Comments from Chris K’s first instalment, ‘Raiding The Lost Ark’ http://www.tremeritus.com/2014/12/01/temple-of-doom-raiding-the-lost-ark/ further demonstrate how the government combined its dominant ownership of scarce land resources and the use of the CPF funds to essentially make paupers of a large segment of Singaporeans. This is seen in the high proportion of Singaporeans’ income committed to mortgage payments and insufficient retirement funding.
Using IMF records to show what the government has never reported to citizens, Chris revealed the government’s continued and massive reserves accumulation of mind-boggling proportions: “$1.62 cash surplus for every $1.00 of GDP growth” (fr 1990 to 2012).
That revelation begs the question, how is that spectacular performance possible? How done? Are Singaporeans so blessed with supernatural political leadership, talents?
Adulteration of a good thing
@BK provided the historical background.
“Ngiam Tong Dow was responsible for drafting of the Land Acquisition Act for Goh Keng Swee the then Finance Minister. He said that the core principle of the Act was that land could only be acquired for a clear public purpose: infrastructure, roads, expressways, industrial estates, hospitals, schools and ‘Low Cost HDBs.’
He then warned that the Act could be abused and degenerate into expropriation.
Has the Singapore Land Acquisition Act lived up to its purpose of ‘Low Cost HDB’ and public good? And how does this contrast with the Asset Enhancement Policy of PAP.”
The spectacular feat appears to result from the adulteration of the Land Acquisition laws original intent that benefitted citizens via less-than 3X annual salary affordability of public housing to one that is almost purely rent-seeking. Worse, in the name of self-reliance and fiscal prudence, the PAP-controlled parliaments piled on the burdens to our shoulders by extracting more money from our CPF savings via low, inflation-deficit interest rates, deceptively-named compulsory Medisave, Medishield and Retirement Accounts.
Chris pointedly summarized the outcome as “government rich, people poor”.
Repentance is not In PAP’s DNA
To be fair, policy-formation and execution are no strolls in the park – and the map is not the territory. However rational, attractive or effective a policy appears on paper and however positive the outcomes originally projected and to be measured, there will always be outcomes that have originally not been projected or considered for measurement.
We must acknowledge the original PAP leadership’s sincerity in achieving for We the Citizens the less-than 3 times annual salary costs of HDB flats pre-1990. Unfortunately, the good done unravelled post-1990, when Goh Chok Tong took over the premiership, he formally entrenched 2 policies, namely; asset enhancement (AE) and foreign talent (FT) acquisition.
@BK further posed the question,
“When the surplus generated by our government is primarily from land sales, which is really a rent-seeking activity, how much of its philosophy then coalesce about such a scheme? Is this philosophy part of the economic policy that induces uncontrolled FTs influx?”
In other words, is welcoming more foreigners under the guise of global competition for and attraction of talent meant not just to grow GDP the easier way (addition of manpower instead of the more time/resource-consuming, difficult route improving productivity) but also to fill up the government’s coffers since more headcounts mean increased demand for housing – at higher prices given SG’s paltry 770 sq km real estate? This has, of course, been marketed to us as AE.
Even LKY himself spoke of AE in glowing terms, comparing HDB prices with apartments in KL, telling his Tg Pagar voters not to sell their flats (without talking about how then the daft voters are to finance their retirement). He also conveniently left out how their as-daft future generations are going to buy their flats priced stratospherically to feed government’s coffers.
Unless purposefully blind, after more than 3 decades of AE and FT policies, the unprojected and unintended outcomes in the form of over-priced, unaffordable HDB pricing and insufficient retirement savings for a significant segment of We the Citizens are now staring us all in our faces.
With outcomes as serious as these two, the government still insist the AE & FT policies that make them look good at the expense of a significant number of citizens are not fundamentally flawed. How’s that? Well, no one has admitted to the flaws despite the PAP Sec-Gen’s self-righteously, shamelessly claiming,
The PAP is also a party that, when faced with problems, acknowledges them publicly and deals with them. We owe a responsibility to the people – to be honest, to be transparent, to be accountable.
Is a solution possible?
In the absence of honest, transparent, accountable – and humble – leadership to address the deficiencies already showing up for years and projected to get worse, it’s left to us to try to inform fellow citizens who are not yet convinced of those flaws for whatever reasons.
We must show and convince the unbelievers, mostly economically better-off ones and those seized by fears of change, that as a result of the PAP’s mismanagement and hubris, a painful period of adjustment cannot be avoided. The better-off ones have valid concerns about any kind of ‘wealth transfer’ or ‘soaking up the rich’ to repair the socioeconomic damage.
Given our arguments that the country’s surplus is humongous, the answer must then lie in the same humongous pile sitting as our reserves. A quantified solution such that the reserves must now be drawn on for this rainy day that it is intended for. We must show up PAP’s fear-inducing higher taxes option as a non-solution, one patently false.
If we can prove that, then the current PAP leadership will be exposed as either incompetent, not quite up to the job – or plain liars. Chris promised that he would come up with the numbers (as much as can be reasonably estimated from IMF reports) to propose a basic state pension that is affordable to alleviate our retirement shortfalls – without raiding the CPF Ark.
We shall soon see. Meantime, others with such understanding of the macro picture should speak up.