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Post People’s Association – Budget 2012

I managed to drag my half lifeless body on an early Saturday morning down to Jalan Besar where the People’s Association Headquarters is at. The program mainly targeted 16 year olds right up to university alumni students. So you can say I was on the higher end of the age group. I met our DPM and Finance Minister together with the famous (for some reason I don’t get it) Yam Ah Mee. In fact I spent a good portion of the session seated next to him. So here are the highlights including updates to my former post regarding this year’s budget.

Highlights & Responses

CPF Contribution

I brought up in a group session that most of the new budget incentives were CPF based. Elderly contributions, dispensing sale amounts from downsizing, and the like. I proposed that the amount handed out via CPF should match the amount a person would get if he had sold his home on his own and had made a safe investment on it. This is my own opinion. The budget this year had a relatively large expenditure on welfare. To fund this, we are not going to dig our reserves but are taking advantage of the higher CPF injections made by the same policies that can result in handouts-over-time. This is well and good but here’s how it works. The CPF money doesn’t sit in a mega bank and collect dust. It is utilized for investment. That is what the GIC is for and remains an important arm of Singapore’s revenue plan. My suggestion was to allow some of the profits to investment trickle to the elderly, say matching a fixed deposit interest rate.

To this Mr. Yam replied that they were doing something close to this. CPF payouts are pegged at a 2% interest rate which is tiny but comparable to fixed deposits. There is also a portion of CPF that the elderly can take out for the sake of investment (i.e. they choose to invest on their own rather than let the government do it). He added that data over a 15 year period showed one thing – Singaporeans are poor at handling investments and often cannot make better returns than what the government can do. So there you go, I had earlier said that CPF works only if your citizens are good at handling the money. The reason why we still have CPF running and expanded is because most citizens cannot plan and handle their cash properly. Oh well.


There was a big push by current and former polytechnic students regarding the disparity in transport cost between polytechnic students and ‘A’ level students. A thorny issue that was met only by a reassurance that Mr. Tharman and his team will look into it. The arguements for it are clear. But the counter arguments are not because it is pretty sensitive. But I’ll fire it anyways. Polytechnic students, though similar in age to ‘A’ level students are not equal to them. Now this is NOT about academic ability. A large majority of polytechnic students are expected to join the workforce after graduation and NOT continue to the university. A diploma has always been more valuable than an ‘A’ level certificate. As such, the fess for a diploma education are higher than an ‘A’ levels education and by extension so should the transport fees. But, as my post yesterday suggested, our polytechnic kids enter the polytechnic thinking they will move on to the university. Ambition is good but facts must be recognized. A polytechnic education pegged at the same level as a university education. They both fall within the tertiary slot. Both outcomes feature certifications that make you ready to earn a respectable pay in the labor market. If you wish to be considered equal to the ‘A’ level kids, then do not expect your diploma to be deemed more worthy than an ‘A’ level certificate. This problem is down to the fact everyone believes they should get a degree thus they think that polytechnics are a hands on version of an ‘A’ level education – a stepping stone to the university. Not true.

There was also a huge discussion regarding increasing the bus fleet. I felt that the questions posed were weak but yet again the most vocal of the lot were those within the ages 16 to 18 category. I didn’t want to sound like a smart ass and correct the participants so Mr. Tharman ended up giving them a short economic lesson. The take away is this. Basically, trains are still our masterplan for the future. Increasing buses is a short term solution because as mentioned before, they compete for the same road space as private transport. But there is a slight difference to an answer I had anticipated. Even with a dense train network, we will still rely on buses more than other developed countries because our weather is a lot more humid. In countries such as Japan where the transport network is highly efficient, you spend more time on the trains and also walk a little bit more. This is to bypass the need of taking buses. In Singapore, no one likes to walk more, not because we’re all lazy, but because it really sucks to walk in the Singapore sun. So there you have it, expect a denser rail network but buses will still feature because we live on the equator.

Foreign Labor & Productivity

Some of the participants who had parents running companies affected by the new laws that the ratio of foreign labor should be reduced come mid 2014 voiced their concerns that local labor will not take up such ‘dirty’ jobs. Valid concerns but it is interesting to see the strategy behind this. Those sectors in which such reduced ratios are enforced are done so in hopes that productivity will increase. Basically these sectors are really unproductive. These sectors lag behind other countries by more than 50%. That’s really bad. So the plan is to force companies to restructure their workflow to be less reliant on manual labor and because manual labor is usually carried out by foreigners, we chop down that ratio. Their hope is that restructuring workflow will make the restructured job positions more attractive to locals thus killing 2 birds with one stone. It could work but this will take a hell lot of time. You can expect the less innovative firms to shut down. I’m a sadist economist. I have no qualms about this. If you’re inefficient, please don’t waste resources. Go do something you’re good at.


Basically, Mr. Tharman spent most of his time explaining to the participants economics 101. The university kids and unversity alumni members stayed relatively quiet through out because of that. I did hope that someone would point out that the fluctuating demand as a major issue for public transport but there was no time for that. It is good to see Singaporean youths engaging in largely effective economic dialogues. Here’s to greater productivity and a better transport network. Forward Singapore.

Dave Junia

Dave Junia | administrator

Analyst. Cyclist. Photographer

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