Parliament
Assoc Prof Jamus Lim urges increased productivity and worker protection in Budget 2023 debate
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Associate Professor Jamus Lim, Workers’ Party Member of Parliament for Seng Kang GRC, delivered a speech during the Budget 2023 debate on February 23, Thursday, in which he acknowledged the Budget’s forward-looking approach in stimulating medium-term growth and improving progressivity.
However, he also noted that it falls short in a number of areas, including its fiscal policy stance, and offered suggestions on how to inspire growth via three key drivers: labour, capital, and productivity.
Assoc Prof Lim began his speech by noting that the fiscal policy stance remains contractionary despite the headline deficit. He pointed out that by conventional international standards, the Budget is in surplus, just two years after the worst recession in Singapore’s history.
While acknowledging the justification for building up a fiscal buffer and running a balanced budget during the government’s full term, he highlighted that the fiscal impulse has already turned negative. He said, “I will not quibble over whether this methodology is justified—it has been litigated and relitigated already in this House—but simply point out the fact, evident to all economists, that the Budget is, by conventional international standards, in surplus.”
Despite this observation, Assoc Prof Lim welcomed some responses to calls for action, such as the Budget’s announcement of the permanent voucher scheme’s increase and the additional $3 billion boost to the Assurance package, which offers much-needed support for coping with the high costs of living.
He noted, “The Budget’s announcement that the permanent voucher scheme would be increased restores the government’s original promise of offset years, and the additional $3 billion boost to the Assurance package also offers much-needed support for coping with high costs of living.”
Furthermore, Assoc Prof Lim welcomed the introduction of additional taxes on high-end property, luxury cars, and tobacco, which adds a cumulative $600 million to revenue.
He said, “While these don’t go as far as we’d like, they do add a cumulative $600 million to revenue. To paraphrase Groucho Marx: a few hundred million here, a few hundred million there, and soon you’re talking about real money.”
He also discussed the CPF ceiling increase, which raises the CPF ceiling from $6,000 to $8,000. While he acknowledged that the pay increase is a good thing, he highlighted that it could stretch already tight budgets for the typical middle-class family in Sengkang.
He suggested an alternative approach, wondering why the government did not choose to return the employer contribution to the full 20 percent instead. He said, “While restoring the employer contribution alone will not fully make up for the additional CPF savings that would result from an increased ceiling, one is still left to wonder why this approach wasn’t part of the consideration for addressing the effects of inflation on CPF.”
In terms of productivity, he discussed the need to address the lag in national R&D expenditure compared to leading economies.
Assoc Prof Lim noted that the national R&D expenditures are falling behind not only the global average of 2.3% of GDP but also those of leading knowledge-oriented nations such as the United States, Japan, Korea, and Israel.
He suggested a combination of increased spending in public R&D, coupled with strong tax incentives to foster private R&D, to elevate the lagging national productivity. The Budget introduces an Enterprise Innovation Scheme to enhance tax deductions for innovation-related activities in Singapore.
Assoc Prof Lim said, “This will take advantage of exemptions for R&D credit in the OECD’s Base Erosion and Profit Shifting (BEPS) framework.”
The strategy is to create incentives for firms to locate their R&D activities in a subsidiary in Singapore, which in turn books R&D fees off revenue from the firm’s entities in other jurisdictions.
Singapore is a signatory to the agreement, and so adhering to the stipulations is BEPS is already a given. R&D credits offer an opportunity to stimulate Singapore’s domestic research activity in a legitimate fashion.
However, the absolute number of firms assisted remains small, to the tune of 520 companies.
He asked, “What has been the main inhibitor to more enthusiastic takeup? Could these constraints be relaxed, especially if we were to ease up on the need for recipients to demonstrate short-term results?”
Assoc Prof Lim also discussed the need for more public-private partnerships (PPPs) in R&D to spur private-sector innovation. He suggested setting up specific funding buckets that allow the funding of moonshots with more flexible targets and filling the gap between seed and Series A funding.
He said, “Such an approach can be especially fruitful in areas such as biotech and pharmaceuticals, where we have world-class upstream research produced by Singapore universities, along with excellent specialized downstream production capacity, but insufficient midstream capabilities.”
Assoc Prof Lim spoke about the importance of sustaining long-term growth and suggested three ways to achieve it. One of the ways he suggested was to address the lag in national R&D expenditure compared to leading economies.
“During 2021’s COS debate, I sketched out the case for heightened total R&D expenditures, noting that its share—of a little shy of 2 percent of GDP—fell behind not only the global average of 2.3 percent, but also those of leading knowledge-oriented nations, such as the United States, Japan, Korea, and Israel,” said Assoc Prof Lim.
He highlighted the fact that spending by other nations had all increased, while Singapore’s national R&D spending remained stagnant. To address this, he suggested increasing spending in public R&D, coupled with strong tax incentives to foster private R&D.
“This Budget introduces an Enterprise Innovation Scheme, meant to enhance tax deductions for innovation-related activities in Singapore. This will take advantage of exemptions for R&D credit in the OECD’s Base Erosion and Profit Shifting (BEPS) framework,” he added.
Assoc Prof Lim also suggested public-private partnerships in R&D to spur private-sector innovation.
Moving on to the topic of labor, he proposed expanding workers’ safety nets with redundancy insurance, citing the need for a backup support system for redundant workers to access their first-best welfare system, which is a job.
