Hazel Poa

Why “Cherry-Picking” Is Good For Commuters

2011-08-01T14:28:00.000+08:00

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

2011-08-01T14:26:00.002+08:00

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.

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

2010-11-16T21:12:00.002+08:00

[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

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

2010-08-14T10:14:00.000+08:00

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.

Statistics on House Prices

2010-04-28T11:00:00.001+08:00

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.

2nd Walkabout in Bishan-Toa Payoh

2010-04-23T10:39:00.000+08:00

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。

Public Transport Fare Changes

2010-04-22T13:32:00.005+08:00

The PTC had just announced an overall reduction of 2.5% in public transport fares, in accordance to the fare formula. The adjustment to public transport fares is implemented together with a change in fare structure to that of “Distance Fare” structure. Under the new fare structure, “Commuters travelling the same distance will pay the same fare for the same type of service, whether they travel direct or make transfers.” (PTC Press Release http://www.ptc.gov.sg/QoSnFares/doc/Fare_revision_2010_news_release.pdf , para 6)

Saliant features of the new bus fare structure compared to the current:
1) Adult fares - increased rates for both minimum and maximum fares, but transfer penalty removed. So those taking direct buses pay more, but those who transfer pay less than before.
2) Senior Citizen and children - those who travel short distances or transfer pay less, those who travel long distances pay more

Recall the announcement made by Second Minister for Transport Lim Hwee Hua on 28 Mar 10 on the “review” of long distance bus services and the pieces start to fall into place.

According to the fare formula*, the fares must be reduced by a minimum* of 2.5%.

So if I have to reduce fares by 2.5%, and I want to cut down on long distance bus services, how can I implement these two measures in the best possible way?

Let us assume for illustration’s sake that one third of the public transport users use the long distance bus services (Group A), while the other two-thirds (Group B) travel short distances or make transfers.

Option 1:
Stage 1:
Reduce all fares by 2.5% across the board. All are happy.

Stage 2:
Remove long distance bus services and the people in Group A cry foul over the increase in bus fares and inconvenience due to transfers. Public sympathy is probably on the side of the affected users.

Option 2:
Stage 1:
Introduce a new fare structure such that
(i) fares are the same regardless of whether users travel direct or make transfers
(ii) the fares for Group A increases, but that for Group B decreases in such a way that overall loss in revenue is still 2.5%.
Being reasonable people who recognize that sometimes policy changes benefit others at their own expense, and since two-thirds of the public transport users benefit, Group A is silent / muted over their own increased costs. Group B is happy.

Stage 2:
Remove long distance bus services. Group A may be unhappy over the inconvenience, but can’t cry foul over increased cost because there is none at this stage. The cost increase had already been done in stage 1.

Well, excellent manoeuvering. Despite knowing what is coming, there is no way out. My sympathies to group A.

But then again, perhaps I am being paranoid. Perhaps the removal of long distance bus services will not happen and this change in fare structure has nothing to do with that.

For, according to the Press Release, Mr Gerard Ee, Chairman of the PTC, said, “With the new fare structure, commuters will have more choices and greater flexibility to decide on the best route to reach their destination and can choose to make transfers without being penalised. For example, instead of waiting for a direct bus, a commuter can hop on to the first bus that comes along and make other bus/rail transfers along the route, thereby shortening their total journey time.”

So you see, we are going to have “choices” of direct buses or transfers.

=================================================
Footnote:

* Maximum fare adjustment = Price Index – 1.5%
Price Index = 0.5CPI + 0.5WI; 1.5%: productivity extraction set for 2008 to 2012.
CPI: the change in Consumer Price Index over preceding year
CPI = 0.6% in 2009.

Wage Index (WI): the change in Average Monthly Earnings (Annual National Average) over the preceding year, adjusted to account for any change in the employer’s CPF contribution rate
WI = -2.6% in 2009.

