Fighting inflation - suggestions for the Govt
Monday, 21 July 2008, 4:04 pm | 1,951 views
Leong Sze Hian / Senior Writer
I refer to the article “Tharman: Pay rises no cure for inflation” (ST, Jul 10).
It states that “Singapore must guard against a second round of inflation, which could happen if wages are raised to keep pace with price increases”.
Employers have been urged by the National Wages Council to make one-off lump sum payments to tide their workers through this period of economic difficulty.
Civil servants were paid an extra bonus recently to help them cope with inflation.
The private sector is also being encouraged now to pay an extra month’s bonus to help their employees.
So, what should employers do now?
Pay the extra month’s bonus, but don’t increase wages?
Or, increase wages, but don’t pay the bonus?
Don’t either of these amount to increasing wages?
I am confused.
Wouldn’t raising wages which spread over 12 months have a more graduated effect on wage inflation, compared to a larger lump sum bonus?
Meanwhile, the following have increased since inflation started to rise last year, in chronological order:-
Petrol, nets fees, service & conservancy charges late payment fees, hospital fees, cable TV, food, electricity, building development charge, HDB rental, ERP, bus fares, special needs school fees, medical insurance for foreign workers, taxi fares, school bus fees, S & CC (Potong Pasir), HDB valuation fees, MediShield premiums/deductibles, ElderShield premiums, cinema tickets, university fees, malls car parking, cost of cashcard, PCF kindergarten fees, etc.
Since inflation for the last 13 months was 7.7 per cent (May’s year-on-year of 7.5 plus the 0.2 per cent increase over April 2008), and the the average annualised wage change was 1.66 per cent for workers, from 1997 to 2007 (using Ministry of Manpower data from its Wages Report), how do we cope with the rising cost of living in the meantime?
I wrote an article about free things in Singapore, and many Singaporeans are contributing to the directory of free stuff at www.theonlinecitizen.com
In the meantime, here are 16 suggestions for the Government to further help singaporeans during this time
1. <!–[endif]–>Reduce the 30 per cent water conservation tax.
2. <!–[endif]–>Reduce the 41 cents per litre tax on petrol.
3. <!–[endif]–>Exempt essential items from GST.
4. <!–[endif]–>Increase tax reliefs to account for rising inflation and increased cost-of-living. For example, the $ 2,000 wife’s relief, parent’s relief, etc, have not changed for many years.
5. <!–[endif]–>Raise interest rates to dampen rising inflation.
6. <!–[endif]–>Freeze the profits of transport and utility companies, such that any increase in profits over the last year, should be returned to consumers like a subsidy, as most of these companies have been making ever increasing record profits, almost year after year.
7. Reverse the increase in property tax on all HDB flats implemented on 1 January 2008.
8. <!–[endif]–>Rescind the increase in rentals for 1 and 2-room HDB flats.
9. <!–[endif]–>Freeze or reduce all healthcare fees increases (these are not included in the freeze on Government fees).
10. <!–[endif]–>Freeze or reduce all university fees increases (these are also not included as explained above).
11. <!–[endif]–>Reverse the 31 December 2007 salary increase for Ministers and withdraw the planned third increase in Ministerial pay scheduled for 31 December 2008.
12. <!–[endif]–>As the Town Councils already have accumulated more than a billion dollars of surpluses in their sinking funds, implement a temporary reduction in Service and Conservancy Charges (S & CC).
13. <!–[endif]–>Instead of giving tax credits, like the children’s tax credits of up to
<!–[if !supportLists]–>14. <!–[endif]–>$ 70,000 for 4 children, which more than 60 per cent of Singaporeans do not benefit, because they hardly pay any income tax - change this system which focuses on tax credits to focus on tax reliefs or direct cash subsidies, so that more lower and middle-income Singaporeans can benefit.
15. <!–[endif]–>Reverse the increase in MediShield premiums/deductibles and ElderShield premiums.
16. <!–[endif]–>Reverse the increase in PCF kindergarten fees.
17. <!–[endif]–>Reverse the increase in building development charge.
As the Budget surplus was $ 6.4 billion, the implementation of some of the above suggestions, may have a minimal impact, from the perspective of fiscal prudence.
