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SDP, Singfirst, WP’s economic visions are affordable
An honorable member of the Coffee Shop Has Just Posted the Following:
http://www.tremeritus.com/2015/09/04...re-affordable/ SDP, Singfirst, WP’s economic visions are affordable September 4th, 2015 | Author: Chris Kuan And worth it. The SDP, Singfirst and the WP are not lacking in political courage when they articulated an equitable economic vision for Singapore to the best of their abilities in light of the PAP government withholding full disclosure on public finances. Singfirst’s Social Safety Net has been criticised as “bankrupting” the nation for spending a portion of the earnings from the reserves, accusations by people who do not seem to know that the PAP is already spending those earnings and had been for 15 years. SDP’s Economic Vision was lambasted by PAP Vivian Balakrishnan as “failed tax and spend policies”. Of course, like any good PAP minister, he mentioned the “Greece” thingy. All this rather rich coming from a man who knew a thing or two about dropping a few hundred million of tax-payer’s monies. Tired old “Greece” thing First this article gets that tired old Greece thing out of the way since the PAP cannot think of anything else than flogged that old dead horse whenever social safety net or social expenditure get mentioned. Thought Singapore was meant to be Switzerland in the first place. The countries listed below are all double rated AAA / Aaa, similar to Singapore. CountrySurplus / Deficit to GDP ratio Debt to GDP ratioSocial Expenditure to GDP ratioAustralia -0.1%26.3% 19%Canada +0.3%56.6% 17%Denmark +0.4%48.3%30.1%Germany -1.7%42.1%25.8%Luxembourg +1.0% 9.2%23.5%Norway+10.1%33.5%22.0%Sweden +0.2%55.5%28.1%Switzerland 030.4%19.4%Singapore +9.2%92.6% 2.0% Clearly, in these countries with strong finances, tax and spend policies have not failed despite the much higher social expenditure. But it is by looking at countries with weaker finances that shows up the PAP’s incoherence. CountrySurplus / Deficit to GDP ratio Debt to GDP ratioSocial Expenditure to GDP ratioJapan-7.6%186%23%United Kingdom-7.9% 91%22.5%Greece-9.9%133%25% If tax and spend policies have failed, then Japan and the UK would have failed together with Greece. Do notice that Greece’s social expenditures are not particularly high – this tells us that the root causes of the Greek problems are not social expenditures. Surplus, surplus and yet not a drop Not quite but one should get the meaning of the PAP’s stinginess when it comes to social expenditure but profligacy when it comes to government salaries and defence spending. First on surplus let us hear from the folks at Singstats (http://www.singstat.gov.sg/docs/default-source/default-document-library/publications/publications_and_papers/reference/monthly_digest/mdsaug15.pdf) FY 2013FY 2014Up to July 2015Surplus / Deficit25.3b25.3b10b Then look at defence in comparison to health (not just spending on healthcare but salaries, equipment, development costs, etc) and Social and Family Development from which welfare spending is controlled. FY 2013FY 2014Up to Q1 2015Defence11.3b11.8b2.7bHealth 5.0b 5.9b1.3bSocial and Family Dev 1.6b 1.3b0.2b In other words, there are more expenditures going into defence than into welfare and health where not all of the spending goes to patients. Increased spending available from 2017 Mr. Balakrishnan seems to be deaf even to his own cabinet colleagues. For Finance Minister Tharman had said there is no substance behind social media speculation of a post-election increase in GST because of additional funds made available from 2017 when the Net Investment Return Contribution framework fully applied to Temasek. How much more additional spending power? NIRC in 20142017 NIRC at GIC’s 4% real rate of return2017 NIRC at Temasek’s 6% real rate of returnTemasek’s $266b Portfolio2.7b5.3b8b That means the NIRC will deliver $11.5b to $14.2b to expenditures by 2017 assuming those contributions from GIC and MAS remain the same. Do remember that last year’s $8b Pioneer Generation Package and this year’s $3b increase in social expenditures will not be repeated next year onwards. There are huge spending resources, it is only a question whether these are spent on an equitable socio-economic outcome for Singaporeans or on fancy weapon systems, vanity infrastructure projects and government salaries. Plenty to back SDP, Singfirst and WP The size of the net investment return contribution shows that the SDP, Singfirst and WP vision of a more equitable socio-economic outcome is not only affordable but actually make some of their proposals, especially Singfirst’s Social Safety Net appeared rather conservative. Will the reserves be depleted by spending the returns? Definitely not, because the NIRC framework only uses 50% of the real return, i.e. less than half of the actual returns. It is also because the government continues to add to the reserves through land sales and excess returns from investing CPF monies. Finally think about it. What better way to make lives better for Singaporeans, especially those socially excluded by absolute and relative poverty by having earnings from the reserves returned to them through social expenditures. And remember, those reserves came mostly from the high property prices citizens paid and the low rate of CPF returns received. Chris Kuan * Chris was regional head of capital markets for Asia Pacific until his retirement. He writes opinions and commentaries mostly on economic and financial matters. Click here to view the whole thread at www.sammyboy.com. |
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