According to this formula, maximum fare adjustment = -2.5%, i.e. fare adjustment
should be -2.5% or below. Hence, 2.5% reduction is the minimum reduction required, not maximum reduction allowed as a statement on the PTC website (http://www.ptc.gov.sg/QoSnFares/fr_overview.html) seem to imply. Somebody should correct that misleading statement. Unless the PTC mistakenly believed 2.5% to be the maximum reduction allowed by the formula, in which case it is quite worrying.

Housing Prices Vs Household Income – Alternative ways of viewing the statistics

2010-04-07T18:53:00.015+08:00

With reference to today’s Straits Times article where Mr Mah Bow Tan said it is not true that HDB resale prices have outstripped income growth. He supported his statement with the following statistics:

This is the data behind the graph:

I would like to point out that the choice of the base year can be very significant.
Let’s see what happens when we change the base year to 2000 and 2001:

And if we look at it since the last General Election:

Resale prices up by 45.6%, while median household income is up 21.3%.

Choosing a suitable base year to support your conclusions is quite a useful trick that we should all learn.

Why should we vote for the opposition?

2010-04-05T15:28:00.002+08:00

The power situation between the ruling party and the voters is a balancing act. If a ruling party secures an overwhelming majority, the balance of power tilts towards the ruling party. If the ruling party has only a slight majority in Parliament, and there is a viable opposition sitting in the wings, then the voters become more powerful.

If you are feeling helpless over some things you wish you could change, if you want greater power over your own life in your own country, vote for yourself.

I want greater power for voters than we have currently. There are two things we need to do to bring that about: 1) reduce PAP’s majority in Parliament and 2) build up a larger and stronger opposition. Although interdependent, the first needs to be done by the voters, the second by the opposition. You do your part, and we will do ours. [If you want to come over and help us do the latter, you know we will roll out the red carpet.]

Joint RP-SDA Walkabout in Bishan

2010-04-05T15:26:00.001+08:00

Yesterday we had a walkabout session together with SDA.

This is the first time I met Mr Chiam and his long time supporters in person. During the walkabout, it was evident there was a lot for respect and support for Mr Chiam on the ground.

I also had the opportunity to chat with some of the SPP members, people who have supported Mr Chiam for 20 to 30 over years. These uncles are warm-hearted, helpful and ever hopeful. Although we are not in the same party, they extended a warm welcome to us newbies, and eagerly shared experiences. Their passion and steadfastness is totally awesome. I have only joined the opposition for a few months and already I am feeling the strain and demand on my time, managing a business, being the mother of 2 boys, and party activities. Yet these people have walked this path for more than 20 years! What kind of mental strength, conviction and compassion must there be for such perseverance?

I am very glad we held this joint walkabout. There is much I can learn from them.

HDB flat sales proceeds and CPF

2010-03-29T12:41:00.002+08:00

According to an article from Channelnewsasia.com (reproduced below), at a forum organized by REACH, PM Lee announced that the government “is exploring how it can further tie a person's CPF to the purchase and sale of an HDB flat”. The implication seems to be that sales proceeds from HDB flats will be returned to CPF.

I have two questions.

“It is a growing trend that has got authorities concerned: Home-owners selling HDB flats to pay off debts, only then to ask their MP for help in getting a rental unit.”

So, if they do not ask their MP for help in getting a rental unit then the authorities would not be so concerned?

“Prime Minister Lee said this goes against the aim of these homes as assets for life.”

So are we to now understand that it is more important to preserve the the government’s aim than it is to allow the indebted person to clear his debt and start afresh?

Somewhere along the line I seem to have lost my ability to understand the government’s rationale and priorities.

I think I would be better able to understand it if the rationale had been that there is too much buying and selling from people trying to extract cash out of their houses and getting fresh loans for the next, and thus this measure is to prevent them from increasing their indebtedness. Although I would have preferred less government intervention, but at least it would have been understandable. But to do so to prevent a debtor from selling his home to clear his debt boggles my mind.