—————-
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Reduce or abolish maid levy H.K. style for 2 years. Spore govt likes to copy, compare to other countries, such as Japan, HK, Sweden….. Swede Way of population policy… so the govt should reduce maid levy in order to boost up the numbers of babies. Can the govt do that ?? I doubt so, this uncaring govt just talk only Swede Way, I say Amway…
Comments edited by moderator. Dear tns: Please refrain from using nicknames which are swear words or cussing. Thanks.
I think the people in charge knows the score, its just that they are not playing. That is my honest opinion. In any relationship, there must be a 2 way flow, but our unique and one-of-a- kind government in charge dont agree, so there we go.
Unless and until the GIC and T come clean with their accounts, it is very easy for the street to imagine that they lost heavily in their recent ventures.
I agree with Tewiniaseng’s call for the abolishment or reduction of Maids Levy.
I’d like to further propose that the minimum salary for our domestic workers be increased as well.
I remember reading an article somewhere (could be here, but I can’t find it) or in someone’s blog on the topic of Maids’ Salary. Singapore is one of cheapest countries to hire a maid (now this is based on the assumption that there is no maid’s levy).
If any TOC’er can find that article, I’d truly appreciate it.
We need to treat our maid’s well also and not take advantage of them.
Dear Sze Hian,
How I wished you are the Finance Minister, instead.
If only your 17 suggestions can be proposed in the parliament, the goverment may have to explain, WHY each of those suggestion CANNOT be implemented.
Given that Ministers in the goverment today, are not compasionate, I am pessimistic that those suggestion be given thought, even.
Best regards.
What do call people who profit on the misery and degradation of others. I believe in the sex trade, they are called PIMPS. And it’s the same all over the world, a fact of life. The only difference is in the level of residue conscience in their depraved souls.
Hopefully these comprehensive and consolidated suggestions would not be thrown into the trashbin by our Government. The list of suggestions work against their interest and I doubt these changes will be made possible in the near future or ever. Please pardon me to take a view that our Government is not ever ready to hear or heed feedbacks or suggestions given by the common people.
Dear People,
Singapore’s leadership is more willing to risk losing billions of dollars in overseas investments by its GLC’s - rather than to spend some money in helping lessen the burden of inflation on its citizens through subsidies !
Contrast this with Hong Kong which just put aside $ 1.9 BILLION for subsidies to help lessen the pain of inflation !
That is why I support SDP. They translate our disapproval into concrete action. Leong Sze Hian should also write articles for the SDP Forum so that SDP can take up his recommendations.
At the end of the day - CSJ is right - we have to stand up for our rights. Its our money - and yet we have no say on how things are done ?
Enough is enough - we have to put our foot down and send the message that we do NOT approve of their handling of our money.
Vote SDP !!
How about a reduction in the government’s defence budget, and other infrastuctural projects? These could further help finance some of the measures mentioned above. I mean, during such tough times, who’d want a spanking new government building, or one that has state-of-the-art equipment?
1. Reduce Water Tax - erh you’ll bathe more often leading to bad habit to waste more water
2. Reduce petrol tax - you’ll take your car to drive aimlessly and to pay ERP charges
3. Essentials exempted from GST - there’s workfare, vouchers from unions all to help the poor already… besides essential form small proportion of total expenditure yadayadayada or the last GST effect this month will ‘be negated’ - I also dun know what this means. Don’t count? Close one eye? Bo Chap? Can meh? Obviously they say Can! Eat Frozen food lor… no frills, no brand.no taste no vitamin.. we have not exhausted the last few options yet… meatless meat? eat grass?
4. Wife/Child reliefs - this has worked well, we are already competitive- wife and children must love.. don’t look at money….. next
5. Raise interest rates? Are you kidding? Property will CRASH. Funding costs of the independant investment companies out there will suffer higher funding costs !! How can? Foreigners bought Sentosa Cove etc will lose money you will lose your job.. you want? Some more those who booked Boon Keng flats will become Boon Dogs flats… (those been to Australia will appreciate this)
6. Freeze the profit of transport companies? Hello, these are PRIVATE companies with sharedholders.. no can do lah
7. Reverse? U -turn - Tak Boleh.. what is Taxed is Taxed.. besides you benefitted from the rise in value ma.. whatever that means to people actually LIVING in their own homes
8. Rescind rent for 1 -2 roomers? Oh those are insignificant. we have noted abuse in the applicants for the rest must also be actually hor… rich and can afford it
9. Freeze healthcare - its up to the clusters to decide.. don’t look here.
10. Reduce/freeze uni fees? then who pays for Foreign talent to come and study for free, get a stipend and extra scholarship to do PHD, free citizenship?
