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Means testing or Mean Testing? Are Singapore’s housing grants unfair to middle-income families?

Singapore’s public housing system is often praised for affordability, yet the disparity in housing grants raises questions. Middle-income families face steep declines in grants as incomes rise, receiving far less support than lower-income groups for BTO flats.

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Singapore’s public housing system is often lauded as a model of efficiency and affordability. However, when it comes to housing grants, particularly for the middle-income group, one cannot help but question whether the current system is truly fair.

The disparity in grants between different income groups, especially those buying Build-To-Order (BTO) flats versus resale flats, raises concerns about whether the middle-income segment is being systematically disadvantaged.

The Middle-Income Squeeze

The Enhanced CPF Housing Grant (EHG) is structured in a way that gradually decreases the grant amount as household income increases. While this might seem equitable on the surface, the steep reduction in grants for households earning between S$4,000 and S$9,000 reveals a deeper issue. These middle-income families receive significantly less support despite still facing substantial housing costs.

For instance, a family with a monthly household income of S$1,500 can receive up to S$120,000 in EHG, making a substantial difference in affordability. However, as income rises, the grant amount rapidly declines. A family earning S$5,000 receives just S$65,000—nearly half of what lower-income families receive. For those earning between S$8,501 and S$9,000, the grant amount is reduced to a mere S$5,000.

According to the Singapore Department of Statistics, among resident-employed households, the median monthly household income from work (excluding employer CPF contributions) grew by 10.8 per cent in nominal terms, from S$8,904 in 2022 to S$9,646 in 2023. This places the middle-income range squarely within the median income bracket, yet these families continue to receive significantly less support through housing grants.

This “middle-income squeeze” leaves families in this income bracket in a precarious position. They earn too much to qualify for substantial grants but not enough to comfortably afford rising housing costs, particularly in a high-cost city like Singapore.

The disparity in grant amounts becomes even more glaring when considering that these middle-income families, while receiving minimal grants for BTO flats, could potentially receive up to S$110,000 in grants if the family that doesn’t exceed S$14,000 in household income opts for a resale flat instead.

This discrepancy suggests that the current grant structure may be inadvertently favouring wealthier households.

The Unfairness of “Means Testing”

The term “means testing” is often used to justify such disparities, suggesting that those with higher incomes should receive fewer subsidies.

However, this principle seems to be turned on its head when it comes to housing grants. Why is it that those who can afford to buy more expensive resale flats are receiving significantly more grants than those opting for BTO flats, which are typically seen as more affordable options?

Consider a household with an income of S$9,001 to S$14,000. If they decide to purchase a resale flat, they can receive up to S$110,000 in housing grants, comprising the CPF Housing Grant (CHG) of S$80,000 and the Proximity Housing Grant (PHG) of S$30,000. On the other hand, if the same household opts for a BTO flat, they would receive no grants at all.

This stark contrast highlights a troubling aspect of the current system: higher-income households buying resale flats are awarded significantly more government support than those purchasing BTO flats, which are meant to be the more affordable and accessible option for Singaporeans.

One particularly puzzling aspect of the current grant system is the Proximity Housing Grant (PHG) and the CPF Housing Grant (CHG), which are only available for those buying resale flats.

The government promotes the PHG as a way to encourage families to stay close together and support each other across generations, yet it is unclear why this grant, along with the CHG, is not extended to those purchasing BTO flats. The absence of these grants for BTO buyers adds to the sense of inequity.

In this context, the system appears less like “means testing” and more like “mean testing,” where middle-income families are left with fewer resources to purchase their homes. This approach not only places a heavier financial burden on these families but also raises questions about the equity of the entire housing grant system.

The Consequence of the Sliding Scale and Loan Restrictions

The sliding scale of the EHG, while intended to provide more support to those with lower incomes, inadvertently penalizes middle-income families who do not qualify for sufficient grants yet face the same challenges of homeownership.

For example, a family earning S$9,000 receives just S$5,000 in grants—a negligible amount compared to the S$110,000 a resale flat buyer in the same income bracket might receive through other grant combinations.

Adding to this burden, the recent tightening of the HDB loan-to-value (LTV) limit to 75% further complicates the situation for middle-income families.

With a lower LTV ratio, these families now have to come up with a larger downpayment, which is particularly challenging given the reduced grant amounts. This combination of lower grants and higher upfront costs places middle-income households at a significant disadvantage, making it more difficult for them to finance their homes.

Reverse Means Testing?

Arguably, the system as it stands resembles a form of “reverse means testing,” where wealthier families benefit more from government subsidies than their lower-income counterparts.

