Budget: A Plague on Both Your Houses

In Political economy, Political governance on 27/02/2012 at 4:22 am

(Or “Budget: Missing the point”)

I think the government has “got it”, more or less, in the overall thrust of the Budget. More below. But I’m annoyed (and sad) that it still hasn’t “got it” when it comes to helping the poor. I like the theory behind the GST Voucher for the poor (it helps make the tax on consumption less regressive). But like Workfare (which I support in theory), it is flawed because the poor need money both now and in the future, but both Workfare and the GST Voucher focus on the future.  I’ll leave it to TOC’s Leong Sze Hian to describe the problem.

“A new GST voucher will be given to help particularly lower-income and elderly Singaporeans, comprising three components – cash, Medisave top-up and U-Save.

‘So, you pay for your GST increase in cash, but you get the bulk of it back not in cash, but as Medisave top-ups which you can only use for medical purposes, and U-Save which helps you to pay for what has historically been generally increasing utility bills.”

A wicked, mean tot. Could one of the reasons for putting the money into CPF accounts rather than pay cash be to lessen the cost to the government? The real value of the cash in the CPF accounts are steadily and steathily eroded by inflation. With the Medisave account paying 4%, and the ordinary account 2.5%, and inflation at juz below 5%, could the government be hoping that inflation reduces its headline cost by the time the money is withdrawn? Even if inflation returns to the 2% range, the real cost to the government is reduced. As I said, a wicked, mean tot that would never occur to a PAP supporter or a journalist in our constructive, nation-building local media.

But I have to reseve some irritation for the refusal of usually rational bloggers to recognise as a Bloomberg report puts it, “Singapore Shifts Priority From Growth to Curb Income Inequality” . At best, they say very grudgingly, “OK BUT …” 

Following the removal of deadwood from the cabinet, and the building of more public apartments despite a forecasted economic slowdown, the government has moved to address, by way of more than words, four other “toxic” issues that make S’poreans angry: the sheer volume of FTs flooding the streets, the use of FTs to keep wages from rising, congested public transport and growing income disparity.

Now whether the measures announced in the Budget are sufficient to reverse the problems that these four issues have caused, I don’t know. I suspect not, and more has to be done. Nor can anyone be sure that this isn’t all Wayang.

But a step has been taken. Whether the step is small or big, only time will tell. Whether more steps will be taken, again only time will tell. But a step has been taken, and this should be acknowledged by those of us who are not aligned with any of the opposition parties, whose reason or justification for existence, is rightly, to oppose the government. 

Those of us who who are not aligned with any of the opposition parties should not be professional critics of the government. Which reminds me, I found Lucky Tan’s “Threats of Defamation Lawsuits : Not a way to win over netizens….” amusing because maybe the PAP thinks that trying to make friends on the internet is a waste of time given its failure to make the internet a more PAP friendly place. If so, the likes of Zaqy and Baey could find their cushy S$15,000 monthy stipends history at the next general election.

And if it’s all Wayang, we will soon know, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.” And come the next general election, the PAP will pay a heavy price.

  1. […] 2012 – Diary of a Singapore Cabby: Free Lunch – Thoughts of a Cynical Investor: Budget: A Plague on Both Your Houses – TOC: The $1.1Bn quick fix – Yawningbread: The S$1.1 billion question — let me say it again – […]

  2. Frankly, the PAP government does not need opposition to sabotage it. It simply likes to sabotage itself. Consider the fact that the Finance Ministry recently announce that investors in gold no longer have to pay GST for their transactions. An amazing concession when the poor have to pay up first and then hopefully wait that they are qualified to receive GST vouchers.

    Let’s not forget that the middle class, which have no such vouchers in the first place.

    As for the foreigner issue, I see it as very simple to set the issue straight. Employers always claim that they cannot get Singaporeans or PRs to apply. This is so simple – the government should get them to put their payroll where their mouth is and simply fork out a flat 20% of first $5,000 of their foreign employee’s monthly salary as the levy.

    Even higher than employer’s contribution to Singaporeans and PR! No issue if you cannot get Singaporeans/PR in the first place right?

  3. Do you see that CPF is no longer a retirement savings fund? They looked at the size of CPF and decided to shift the cost of medical care to the fund. Now CPF is used to finance your HDB flat and pay your medical bills, except your retirement! They are pulling out all stops to prevent you to withdraw it for retirement.

  4. Systemic policy failure. Though I will keep an open mind, I remain skeptical that a leopard can change its spots and the PAP can change its nature.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: