Contrary to his claim, DPM Heng’s strategic financial plan in Budget 2020 will not prepare the country for the long term. It’s an old strategy of an investment-driven, export-oriented economy that was suitable for the past few decades but are either inappropriate or inadequate in meeting new challenges.
These challenges are of a different kind; they are disruptions caused by new factors such as geopolitical rivalries, technology advance, climate change or global epidemics like the current coronavirus. The net effect is to lower demand and supply, usually significantly and sometimes permanently. While we cannot simply wish these disruptions away, we can and should build and develop “anchors” that will stabilize and hold Singapore firmly and not be “blown off”.
To do so, we have to increase domestic consumption and investment significantly so that whatever happens outside Singapore, our economy can still grow and our people can continue to be employed. This extra spending should be targeted at essential sectors such as healthcare and education, help families cope with the rising cost of living, reinvigorate the local neighbourhood economy of shops, markets and eateries, and lower costs of doing business. This boost to essential consumption (which I have estimated at $25 billion) will bring the welfare of our people to First World standards and substantially reduce business cost by removing and replacing the 8 to 10.5% Medisave contribution with full government subsidy on healthcare.
To increase essential investment that will really prepare our country and people for the long term, I have proposed building more schools and hospitals with the necessary increase in manpower, public flats with full land subsidy and a new SERS programme to solve the problem of the 99-year lease expiry. In addition, I have also suggested a Midcareer Change and Upgrade Fund for our PMETs, a Young Enterprise Fund to inspire our young to dream big and a Green Fund to tackle climate change. This investment package will cost $10 billion.
No tax increase, No bankrupting the country
This combined package of $35 billion ($25 billion plus $10 billion) is not one-off boost to the economy but an annual one that is sustainable for the long term. It does not require any tax increase nor a dig into our past reserves (meaning not touching the principal sum of our savings). The consumption part of the package of $25 billion comes from the long term expected real rate of return of 4% on our reserves of over $1 trillion (=$1,000 billion) while the investment package of $10 billion is to be paid out of the revenue from the sale of state land leases (averaging $16 billion a year in the past 10 years).
The details are spelt out in my economic plan “Take Back Our Money, Be True First World” which is available at my website https://tanjeesay.sg
Out of 12 new cases today, 9 are from SAFRA. I reproduce below a letter from a certain Maurice Tay who points out the direct cause of the problem and who should be made accountable. (I do not know who Maurice Tay is but he talks sense and I am reproducing his letter here.)
“*Why non-essential event was given go-ahead despite DORSCON orange alert?*
Letter to People’s Association Chairman, Lee Hsien Loong and Deputy Chairman Chan Chun Sing
Dear Sir, It beggars belief that such a large scale, non-essential event was given the go-ahead to proceed despite a Disease Outbreak Response System Condition (DORSCON) orange alert in place on the 7 February. For it to be given the tag of a “private function” misleads the public into thinking it was a small family function or such when it was later revealed that the two events hosted a combined total of a few hundred people, most of whom attended singing classes under the purview of People’s Association (PA) and/or Resident Committees (RCs). On top of it, the event(s) were held in the premises of SAFRA Jurong.
I think the public would like to know if PA/RC had any knowledge of a function being organized that gathered a few hundred people in an enclosed air-conditioned environment. The attendees of this function were part of the PA/RC singing classes.
If PA/RC were not in the dark, what happened to the oft-touted social responsibility advocated by our government in a bid to contain the spread of the COVID-19 virus? As a grassroots body, where is the “lead by example” approach?
Why hadn’t SAFRA Jurong erred on the side of caution given the scale of the function in question when DORSCON orange was already in place? Even private condominiums have ceased the booking of all function rooms and bbq facilities in a bid to do their part to contain the spread. The AOG Church which had originally planned for a function to be held on the 8 February, had made the socially responsible move of cancelling the event after the DORSCON alert was raised to orange.
This, to me, is a classic case of playing Russian Roulette on the part of the singing coach(es) and whoever was responsible for letting this event take place. Well, the suspense is over and unfortunately for the larger community and our medical workers, those who chose to play this risky game lost. We now have this SAFRA Jurong case as the second-largest cluster in Singapore. It is not a game we can afford to keep playing given our limited resources.
