NSP responds to the Budget 2011

Goh Meng Seng

The author is the Secretary-General of the National Solidarity Party.

The National Solidarity Party

The National Solidarity Party

The National Solidarity Party is very disappointed that the PAP government did not address the fundamental question on whether the current economic growth model of “Growth at all cost” based on indiscriminate importation of foreign workers at ALL LEVELS of employment in this budget. Instead, it tries to address the “ill symptoms”, which are caused by this flawed economic strategy, in such an inadequate way.

While the excuse of low fertility rate is cited as the main reason to import excessive foreign workers into Singapore, the miserable $300 to $400 Child Development Credit is totally inadequate to address this problem. We would expect Healthcare cost to be lowered or a comprehensive social safety net for children up to 18 years old or heavy subsidy for pre-school education etc. The little top ups to students’ Edusave by $130 could hardly offset the enormous increase in tuition fees over the years. Apparently there are not enough subsidies given to tertiary institutions to defray the rising costs. On the other hand, there are no new initiatives to strengthen work-life balance for couples so that they could enjoy family life with their children.

The only “real” solution to the low fertility rate provided by PAP government is to depend on the influx of foreign workers. Although PAP has increased workers levies but it falls short of giving us the assurance that the number of foreign workers, thus population, will not grow any further.

The first critical problem of having excessive foreign workers is, either citizen’s job is displaced or wages are suppressed by them. PAP has chosen to increase workers levies while giving more workfare to citizens to address these problems. However, we believe that without a minimum wage scheme, the effectiveness of both the workfare and workers levies will be dampen (due to substitution effects).

The influx of cheap foreign workers has apparently suppressed wages and thus widened the income disparity. According to the chart shown in the budget speech as well as what the Finance minister has said, the real income growth of the 20th percentile in the past decade would only be 5% instead of 8.1% if it was not for the workfare. The income disparity has widened when the real income growth for the 50th percentile is 20.7%!

There is no doubt that workfare has managed to close the gap of the widening trend just a bit but the most important question we have to ask, is this economic model sustainable in the long run? Can the PAP government guarantee that it will keep giving out more and more workfare in the years to come in the bid to cushion the impact of the widening of income gap?

We are very doubtful about the Finance Minister’s assertion that we could grow the real income of all our workers by 30% for the next decade. We are only able to raise the income of 20th and 50th percentile by 8.1% and 20.7% in real terms respectively when our economy has an average growth of 4%-6% in the last decade, how could we possibly achieve a higher growth of 30% in real terms for ALL Singaporeans when our Finance Minister only expects our economy to grow at a slower pace of 3% to 5% for the next decade? We believe that only the million dollar salaried ministers will enjoy more than 30% increase in real term for the next decade!

In the mad pursue of more foreign workers, the PAP government has taken the lead to cultivate the mindset that only foreigners are “talents” while Singaporeans are not. The government should not put too much emphasis on foreigner as talents. Our own MNCs should put more emphasis on grooming our Singaporean PMETs instead of replacing them with “foreign talents”.

We do not think that the effort to raise productivity would bear fruits in raising our citizen’s wage as long as PAP continues to let the whole world to supply us with cheaper and younger foreign labour indiscriminately. The economic growth model has to be changed. There is no comprehensive plan to groom local SMEs as well as local talents with world view.

The sudden rapid increase in foreign workers has also caused a whole range of other problems from rising inflation to crowded public transport, inadequate healthcare infrastructure and high housing cost. However the PAP government has not addressed all these problems effectively at all.

The Minister says he wants to help Singaporeans to fight inflation but he has conveniently avoided mentioning anything about GST. GST should be reduced and there is no commitment from PAP not to increase GST any further either.

In spite of a shortage of hospital beds, the budget for Ministry of Health has been reduced for 2011. This is due to the cut in “development expenditure”. We are surprised that the government has cut funding in this aspect while increasing the Defence budget by a substantial 5%.

We believe that the key issue of high HDB price lies with the pricing policy of new HDB flats. NSP advocates cost-plus pricing for new HDB flats. Giving more grants to low income buyers will not solve the burden of 30 years mortgage tagged on these flat purchases.

In conclusion, NSP would want to make an open call to PAP government to set its priority right. The PAP should not focus on how much goodies it is going to give voters in this election year but focus on the long term structural problems of our economy. As long as the ruling party refuses to realign its economic growth model for the coming decade, we will forever face the critical problems raised above.

A responsible government should take the welfare of our citizens at heart in longer terms instead of engrossing itself in populist policies which may bring short term alleviation of unhappiness on the ground but totally unhelpful in solving our longer term structural problems.