Friday, March 6, 2015

CPF Minimum Sum – Making it Meaningful

As had been pointed out before, the issue with CPF is not the increasing CPF Minimum Sum, it is inadequate retirement savings.

The CPF Minimum Sum is an estimation of the amount an average person would need to meet basic needs after retirement.  This amount is revised regularly to take into account inflation, and maybe changes to life expectancy as well.  All very sound.

But we can do better.

Instead of just being the amount that the Government will not allow you to withdraw out of your CPF account at age 55, it should be the amount that the Government will top up to, for CPF members who fall short.  Only then will it be truly meaningful.

With power comes responsibility.  Or it should.

The Government is given powers in order for it to carry out its responsibilities.  Those of improving the lives of the people; of ensuring equal opportunities regardless of background, wealth or any other personal factors; of righting wrongs; of moderating market excesses, inefficiencies and downright failures via regulations; and of income redistribution, amongst others.

In the same manner, in return for implementing a compulsory saving scheme where control of the funds lies in the hands of the government rather than the individual, it must be accompanied with the responsibility to ensure a retirement with dignity for those who put in a reasonable effort to provide for himself and his family throughout his working life.  Power and responsibility must come together in a package.

A scheme that seeks only to control but gives nothing back earns you compliance at best, and resentment at worst, never respect.


Singaporeans are not unreasonable.  We do not expect the Government to commit itself to amounts it cannot afford or that is unsustainable over the longer run.  But let the fundamentals be set right to reflect our values and our commitment to each other, as fellow Singaporeans, as a nation.  We can adjust numbers when circumstances change, but we cannot adjust trust, respect and bond as quickly.

Monday, August 1, 2011

Why “Cherry-Picking” Is Good For Commuters

Date: 1 August 2011

Transport Minister Lui Tuck Yew argues that the National Solidarity Party’s proposal for more competition in bus services would lead to “cherry-picking” of lucrative routes by multiple operators and hence be negative for commuters.

Lucrative routes are lucrative because demand is high, and more commuters are packed into each bus. “Cherry-picking” by multiple operators would mean more buses along these routes leading to shorter waiting times, less congestion in the buses and hence more comfortable rides, and more competitive pricing. With greater supply, these “lucrative” routes would become less lucrative. The “cherry” could swiftly turn into a “lemon”, forcing inefficient players out, and slowly turn into the common “apple”. Such is the magical fruit kingdom that boring people like me call the free market.

Meanwhile, the licence fee for the “lucrative” routes can be used to subsidize the operation of non-profitable routes, to ensure the continuation of these services.

Greater competition can lead to more differentiated services coming into the market to serve different levels of expectations. Only by better meeting the needs of the commuters can we persuade more of them to forego private cars and opt instead for public transport, thereby relieving the growing congestion on our roads. Public transport, with its higher passenger density, is a more energy efficient and hence greener mode of transport compared to private cars. Let us encourage its development in all the ways that we can.

It is disappointing to hear the same old reply from a different Minister. The political renewal that Singaporeans want to see is not just a younger Cabinet, but newer ideas and innovative approaches to problem solving.

Public Transport: Why the PAP and WP positions fall short of commuters’ needs

Date: 26 Jul 2011

There has been much debate over our public transport system lately. Public unhappiness over fare increases stems from dissatisfaction over the level of service in our public transport, primarily over issues of under-capacity and the lack of any alternatives for the bulk of our population.

The Workers’ Party proposes the nationalization of public transport. The People’s Action Party on the other hand advocates the status-quo. But it should be apparent that the status-quo is not working. The PAP needs to snap out of its complacency.

The WP’s proposal to nationalize public transport however would not solve the problem of under-capacity. It is unrealistic to expect state-run organizations, usually large and cumbersome, to be able to respond speedily to rapid changes in demand. We need only look at our public housing, public hospitals and polyclinics which are similarly plagued by under-supply to realize that.

