A National Day Message from the Reform Party

Dear Fellow Singaporeans,

On Monday we will celebrate our 45th National Day since the break with Malaysia in 1965. Most Singaporeans justifiably take pride on this day in our country’s economic achievements since independence. Indeed the PAP government uses this day to peddle its version of history and contrast what is presented as their achievements with the unprovable counterfactual of what life would have been like for Singaporeans if the PAP had not been in charge. Our bookstores proudly display MM Lee’s book entitled, “From Third World to First” and foreign journalists often repeat the mantra that Singapore was a mangrove swamp before the PAP were elected to power. Last National Day PM Lee showed slides of Singapore as it was fifty years ago and contrasted it with the shimmering metropolis of today.

Yet it is only right that these achievements be set in context and relative to what other countries have achieved. At independence Singapore already had several advantages over other countries at similar stages of development, including an incomparable strategic location and one of the world’s best natural harbours as well as the benefits of past investment and legal framework by the British Colonial powers, including a world-class dry-dock, the deepest dock in the region and a reasonable infrastructure and education system. Between 1960 and 2007 Singapore’s real GDP per worker grew some 660%. However over the same period Malaysia managed 643%, Thailand 668%, Hong Kong and South Korea both managed 800% and Taiwan managed 1240% over the same period. The Reform Party has already drawn attention to the fact that when Singapore’s very impressive-looking statistics for real GDP per capita are normalized for the effects of Singapore’s much greater pool of productive workers relative to the total population then our real GDP per employed person in 2008 drops to only slightly higher than that of South Korea. When account is taken of the much longer hours worked by Singaporeans then the real GDP per hour worked is only some US$25, about the same level as Korea and well below Japan on US$39 or the USA on US$55. Over the period 2000-08 our real GDP per hour worked only expanded by some 1.2% p.a. while the USA and Japan managed 2% and Korea managed 4.2%. Productivity fared worse, falling sharply subsequent to the recent recession (by some 14% peak to trough). The undoubted recent sharp recovery on the back of the spectacular GDP growth numbers will probably only put us back to where we were in 2007. In other words we are no better off than in 2007 let alone than in 2009.

The only conclusion one can draw is that, despite the incessant harping by the PAP government on the superior quality of governance Singaporeans enjoy, there has been little value-added despite the multi-million dollar salaries for our ministers and the curtailments of personal freedoms and political rights that we have suffered. Indeed, Hong Kong, with its minimal government interference in the economy, stands in stark contrast to Singapore where after the share of GLCs and foreign MNCs is taken into account there is precious little left for domestic private enterprise.

But how has the average Singaporean done over this period? While we would not dispute that there have been substantial advances since 1959, in line with the experiences of most developed nations, statistics for the last ten years tell a different tale, particularly for those below median incomes. Using figures provided by the Household Expenditure Survey for period to 2007/8, one can compute that average real incomes of the poorest 20% of resident households fell by at least 15% over this period and by considerably more if a basket of consumption goods more appropriate to the consumption patterns of this segment were used. While the real median incomes of resident households increased by some 20% from 1999 to 2009, or 1.8% per annum the practice of lumping together Singapore citizens and PRs as residents coupled with a big increase in the number of new citizens and PRs, likely to have less dependents and be earning more than the native Singaporeans, may mean that this is less impressive than it appears. Certainly when one looks at the figures from the Labour Force survey the increase in the median real wage for those in full-time employment from 1999 to 2009 falls to some 1.4% p.a., and this again may be influenced by a big influx of more highly paid PRs and new citizens during this period and by a change in the definition of full-time employment. Previously this meant those working in excess of 30 hours per week but in 2009 this was changed to 35 hours thus presumably eliminating from the calculation of the median many lower paid workers. In any case the CPI is unlikely to be an accurate reflection of the increase in housing costs during this period based on the notion of an imputed rent calculated by some bureaucrat. As my fellow-candidate Hazel so kindly pointed out in her recent blog the Resale Price Index for HDB flats has risen by some 45% between 2006 and 2009 (and continues to rise) while nominal household income has risen by some 21% over the same period.

On National Day the PAP government will predictably point to the economic growth numbers and say, “Look how well we’re doing” , at the same time exhorting Singaporeans to work “cheaper, better, faster.” With the release of the second quarter GDP figures there’s likely to be a sharp increase in productivity, possibly putting us back to where we were in 2008, allowing the government to proclaim the success of its productivity initiatives, which it introduced after the Reform Party pointed out that economic growth had been built for some time solely from increased labour inputs rather than through working smarter. And while no doubt there will be some goodies for the electorate in a pre-election softening-up, it will largely be back to business as usual as regards the liberal foreign labour policy. As PM Lee said recently the strong economic growth figures mean that business needs at least another 100,000 new workers. On this logic there seems no reason why Singapore should not grow its population to the size of the USA, India or China since it’s always possible to generate more growth if you can import more people. And this was prefigured in a ST article last Friday, which said that the entire world population could be comfortably accommodated in an area 1,000 times the size of Singapore which entirely coincidentally happens to be 1,000 times the 6.5 million population target which is quietly coming back onto the government’s radar screen. And after this is reached the next target will be 8 million, and who knows what after that in an effort to keep growth going by maximising the economically active proportion of the population even as the profile of the native population begins to rapidly age.