Are we down to treating symptoms only? Is this scheme going to be accompanied by some other schemes to help the indebted person sort out his financial predicament?

Am I old-fashioned to think that elected representatives are elected and paid by taxpayers to help the people they represent? Is this the help we can expect when we are down?

How is the HDB flat an asset when it cannot be utilised as we will? Private properties can be sold to repay debts but not HDB flats?

What about foreclosures / mortgage debts? Would banks still have first charge over CPF? Does this mean that sales proceeds from the sale of HDB flats can be used to repay bank loans but not other debts?

It seems I lied when I said I have two questions.

===============================================================================
From : Channelnewsasia.com
Title : Govt to explore ways to increase use of CPF for buying HDB flats
By : Hoe Yeen Nie
Date : 27 Mar 2010 2131 hrs (GMT + 8hrs)

SINGAPORE: The government is exploring how it can further tie a person's CPF to the purchase and sale of an HDB flat.
The aim is to strengthen the message that property is an asset for one's old age.
Prime Minister Lee Hsien Loong said this at a forum organised by REACH, the government's feedback unit.
It is a growing trend that has got authorities concerned: Home-owners selling HDB flats to pay off debts, only then to ask their MP for help in getting a rental unit.
Prime Minister Lee said this goes against the aim of these homes as assets for life.
"When we help people to own a home, it's really for you for life," Mr Lee said. "When you're not so old, and you've bought the house, and now you see that the pot of gold is down there and you ignore the 'please don't break the glass sign' and you break the glass and take the money out straightaway, then what happens to you? Or more importantly, your children and your dependents? Where do they go?"
Hence, the government wants to strengthen the CPF route in the buying and selling of flats.
"Like what we've been doing with the Additional Housing Grant - that grant we give you into your CPF, you can use it to buy a house," explained the Prime Minister.
"If you sell the house, the money goes back into the CPF. So if you're buying another house, you can use that for another house. If you're not buying another house, the money is there for your old age."
On tackling income inequality, the Prime Minister said the point was not to measure the size of the gap, but to look at how the poor can be made better off.
Access to a good education and a high rate of home ownership are two of the best things the government has done.
However, Mr Lee noted there are some people who will be left behind.
"And my advice is, please try to help yourself. And particularly, please help your children to break out of this cycle," he said. "The government will help them, but you must help them too."
Said Dr Vivian Balakrishnan, Minister for Community Development, Youth and Sports: "It's not just about dollars. It's how you deliver the dollars, how you deliver assistance so that people make the right decisions for themselves and their children.
"If you were a poor person, anywhere on this planet, Singapore is the one place where you will have a roof over your head, where you will have food on the table. Even if you can't afford it, we will have meals delivered to you. You will get healthcare.
"Do not lose sight of the fundamentals. And I am confident that we have done our duty for the people who need our help."
The hour-long dialogue also saw questions on the teaching of the Chinese language, and more help for singles.
In response to a question on casino entry fees, Mr Lee said the aim was not to prevent Singaporeans and permanent residents from gambling. He added that gambling was not harmful if seen as a form of entertainment, but it does become a concern when people get addicted.
The dialogue session is part of a forum on securing Singapore's future.
- CNA/yb

Property Prices

2010-03-26T23:59:00.006+08:00

If HDB flats are affordable because the average HDB owners pay less than 30% of their household income as mortgage payments for their homes, then bungalows in Singapore are also affordable because the average bungalow owners pay less than 30% of their household income to pay for their homes.

No, I do not have the statistics on what % of their income bungalow owners pay in mortgages, I was merely trying to illustrate the invalidity of the above argument.

The govt has immense influence over the property price levels in Singapore. It claims it cannot control resale flat prices. That is only true if we are looking at individual transactions. But the general price level of resale flats is largely determined by new HDB flat prices. New HDB flat prices form the base for all property prices. So how does HDB price its new flats? It is based on resale prices. Exactly how, I have not been able to discover. So I shall assume that here that new flat prices is based on resale prices of similar flats in similar locations minus a fixed quantum or a percentage discount.

