Sometimes I wonder… why don’t our nanny government trust its citizens to save for old age and illnesses themselves? Afterall, in today’s world, many Singaporeans are well-educated and smart enough to understand the need to save for a rainy day. Of course, there are exceptions, but I am certain they form a minority of the population.

I agree with a comment one of my readers left in my earlier post - that the CPF is a very old fashioned and “kiasu” way of doing things. Perhaps it is suitable for the less educated Singaporean of yesteryear, who may not fully understand the importance of saving for medical or old age use. However, as the CPF scheme evolved over the years - it has become less straightforward as simply saving for old age.

What do I mean? If it is for old age, why does the government disallow people to take out ALL their CPF money at a certain age? Instead, it chooses to force old people to spend less by rationing out their old age savings. And the ration is really small, somewhere around $300 - $400 a month I think. What is the rationale behind this? Afraid that old people will squander their savings? In fact, the minimum requirement for retirement savings in CPF is going up.

Another rationale for CPF is for payment of property. This I can understand. However, this is still not a reason for not returning the money upon retirement.

The monthly ration is so little that it is barely enough to make ends meet. It’s not like the old folks are taking handouts from the government and squandering it… it’s all their own hard-earned money over decades of contribution to nation-building!

Is this what our government deem as welfare? To force people to save and rely on their own hard-earned CPF money in old age? And only when they don’t even have CPF money, they get $290 a month… barely enough to survive on.

The only rational reason I can think of, is to prevent old folks from leeching from the government coffers by forcing them to survive on their CPF savings. Another probable theory is that CPF money goes into government investments (perhaps GIC and others)… which the government generates its surplus on and pays interest of 3.X% back to our CPF accounts.

Well, it should be generating high surpluses since any reasonable investment will probably reap at least a high single digit % of profit… all these with our money, and paying just 3.X% for the use of the funds. If Singaporeans are allowed to take out all their CPF savings in old age, then CPF’s funds will decrease by 20% (assuming there are 20% of old folks eligible to take out their CPF monies). I believe this is a major reason why we are not allowed to take out everything at retirement even though retirement savings is the so-called rationale for CPF that the government wants us to believe in. If the government really intends for CPF to be a retirement savings scheme where it helps us to save and invest our monies, then it should return the full amount of capital gain that it earns with our funds, not just a measly 3.X%.

With this in mind, so how much money are we actually paying to the government each year? Just the ~20% income tax plus 7% GST? Nay. If we include CPF money that are locked up on our behalf (and then used to fund government investments), it would be another 20%. Of course, end of the day we can get it back… when we die it goes to our dependants (so why the empathsis on retirement savings, when many people can’t even finish using their own CPF monies at the rate of a few hundred dollars a month at their deathbed?). And oh, by the way, if we have no dependants, the money would go to the government. I wonder how much CPF savings of deceased people with no dependants goes to the government each year.

Another popular reason for CPF is for medical protection. It’s a rather weak argument, I think. In today’s world where we have medical insurance (both government and private ones), people who plan properly don’t really need to use their CPF savings to pay hospital bills anymore, since a good bulk will be paid for by insurance. It is perhaps more adequate for older folks of today and uninsured people, but that would not form a majority of the population either. Whatever the case, there can be a more flexible scheme put in place whereby Singaporeans with no form of medical and retirement protection planning will need to put more money into CPF than those who already have taken steps to care for their own future.

So it would seem like Singaporeans are paying for most of life’s necessities out of their own pockets - healthcare, housing, retirement, education. Is there any welfare at all for the average man on the street? Some countries have subsidy schemes for housing, free education and healthcare… what welfare does Singapore provide for its people in return for their serving and building the nation? Only occasional little things like, $XX “subsidy” on S&CC charges.

I wonder if there are any statistics on how many percent of the government budget goes to welfare payments… and if it is available, it will be interesting to see how we compare with other countries.

Today, I received an interesting comment from a reader all the way from Denmark. Here is his well-researched and insightful response, reproduced in full.