11. I cant even type this one….. you suggest a PAY CUT FOR OUT OF THIS WORLD TALENT? You want your daughters and wives to become maids in other countries ah?
12. Town Council surpluses - cannot cut losses - alot in shares already.. now markets are bad.. it’s also for the Loooooonnnggg term .. we explained already mah
13. / 14. Please refer to Pt. 4… don’t bring up old subject lah
15. Reduce premiums - cannot, cannot.. no free lunch … this rule laid down long time ago leow mah.. you need me to repeat izit?
16. Reverse kindergarten fees? Again ‘gostun’ / ‘u-turn’ cannot lah. You want th best care and foundation for your kids right? This is the basic foundation of World class education you know.
17. Reduce Development charge? How can it be.. its the Golden Years .. next 5 -10 years are Best Years of Your Lives !!! IR not complete yet some more.. F1 gonna start very soon. some economists say Singapore Flyer ‘flying’ already so property must also be very good right?
I appreciate your thoughts and I am sure many of us out there have at one time or another thought some of these too and this is an excellent summary. Unfortunately, I have sensed that all these suggestions have been ‘rejected’ in one form or another over time before you can even table it in parliament…
Oh, do please Surprise me !
hahaha
We should also abolish the TV and radio license fees. When SARS hit and the hotels complained about low occupancy and slipping margins, the govt did away with the $110 per room TV licence fee and changed that into a lower flat fee.
And if Govt accepts these suggestions, what will happen?
Different ministries will collect lesser revenue, resulting in lower GDP / GNP
Ministers / ministries cannot meet their KPI for 2008
All these translate to lower perfomance bonus for 2009 -
You think this will happen?
They will all prefer to close one eye and ignore the combined effect they have on the man in the street and hope someone else will act first.
This is where we see how weak our PM Lee is leading our contry.
It is on auto pilot and the only people suffering are the plebians.
Hi Leong,
I suggest it might be worthwhile to understand first the underlying causes of the inflationary pressures before proposing your suggestions.
In my opinion, the inflationary pressures we are currently seeing is a world-wide phenomenon. Singapore, being such an open and small economy, is extremely vulnerable to short-term changes in prices of raw materials (imported inflation). The Singapore monetary policies are geared for medium to longer term facilitation of the growth of the country and hence we are at the mercy of the current volatility of price pressures.
Your suggestions to abolish or reduce fees/taxes will most likely increase domestic consumption, thereby exacerbating the inflationary pressures. (More people chasing the same goods.)
Targeting the domestic SIBOR rates have little effect - other than in the short term. The MAS have explicitly communicated that their sole monetary policy is exchange-rate targeting. Economically speaking, there cannot exist both exchange-rate and interest rate targeting, we can affect only one variable. And as ‘The SS’ rightly pointed out, raising interest rates will mean a collapse in the property market.
best,
Eaststopper
Scrap the whole damned propagandalistic NDP. As I understand the budget was closed to S$100 mil. We should encourage it to be a community based celebration like in the US. Think of how many people U can help with that amount.
NDP only satisfy the egos of the Men-In-whites.
12) Eaststopper on July 21st, 2008 5.51 pm
Any suggestion from you that our dear governement can do even though then inflationary pressures we are currently seeing is a world-wide phenomenon - assuming that ours is totally attributable to external causes which I doubt so.
“Your suggestions to abolish or reduce fees/taxes will most likely increase domestic consumption, thereby exacerbating the inflationary pressures. (More people chasing the same goods.)”
Really, how ? In strict quantities ? We are talking about inflation bringing down the level of real consumption if it is not matched by the increase of real spending dollars. It is a matter of transfering wealth and the fine mechanics of it - whether it stays with the general public at large for their own spending allocation or diverted to the government in the form of fees/ taxes for the latter’s own allocation - proportionately more so to the needy ?