What is needed then is more competition. Theoretically, we have two companies “competing” against each other in bus and MRT services. However, since there is no duplication in their area of service, commuters have no real alternatives. Thus we effectively have two monopolies.

First, we need to consider bus services and MRT services separately.

MRT Services

It is not practical to expect full privatization and competition in MRT services due to the infrastructure and huge capital required.

But partial competition can be introduced. The government can retain ownership of the major fixed assets – tracks, stations and trains - and sub-contract out the operations to private companies via tender. SMRT and SBS Transit should not have certainty of operating rights, but rather would have to tender for the rights at regular intervals, in competition with each other and with other companies that may be set up by former employees or foreign operators. Each line (North-South, East-West, North-East, Circle, Downtown, various LRTs) can be tendered out separately or bundled. Tenders will be awarded based on service levels and cost. The Government charges fares at a level sufficient to pay the sub-contractors.

Unfortunately, while this arrangement provides incentives for efficiency and cost control, capacity would still be determined by the Government and hence cannot be as responsive as private operators. It is an inherent weakness of the MRT system that capacity cannot be increased rapidly. We therefore need to rely on our bus services to be more responsive.

Bus Services

Bus services should be liberalized. We need multiple private bus operators who are smaller, nimbler and profit-seeking, and who will respond faster to changes in demand. If demand increases rapidly, profit-seeking entities will eagerly increase supply just as rapidly. Slow movers will lose market share.

Routes should be centrally managed by a transport authority, and every private operator, regardless of size, should be free to apply for licenses to ply any of the routes, making their decisions based on business considerations. Operators will either ply existing established routes or propose new ones to the transport authority. Bus services may also duplicate MRT routes to provide indirect competition to MRT services, and to meet demand in excess of MRT capacity. Capacity in bus services can be expanded far more rapidly than that of MRT services.

Let market forces determine the supply and set the fares. The government’s role in bus services should be limited to:
i. setting the standards for safety and service,
ii. managing routes,
iii. disseminating information on bus routes and ridership numbers,
iv. gathering commuter feedback, and
v. licensing.


In addition, the Government should fulfill its social responsibilities by providing the necessary infrastructure and subsidies for
i. non-profitable but essential routes (which can be funded by bus
licensing fees),
ii. full-time students, elderly and disabled, and
iii. low-income earners and families.

With this model, we can move towards a more responsive transportation sector driven by market forces, with the incentives to innovate and cut costs, while meeting our social obligation of ensuring affordability for those with lower incomes.

Tuesday, November 16, 2010

Affordability of HDB flats - A Response to Minister Mah Bow Tan's article

[This following entry was first posted at the Reform Party blog: http://votingrp.wordpress.com/ on 14 Nov 2010]

Two measures of affordability were offered by Minister Mah Bow Tan in his article “Are HDB flats affordable?” which appeared in Today Online on 12 Nov 2010. The first was the housing price-to-income ratio (or HPI), which compares median house price to annual household income, and the second was the debt-service-ratio (DSR), which looks at the proportion of the monthly income used to pay mortgages. Let us first consider the HPI. From 1990 to 2009, median household income increased from $2,296 to $4,850[1] – an increase of 111%. Over the same period, resale flat prices increased by 342%.[2] The affordability of HDB flats has certainly deteriorated very significantly over the past 19 years. It now takes a median income household more than double the time to pay for the flat.

Next, we consider the suitability of the debt-service-ratio (DSR) as a measure of affordability for national planning purposes. There are several shortcomings, the most serious being a pre-qualified sample - the DSR is calculated based on existing home owners. These are people who can afford to buy the flat. Those who cannot afford to buy a HDB flat would not have bought one and hence would not be captured by the DSR. The loan application process would also have weeded out those whose DSR would exceed the “30-35 per cent international benchmark for affordable expenditure on housing.” Under such circumstances, it would be quite difficult for an examination of the DSR to turn out with an “unaffordable” rating, no matter what the price level. For example, if good-class bungalow owners use only 15% of their income to service their mortgages, can we conclude that good-class bungalows are very affordable?