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I read with interest Mentor Minister Lee Kuan Yew’s remark in Singapore’s Parliament that Denmark, Finland and Switzerland can afford mediocrity in the remuneration of their ministers.

I shall restrict my observations to Denmark and Finland.

These 2 Nordic countries reward their leaders, in both the private and public sectors, somewhat less handsomely than Singapore. Despite this, I would suggest that both countries’ governments are by no means mediocre, and neither have they evinced any indication of being able to afford it.

Finland has managed to weather the collapse of the Soviet Union in the early 90s, a market for 20% of its exports, in no small part due to its successful transformation from a resource-based to a knowledge-based economy. Its leading multinational, Nokia, is the market leader in the mobile telecommunications industry, with a global market share of 36% in the manufacture of mobile phones (Q42006) and revenues of €41.121 billion (2006). While most of the credit for this success story can be attributed to the Finnish private sector, Finland’s government had a significant role to play in creating the optimal framework for the flourishing of the technology sector. From the mid 1960s onwards, there were special efforts to expand higher education, with a law on higher education passed in 1966, the result being that Finns are some of the most well-educated people in the world.

The Finnish government was also instrumental in pushing for the promotion of GSM as the European mobile telephony standard, based on the Nordic countries’ experience of NMT, an earlier, pan-Nordic standard. The early adoption of GSM in Finland provided the platform for Nokia’s global breakthrough. Decades before the global liberalization of telecommunications markets in the 1990s, Finland’s telecoms market had already been liberalized, and thus had possibly the world’s most competitive market for telecom operators and equipment makers. Credit for this is in no small part due to the role of the Finnish government. Finland devotes a higher percentage of its GNP to research and development than most countries, and the role of the government has been critical, especially in the early 90s, where public-funded research increased despite recession.

In the case of Denmark, the government made the decision in the 1970s to intensify research into renewable energy. Important research was carried out at Risoe, the government research centre, into wind energy. It took political courage to subsidize feeder tariffs for wind turbine-produced electricity. That decision has paid off handsomely. Today, Danish-based companies have a global market share of ca. 50% in the manufacture of wind turbines, an industry with global annual growth rates of 30%, and estimated revenues of €10 billion (2006, est.). Indeed Denmark’s Vestas has recently set up engineering and research facilities in Singapore.

In more general terms, I would submit that both countries’ systems and governments are not mediocre, and are like Singapore’s, acutely aware of not being able to afford it. Rather than Europe being there to catch Finland and Denmark should they falter, both countries have been net contributors to the European Union budget since their accession. Mediocrity is not a hallmark of either society either. In the last 30 years, both countries, despite their small populations, have produced individuals who have won Olympic gold medals, Oscars and Nobel Prizes. They have produced New Economy pioneers, for example Finland’s Linus Torvalds, the creater of Linux (an open-source operating system and competitor to Microsoft’s Windows) and Denmark’s Janus Friis, co-founder of Skype (a peer-to-peer telephony application).

In conclusion, both countries’ positions as globally competitive economies and high-achieving societies have been attained against the backdrop of low corruption levels, and high levels of trust between citizens and government, and seemingly despite high taxes and comprehensive welfare states. This has not required stratospheric levels of remuneration of government leaders and officials.

Mr. Gregory Glen
Holstebro, Denmark

In today’s news, PM Lee was quoted as saying that Singapore’s economy will continue to grow at about 5% yearly. Sounds like “good growth” at first look, but if we think further about it, it’s hardly surprising, and perhaps 5% is even too low.

It’s quite clear by now that Singapore intends to have a population of 6.5 million eventually. This is approximately a 40% increase. If I am not wrong, the target is to have this in 20 years’ time. So this means an annualised population growth rate of 2%, of which migrants are supposed to take up a huge portion. So this means that our workforce will grow by approximately 2% a year.

Taking this into perspective when considering the 5% GDP growth rate - 2% or so will come from the increased workforce… leaving a balance of 3% - which isn’t that impressive afterall after taking into account inflation rates. This means that we aren’t really growing the economy much through technology improvements, which would probably be a better, more sustainable way of economic expansion.