In the 8 years I’ve lived in my current place, the roadside handrails have been repainted four times. My void deck has stainless steel bike stands (one for each bike). The new police Hilux pickups have sports rims. Such public spending is extraneous.
Now that these recommendations have gone to the public domain,
I am sure there is less need for Opposition party now ?
Correct me if I am wrong.
TOC is so cute.
of the 16 suggestions you mentioned, one last additional point is to ask our dear gahmen to stop enriching themselves for a pay hike. They are paid millions and if they can tell me that they suffered inflationary concerns i say they are the world biggest liars. When will they listen to the people? How long will our dream of a nation for singaporeans ever come? I felt compulsive to fly a American flag outside my window than a Singapore flag that reminds me of a f**k up gahmen we have.
dear sze hian
This may sound unpleasant but i suggest you save your time for other things because your proposal will never be taken seriously.
In fact, a typical response to all your suggestions can be possibly summarized as follows:
“We cannot do this because it will promote a crutch mentality and destroy the good work ethic which has been the cornerstone of this country’s 43 years of success. To do all these would lead us to the dead-end of welfarism, which the Westerners have a hard time to extricate themselves from it at present. If you have difficulties, we have all the relief packages such as GST offset package and progress package. If your pay is low, you work and we will top it up with Workfare. That is the best way for this country and we know what we are doing.”
How would you respond then?
Dear anonymous
I am just an ordinary citizen
I analyse, give my views, make suggestions - on issues and policies that I feel may need to be reviewed, because they affect my fellow Singaporeans, my country’s future
Dr Ng Eng Hen always says, WP running out of ideas, no alternative proposals, blah blah…. ok now this is the alternative proposal from our Mr Leong, the future MP in waiting…we have to press the govt, engage them, make known our ideas, to force pap to accept our proposals. What can they say now ? empty talk or totally ignore it.
Actually, I can only say this is the tip of the iceberg of Public Relations the government has in approaching the pending Ministers’ pay rise.
But encouraging private sectors and also hailing public bonus, they are stepping stones to give themselves the pay raise.
Can we handle the truth? Nah… at least 66.6% didn’t want to see the truth. It hurts.
Kaffein
We tired of people keeping us that it is a world-wide inflation. Now, when the coffers put investment in frailing banks, did the government tell us it is world-wide practice too ? When the government choose not to report about the loss of investment money over frailing bank due to PAP’s arrogancy and ‘I know it best attitude’ attitude, did the government tell us too it is is world-wide issue too. When the LKY says it takes 30 years to see return of investment, did someone tell us that a moron is in control ?
Let’s not keep blaming the world for these and that when it obviously the major culprit here is our dear arrogant and complacent government. Inflation play a part but it is nothing compare to our government where everything is been taxed, even basic necessities, losing money and keep mum, giving rhetoric for price hike, cover up,.
Now when inflation happens, why not someone stop the pay rise of our ministers ? Are inflation nonchalant to our ministers ? 26 years high and yet our ministers can keep sounding out bullshit as though as happen. Uniquely Singapore ! God save the emperor and dynasty !
I have 2 more to add to the list:
1) Don’t implement Means Testing. Significantly reduce hospitalisation subsidy for PRs instead.
2) Ministerial salary increment should follow NWC recommendation!!!
I do not understand Tharman’s logic that giving workers decent wage increment would result in further inflation. Let’s be frank here. How can the spending of a country with a population of 4+ million have any meaningful impact on global food prices, crude oil pricee, etc.?????
I didn’t know S’poreans can control lower global food prices by simply spending less!!!
Quite saddening, to read all the cynical comments here. but i must say i agree with them all. I notice the use of the words reverse in the suggestions… not gonna happen man. it’ll amount to admitting you’re wrong. which won’t ever happen with this government. I will be truly surprised to see our government actually adopt even one of those suggestions. until then… keep hoping lah hor. after all hope is free. no tax/surcharge… yet.
Pride cometh before the fall.
