Uniquely Singapore
With headlines in our local papers screaming “S’poreans in line for $3b payouts” (TODAY, April 15), “$3b payout over the next six months” (Straits Times), “2.4m S’poreans to get $3b in benefits this year” (Straits Times), one would be hard pressed to find anything amiss.
The Ministry of Finance’s (MOF) press release that some 2.4 million Singaporeans stand to get $3 billion in benefits this year, to help them cope with the rising cost of living, is laudable.
Until you sieve through the $3 billion help package itself.
Skewed examples in MOF’s press release
In its press release, the MOF says:
“For example, a family of three living in a three-room HDB flat could receive benefits of about $5,000, which is about six times the estimated increase in their cost of living (Annex A), and a family of five living in a 5-room HDB flat will get about $4,900 – about 2.5 times the estimated increase in their living costs (Annex B)”.
The above two examples given may be skewed towards higher benefits, because they both have retirees and older low-income household members, who receive relatively higher benefits and the Workfare Income Supplement (WIS) than the average household.
If we take for example, a typical family of a couple with two children, and household income of say $4,000 ($2,000 each working member), the direct cash benefits would be $1,100 ($700 Growth Dividends and $400 GST Credits).
Thus, the benefits may not be 2.5 times the estimated increase in living costs in 2008, but only 0.56 times ($1,100 divided by $4,912 (Annex B) divided by 2.5).
What percentage of households has a combination of both retirees and older low-income workers in the same household? This may probably be the exception, rather than the norm. Thus, the examples given by MOF are not terribly accurate or representative of households.
Offsetting inflation?
Further, despite claims by the government that the handouts will help combat inflation, this may not be completely true.
For example:
- Medisave top-ups which can only be used in the future when one is hospitalised. Also, MediShield premiums will be increased this year. According to the Straits Times, “basic MediShield insurance are set to increase – by about $120 for most people… They will go up for everyone, with older policy-holders bearing higher increases, and younger ones most likely paying just a few dollars more.” In another ST report, “For older people who are likely to require more hospital care, the premium is set to increase by less than $40 a month. Their current premiums range from $600-$705 a year. The change will push it to more than $1,000 a year for them.”
- The Post-Secondary Education Account (PSEA) can only be used when children enter university. How many households have children that enter universities annually? (Universities have also announced, in February 2008, an increase in tuition fees by between 4 per cent to 20 per cent – Straits Times.)
- The Property Tax Rebate may be negated by the increase in property tax for all HDB flats from 1 January 2008
- The U-Save Rebate may be eroded by increased utility tariffs. (Channel NewsAsia)
- The S & CC Rebate may be offset by the previous years’ increases.
- The Income Tax Rebates may not benefit the lower and middle-income, as over 60 per cent of Singaporeans do not pay income tax.
By the way, The PAP Community Foundation (PCF) has just announced that the fees at its kindergartens will increase by up to 100 per cent in July. (“Sharp hike in kindergarten fees”, Today, Apr 25).
It is important to note that the GST Credits are meant to offset the GST increase last year, and is not a new or extra measure to cope with the 26-year high inflation.
In the example given of a family of three living in a 3-room flat, with two retirees and a son earning $1,000 a month (Annex A), even after adding the direct cash benefits, the per capita household income would still be only about $449 (see below [1]), which is still below the criteria of $500 which is generally used to define a needy family in Singapore.
I feel that it may not be very appropriate to describe the so-called “benefits” as “six times the increase in their cost of living”.
Medisave top-up keeping step with healthcare inflation?
As to the claim of giving about 60,000 elderly an extra $100 top-up to their Medisave in September (“Over 80s to get extra $100 Medisave top-up”, ST, Apr 18), the total one-time ad-hoc top-up amount is only enough to pay for about one to one and a half years of the premium increase.
Remember that, according to news reports, Singaporeans aged 81-85 will need to pay between $30 and $40 more a month in premiums – or up to $480 more a year.
What’s the point of ad-hoc top-ups, when medical costs and premiums keep rising? How can the Medisave top-up be included as “benefits to help Singaporeans cope with inflation”?
To facilitate analysis and policy review of the impact of the benefits package, I would like to suggest that a breakdown of the different amounts for each benefit category for different households by income be made available to the public.
Raising wages not an option, depending on govt handouts is?
So, what else can be done to help Singaporeans cope with another 26-year high inflation of 6.7 per cent in March 2008? Raising wages?
Well, according to the acting Minister of Manpower, Gan Kim Yong:
“Raising wages to address the issue of rising costs may be an enticing option but that is not the right solution… He said adjusting wages upwards to meet rising prices would only result in a “price-wage spiral” and Singaporeans should look at the bigger picture.” (Channel NewsAsia)
It would thus seem that Singaporeans will have to regularly and constantly depend on the government for handouts in order to ‘fight’ inflation. Yet, such ad hoc top-ups will only be given “provided we have the surpluses in the budget”, according to Senior Minister Goh Chok Tong. (Channel NewsAsia)
Perhaps the more important – and puzzling – question is: Why have Singaporeans, with one of the highest savings rates in the world, become so dependant on government handouts to even just get by?