The DSR is a reasonable measure to assess if a particular person/family can afford to buy a particular property, but to use that as a gauge of affordability for the general population leaves much to be desired.

While it is true that increasing subsidies for HDB flats require some reallocation of resources, it is interesting to note that the first 3 options that occurred to the Minister for National Development are: (1) cut education budget; (2) cut healthcare budget; and (3) increase taxes. The Reform Party is happy to offer some other options for consideration: (1) cut defence budget; (2) reduce the payments made by HDB to SLA for the purchase of land to build HDB flats – to the best of our knowledge, these payments go eventually into the reserves which is not used to fund any public sector services or projects; and (3) cut ministerial salaries.

Apart from increasing subsidies, prices of HDB flats can be managed by

(1) a better management of the supply:

a) Adjusting the supply based on factors like number of marriages and immigration
b) Setting an acceptable band for resale prices relative to median income (for example, 50 times the median income plus/minus 20%), then increase supply if prices go above the band and decrease supply if prices go below. This is similar to the way MAS manages the Singapore dollar exchange rates.
c) Cutting down the waiting time for new flats by building in advance, not Built-To-Order
d) Manage any temporary excess/unsold new flats by renting them out

(2) Mortgage regulations that take into account specific factors in Singapore like the existence/non-existence of a pensions system or social safety nets. This is to pre-empt situations like retirees with no/little savings despite our CPF system because all their CPF savings went to pay for their flat.

In addition to a prudent but active management of HDB flat prices, affordability can also be enhanced by targeting specific trouble spots like upfront payment for first-time home buyers. This can be done by adjusting the allocation of subsidies.

If elected to government, the Reform Party, being keenly aware of the limitations of relying solely on a few quantifiable measurements, will strengthen our decision making process by listening more intently to the voices of the people, and qualifying our national policies accordingly.


[1] Department of Statistics – Top-line Indicators
[2] Resale price index 1990(4Q)-34.1, 2009(4Q)-150.8, source: HDB

Saturday, August 14, 2010

Reflecting on the issue of the Weighting of Mother Tongue Language in PSLE

The Education Minister Ng Eng Hen revealed in an interview that the weighting of mother tongue language in PSLE could be reduced. It provoked an instant and tremendous reaction. Teachers, parents and working adults spoke up eloquently either for or against the change. The newspapers were flooded with letters. There are merits to both sides of the argument. The subsequent announcement that the weighting would remain brought either relief or dismay to many.

The whole incident merely served to highlight the extent to which examinations has taken over education in Singapore. The conviction of the MTL teachers that a reduction in the weighting of MTL in the PSLE would lead to a significant decline in students’ desire to learn MTL spoke volumes about the state of our education. (If the teachers do not know, who would?) The letters from parents attested the importance placed on and the stress caused by the PSLE.

Personally I would have preferred that there is no PSLE, that all students proceed to secondary education without streaming, much like the system in Finland, as we have suggested in the Reform Party’s education seminar in Jan 2010. This would make much of the problems identified by the various stakeholders disappear. However, there is no point indulging in wishful thinking, since we are still some time away from our vision of forming an alternative government. So, accepting the framework as it is, some adjustments can and should still be done.

It appears as if this issue is now over, with the Government’s announcement that there will be no change in the weighting of MTL in PSLE. But can it really be over, when the problems faced by a segment of our student population still exist? The fact that MOE was considering a change in our PSLE weighting system showed that the extent of the problem is not negligible. Wouldn’t the problems continue to fester and occasionally flare up again? Should we be content that the will of the majority is served? Must it be a win-lose situation?

I can readily believe that there are many students struggling with MTL because I have seen the difference in my son’s command of the English and Chinese languages. He is going to be four years old soon. He speaks fluently in English but struggles to find the right words in Mandarin. (And his pronunciation is weird, you know, exactly like in TV shows when Caucasians speak mandarin.) I think he has a fairly balanced language environment. The maids speak to him in English, his grandparents speak to him in Mandarin, and my husband and I used to speak to him in both languages. The huge disparity in his command of the two languages has caused me to believe that maybe Chinese really is more difficult to learn.