A family with a household income of S$9,001 receives no grant if they purchase a BTO flat, yet the same family could receive up to S$110,000 in grants if they choose a resale flat—provided they can afford the cash for the downpayment, which can run into hundreds of thousands of dollars in the resale market. This discrepancy suggests that the current grant structure may inadvertently favour those who are better off at the expense of those who are less financially secure.

The intent behind Singapore’s housing grants is to make homeownership more accessible and affordable, but the current system seems to fall short of this goal for middle-income families, with the distorted public housing system being patched up with grants and subsidies.

The significant disparity in grant amounts between BTO and resale flats, coupled with the exclusion of the PHG and CHG for BTO buyers, raises serious questions about the fairness of the system. The added pressure from the tightened LTV limits only exacerbates the financial burden on these households, making it even harder for them to achieve affordable homeownership.

As Singapore continues to refine its public housing policies, it is crucial that the needs of middle-income families are not overlooked.

These families, who are often squeezed between the lower-income groups that receive more substantial support and the higher-income groups that can afford private housing or resale flats, deserve a fairer share of the pie.

It is perhaps time to re-evaluate the current grant system to ensure that it truly supports all Singaporeans in their journey to homeownership rather than disadvantaging those in the middle of the BTO market.

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Opinion

A tragic reminder: The urgent need for defamation law reform in Singapore

Opinion: The tragic suicide of Geno Ong highlights the emotional and financial toll of defamation lawsuits in Singapore, where plaintiffs often aren’t required to prove reputational damage. Her case, alongside others, calls for urgent reform to ensure fairer balance between protecting reputation and free speech.

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The recent suicide of Geno Ong has once again cast a spotlight on the nature of defamation laws in Singapore and the pressures they exert on those caught in legal battles.

Ong’s tragic note, accusing businessman Raymond Ng of financially and emotionally breaking her through lawsuits, reflects the personal toll of defamation cases in a jurisdiction where proving damage to reputation is not always required.

This backdrop invites a broader reflection on how defamation laws in Singapore are structured, particularly when compared to other legal systems like the UK’s.

In the UK, as seen in the recent case of British billionaire Sir James Dyson, courts demand that plaintiffs demonstrate significant reputational harm.

Dyson lost his defamation case against the Daily Mirror because he could not prove any financial loss stemming from the publication. This standard, established under the UK’s Defamation Act 2013, creates a higher threshold for plaintiffs, emphasizing the need to show serious damage.

In contrast, Singapore’s defamation laws, as demonstrated in the recent legal victory of Singaporean Ministers K Shanmugam and Vivian Balakrishnan against Lee Hsien Yang (LHY), do not require proof of reputational damage.

The Ministers successfully argued that LHY’s Facebook post insinuated corrupt practices, even though LHY maintained that his post did not imply personal benefit or corruption. The Singapore court sided with the Ministers, and LHY did not pursue a counterclaim.

Comparing Legal Standards: Singapore vs. the UK

This divergence between the UK and Singapore is stark. While Sir James Dyson’s lawsuit was dismissed due to a lack of evidence of financial loss, the Singaporean Ministers’ lawsuit prevailed based on the interpretation of a Facebook post, with no need to prove actual harm.

In Singapore, it is often the defendant’s responsibility to disprove the defamation, a legal structure that may make it easier for powerful individuals to pursue and win defamation suits.

For critics, this represents a significant flaw in Singapore’s defamation laws, as the threshold for sustaining defamation suits is relatively low. Plaintiffs in Singapore are not required to show reputational damage or financial loss, leading to concerns that defamation laws may be used by the wealthy and powerful to silence critics, rather than to address legitimate harm.

The Impact on Free Speech and Public Discourse

These cases raise important questions about the balance between protecting individuals from defamation and safeguarding freedom of speech.

In the case of LHY, one might question what reputational harm the Ministers could have suffered when they remained in power and continued to be elected by the public.

Should defamation lawsuits be used when public figures face criticism in a democratic society? These legal actions, especially when successful, may have a chilling effect on free speech, discouraging citizens from voicing concerns about public figures for fear of legal retaliation.

Similarly, in the case of Geno Ong, Raymond Ng’s defamation lawsuits against her raise significant questions about the actual damage to his reputation.

Ong’s accusations, while serious, appeared to target a niche social media audience and did not seem to widely impact Ng’s standing or business operations.

Given his continued involvement in business, it becomes difficult to argue that Ng’s reputation suffered substantial harm from Ong’s posts. This situation echoes broader concerns about Singapore’s defamation laws, where plaintiffs are not required to show clear evidence of reputational damage to succeed in their claims.

Moreover, the Ministers chose to serve LHY legal papers in the UK, a jurisdiction with a higher threshold for defamation claims, through social messaging rather than physical service.

