Parliament: Budget 2014 (Pritam Singh) – 3 March 2014

In the Workers’ Party 2011 National Day message titled “Honouring our First Generation”, the Party made a special tribute to our Pioneer Generation, the first generation of Singaporeans who built Singapore during the early decades of Independence which was a message in gratitude to our parents, grandparents, uncles, aunts, elderly cleaners, the retired civil servants, teachers and the first National Servicemen.

This special group embodied the Singapore spirit, the determination to work hard and to overcome odds to crave up a better life for all Singaporeans today. Indeed, they are a shining example for generations of Singaporeans to come.

In 1960, my father boarded the SS Rajula in India, a British-India steam navigation company passenger and cargo steamliner of Singapore, to join my grandfather who worked in the old Outram prison. Coincidentally, the SS Rajula was the same ship that various troops from India to Singapore before the Japanese invasion of Malaya in December 1941.

This migrant story is not an uncommon one amongst many Singaporeans, particularly Indians who came to Singapore and Malaysia after World War II. Although my grandfather and many pioneers have already passed away, the Pioneer Generation Package (PGP) is a welcomed recognition to the efforts and struggles of these peers who are still alive today and who embodied the Singapore spirit — the determination to work hard, to overcome the odds and to carve out a better life for their children.

The emphasis of the package in the area of healthcare will give our pioneers some peace of mind even as the Government should be remain mindful of pioneers who may not be able to afford co-payments because of their chronic conditions and the high cost of medication.

I will speak on three issues that were covered in the Budget – transforming the economy through changing our social norms, the CPF rate increase and the Carbon Emissions-Based Vehicle Scheme (CEVS) scheme.

While Budget 2014 is likely to be remembered for the recognition given to our Pioneer Generation, the point the Finance Minister made about changing our social norms, in the long term, may well prove to be as emphatic, if not more empathic than the appreciation generated by the PGP.

The Finance Minister spoke about changing our social norms in three broad areas. At the workplace, there was a call for a workplace culture where employees are appreciated and valued so as to engender an empowered workforce with real knock-on benefits on productivity. This was closely associated with a call for Singaporeans to aim not just for competence but excellence. Equally important, there was a call on employers to understand that doing the job well was the goal, not the long hours on the job. Finally, the Finance Minister urged all of us as consumers to change our habits, become at ease with self-service facilities, and treat service staff with respect.

The cultural changes required to transform our economy would have to be deep and sustained with resources devoted to educative efforts, and in the appropriate case, a regime of incentives and disincentives to modify behaviour. We have heard of such forays before.

Two years ago, the NEA took the step of moving in this direction by kick-starting a process of getting individuals to return their trays at selected hawker centres with a view to alter individual behaviour. This initiative has been rolled out to 34 out of 107 more hawker centres in 2013. The results are likely to be progressive, with ups and down and but with the desire that ultimately, only a minority of individuals will be more resistant to change than others. But eventually, change will be optical in that we will be able to see the results of such initiatives and gauge how far we have come.

However, it is harder to gauge the effectiveness of measures such as a more empowered workforce where the views and contributions of employees are appreciated and valued. Our companies should be made to see the real benefit of such initiatives, supported by Government incentives to promote such cultural change. This may well include leadership training packages and incentives for employers and businesses to send their middle managers and decision-makers for skills upgrading and promoting, recognising and rewarding efforts to pursue such change.

Beyond how we are going to measure how our companies effect such change, a rigorous and sustained public education effort should be launched both for employers and employees. This cannot just be another campaign – it will have to be more fundamental and whole of Government – getting people to be more conscious not just about productivity, but to create a belief in their ability and power to effect positive change. This will mean putting more information in their hands, encouraging a spirit of inquiry in our people, and even relooking how we educate our children.

I would like to move on to the CPF rate increase. The raising of the CPF Medisave rate by 1% for all workers in this Budget was a positive announcement. However, it is difficult to appreciate this increase holistically until the impact of MediShield Life premiums is announced, even as the promise of a more flexible use of Medisave for outpatient treatment is welcomed.

It is nevertheless noteworthy that the new total CPF contribution rate of 35% for workers between the ages of 50-55, and 25% for workers aged between 55-60 have surpassed those proposed by the 2003 Economic Review (ERC) Sub-Committee on Policies related to Taxation, the CPF system, Wages and Land.

Nonetheless, I am concerned about the employment prospects of older workers in light of media reports that these higher CPF contributions would put a tighter squeeze on profits, and because of the fact that it is our SMEs that proportionally hire more older workers.

In fact, the 2003 ERC Subcommittee’s report referred to earlier justified reducing the CPF rate for older workers precisely to make them more employable. In 2003, then Minister Lim Boon Heng, on the back of the decision to slash the CPF contribution rate from 36% to 30% stated that having watched retrenchments carefully over the preceding 22 years, the invariable conclusion was that older workers are more vulnerable to retrenchments, and take longer to find a new job.

I hope employers do not resort to selectively shedding older workers because of the 2% CPF rate rise they will have to bear for workers aged between 50-55, and 1.5% for those between 55-65. The overwhelming majority of Singaporeans in this age bracket do not qualify for the PGP and would need to build up their Medisave and retirement balances in light of the higher MediShield Life premiums. I hope employers do consider this larger societal concern, even as they battle on to develop new productivity initiatives, and manage with fewer foreign workers, in addition to the ever-present business challenges of high overheads.

In light of feedback by some employers, it would be important for the Government to nonetheless monitor the reaction on the ground with regard to the employability of older workers in view of the CPF rate rise, so that our most vulnerable workers are not priced out of the workforce.

Finally, the Minister spoke of extending the Carbon Emissions-based Vehicle Scheme (CEVS) until June 2015 with a view to continuing the scheme thereafter. The Minister stated that more than 50% of new cars received CEVS rebates, an improvement over 2012 when only 40% of new cars were in the rebate bands.

However, in assessing the efficacy of the CEVS scheme against the environmental sustainability and climate change, it is worthwhile to consider that the neutral zone where no rebates are attracted and surcharges levied lies between 161 and 211 grams of carbon dioxide per kilometre. Even in 2011, about 60% of cars sold in Singapore already fell in this zone, so it is debatable how far the CEVS scheme as it stands, is going to encourage a larger green footprint in Singapore.

While the CEVS scheme is positive policy, there is scope for the Government to review the carbon emissions standards so as to alter behaviour in favour of greener policies through a scheme of clearer and sharper incentives and disincentives. As the reality of climate change becomes ever more apparent, there is considerable scope for Singapore to increase its soft power by establishing itself as a leader in embracing green technologies in view of our small size. Mdm Speaker, I support the Budget.