I think people have missed the issue. Prof Asher is not saying
for a moment that we should opt for state welfare instead of the
CPF system. The issue is how the CPF system is run.
By allowing and in fact encouraging Singaporeans to use their CPF
for housing, we have seen the dramatic rise in property prices over
the years, so much so that Singapore becomes non-competitive.
Residential property prices do have a bearing on commercial
property prices as well in land-scarce Singapore. Whether it is the
doctor's fees or the cost of ice cream, a significant part of it
goes to pay for the rental of the clinic or factory.
To reverse that trend, the government is trying to bring down
infrastructure costs but that will have a detrimental effect on our
retirement savings, since much of it is tied up in that HDB flat.
In the past, conventional wisdom is that when you retire, you
downgrade from that executive flat to a 4-room flat and live off
the profits. Looking at the prices today, how much profit do you
get? But many do not have anything else in their CPF savings apart
from that HDB flat. If you don't get a windfall from the sale of
your flat, or worse, if you suffer a loss, then what are you going
to live on in your retirement?
The other very valid point by Prof Asher is that there is no
transparency in the way Temasek Holdings invests our CPF funds.
Going by international industry standards, the returns we get for
our CPF savings is below par. Why is that so? Apart from the few
leaks such as that disastrous investment Ho Ching made in the US,
we will never know...