At the same time, we will have to suffer a poorer quality of life associated with having to squeeze in 2 million more people on this small island. On top of that, we are expecting 50% increase in tourist arrivals when the Integrated Resorts open for business. It will sure be quite a squash!

So how about 20 years later? By that time, what will the government do to grow the economy? Aim for another 2 million additional population? We, and our government policy makers… eventually have to face reality - is this policy of capital deepening really workable and sustainable in the long term? How much more population can Singapore accomodate? When there is no more space for population growth, how will our economy be expected to grow?

So are we really going to be doing better?

mrbiao is going to stop ranting about Singapore’s societical problems for a few weeks while he mugs for his exams. Unless there is an event that compels him to blog (i.e. minister pay to go up to $10 million or something), there should be no updates until May. Do stay tuned for more updates, or if you wish, subscribe to my RSS feeds to get updated!

Now that everything´s been said, it leaves to be seen whether feelings of the common man on the street will once again be blatantly disregarded, or will the government leaders for once reverse their decision on the salary increment?

Can the government for once respect Singaporeans´ opinions against the increment? Singaporeans are mostly well-educated and we can differentiate right from wrong. If a majority of people don´t think it´s a good idea, then there must be something wrong. Can the high and mighty leaders come down to ground level and listen to us, respect us and make a decision that will make the majority of the citizens happy?

Somehow, I think that at the end of the day, the rubber-stampers will just approve it.

AFP - A senior White House official on Tuesday admitted he was floored by the news that Singapore’s prime minister earned five times more than US President George W. Bush.

“I’m going to emigrate and run for office in Singapore,” the official said on condition he be identified only as “a senior administration official who sits in disbelief after reading that story.”

On Monday, the Singapore government had announced a fresh 25.5 percent pay hike for Prime Minister Lee Hsien Loong, boosting his salary to 2.05 million dollars per year.

Bush gets paid 400,000 dollars per year for doing his job, according to the White House.

Combined with personal investment income, he and his wife Laura reported 618,694 dollars in taxable income in the 2005 fiscal year. They had to pay 187,768 dollars in federal taxes.

But maybe Bush shouldn’t feel so bad. The Singaporean’s paycheck is eight times fatter than Japanese Prime Minister Shinzo Abe’s.

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Even as the rest of the world (including senior administrators from first world countrie) gawks at the huge paycheck and payrise, our leaders are still adamant about it. Nothing is going to change, that´s for sure. What´s the point of debating this in parliament when nothing is going to change? I am sure that was what opposition MP Low meant when he said that debating on this is a waste of parliament time.

Now here´s another chart-topping feat for #1-loving Singapore - Having some of the best paid leaders in the world.

I also noticed that with all these debates, some of our leaders have inadvertently referred to other nations, indirectly criticising their ¨situations¨.

Denmark, Switzerland and Finland are part of Europe. You can fail and you’re still caught in the European situation. If you fail here, you go back to a Southeast Asian situation. Just look around you…

… Their systems and governments never produced the kind of transformation that we have, and their system and government have a broader base and can afford a mediocre government

In this simple few sentences, a dozen countries have been indirectly criticised. Mediocre government? Does this imply that Denmark, Switzerland and Finland are all inferior to us in terms of leadership? And how about all the other Southeast Asian nations? No doubt we are one of the better off countries in SEA, but is there a need for such a scorching remark?

It is no wonder that many other countries simply hate us.

Why does a ministerial payrise require weeks and weeks of non-stop, daily dose of defense and justification from ministers? Is it that Singaporeans are too stupid to understand the importance of an increment, or is it the opposite - that Singaporeans are no longer as guillible as before?

