Recession over: Really? Time to increase fees?
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Recession over: Really? Time to increase fees?
By Leong Sze Hian
I refer to the reports “MM Lee warns of dangers of slow growth if productivity does not increase” (CNA, Feb 18) and “S’pore income gap narrows” (ST Breaking News, Feb 19).The former article reported MM Lee as stating that “The island state has a growing economy, increasing real incomes, better homes which are rising in value, and citizens are generally better off”.
Well, the next day, we had the news that the economy contracted and nominal and real incomes shrank.
According to an Occasional Paper released by the Singapore Department of Statistics (DOS) on February 19, under the section “Key Household Income Trends, 2009”, household income from work declined in 2009. The decline in household income from work reflected the weaker labour market conditions in 2009, which saw higher unemployment and lower wages.
It was further stated that “Median monthly household income from work among all resident households declined by 1.9 per cent from $4,950 in 2008 to $4,850 in 2009. After adjusting for consumer price inflation in 2009, median household income from work saw a decline of 2.5 per cent”.
On the same day (Feb 19), the DOS released a report on the Performance of the Singapore Economy for 2009, which said that “Singapore’s economy contracted by 2.8% on a quarter-on-quarter, seasonally adjusted basis, in 4Q2009″, and that “the economy contracted by 2.0% in 2009”.
So, were we in a way overly optimistic when “Singapore declared the recession (was) over in November last year”, according to the CNA article “Singapore economy to grow up to 6.5% this year: govt” dated 19 Feb?
It was announced by the press that “in the past few months, the government has taken further steps to widen the differentiation between citizens and Permanent Residents and to slow down the inflow of foreigners”.
Furthermore, on the same day (Feb 19), it was also announced that Polytechnic and Institute of Technical Education (ITE) fees will be increased from April. The press reported that “The Government decided to keep fees at the status quo last year because of the economic recession but this year, as the economy turns, it is timely to raise the fees” (“Fees for poly and ITE students going up in April”, ST, Feb 19).
If we really want to widen the distinction between Singaporeans and permanent residents (PRs) and foreigners, why can’t we just raise fees for PRs and foreigners, instead of raising fees for Singaporeans too?
Since we want to take on the “challenges such as increasing productivity and raising skills across the board” and the government has acknowledged that “every worker also has to be re-skilled, re-trained and re-educated to achieve higher standards of capabilities”, why are we raising vocational education fees so soon before wage cuts are restored?
In this connection, another example is the reduction of the subsidy by five per cent for PRs in Class C wards in hospitals from next year, and by another five per cent the following year.
Actually, a five and 10 per cent reduction in subsidy from the current 70 per cent subsidy, translates to a 16.7 and 33.3 per cent increase in medical fees, respectively.
With regards to the assertion that “we always give preference to our own citizens”, with the total increase at 100 per cent, from the former 80 per cent subsidy to 60 per cent eventually, many Singaporeans may bear the brunt of the increase if they have PR or foreign spouses, dependents or employees.
So, why not increase medical fees for PRs and foreigners, but reduce fees for Singaporeans instead of maintaining the status quo?
So, incomes are down, GDP has contracted in the last quarter, but fees are going up.
Let’s hope that other fees and costs will also not start to go up, citing the reason that the economy is recovering.
Those who may suffer the most when costs go up and incomes go down may be the poor.
On the same issue, there have been media reports that charities need more donations.
For example, the National Kidney Foundation (NKF) had a budget deficit of $0.9 million, its biggest shortfall in 10 years, for the 2008/2009 financial year ended in June (“NKF to dip into reserves of $270m: Charity hit by economic downturn and drop in donations”, ST, Nov 29, 2009).
According to its annual report for 2007/2008, the surplus was $9 million, and the surplus for 2006/2007 was $19 million.
Does this mean that the 2007/2008 net surplus of $9 million alone, not counting the 2006/2007 surplus of about $19 million, may be enough to cover about ten times or ten years of the current year’s $0.9 million deficit?
There has been a significant reduction in investment income from $11.6 million in 2006/2007 to $3.2 million in 2007/2008, and to just $80,000 now.
What has NKF been investing in such that its investment income can fall from $11.6 million to $80,000, a drop of more than 99 per cent in two years?
NKF has $270 million of reserves now, compared to $262.8 million in December 2005.
When the NKF saga broke in 2005, one of the issues which riled Singaporeans was that it had some 30 years or so of reserves instead of the three years that the public was led to believe.
Its 2007/2008 report states that “After adjusting for inflation, the existing surplus fund is expected to last for only seven years”.
Now, it says that its current reserves of $270 million can only last for five years or so.
I am somewhat puzzled by the figures — if $262.8 million in 2005 was deemed to be about 30 years of reserves, why is it that $247 million in June 2008 was expected to last for only seven years, and now $270 million for just five years, despite cost-cutting measures like giving cubicles instead of rooms to managers?
How does the NKF fare in the light of the new guidelines for charities on the accumulation of reserves?
Despite the current year’s $0.9 million budget deficit, is NKF still the largest charity with the most reserves, and the most number of years of reserves?
Finally, with regards to the statement “Without growth, Singapore will not be what it is and the key to our growth is a government taking right decisions and labour unions, employers, and the government working together. No other country in the world has got this combination”, let the following statistics speak for themselves:
- There are 24,000 needy residents in just one CDC — North East Community Development Council. How many needy in total in Singapore?
- Singapore’s workers continue to lead the pack when it comes to the number of hours they put in at work, according to a report by the International Labor Organization (ILO). The report puts them at the top of 13 economies in the group’s Global Wages Report for 2008-09, surpassing even the notoriously hardworking Japanese and Taiwanese.
- Only 60 per cent are projected to have at least $67,000 in their CPF in 2013, according to a CNA report.
- 60,000 flat dwellers were given financial counseling by the HDB as a result of having difficulty in paying for their flats in 2008, and 30,770 flat-owners were in arrears over three months as of September 2009.
- According to the Department of Statistics’ Household Expenditure Survey released in December, the Average Monthly Household Income by Income Quintile for 2008, was $1,274 and $3,476 for the 1st–20th and 21st–40th quintiles respectively.
- 105,965 households earn below $1,000.
- 116,092 households earn $1,000 – $1,999
- Yhe bottom 20% of households’ monthly income declined by minus 1,4 per cent per annum in real terms from 1998 to 2008, and the 21st to 40th quintile of households’ income increased by only 0.9 per cent (2.3 per cent increase less 1.4 per cent inflation) in real terms.
- The unemployment rate for cleaners, labourers and related workers was the highest across all sectors in June 2009 at 8.3 percent, according to the MOM’s Workforce 2009 report released last year.
- Part-timers’ median income in 1999 was $600. The increase for the last 10 years was only $20, or an annual increase of only 0.3 per cent, without adjusting for inflation. And it is important to consider that a possible reason for the $20 increase may be that a part-timer is now defined as one working 35 hours or less, instead of 30 hours.
- 401,600 resident workers earned less than $1,200 a month as of June 2009.
- The number of children applying for the Straits Times Pocket Money Fund reaching an all-time high of 11,642.
- For the poorest 20% of households, their Expenditure at $1,760 in 2008, was 38% more than their Income of $1,274.
- Singapore was ranked very high at No. 10 in Mercer’s 2009 Cost of Living Survey.
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