to last for only seven years, and
now $270 million for just five years, despite cost-cutting measures
like giving cubicles instead of rooms to managers?
How does the NKF fare in the light of the new guidelines for
charities on the accumulation of reserves?
Despite the current year’s $0.9 million budget deficit, is NKF
still the largest charity with the most reserves, and the most
number of years of reserves?
Finally, with regards to the statement “Without growth,
Singapore will not be what it is and the key to our growth is a
government taking right decisions and labour unions, employers, and
the government working together. No other country in the world has
got this combination”, let the following statistics speak for
themselves:
http://theonlinecitizen.com/2010/02/recession-over-really-time-to-increase-fees/#more-20175