One shudders to think what would happen to the poorer Singaporeans if there were no “budget surpluses”.
Click on pictures to enlarge.
Special thanks to Grace Toh.
Additional contribution from Andrew Loh.
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[1] $4,150 Growth Dividends + GST Credits + WIS plus $12,000 income, divided by 12 months divided by 3 persons.
Read also: The Relentless Rising Cost Of Living.
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Related posts:
- $1.5m to help needy cope with inflation
- Fighting inflation – suggestions for the Govt
- Recession, but MRA and food inflation up?
- Uniquely Singapore, F1 or F9?: Inflation up, HDB property tax up, statistics disappear, Ministers’ pay up again soon
- Sinking funds: From $1 billion in 2007 to $2 billion in 2008
aygee Says:
But what i disagree is that in doing all this for the survival of Singapore, the residents are forgotten. thats where it becomes very sad.
i totally agree. the govt only focus on building singapore inc. at all cost.
unless they start focusing more on the ‘heartware’ instead of the ‘hardware’ they will not be getting my vote.
I’ve read that the last payout would be in 2010. Something significant about that date methinks… Why such a large spread out of payments I wonder?
Also they are called growth dividends. Man… I feel like I am owning 0.000001 percent of stock of some corporation.
Those can quit spore are in deed lucky, for me i have to suffer here for long long years.In the end no CPF savings,can’t withdraw for so many reasons.What is the use of savings and you cant get your money.Those young ppl,got chance better migrate
Remember to remove about 50% of Singapore’s population from the calculation. Foreign workers and PR’s do not get “rebates”.
So, an average of $1100 per person? Assuming 2.5 million eligible Singaporeans (how do you apply CPF grants to babies?), 2.5m x 1100 = $2.75 billion. Seems that even the “best case” scenario totals up to less than 3 billion. And don’t tell me that 0.25 billion (= 250 million) is insignificant…
Oh, maybe that was the printing cost for the fliers?
They sure been getting a lot of business recently no?
“Will there be another Swiss bank like UBS for wealth management? We doubt it. That’s why we invested in it.”
Lee Kuan Yew
Is this a response to netizens’ posting on TOC?
The fact remains that the investments were made at a questional time. 7 or 9% annual returns sound good only on paper.
Can you deny the fact that with the same amount of investments in those banks done at their recent stock prices, GIC or Temasek would have increased their percentage of shares in those banks very significantly?
In what way can Singaporeans hold GIC and Temasek accountable for less than desirable investments since we are the shareholders?
Through the ballot box, of course!
Expected,
I cant imagine how much GIC is going to lose in banks with a bottomless pit and the figures will require 56 man years or more to calculate.
These banks are still raising capital and diluting stakeholders. Who ’s call will it be to end capital raise if ever SWF buys more of them? Can SWF take up a seat in the board and say no to capital increase so that no more diluting our investment? Why the old man still so hard up on these banks? Did he want Singapore Inc to crash earlier by investing unwisely? We have money but it can be emptied sooner than we know.
I am totally against anymore investment in sub prime hit banks. Once bitten twice shy, yet our GIC seems to like getting bitten all over again.
FG
Fever Guy,
that’s why the old man says it may take 30 years . By then, he’s gone, his family gone. No one accountable just like it is today. The new generation forgets about the ‘blood debt’ LKY and coffers own citizen 30 years from now….
Do I say that Singapore future is gone ? Yes, it is gone because ministers that not even willing to hedge on Singapore but bet on getting more money first and then setting up law to prevent investigation show much confidence they have in future in Singapore. No one accountable. No one responsible. None of our asset transparent to citizen. Decade from now, all the old Papstards meet their maker, and so will be our money.
Now, all we doing is just surviving. We have to find ways to salvage the situation.
Shareholders that doesn’t even have access to the most basic form of information – Annual Report. What kind of shareholders are we? If we are “investing” in the future of our country by paying tax, shouldn’t there be at least some kind of accountability from the people who’re managing these funds?
“GIC, set up in 1981 to manage the country’s foreign reserves, has earned an annual average 9.5 percent since inception, it said two years ago at its 25th anniversary.
The company, which doesn’t publish its financial statements, aims to achieve a rate of return exceeding the average inflation rate in the U.S., Japan and Germany, according to its Web site.”
“Lee said the fund would probably not give in to calls to be more “transparent” and is unlikely to disclose its returns beyond a period of 5 to 10 years.”
source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGSqHSr.EHjw&refer=home
We asked about publishing financial statements. May I know if other SWFs publish financial statements, and if so, fully, to their citizens? If not, we should not expect any different treatment for GIC or Temasek, as far as SWF is concerned. I do believe there’s a need for some non-disclosure here as it involves a country’s reserves & the way it is managed. What is published and known to the citizen can also be exploited by others to sabotage Singapore.