I have never had that problem because I grew up in a household where nobody spoke English. I started learning my a b c only when I started school. When I took my PSLE, I took Chinese as 1st Language and English as 2nd Language. (Yes, they had those things back then.) Learning Chinese was a piece of cake! I was thunderstruck to realize that my son could become non-mandarin speaking if I let it carry on unchecked. So Tony and I started to speak to our sons in Mandarin and refused to understand the elder son if he spoke in English. (The younger son is not speaking properly yet.) Within a few months, his mandarin improved significantly. But I can now imagine how difficult it can be for the children if their parents do not speak the so-called mother tongue! It is really difficult to learn a language when you do not have the right language environment, and unrealistic to expect a higher level of proficiency solely on the basis of race.

I would want my children to learn Chinese, even if it has zero weighting in the PSLE, for both sentimental and economic reasons. The Chinese language is important to me, in ways beyond the PSLE. It is my first language in every sense of the word. Although three years of undergraduate studies in UK and years of working life has rendered my proficiency in Chinese to deteriorate to a rather pathetic state right now, it holds a special place in my heart that will never go away. As for economic reasons, who can be blind to the size of China’s growing economy? And India’s and Indonesia’s too? In 10 to 15 years’ time, when the current batch of primary students graduate and enter the workforce, how valuable would their command of their MTL be to them? So I can empathise with both those fighting to retain the status of MTL and those calling for the system to be changed to reflect changing demographics.

The problem lies in insisting on a one-size-fit-all system. Treating students with a MTL home environment and those without in the same manner is not workable. I also do not believe in squeezing a square peg into a round hole. If we can allow greater diversity in admission criteria in different schools, our education system can better serve the needs of different sections of the population. This can be done in a similar fashion to the Direct School Admissions where a small percentage of places in some schools can be set aside for admitting students on 3 best subject basis. Alternatively, set up new secondary schools that admit students on a 3 subject basis.

We can afford to loosen up on the uniformity in favour of a better fit for the different families that make up Singapore. Let the education system be one that strives to serve the needs of our population, not one that expects the population to conform to its rigours.

Wednesday, April 28, 2010

Statistics on House Prices

Another graph from the Minister for National Development to show that house prices have not outstripped income growth. Another careful selection of base year. This time it is 1995. The graph is presented despite the absence of 1996 income data, resulting in an incomplete and rather odd looking chart. [ Cannot find another appropriate base year is it? ]

Sigh. I could of course as someone suggested show the charts of all the different base years, most of which would show the Resale Price Index (RPI) increasing more than the median household income(MHI) , but I fear that would make me appear rather juvenile. Many netizens already know the truth. As others have already pointed out, using all the others years from 2000 to 2008 as base years would show RPI increasing faster than MHI. This can be easily proven if challenged.

And, judging from the fact that the chart presented by M for ND is a since-1995-but-minus-data-for-1996-due-to-lack-of-info chart, I will hazard a guess that using 1998 and 1997 as base years would similarly show RPI outstripping MHI. Reasonable guess you think?

And for those who clamour for longer years of data, Lucky Tan has a chart going back to 1990.

But enough of charts. My intention when I blogged about the misleading chart was to show that there are many ways of interpreting and presenting statistics. Charts for 2000, 2001 and 2006 were chosen as examples to illustrate that point, not to advocate them as suitable base years. We need to look at data more holistically. Statistics should be used to understand, not to justify.

In fact, there are more problems with the comparison of RPI vs MHI apart from the base year:

1) Other netizens have pointed out that the RPI does not take into account the differences in sizes of the same flat type over the years. As flats get smaller over the years, the price in terms of per-square-foot (psf) basis increases by more than that indicated by the RPI.