I read this article in the Financial Times, “Wealthy Americans need not fear Bernie Sanders’s love of Nordic socialism”.
“…they are also more egalitarian, since there are fewer very poor people while the extremely wealthy own a smaller share of total national income.”
The Nordic welfare benefits are probably the best in the First World that are a key part of my proposal for a true First World society for Singapore as outlined in my economic plan “Take Back Our Money, Be True FIrst World” (click https://tanjeesay.sg).
Even before public transport becomes free from last Saturday, Luxembourg households paid only 0.6% of their total monthly expenses on bus and train fares, the lowest in the European Union where the average household pays 2.5%., Belgium 1.1%, Denmark 1.4%.
How much of the average household budget do Singaporeans spend on public transport? A much higher 3.5%.
What should Singapore do to bring First World welfare to the people, not only in public transport but in many other essential services, all without increasing any taxes or bankrupt the country? You can read about my proposals in my economic plan “Take Back Our Money, Be True First World” available at https://tanjeesay.sg
an unequal society and not a true First World country. Other First World
countries have things that we do not have. They spend more money on their
people. Their governments give back what they take from the people. But the PAP
government over-taxes and under-spends on the people. They take away one whole
chicken from the people and give us only a chicken wing. As a result, the
government accumulates huge surpluses that now exceed $1 trillion ($1,000
reserves generate substantial investment returns. But the government allocates
only a tiny proportion of up to 2% to the national budget even though they
expect to achieve a higher long term annual real rate of return of 4%. We
propose allocating the full expected rate of return of 4% to the budget as
this would still leave the principal sum of the reserves untouched. This is
what Norway does with its sovereign wealth of over US$1 trillion, giving the
full expected return to the national budget each year.
First World Welfare
A full 4% contribution for the Singapore budget would mean over $42
billion available to be spent to help the people in 2019, instead of the
allotted sum of $17 billion, and the extra $25 billion is more than enough to enable
abolish the 7% GST,
provide full subsidy for healthcare,
provide full subsidy for education (no fees for
school, ITE, poly, university),
provide cash allowances to children and the elderly
which will in turn boost the local economy and help small businesses (shops,
eateries etc ), and
lower fares of public transport.
How to Sustain into the Future
We can and must sustain this First World welfare well
into the future by safeguarding and building up the people’s long term stakes
in the country –
continue with a new SERS to counter
the declining value of old HDB flats,
make HDB flats truly affordable to
the young by not charging the cost of land, adding additional restrictions on
the resale of these new flats,
build more hospitals and schools, and
double healthcare and educational personnel,
fund career change plans of
mid-career PMETs facing career disruptions,
inspire and fund the young to realise
their dreams of creating technology giants and
support and fund initiatives of the
young to tackle climate change.
This program is estimated to cost up to $10 billion.
As it involves safeguarding the future, it should and can be funded by revenues
from land lease sales. The past 10 years of land sales had generated an average
of nearly $16 billion a year which is $6 billion more than required.
No New Taxes, Not “Raiding” the Reserves, Not Bankrupting the Country
No tax increase nor new tax is required to provide and
sustain our proposed First World welfare programmes; instead taxes such as the
GST and fees and charges for education and healthcare can be removed. Moreover,
we will only be spending the investment returns on our reserves without touching
the principal sum. Our country will not go bankrupt but will continue to have
more than the principal sum of our reserves intact that will continue to
generate returns to sustain our welfare spending.
Dual-Engine Economy: Growth & Welfare Together
We must now abandon the lopsided growth ideology of
the PAP and fire the engine of the economy on both fronts at the same time,
achieving economic growth and people’s welfare together like a true First World
society. We deserve it and can achieve it.
It is time that we take back our money and build a
true First World society.
“There is no such thing as public money. There is only taxpayers’ money.” – Margaret Thatcher, October 1983
“Take Back Our Money, Be True First World” – Tan Jee Say, February 2020