Tony Tan’s Speech at NUSPA Forum on 3rd November 2010

I like to thank the NUS Students’ Political Association for this invitation. Distinguished guests, NUS students and members, a very good evening.

I like to share some of my encounters during my walkabouts.

• He was a man aged 45. He said that it was hard to keep pace with the rising cost of living. He was visibly upset when he spoke about the large number of foreigners in Singapore and felt that they are replacing locally bred Singaporeans. I asked him how many children he has. He replied “how can I afford?”.
• In another encounter, a man in his 40s whose HDB flat is in arrears asked me if he could pawn his HDB flat. He is ill and unable to work. He needs the money. But he is unable to sell the flat as he has yet to meet the minimum number of years of residence required.
• Recently, there was a woman who asked me: “Why are you doing this – you are doing well and this country is so wonderful and has given you so much, why are you opposing the government?”
• Because it is not enough.  It is not enough that I am doing well when I can see others not doing quite so well.  Many of you here will probably obtain your 5Cs or have already done so. Does it mean then that you should just keep quiet if something that is happening in this country does not seem to be right? We have helped a homeless pregnant woman living in a tent in Sembawang Park, together with her 2 boys. Till now, I still find it hard to believe this happened in Singapore. It is exactly because this country has given all of us opportunity, we owe it to this country to ensure that we do the right thing and give back.
• Some of the issues encountered by the Singaporeans that I mentioned seem to be a consequence of their own actions. This is not the case. Policies are the invisible hands that affect the lives of ordinary Singaporeans. If ill conceived, they have significant impact downstream. I believe the current policy of focusing on GDP growth above all else is a mistake, one that yields apparent results in the short term but brings along long term pain.

Adopting the strategy of the importing labour to increase the GDP growth creates a vicious cycle.

By massive labour import over the last few years, it leads to higher demand for good, services and housing resulting in higher cost of living, and greater competition for jobs. Local men would also be disadvantaged by National Service.

The unintended consequence of such action leads to diminishing confidence of their citizens for their future and reduces the value of citizenship.

Some PRs whom I spoke to do not want to convert to citizenship, as they do not feel that the difference between citizens and PRs are sharp enough. They think that this is a good place to make money, and they are certain of their future when they return home to their motherland. They also feel that this is a good place for their children’s education and Singapore is a good springboard to other developed countries like Australia and US.

Vicious Cycle due to Strategy of Labour Import to increase GDP

• The outcome of this strategy is a 2-Singapore. One for the haves; the other for the have-nots. Is this the country we want? A divisive society. What happens to the promise of building an “Inclusive Society”?
• Statistically, there is a significant increase in foreign labour input in the last few years specifically from 2007-2009 to spur the growth of GDP. This has invariably resulted in the increase of the cost of living. Let me highlight some examples. 

1. From 2006-08: Electricity Tariff increases by 23%
   Hospitalisation Cost increases by 13.5%
2. “As of Oct 2008, 8% of 420,000 HDB Households with outstanding loans defaulted.”
3. “Findings indicate that Singapore’s bottom 10 per cent was the hardest hit. 2009 was a rough year for all. Each member of the poorest group of households got a monthly income of S$334, down from S$340 in 2008.
   In real terms, the average income per household member among employed households fell by 3.5 per cent.”

• Would all the policy makers one day come from one Singapore who may no longer understand issues face by Singaporeans living in the other Singapore?

Making of a 2-Singapore

We also fail to put in adequate infrastructure development to cope with the significant increase in our population.

1. While total number of passengers increases by 20% from 2006 to 2008, the total Train Kilometre operated by train companies increases only by 8.8%.

2. While total number of vehicles grows by 12% and total number of cars grows by 16% from 2006 to 2008, the public road increases by a mere 1.9%.

How about the middle class? They are sandwiched. Let us take a look at some graphs

1. The blue line represents the Resale Price Index, the red line Median Household Income. The base years have been changed in order to clearly understand the impact of the rising prices of HDB flats, and their impact on Singaporeans. By altering the different base years, one can better appreciate the significant increase in the resale price of HDB, specifically when the base year is 2006. By looking at the graph with Base Year 2006, the increase in Median Household Income has clearly not been able to keep pace with the gain in HDB Resale Price.
2. What this means is that the middle class would have to work harder to earn more to pay for their housing, while spending less and saving less for their retirement.
3. With rising housing prices, domestic consumption by the middle-income group would also be put under pressure. China is focusing on increasing its domestic consumption to move away from their heavy reliance on export to drive the economy.

Median Household Income

Our liberal labour policy in support of GDP growth has resulted in the following consequences:The policy of GDP growth by labour input has created this entire list of immediate problems. Is this policy being short term? Are we feasting today so that there will be a famine tomorrow?

• Has this solve our ability to increase our Total Fertility Rate (TFR) in the long run? Our TFR is below 1.3. We need a TFR of 2.1 just to replace ourselves.
• Singapore is a small island; there is a limit to which how much we can grow our population.
• After our population hits 6.5 million, then what’s next? What if we still have a dismal productivity growth?
• Are we building a nation – a place where we can be proud of, or just a strip of land where people can be here to make money and with the intention to leave?
• Maybe we can do a survey later to ask you whether do you feel like leaving this country.

We do have an alternative model.

• It starts with leadership. Look at the last financial crisis in USA. They have the best minds and brains in their banks, in Wall Street. But the system is weak; it is non-transparent with little accountability. So getting the best minds and brains, and then trusting them is not good enough. Pegging the entire reward system of the ministers to a single KPI: GDP growth is a systemic risk to the nation in the long run. A summary of the policies are in the next 4 slides.
  

Finally, in the late 1960s, Singapore’s government saw rapid population growth as a threat to living standards and political stability, as large numbers of children and young people threatened to overwhelm the schools, the medical services, and the ability of the economy to generate employment for them. The policy of “Boy or Girl – 2 is enough” is implemented as part of the family planning.

It was hailed as a success as Singapore’s TFR plunges from a high of 4.66 in 1965 to 2.1 in 1975

Policy cannot be short term at this stage of Singapore’s development. The world is undergoing massive changes. We cannot afford to bank on policies that will bring us short-term benefits, while leaving future generations to pay for the mistakes they did not make.

Thank you.

[1] Singapore Statistics.
[2] http://www.channelnewsasia.com/stories/singaporelocalnews/view/390652/1/.html[3] http://www.channelnewsasia.com/stories/singaporelocalnews/view/1038568/1/.html