2) According to the Department of Statistics:
“Household income from work refers to the sum of income received by all working members of the household from employment and business but excludes the income of domestic helpers. For statistical purpose, a household refers to a group of persons living in the same dwelling unit and sharing common living arrangements. A household may comprise related or unrelated members. Resident households are households headed by Singapore citizens or Permanent Residents. This category includes employed households and households with no working person.”

This would mean that household income would increase without any increase in individual wage levels under the following circumstances:
a) More households with both husband and wife working
b) More working children staying with parents for longer periods due to later marriages or no homes of their own
c) Later retirement
d) Relatives without homes of their own moving in
e) Renting out of rooms to other working adults. The incomes of the tenants are included in the household income as well according to the above definition.

All of these make it difficult to understand the people’s pain if we merely look at RPI vs MHI. In fact, this creates a vicious cycle whereby if prices increase, making homes more unaffordable, we will have more people crammed in each household therefore pushing up the household income, which then seemingly justify the higher prices!

Hopefully DOS will start to release / collect data on median income for individuals and use that for comparison instead. DOS currently publishes data on average income of individuals, but average values can be skewed by extremes and hence would not be ideal.

I am happy to read that HDB will be looking at shortening the waiting time for new flats by moving away from the BTO scheme. Much of the frustrations of home buyers arose from the fact that waiting time for new flats is too long and prices of resale flats are too high, making them feel sandwiched between a rock and a hard place. The long waiting time also channels demand towards resale flats, applying upward pressure on prices. If this can be done, it will make the lives of many young couples easier.

Friday, April 23, 2010

2nd Walkabout in Bishan-Toa Payoh

Last Sunday morning 18 Apr we held another joint walkabout with SDA at Bishan. The experience this time round was significantly different from previous walkabouts. The residents here were a lot more forthcoming and in fact eager to enter into discussions and debates.

One resident in particular left a deep impression. I asked him if he would vote for the opposition. He replied in Mandarin and I shall try my best to translate: The PAP managed the economy very well, but over-emphasized material achievements, fostering a tensed and highly competitive environment, which is detrimental to the building of a caring society. Although this is a problem for the society as a whole, it would be better if the government could provide some support. If the opposition can handle the economy well and at the same time help foster a more caring and compassionate society, I will vote for the opposition.

This is one of the best answers I have heard. I am sure he spoke for many. While we develop our economy, we need also to pay attention to our emotional and moral developments. They need to complement each other for a more stable and sustainable progress. The strong helping the weak is not only for the benefit of the weak, but is beneficial to the strong as well.

Before I met this resident, I had encountered another woman who asked me point blank:”So what benefit can you give me? If there is benefit then I vote for you lah!” While my rational mind tells me there is nothing wrong with this question, and in fact only to be expected, it was spoken with such self-assuredness, such absolute certainly that it is perfectly legitimate to bargain thus with her vote, that I was saddened. Thank goodness for this other resident who brightened up my day again.


四月十八日,我们与新加坡民主联盟一起到碧山拜访选民。

这一次的经历与之前有显著不同。这儿的居民比较积极地与我们交流讨论。

有一位居民的谈话尤其让我影像深刻。我问他会不会投反对党一票, 他说:“人民行动党在经济上做得很好,但太强调物质上的得失,使得人民精神紧张,相互之间竞争很强烈, 没有友爱精神。虽然说友爱精神是社会的问题,但如果政府能加以支持会更好。如果反对党可以同样把经济掌控好,又能鼓励人们有爱心,互相帮助,那我就会投反对党一票。”

这是我所听过最好的答案。相信他说中了许多人的心声。在经济发展的同时,我们也应同样注意精神上的发展,两者相辅相成,才能更稳健。帮助弱小,不单是为了弱小,同时也会让强者得益。

在遇到这位仁兄之前,有一位太太问我:“你能给我什么好处?有好处我就投给你。”虽然她说的没什么不对,但如此理直气壮的交易,还是让我有些小难过。亏得这位仁兄一番言语让我恢复了精神。