Summary of Concerns Raised by Mr Low Thia Khiang in Parliament on 29 August 2003

In his National Day Rally speech, the Prime Minister said jokingly that he must have suffered from amnesia. I want to tell the Prime Minister that he and in fact, the whole PAP are suffering from amnesia.

At the last General Election, the PAP shouted the slogan, "Support the PAP for a secure future." Yet, barely two years after the election, the PAP has apparently forgotten its promise to the people of Singapore. While The PAP is suffering from amnesia, the hopes of 75% of the voters are shattered. They have placed their trust in the PAP, but in return their income has been declining, their rice bowl not secure. The PAP government is doing nothing to intervene, even when those companies who are doing well are adopting "pre-emptive" retrenchment measures. Where is the security that the PAP talked about during the election? Even as late as this year's Budget debate, the Government still pledged in all seriousness that the CPF contribution rate would be restored to 40%. Yet, a few months later, we are faced with a further reduction in the CPF contribution rate. What happened?

The PAP Government is like the hare in the fable of "The tortoise and the hare". Unaware of how long it has been sleeping, it suddenly woke up to find that the whole world has changed - the tortoise has overtaken the hare. It seemed like only yesterday when the workers in Malaysia, China and India were drawing salaries lower than ours. Overnight, we lost our competitiveness. Therefore, our CPF contribution and salaries have to be slashed immediately if we were to retain our rice-bowls.

The PAP government compares the Singapore workers' salaries to the salaries of workers in other countries and comes to the conclusion that our salaries are far too high and not competitive and therefore, have to be cut. Why not compare Singapore's cost of living and the salaries of the Singapore Ministers' with that of the other countries? The PAP government claims that it costs much less to maintain the their government than it costs the developed countries to maintain their governments. But, how does it compare to the developing countries?

The PAP government has boasted that every public service it provides is aiming to attain world class standard, such as a world-class transport system, world-class healthcare system etc. Of course, the charges are world-class too or more! Now that we have lost our competitiveness, our workers have to draw third-world salaries but still pay world-class charges. In addition they have to pay the ever increasing Goods and Services Tax (GST). Is this the kind of better future that the PAP has guaranteed?

The PAP government claims that there are many jobs in the labour market. It blames the people for not willing to take on menial jobs or travel long distances for their work and for refusing to accept lower salaries. Has the PAP government considered the burden of the people and the income that the workers must have to maintain a basic standard of living in Singapore?

The CPF system has been in existence long before the PAP became the government. Its original objective was to ensure that the workers would have some savings for their old age upon retirement. Then, the PAP Government expanded the functions of the CPF, linking it up with public services, such as housing and healthcare. As the PAP government is very firm in resisting the idea of a welfare state, the CPF has thus taken the role of a social safety net, provided by the people for themselves. It has also become a key pillar supporting a world renowned public housing programme.

One of the more serious implications of such changes is that the CPF system has become a tool for the PAP government to evaluate the purchasing power of the people when determining the charges of public services. They use the CPF savings of the people as a yard stick to determine their affordability The prices of HDB flats kept going up when times were good because the PAP government said that the people had a lot of CPF and could therefore well afford them. When healthcare charges went up, the Government said that the people have enough Medisave in their accounts, so the medical fees were "affordable". University fees went up because the Government said that the people could use their CPF savings to pay for them, and they were again "affordable".

This system has also led to a misconception among the people that the CPF was a security for their living and they could always use the CPF for their housing and healthcare. Since their CPF savings is something which they can see but cannot touch, they are not so concerned with increase in the charges This eventually resulted in a mentality of accepting every increase without much resistance.

Soon after the CPF system was used by the PAP government as a tool for macro-economic control, the economy went into a recession. Our CPF contribution rate, at one time, was as high as 50%. But with the recession, the Government began to manipulate it. So at a time when the people are having problems making ends meet, they also have to face the impact of the CPF reduction.

Now that Singapore is faced with competition from the other low cost countries, our "far-sighted" PAP government which has always claimed responsibility for our economic miracles, find this challenge too arduous for their creativity. Thus once again the CPF has become the sacrificial lamb.

Any changes to the CPF policy will have far-reaching repercussions on the lives of the people. Their choices of housing, healthcare services, retirement plans and even the children's university education are, to a large extent, dependent on the amount of CPF they have in their account On the one hand, the PAP government wants the people to be responsible for their own financial planning and retirement plans; on the other hand, they keep raising the aspirations of the people and making use of the CPF as a tool in managing the economy, thus throwing uncertainties into people's financial plans. For example, many people believed the PAP government's propaganda for "asset enhancement" and spent all their CPF savings on the purchase of properties. Now that the CPF contribution rate is reduced all of a sudden, they would have problems servicing their loans. Those who have blind faith in the PAP's myth of asset enhancement are the biggest victims of these changes of CPF policies.