Needless to say, the Reform Party has a different vision for Singapore. Though those who have different visions to the PAP have frequently been called unpatriotic and the whole notion of exercising your democratic rights to freedom of expression and choosing your own government has been branded as un-Singaporean and un-Asian, we would reverse that and say that there can be nothing more patriotic than caring enough about your country to want to have a say in how it is governed. We have consistently pointed out that just as lack of competition in business leads to monopoly, higher prices and poor service for the consumer, so competition in politics is necessary to ensure policies are scrutinised and mistakes exposed. While liberty is the inalienable right of every individual and there should be damn good reasons for infringing on those rights, the Reform Party would go further and say that it is necessary if Singapore is to be competitive as a modern economy. We have been surpassed economically by South Korea, Taiwan and even Hong Kong all of which are considerably freer than we are, will we allow ourselves to be surpassed by India, or at least by the fastest-growing regions of India because of our government’s desire to maintain control at all costs.

Since the Reform Party started pointing out how ordinary Singaporeans were being failed by the PAP and how we would focus on more relevant indicators, such as growth of GDP per hour worked or growth of real median incomes rather than just GDP, the PAP has again borrowed from us and said that it is committed to providing a better life for all Singaporeans. Indeed Minister Tharman has said that the government’s goal is now to maximise real median incomes and set a target of $3,100 for median incomes by 2020. One way it may achieve this is by admitting large numbers of better paid immigrants as citizens or PRs or by awarding more scholarships to foreign students who are invited to become PRs without having to do NS. But as long as the government continues to treat Singapore as a business rather than a country it is doubtful whether the target can be achieved. For a firm labour is just one of the inputs and provided its cost does not rise or can be cut by using cheaper labour from abroad, for instance, then there is no incentive to use labour more productively. And this is what has happened in Singapore, as I pointed out in my comment on Alex Au’s article on “Domestic Costs Drive Inflation, Not Import Prices.” As long as the government permits a relatively elastic supply of labour from abroad while the cost of other domestic inputs, like land, continue to rise (partly because of the government’s position as the monopoly owner of most land), then the real wages and salaries of our own workers will get squeezed. And this has indeed happened.

So how would the Reform Party change things? Many of you will be familiar with at least some of our proposed policies but let me repeat the more important ones, at the risk of boring you:

• A more rational foreign labour policy particularly for semi-skilled and skilled labour which competes directly with Singapore workers, including a requirement for companies to show that they had advertised the job to Singaporeans at the going wage rate for a certain period. At the same time the Reform Party, in keeping with its generally business and investment-friendly ideology, would be relatively liberal in its immigration policies in industries where Singaporeans lack the necessary skills.
• A minimum wage to encourage businesses to use unskilled labour more productively and act as an incentive to employ Singaporeans rather than foreigners once their cost advantage had been eroded.
• Greater investment in education and training and expansion of university enrolment which still lags behind that of the advanced countries. We understand that the new schemes for retraining for less skilled workers announced in the Budget have been poorly taken up because the workers concerned do not see much benefit from the training. By controlling the supply of foreign skilled labour and thus raising the rewards to education there would be greater incentive for Singaporeans to undertake the necessary training.
• Reducing the number of scholarships given to foreign students and/or requiring them to do NS while increasing the assistance given to less well-off but bright Singaporeans to enter further education.
• Restoring the rights to freedom of association and the formation of independent trade unions with appropriate democratic safeguards to prevent the economy being damaged by the actions of a small minority. Right to strike not to be allowed in essential services or government.
• Curbing the relentless rise of housing costs by releasing more land and allowing more competition while at the same time scaling back HDB’s role to be that of providing public housing for the poorest 20% of the population. As part of the privatization of land the Reform Party would examine the possibility of turning over the freehold rights to the owners of HDB flats. We would also take further measures to segment the market and restrict the speculative demand for HDB properties. At the same time with so much of the average Singaporean’s wealth tied to HDB property we would be mindful of the need to prevent a property price collapse which has so badly affected the US economy.

You can read about our other policies elsewhere in our blog, specifically our 19 policy pledges. As you read them it is my hope that you will find the Reform Party’s vision for Singapore so much more attractive than the ruling party’s that you will come forward to support us and help us make this dream a reality.

All that remains is for me to wish my fellow Singaporeans a very happy National Day and let’s take the first steps towards taking control of our destinies.

Majulah Singapura!

Sources: US Bureau of Labour Statistics, Penn World Tables, Singapore Household Expenditure Survey 2009, Singapore Yearbook of Manpower Statistics 2010.

Released by Kenneth Jeyaretnam on behalf of the Reform Party, August 8th 2010