This decision, and the Ministers’ choice to pursue the case in Singapore rather than the UK, where the case might have been dismissed, raises concerns about fairness. Critics suggest that Singapore’s legal framework, influenced by long-standing laws and political structures, favours those in positions of power.

The Future of Defamation Laws in Singapore

The contrast between the Dyson case in the UK and the Ministers’ case in Singapore demonstrates how defamation laws in different jurisdictions can lead to significantly different outcomes.

In the UK, the onus is on the plaintiff to prove serious harm, offering greater protection to free speech. In Singapore, the burden often shifts to the defendant, creating a system where plaintiffs in positions of power can more easily sue for defamation without showing significant damage.

Without legislative reforms, defamation laws in Singapore may continue to be seen as tools that can be used by those in power to suppress criticism, stifling public discourse.

Geno Ong’s case, while rooted in personal tragedy, highlights the emotional and financial toll that defamation suits can have on ordinary individuals.

Ong’s story, alongside high-profile cases like those involving the Ministers and LHY, underscores the need for a deeper conversation about the purpose and fairness of defamation laws in Singapore.

Ultimately, Singapore must grapple with the question of whether its defamation laws strike the right balance between protecting reputations and upholding freedom of speech in a democratic society.

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Opinion

Charity or Campaigning?: The blurred line between aid and political influence in Singapore

Opinion: The intersection of charity and politics in Singapore raises questions when politicians appear at events like grocery distributions. While well-intentioned, such appearances can blur lines, influencing vulnerable voters who may associate aid with political figures, impacting free and fair competition.

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The intersection of charity work and politics is a sensitive topic, particularly when voluntary organisations and political figures come together to distribute handouts.

In Singapore, where elections often see the People’s Action Party (PAP) dominate constituencies, these charity-driven distributions, whether intentional or not, sometimes blur the lines between volunteerism and political campaigning.

Grace Fu, a PAP politician representing Yuhua Single Member Constituency (SMC), posted on her Facebook page on 27 August, highlighting an event where student volunteers distributed groceries and household essentials to the residents of Yuhua.

This initiative, organised by the South West Community Development Council (CDC) and HRHS (好人好事), saw volunteers working to help defray living costs for residents.

While the post emphasized the role of kindness, the optics of Fu personally being present to hand out groceries may give rise to questions about the intent behind such appearances.

You can see similar events where Ms Fu is seen along with handouts by charitable organisations to residents in Yuhua.

This brings to mind a conversation I had with Robin Low, the Singapore Democratic Party (SDP) candidate who ran against Fu in the 2020 General Election.

Low shared his hopefulness during the campaign, buoyed by residents expressing dissatisfaction with the status quo and support for the SDP’s platform. Yet, despite this apparent backing, he was disheartened with the final results, receiving only 29.46% of the vote, a marginal improvement over the 2015 results but a step back from the 2011 outcome.

Low’s experience post-election provides a striking insight into how residents may interpret acts of charity. As he went back to thank voters, he had a conversation with one resident who had expressed support for SDP during the campaign.

When asked why he ultimately voted for Fu, the resident admitted that his decision was influenced by the gratitude he felt for a bag of rice he received, mistakenly believing it came from Fu herself. Low tried to explain that the rice was actually from the NGOs involved in the event, but the resident was confused, noting that Fu was present during the distribution.

This anecdote, while personal, illustrates a broader challenge in Singapore’s political landscape.

While the distribution of goods is often driven by NGOs and charitable causes, the close proximity of politicians to these events can leave a lasting impression on residents—one that may influence voting decisions, particularly among the poor.

For some, the gratitude felt for these handouts, even if provided by a neutral third party, can be transferred to the political figures who appear during the distribution.

This, in turn, complicates the narrative of free and fair political competition, especially when residents are left unclear as to the true source of the support.

The perception that politicians are directly responsible for handouts, whether accurate or not, can sway the votes of the more vulnerable populations who feel a sense of obligation or gratitude for this perceived generosity.

For poorer residents, the immediate and tangible relief from a bag of rice or household essentials may outweigh the less immediate and often abstract promises made during political campaigns. It highlights how acts of charity, even when unintentional, can play a powerful role in shaping electoral outcomes.

This scenario raises questions about the ethical implications of politicians being present at charitable distributions.

While these events can genuinely benefit residents, they also risk being seen as part of a larger campaign strategy, where goodwill is exchanged for political support. It is a complex dynamic that touches on the heart of political ethics in Singapore and calls for clearer boundaries between voluntary aid and electoral influence.

In a broader sense, this reflection encourages us to consider how the provision of aid, particularly to the poor, can be seen as a tool of influence.

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