Today, Minister for Defence Teo Chee Hean continues to defend the government’s stand. He attempts to convince Singaporeans with the following statement:

This little red dot is very special because all of us have taken the trouble to take care of it very very well. All Singaporeans have worked hard to make Singapore special. The government is a special government - carefully constructed, bringing in the best people so that it can move Singapore forward, even with all the disadvantages that we have - the lack of resources, the position that we are in the region and in the world. And, Singapore is helped along by a first-class, excellent, efficient, uncorrupted public service that helps it to achieve Singaporeans’ dreams.

I wonder which government doesn’t think that it is a special one? In this case, if I am right that most governments around the world think they are unique and special in their own right, then why don’t every government in the world attempt to raise their ministers’ salaries to similar levels as this little red dot’s?

No doubt, Singapore’s civil service is relatively first-class, efficient and uncorrupted compared to others in the region. Thus, it is fair that civil servants should get market rate salaries. However, that is missing the point - the point is, the benchmark is flawed.

Now, imagine if the US benchmarks salaries for top civil servants in the same manner as Singapore does - by taking the average salary of top XX earners in the country. Top earners in the States earn more than those in Singapore… if this is a good benchmark, then the US government will go broke!

I wonder how the benchmark was derived? Which economist came up with this? Is there any evidence that this is a right benchmark to follow? Is this a fair, unbiased methodology?

These are the questions bugging many Singaporeans, not the fact that Singapore has a good civil service. Instead of addressing these issues in question, we are being treated to daily stories on how good these people are. Yes, we already know we’ve got a good civil service - now, can we be shown the supporting evidence that the benchmark is a fair one?  Can we also be given asssurance that a payrise based on % GDP improvement will not result in “window-dressing” activities?

Apparently, some ruling party MPs have questioned the need for and magnitude of the payrise announced today. It’s encouraging to know that the PAP now has some MPs who dare to speak up against their comrades who formulate policies, rather than just rubber-stamp them. However, it remains to be seen whether there will be any effect, whether what they say will eventually change the outcome.

I doubt so, since most (if not all) of the time, our government will not reverse its decisions despite having much objection from the public.

Words are just words. We need to see some concrete actions for things to change. The MPs can question every single aspect but in the end nothing changes. Well, I suppose it’s still a good start compared to the past…

The word is out - Ministers´ salaries will go up by up to 60%. For permanent secretaries, their remuneration will go up by 66% by end-2008.

However, revisions for entry level civil servants´ salaries pale in comparison - A degree-holder at the management executive level will only receive a total of UP TO 16% increment.

This is a clear sign of the state of income disparity in Singapore, what´s more, being advocated by the government.

It has also been revealed that, up to now, ministers enjoyed a car allowance of 2.5 times their monthly salaries annually. Taking the $1.2 million current salary they enjoy, that would equate to $200,000 of car allowance annually. This allows them to buy a new BMW each year plus some leftover money. Which private sector company offers such perks? It´s no surprise, and high time for them to remove this ¨allowance¨.

Sounds good. But, wait a minute! They will remove the car allowance, but increase the GDP bonus and performance bonus. So is the car allowance removed for good, or is it just disguised as other forms of payments with a simple name change?

As the Car Allowance is no longer relevant, we will remove it formally. In its place, we will increase the GDP Bonus which depends on the performance of the economy, and performance bonus which depends on their individual performance.
- Teo Chee Hean, Minister-in-Charge of Civil Service

Under the new arrangements, high ranking civil servants and ministers will enjoy 7 months of performance bonus (up from 5 months), and if the country´s GDP grows at a good rate, they get an additional of up to 8 months bonus (up from a maximum of 4 months). The question is, will this encourage ¨window dressing¨ by those whose salaries depend on the country´s economic growth? As we know, many accounting scandals in publicly listed companies around the world are results of over-empathsis on financial performance, leading to executives who get motivated to put out nice figures.

Certainly, ministers deserve good salaries for leading the country. However, the question is: How much is enough?

In his same speech, Minister Teo added:

The Prime Minister’s salary currently ranks 164 among income earners. After the revision, the Prime Minister’s salary, at $3.1m will rank 102^nd among the private sector earners. In 2000, the PM’s salary ranked 63^rd. The MR4 salary currently ranks 769th among income earners. The revised MR4 package will rank 438^th compared with 367^th in 2000.