But what if this discount is less than the resale premium that the market is willing to pay? For example, if buyers are willing to pay $80k more for resale flats because they can get it immediately and have greater choice over the location , floor level etc, but the discount factor for pricing new flats is say $50k, then this would cause a price spiral.

Illustration:
Period 1: new flat prices $200k, so resale prices $280k
Period 2: new flat prices adjusted to $(280-50)k = $230k, so resale prices climbed up to $230 + 80k = $310k,
etc
I suppose this will carry on until the resale premium shrinks to the level of HDB's discount factor before some form is equilibrium is atttained. But it is the market that adjusts to HDB, not the other way round.

Ideally, home prices should move in tandem with wage levels. Unfortunately, property prices are subject to many other forces and do not always track wage movements. But since the govt has absolute control over new flat prices, it should price HDB flats based on wage levels rather than resale prices, thereby providing greater stability to price levels. For example, 3 room flats could track the 30th percentile wage level, 4 room flats the median, etc. And the income ceilings for each type of flat could also track a benchmark wage level.

If we continue to allow property prices to outstrip wage growth, we will see our future generations having to fork out a larger and larger proportion of their income for housing, and life will get progressively harder.

Resume blogging

2010-03-24T15:28:00.003+08:00

I have not posted anything on my blog for a long time, though I have continued penning my thoughts offline. The reason was because my last post on the homeless issue seemed to have been picked up in several quarters, and concerns arose on whether my posts would be taken as the official position of the Reform Party. I deliberated over whether I should stop blogging or clear the content with the party before posting. The latter, frankly speaking, is something I will not like to do. But then, life is not always about my own personal likes/dislikes. The irony of becoming gagged or muffled upon joining a political party is not lost on me either. And so I mulled over this for a long time. Yes, I know 2 months is a long time to mull over this, but I am by nature a cautious person, and I wanted to be sure. [And yes, I know the question this begs asking is “If you are so cautious, why did you join an opposition party”. Ahh, the answer to that question is so complex, it would be like trying to tell my whole life story, and I am not about to commit political suicide by boring netizens to death. Instead, I shall attempt to give interested persons the means to draw their own conclusions, by writing more diligently on my blog.]

I place the blame of my previous dilemma squarely on Kor Kian Beng’s shoulders. [Kian Beng , if you are reading this, I am only half joking.] A press release from the party was sent to the Straits Times about our Education Seminar and a brief description of the speakers. I admit I totally did not see what was coming. I was naively expecting publicity on the education seminar and marveling at the support shown by the ST towards this event. The resulting article was all about scholars joining the opposition, and not a word about the seminar appeared. What an effective lesson on newsworthiness that was. I shall not make the same mistake twice.

Before the article, I was expecting to start my new journey in obscurity, taking my time to learn the ropes, for I feel I am but a baby in the new world that I have ventured into. Life seldom goes according to plan does it? Rightly or wrongly, because of the article, I have felt compelled to accelerate my learning curve, and it is a lot more work than I had anticipated. There is so much information that I need, but no easy way of finding it. Pouring through the Hansard required all my determination to keep at it. Sigh, fictions are so much easier reads. So please, anyone out there – journalist, researchers, librarians, students - who knows of any useful and reliable resources accessible to individuals, do let me know.

Justin told me I should not allow myself to be rushed just because of that article. But if there is one lesson I learnt very much to heart in my 17 years of working life, it is the importance of managing expectations. That article has raised expectations that I must recognize and take into account in my decisions. In any case, it is not pushing me into a path I do not wish to take, merely hurrying me along.

Hence the decision to continue blogging. This will be my way of managing expectations. What I am, what I am not, what I believe in, what I hope for, let it be out in the open way before any decision needs to be made. As indicated in my revised header, all opinions expressed here are my own, not to be taken as the Reform Party’s official position.