I think there are two main issues that can be better addressed by the Govt:
1. the reported gains from these investments do not translate into benefits for the citizen
Yes, there are growth dividends, tax credits, economic shares, etc, but these do not stem from gains on investments, and if they do, we have not been told. A large part of the Govt’s surpluses stem from revenues collected from the citizen. So the question is, what about gains on investments made from the citizen’s money? Where and how are they spent?
2. The absence of check and balance on how funds are used and investments made
With unlimited access to a pool of ever-increasing reserves for investment, how can the citizen be sure that investments are being made and managed in a responsible manner, and that indeed half of earnings over a 5-year period is being spent (where and how)? How much is being re-invested, and in what form? Are investments sufficiently diversified to spread risks and to ensure a healthy overall return? How are the fund/wealth managers rewarded? These questions need to be answered and validated, at least by a qualified independent party appointed and supported by the necessary legislation to facilitate this, and also to recommend and enforce corrective actions where necessary.
The Govt cannot afford to downplay the need to address these 2 issues. Afterall, the reserves exist because of our primarily contractionary fiscal policy over the years, and the main source of reserves is still from the citizens.
The citizens are appreciative of the foresight of the Govt to manage and grow these reserves, instead of squandering them away. However, there is a very real need to ensure that the management of these reserves is carried out in a responsible manner, that independent processes are in place to validate this and address any deviation, and that gains on investment should be shared with the citizens in an equitable manner.
” I do believe there’s a need for some non-disclosure here as it involves a country’s reserves & the way it is managed. What is published and known to the citizen can also be exploited by others to sabotage Singapore.”
It comes to a point that no one trust the competency and judgement of those who make the investment of Temasek and GIC because no one is responsible and accountable at all as in the case of Selamat. From the Selamat, we see the true face of PAP that is no one on top going to be responsible. Imagine one day, if this thing blow out, who are responsible ? Not the management but the lowly operational guy who just as pathetic as the Selamat guard ?
So the non-disclosure seems to be protected the incompetency and ineptness, and doing cover-up and all sort of thing. Isn’t so much investment end up as bad deal and yet no one even get boot out and question it ?
ShinCorpse among those ? Where is the verdict ? Move on already ?
Is Singapore’s financial is that strong as proclaimed by the government, why’s there to fear any attack if revealed to the public ? Not unless, it is all make-believe.
The only thing I believe is that they fear scrutiny by the public, and their only excuse is that what they do is so complex no one or MP even understand them. Frankly, are these jokers even understand what they doing ?
in protecting WKS – LHL has made it very clear – if it is calculated risk, and if the dice is thrown and it shows one instead of six, it is not the government’s fault.
In parliament, Tharman has indicated, the govt should not monitor the investments of GIC and Temasek too closely as it would hinder their investment.
LKY indicated in the bloomberg interview – it will take 5 – 7 years to recoup our losses in Citi and UBS. Shincorpse and Suzhou – no news.
Sorry, the govt is not accountable to our reserves, and they have indicated that our citizens do not need to know where our reserves are going.
As long as LKY is managing GIC , Ho Ching Temasek and LHL is managing Singapore – we can sleep soundlee. first world corporate governance.
Do not expect anyone to dare cast doubts and ask for independant audits. Ong Teng Cheong did not even get a state burial and I feel sorry as he was a hero in singapore. Lucky they did not incarcerate him in ISD or demonise him like Devan Nair. (cross dressing alcoholic)
Hi all,
Most of the points have been well covered in relation to GIC and Temasek’s investments.
Without a good estimate of the amount of S’pore’s reserves, how are we going to quantify and qualify their returns? Base on $100/200/300 billion? 1% of either of these sums is a monstrous difference.
Is there transparency in the remuneration of the executives and management at Temasek and GIC? Do we need to wait till a sub-prime type of management crisis there to realise the magnitute of their losses?
As far as I’m concerned, there are only two distinct reasons for being evasive about GIC, Temasek and the reserves. One, we have so much more than perceived. Two, we use to have so much but depleted significantly over the last 2 years, especially since 2007 with the onset of the crisis.
These is also a possibility that GIC has invested heavily in UBS prior to the crisis and finds it necessary to give it a lifeline.
Whatever the reason, any further injection of funds into UBS will only serve to cover their write-offs for the foreseeable future.
To protect himself, LKY hints that this investment may take up to 30 years to bear fruits. Unfortunately, it is unlikely Singaporeans can hold him accountable.
May I offer this uninvited advisory to whoever concerned?
Do not commit any long-term liability until the full impact of the crisis is known. The wealth of countries will be decimated and untold sufferings will unleash on human.
We are already into the second phase of the crisis with high inflation and extremely high prices of most commodities. Take care and practise utmost prudence.