Why does the PM´s salary got to be compared with top income earners´? Are we missing out on something, or is the American government too stupid to pay their President just US$400,000? Compared to top income earners in USA, where many of the richest people in the world live, what rank does President Bush hold?

I can imagine him feeling sorry for himself when he compares his responsibilities and salary with that of the leaders of Singapore, a tiny red dot with a soon-to-be population of 6.5million squeezed in, compared to the USA, which also happens to be a major world power.

In addition to his role of running the US government, George Bush´s responsibilities goes well into the international arena where his government´s policies can make or break almost any other nation. If anybody is underpaid, then it must be him. Of course, here again I must empathsise that I do not mean this to be a vote of support for Bush. This is meant to be a comparison of responsibilities and remuneration.

Each minister´s new pay package of $1.9 million can effectively pay for 63 fresh graduates. Of course, this is not a fair comparison since ministers are supposed to be big fish while fresh graduates are more like ikan bilis, however, I like to think that it is a good perspective to look from - is a minister worth this much?

Another comparison - NTUC Income´s ex-CEO Mr. Tan Kin Lian used to draw only $600,000 in his job as head of a company that insures a good bulk of Singaporeans, and he was in that job for nearly 30 years, growing the company from managing a few million dollars worth of investments into a financial giant managing $16 billion of portfolio.

In total, this increment exercise will cost Singaporean taxpayers´ $214 million, or about $50 per capita. That´s expensive.

I feel very sad for Singapore - with our leaders´ patting their own backs and approving their own salary increments, while the below average Singaporean struggles to make a living. This is meritocracy - at it´s best and worst.

These days, I feel that I’m not getting anymore bang for buck for the $0.80 copy of The Straits Times. I’m better off reading international news websites like BBC and CNN. When I flip the ST, my eyes are treated to pages upon pages of articles on how wonderful Singapore is, and how our ministers deserve the hefty $1 million or more payrise.

Everyday for the past few weeks since the payrise was announced, a minister or another had been quoted in the papers telling Singaporeans how wonderful their rulership has been and how much they deserve the extra money for giving up more rewarding pay packages they could have gotten in the private sector.

Fresh off the press, I quote from today’s papers:

“I’m paid $2.7 million. A top lawyer, which I could easily have become, today earns $4 million. And he doesn’t have to carry this responsibility.”

What an act of selflessness, what greatness! Besides our Dear Leaders, which other country’s leaders are so self-sacrificing? I think we should erect statues of all our ministers for their selfless contributions to the growth of our nation.

This ongoing controversy has proven one thing - that many Singaporeans are not stupid and will not just accept things as they are. A growing number of normal Singaporean citizens are setting up blogs and participating in online discussions to voice their disagreement or unhappiness with a variety of government issues.

This is the new generation of Singaporeans. A generation that is exposed to the rest of the world via the Internet and more affordable air travel. A generation that will not just take what is prescribed by the country’s leaders as God’s words. We shall see in a few years’ time, when this younger generation becomes eligible for voting… whether Singaporeans remain as guillible as ever or, if I am right, they will exercise their rights to vote for a more balanced government.

Goes to show that many Singaporeans are not convinced at all, despite the PR campaign. My opinion is, why bother wasting newspaper pages on such reports when they are going to force the payrise down our throats anyway? Might as well put the editorial space to better use (or maybe in their opinions there are no better news than comments made by some ministers to self-praise).

Before I end, here’s another quote from that funny blog:

The combination of the perfect flawless leadership of Leader Kim Jong Il that has never even once suffered a single setback, reverse, failure, disaster or fiasco, and his Songun politics have made the socialist Korean Motherland into an impregnable fortress bristling with the bayonets of flesh of the invincible Korean People’s Army and People vowing eternal obedience and loyalty for the Leader and casting their lot with him in a do-or-die spirit or revolutionary militant zeal, posing the dilema that no formidable enemy even dare oppose, challenge or provoke.