Workers’ Party (WP), the Singapore People’s Party (SPP), the Singapore Democratic Party (SDP) and the National Solidarity Party (NSP) JBJ, Chiam, Low, Sebastian Teo , chee will help us to get more richer
yet what winner said is truth is that Workers’ Party (WP), the Singapore People’s Party (SPP), the Singapore Democratic Party (SDP) and the National Solidarity Party (NSP) JBJ, Chiam, Low, Sebastian Teo , chee the opposition party must win the pap in election day where i m hopping to see where majority win hope that the opposition can win by getting from more votes from the peoples
Sze Hian, almost none of these ideas sound like they would have even the slightest dent on the economy. Instead, some of your proposals sound like they can only be funded if the govt is willing to take on a large budget deficit. In itself, that is not always a bad thing, but is not easy to reverse thereafter.
Every dollar returned to the citizen means an additional dollar that the govt has to fund one way or another. For instance, reduced taxes on fuel could mean a savings of $X million to motorists, but what good does it do for people who use public transport? Also, is it the govt’s job to interfere with the profits of private sector firms such as SMRT/SBST, or educational institutions like NUS/NTU/SMU? Shareholders will cry foul, and tertiary institutions will have to find some way of making up the lower revenue since their govt subsidies are gradually being reduced.
Your ideas are well-intentioned no doubt, but there are consequences behind each of them that must be more carefully considered…
I don’t really mind if the Ministers’ pay was halved though, but that probably won’t save more than $20-30mil a year, which is considered small change compared to the overall budget — recall that the budget surplus for FY07 was about $6.4bil.
Next the garment will say “Fees Reduction and Freezes, not the answer”
Tharman and the garmen, as usual, trying to smoke us……if i know i am going to have a pay rise, i will treat my family to a nice meal at a restaurant, buy myself a nice watch, buy meself new working clothes, lagi better if can buy car (hahaha)……now imagine if 1 million workers also get their pay rise like me……
but now garmen say “Pay rises no cure for inflation” and i never get pay rise becos my boss say garmen say like that, so how? inflation go up, i now jam brake, don wana spend, imagine 1 million people also like me, no pay rise and jam break………restaurant, watch shop, clothes shop all will close down…..
Alamak, Tharman, wana bluff who?
The only way u could force these reforms thru is
1) People’s Revolt - something like what happen during the overthrow of the Marcos government which is quite unlikely to happen
2)For the well paid jokers to feel what is like to go without their fat paying salaries and made them collect used cans from the trash bins - again quitely unlikely
3) Pray for a change
4) Take possession and vote for a change
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even university alevel degrees holder o level nlevel ite earn much money but we still want more moneys joining millitary or police law society doctors is still not enough salary would want more wages increase throughout the whole years so i would definity choose opposition partys !!
These are good ideas.
But it also reinforce what I have ofetn said..namely our inflation is due to domestic cost factors rather than external factors.
Therefore MAS’ policy of appreciating the Singapore dollar viz-a-viz the US$ will have limited effect except as to reduce our export competitiveness.
If the Government dares, one quick but drastic approach to reduce inflation is to reduce GST straight away to 5%.
Later as Sze Hian suggest waive GST on food and other neccesities.
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All I know is the the new ERPs and their timings suck big time. There is hardly any traffic going into the city on Saturday e.g. from the Nicoll Highway side and yet the money grubbing ERP takes off $2 each time. $#(I$#)$)$)$#**
Dear Mr Leong,
I just like to say
Thank You !!!
on behalf of the citizens of Singapore.
I just wish that you continue to help Singaporeans
with your knowledge and experience.
best regards
Dear Mr. Leong,
Excellent article here and I am all out to support your call to the gahmen to lower some of the taxes that affects the citizens pocket more than theirs.
Let me know if you are standing in the next GE, if you every do so I will definitely vote for you if you are contesting in the estate I live.
We need more opposition party member who can talk that talk and walk the walk with substance like this article.
I see the 2 issues — (1) not raising wages to attempt to combat inflation (Tharman), and (2) increasing subsidies to alleviate the pain of inflation (Leong) — as two orthogonal messages.
Issue 1: The rational is logical: increasing wages artificially just makes everything more expensive since consumers of the products and services of our employers have to pay more.
Issue 2: It is unquestionable that 16 proposed subsidies will reduce cost of living for many people independent of the presence of inflation. These measures however do not cure the cause of inflation.
Well… petrol prices have dropped 5 times this month and that’s a relief. I wonder if the govt had a hand in persuading the oil cartel here to lower their prices