“In the spirit of encouraging risk-taking and entrepreneurship, we can also consider including the self-employed into the scheme—perhaps with different contribution shares—as we did during COVID-19,” he said.
He addressed concerns about the potential negative effects of redundancy insurance on workers’ incentives to search for a job, but noted that studies of advanced economies that have rolled out such insurance schemes tend to find little adverse consequences for employment outcomes.
The cost of the redundancy insurance scheme proposed by the Workers’ Party is much lower than in other jurisdictions, as it only covers redundancy and unemployment rates in Singapore tend to be much lower.
Assoc Prof Lim suggested that contributions toward redundancy insurance should be passed on to workers, but the government should also contribute regularly to the pool in the form of a special-purpose development fund.
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Parliament
Workers’ Party to question Govt on Mobile Guardian breach and entry of extremist preacher in upcoming parliamentary sitting
In the 9 September 2024 parliamentary sitting, the Workers’ Party will raise questions on the Mobile Guardian breach, which affected 13,000 students, and the entry of extremist preacher Amir Hamza. Other key topics include housing affordability and the costs of the Founders’ Memorial.
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In the upcoming parliamentary sitting on 9 September 2024, the Workers’ Party (WP) Members of Parliament will focus on key issues such as housing affordability, cybersecurity, national security, and public expenditure.
The topics raised reflect the party’s attention to areas affecting Singaporeans’ daily lives, public safety, and the management of government resources. (read PQs here)
Housing Affordability and Policies
Housing remains a priority, with multiple WP MPs addressing questions on the topic. Mr Chua Kheng Wee Louis is seeking details from the Minister for National Development regarding HDB loan-to-value ratios and HDB resale price trends over the past five years. This aims to provide insights into the challenges faced by first-time homebuyers.
Additionally, Ms Sylvia Lim will question why some Build-To-Order and Sale of Balance flat applicants are restricted from selecting flats in projects with later booking dates, seeking clarification on policies that may limit buyers’ choices.
Cybersecurity in the Education System
The recent breach of the Mobile Guardian app, which impacted 13,000 students, is another key focus. Mr Gerald Giam will question the Ministry of Education on how many students were affected, the extent of data loss, and recovery measures.
This follows a Reddit user’s claim that the vulnerability had been highlighted months before the breach. The Ministry confirmed receiving the tip-off but stated that the reported breach had been patched, although the informant refutes this in a subsequent Reddit post.
Ms He Ting Ru will also address the Ministry of Education, asking how it plans to involve parents more actively in managing their children’s devices following the security breach and the removal of the Mobile Guardian Device Management Application.
National Security and Extremism
Mr Pritam Singh is questioning the Minister for Home Affairs about the entry of Bangladeshi preacher Amir Hamza, who delivered a sermon in Singapore on 9 August 2024, asking if he is on any watchlist in the possession of Home Team security agencies.
Hamza was able to enter the country under a different name, raising concerns about the effectiveness of Singapore’s security measures.
He had publicly announced his intention to enter Singapore on his Facebook page with the date and location specified.
Transparency in Public Events
In another area, Mr Gerald Giam will question the Ministry for Culture, Community and Youth on the People’s Association’s criteria for inviting elected MPs to Resident Network-organized events, asking for details on how equal access is ensured for MPs from all parties
Costs of the Founders’ Memorial
Public expenditure will also be under scrutiny, as Mr Chua Kheng Wee Louis asks for information on the development and annual operating costs of the Founders’ Memorial. The S$235.6 million project has sparked public debate over the use of taxpayer funds, with critics questioning whether such a large sum is justified for a national monument.
Defense
About 580 National Servicemen disrupted annually for university studies from 2018 to 2022
In response to a parliamentary question by WP MP Gerald Giam, Minister for Defence Dr Ng Eng Hen disclosed that about 580 full-time NSFs were allowed university disruptions each year, between 2018 and 2022.
Notably, about 520 opted for local institutions, while the other 60 pursued studies abroad.
SINGAPORE: Annually, from 2018 to 2022, approximately 580 full-time national servicemen (NSFs) were granted disruptions to pursue university studies, as revealed by Minister for Defence, Dr Ng Eng Hen.
Among these disruptions, 520 NSFs chose to attend local universities, while 60 embarked on overseas academic pursuits, marking a distinctive trend within the sphere of National Service (NS) commitments.
Dr Ng was responding to a Parliamentary Question presented by Mr Gerald Giam Yean Song, a Member of Parliament from the Workers’ Party, on Tuesday (19 Sep).
Mr Giam sought clarification on the number of full-time NSFs who were granted disruptions for overseas studies, the proportion of Government scholarship holders among them, and the rationale behind allowing these disruptions.
In his written response, Dr Ng elaborated that the majority of disruptions, approximately 70%, pertained to NSFs who had enlisted later than their peers.
This aligns with the policy of ensuring that each cohort commences their university studies in the same academic year, necessitating disruptions for these later enlistees.
Around 27% of the disruptions were allotted to NSFs pursuing medical studies, preparing them to serve as SAF Medical Officers during their NS.
Public Service Commission (PSC) scholars make up the remaining 3% or an average of 19 NSFs. This follows a long-standing practice since 1967 to attract top talent into the public sector.
Dr Ng emphasized that all NSFs are required to complete the remainder of their full-time NS after the disruption period.
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