Please do not presume anything just because I was a scholar. It only meant I was very good in mathematics (and that is something I will unashamedly admit, I am very good in mathematics and modesty can go take a hike.) But whether I will be any good as a politician, please keep an open mind.

I have found the cyberworld to be a totally different world. What I see and hear on the net, and what I see and hear in my physical life, from friends, relatives, colleagues and people I meet on walkabouts form two totally different pictures. It would therefore be dangerous to start to believe that the cyberworld is reflective of the real, but I have found it a perfect environment to put one’s ideas under scrutiny. Nobody is going to hold any punches. If there are holes, somebody will find it. What better place to train yourself to think and write with discipline?

I am all in anticipation.

Homeless and homeless-to-be

2010-01-29T22:36:00.004+08:00

Over the past few weeks, I had become involved in some activities organised by TOC to visit the homeless, bring some gifts and listen to their personal histories. It was an eye-opener.

Through these outings and talking to other participants, I learned that all the homeless shelters in Singapore are packed. There is no room for more. HDB rental flats had a long waiting list with a waiting time of about 2 years. Hence the "latecomers" started camping at the beaches.

And here they encounter problems with NParks regulations. To pitch a tent in the park, a permit is required. Each person is allowed to book up to 8 days each month. If anyone is found to be camping without a permit, he will be fined and ordered to leave. If anyone is found in the tent whose name was not in the permit, the permit applicant is blacklisted so that he can no longer apply for any more permits. So where are these people to go? That does not seem to be anybody's problem except the homeless themselves'.

Not all of the homeless are jobless, some are still holding jobs, but the pay is too low for them to buy / continue paying for a flat. In one case, the husband had a job, a night shift job, and he had to give it up because he could not leave his wife in the park alone. Once you are homeless and jobless, it can be very difficult to get back on track. How do you apply for jobs, without an address/telephone number where you could be reached?

But TOC had published several articles on this before, and hence I shall not dwell too much on the same case.

Recently the appalling situation has come closer to home. A friend is in immediate danger of becoming homeless due to her divorce. I could not believe it at first. She has custody of her children, so they do form a family nucleus, and they are still paying their mortgage, so I could not understand why HDB is ordering them to sell the flat. I called up HDB to seek clarification. HDB explained that she and her ex-husband co-own the flat, but due to the divorce, HDB cannot allow them to continue to co-own it. Hence, either the husband or the wife must buy over the share from the other party. But unfortunately, neither one of them had the money to buy over the flat and refund the other party's CPF. Hence it must be sold. I then went on to ask why they cannot be allowed to continue to co-own the flat since both parties were happy with that arrangement. The officer explained that it would be unfair for the ex-husband who might want to apply for another flat. While this is perfectly understandable if the ex really wanted to apply for another flat, but in this particular case, he wanted to continue with the co-ownership so that his children would have a home. So I discover that it is actually with the good intention of protecting the rights of the husband that the HDB is now going to force his ex-wife and children into homelessness. Isn't that just lovely? A rule meant to protect does the exact opposite, and yet no amount of persuasion / appeal (seen MP and all that) can effect any change in decision.

She does not qualify for HDB rental flat but can't afford to buy a flat on her own, or to rent a flat at market rate (which I discover to my horror is getting close to $2k for a 3 room flat!). Her son, would you believe it, is serving full time NS now, but has already secured a job with a GLC. When he starts work in 2 years time, he and his mom will be able to buy a flat together. So, please sir, can we just delay this until the son finishes serving his NS ? No can do!

So it looks like a new homeless case will be created. This could have been avoided if some flexibility could be exercised / built into the rules. And it seems hers is not an isolated case. How did we come to this? 8% of HDB households are behind in their mortgage payments. If we continue to deny the existence of homelessness, it will only get worse, contributed by people who are unaware that their actions are agravating the situation. A simple acknowledgement of the problem could pave the way for plans to be hatched, actions to be taken.