The PAP government has apparently run out of ideas in coping with the current difficulties and has to resort to cutting the wages and CPF of our workers, time and again.

It is a well known fact that our high land cost is the biggest culprit contributing to our high business costs, but the PAP government seems to be "sparing the rats to save the dishes". It does not dare to significantly bring down the land cost for fear that it would seriously affect the asset value of the people and they would have to pay a very heavy political price for that.

Of course, currency devaluation is another means that would create a significant and immediate effect in bring down our business cost, but the PAP government is again not prepared to do so for fear of political consequences. Taking the lesser of the evils in protecting their political interest, the PAP government could only choose to cut our CPF. However, from the perspective of long term interest of the nation and the people, what are the pros and cons of such option? Even if the CPF is reduced to 30%, can the PAP government guarantee that it would be effective? If not would there be a continuous reduction? The PAP government should give us a clear indication so that we can be psychologically prepared.

Let's look at the situation now. Many companies are still making profits despite the poor economy. But the PAP government is adopting a one-for-all scheme whereby all the companies are entitled to a 3% cut in the CPF contribution.. The Government urges these profitable companies to pass on the savings to the workers in the form of bonuses. However, the Singapore National Employers' Federation has clearly indicated that they do not encourage such a practice. The Government should clearly state their stand in protecting the interest of our workers in this aspect.

Furthermore, the PAP government might even derive some fiscal benefits from these changes too. It could gain from the CPF cut of the civil servants. On top of this, companies may turn profitable or increase their profits because of these CPF savings and in such instances, the Government will be able to collect more income tax. Is this not a case of indirectly transferring the cut in the people's income to the government's coffer? What is the Government going to do with this income? Is the Government prepared to give them back to our people just like what they are encouraging the profitable companies to do?

As for the CPF contribution rate, as early as 1994, after analyzing the problem of the 1985 recession, the Workers' Party has stated very clearly in our manifesto that the CPF rate should be fixed at 35%, with the employer and employee contributing half each. Today, I still believe that 35% should be our long-term target. The PAP government should examine the effect of other variables such as the scale of the Government and other costs which are introduced by the regulatory control of the Government, land cost, etc and reduce these costs. Together with the restructuring of the wage system and increase in productivity, we can then enhance our competitiveness. By doing this, we can avoid manoeuvring the CPF and affecting the financial planning of our people.

Apart from that, most people in Singapore have used almost all of their CPF money to pay for their housing loans and the increasing medical charges. The balance in their CPF account is not enough to cater for their old age needs. If we fix the CPF rate at 35%, it would enable people to better plan for their retirement, and it would also strengthen our policy in preparing for an aging population.
As for the older workers, the Workers' Party in its manifesto has stated that workers above 55 years should be allowed to decide themselves whether to contribute to CPF. This would give them a better chance of further employment.

With the CPF cut now, it is even more important to seek higher return for investment of the money. The current practice of lending the money to HDB so that HDB could lend to the people, thereby earning some very small interest, should be revisited. The Government should consider setting up a centralised CPF investment agency to look into ways and means of earning higher returns. We have yet to see any government action in this aspect. Of course, there will be risks in any investment but we should let the people choose from the various investment plans, ranging from high risk-high returns to low risk-low returns.

It takes more than one cold day for the river to freeze three feet deep. The predicament of Singaporeans facing both the cuts in wages and CPF is a loss-loss situation that has been brewing for quite some time. The problem could have rooted way back in 1986. The PAP Government has all along been very proud of this Government-employer-employee tripartite establishment. It used to boast of the tripartite system being a triple win situation. But as it turns out, we all know that there is only a sole loser - the workers. They are sacrificed whenever there is an economic recession. Even though the PAP government is confident that our economy will recover, however, it will be a "jobless recovery" if the reduction in our business costs cannot stop companies from relocating. With people facing prolonged unemployment should the Government not re-look into the possibility of setting up some sort of social safety net?

The PAP government has been saying all the time that Singapore is enjoying the premium of a good, effective and efficient Government, as well as our first class infrastructure. We are far better off than our competitors in many aspects and are holding many world's No. 1 trump cards. It is not a problem when we compete with other low cost economies even though our costs are high. When our people complain of high business costs and the high cost of living, the PAP government always chided them for crying "wolf". Then, suddenly, we find many companies relocating to other countries, resulting in wave and wave of retrenchments and we see the major shipping companies moving to a Malaysian port. Only then did the PAP government wake up and started talking about cutting business costs. And it is the workers' salaries that are being cut. Adding to the burden of our workers, charges in public services, utilities, transportation and education are increased. Prior to the election, the PAP painted a rosy picture and committed to restore the CPF rate back to 40% , they even put money in the people's pockets. Once the election was over, they took the money back through an immediate increase in the GST rate. Now they are asking the people to forget the PAP's promise of the restoration of CPF contribution rate. It has broken faith with the people and let them down. It should apologise to the people of Singapore.