As for my friend, she plans to send her sons to a relative, while she goes to Malaysia to live with another relative, until her son finishes NS. But she is very sad at having to leave her sons, so we are going to try and help her out, to chip in with rent so that she can stay in Singapore.But she says it is very "pai seh" and she has not yet agreed to accept our help. But we are still trying.

Employment Assistance Payment (EAP)

2010-01-15T18:24:00.004+08:00

The chinese have a saying, shang you zhen ce, xia you dui ce ( the people above set the policies, the people below device counter measures).

Regulating that employers pay ex-gratia payments to older employees when they can no longer find suitable positions for them creates greater disincentives to employ older workers. Couple that with the virtually unlimited supply of foreign workers, what would companies do?

Companies are bottomline driven and it would be naive to expect otherwise. Would they:
A) Avoid employing anyone over the age of (say) 40 so that there is very little risk of having to incurr this additional expense
B) Offer only contract employment to avoid incurring this additional expense
C) Employ foreign workers to avoid incurring this additional expense
D) Find ways to legitimately let go of older employees (e.g. poor performance appraisals, transfer to onerous/unsuitable positions, etc) to avoid incurring this additional expense
E) All of the above
F) Embrace the employment of older workers and dutifully pay EAP giving absolutely NO THOUGHT whatsoever as to how they can avoid incurring this additional expense

Which is your answer?

Loan Sharks

2010-01-13T10:48:00.005+08:00

According to Straits Times 13 Jan "Law gets tougher on loan sharks", parliament yesterday toughen the legislation on loan sharks. I am all for it. Seeking profit by taking advantage of people when they are down is definitely an action that we want to get rid off.

However, subsequent paragraphs caused me some disquiet. It says " He (AP Ho Peng Kee, Sr MOS for Law and Home Affairs) said that while the focus had been on the loan sharks and their helpers, the ministry had also looked into whether borrowing from loan sharks should be made a crime. The issue drew mixed views and for now, it will not be a crime to borrow from loan sharks."

I am very relieved the govt is not going to criminalise borrowing from loan sharks for now. It would have been disastrous. If the borrowing is also illegal, where are we pushing the people who are so desparate that they had to borrow from loan sharks? They will start to hide from the govt as well, falling deeper into the hole they have dug for themselves, and making such illegal activities even harder to eradicate.

I would have approached this problem from a different angle. Why do loan sharks lend money? Because they can profit from it. So lets make it a non-profitable business, better yet, make it a money-losing proposition. For example, extend the full protection of the law to the borrowers and their family. Publicise widely that borrowers need not repay a single cent of any loan that charges an interest rate above the legal limit since the loan is illegal in the first place. Offer police protection for those who face harrassment from loan sharks. If the lenders cannot get their money back, they are not going to lend. They are not going to get so many runners (many of whom are borrowers themselves who cannot afford to repay their loan) to do their dirty work. In my view, this would be more effective and more in keeping with my innate sense of justice.

At my cousin's wedding

2009-10-26T10:38:00.004+08:00

Last night my husband and I attended a cousin's wedding. For many of the relatives that we do not meet often, this is the first time we see them after we decided to join an opposition party.

Their reactions, and those of our friends, were illuminative. The elder ones were mostly apprehensive on our behalf. Concerns were expressed over our financial state of affairs, suggestions on parking funds overseas or setting up trust funds, and the like. The younger ones - some were gleeful and gestured " go go go!", while some were not interested/felt we were doing something futile. A closet opposition supporter (i.e. been voting opposition all along but kept it a secret) revealed herself to us, and said that she would never have told us if not because of our joining the opposition camp. In fact, she said that when told my husband decided to join a political party, she had initially assumed he joined PAP, on account of our being former govt scholars. Upon clearing her misunderstanding, she was absolutely delighted and proceeded to shower us with approval and warmth. : ) I am not sure if it made any difference to my husband, but for me, I must say that was quite a boost to my morale.

Having step on this path for only a few months, I have realised it is a very lonely game. The climate of fear has never been so starkly felt, and I found myself trapped in it far deeper than I had realised. I find myself thinking twice about contacting friends or former colleagues who are working in the civil service, stat boards or other govt related organisations. Would they still welcome my company? Would they worry about being implicated? While the rational part of me wants to reject such undue worries, I can't seem to prevent myself from getting more sensitive. But paradoxically, this realisation further strengthened my resolve on choosing this path. Such an unhealthy climate is not one I wish for my children.

My elder son was delighted with the wedding, because they gave him a HUGE lollipop. It was the biggest lollipop I have ever seen. I was told it came from my cousin's friend's shop - called Sticky, I think. It was a great idea. My son has never been so well-behaved at a wedding. He usually gets bored after a very short while and will start to wreak havoc and keep me very busy. Last night he sat docilely in his seat, licking and crunching his lollipop, occasionally requesting me to clean his sticky face and fingers. Ahh, what bliss! All weddings should dish out lollipops to little boys. Long live Sticky and may you have great business!

At the wedding, a video of my cousin's proposal was shown. It was a BIG proposal. A boat decked out with a colourful banner bearing the words "Will you marry me?" floated down the Singapore river towards an unsuspecting bride-to-be , sprouting pink and white balloons. I never thought my cousin is so romantic and demonstrative! Judging from the girl's response, she had no idea this was gonna hit her. While as a spectator, I found it very sweet and romantic, frankly, if I had been at the receiving end of that proposal, I would probably have been flabbergasted at the sudden public display, not having been mentally prepared. Guys who are planning a grand proposal should bear in mind that his beloved might appreciate some advance notice to prepare herself. Surprises sometimes end up surprising the surpriser. Drop hints liberally. Anticipation is so much sweeter, really.

Should we have minimum wage?

2009-10-20T10:46:00.002+08:00

I have some reservations about the minimum wage. Quite apart from the controversy over whether minimum wage reduces jobs, I am also concerned about the impact on the 2nd tier of the lowest income earners. The way I see it is this: If we implement minimum wage, those currently earning below the minimum wage would benefit from this, but as wages increase, cost of goods and services increase. As this affects those earning minimum wages, it is probably the cheaper goods and services that are affected more than the luxury goods/services, so the people feeling the most impact from rising cost would be those earning just above the minimum wage. This group does not benefit from the minimum wage, but will now have to pay more for goods and services – resulting in a decline in living standards. It seemed like shifting the burden from the lowest 10-15% say, to the next lowest 10-15%. Which really is not a solution at all.

Comparatively, the workfare scheme would seem a better option. It avoided the potential problem of distorting market mechanism and causing a possible drop in number of jobs, while topping up the income of the lowest wage earners. However, the debate here would be over details. What should be the income level below which the workfare scheme kicks in? How much should the wage supplement be at each wage level? The current amount reflects the current government's long standing position towards free lunches -- very conservative. So conservative, that not much effect is felt and hence we still hear occasional clamours for minimum wage. I personlly think it would be better to fight for higher amounts in the workfare scheme than implementing the minimum wage scheme.

That said, it does not address the problems faced by those earning above minimum wage levels, but are either losing their jobs to foreigners or getting lower wages than they used to before the influx of foreigners. But that will be the subject of a separate post.

2009-10-20T09:38:00.000+08:00

ST Article 20 Oct 2009:
MM Lee: Social Divide Inevitable

When there is a will there is a way.

It is inevitable that as a country becomes more developed and educated, its population will want greater freedom of speech and expression, more political choices, checks and balance against concentration of power, personal liberties, etc etc.

What are the ways? GRC. ISA. Films Act. Media control. Lawsuits.

It is inevitable that people would want to go for higher paying jobs. What are the ways? Peg ministerial salaries to highest earners in the country.

Ingenuity abounds. When there is a will there is a way. Is there a will?