NDP Rally 2013: Will The Government Do More For The People?

Last week, it was reported in the Today newspaper that Deputy Prime Minister Tharman Shanmugaratnam had said that, “the Government will be announcing measures “soon” to help the pioneer generation of Singaporeans who were unable to reap the full benefits of Singapore’s economic rise during their working life. Specifically, the authorities will be looking to alleviate the healthcare costs in “all aspects” — including hospitalisation, outpatient and nursing home bills — for this “very special group”.

The Today newspaper had reported that Mr Tharman had also “noted (that) this group of Singaporeans did not manage to accumulate much savings in their Central Provident Fund because their salaries were relatively low.”

Today also reported that, “political watchers expect the National Day Rally on Aug 18 to be a possible platform for the announcements.”

What I found disconcerting was that Mr Tharman had also said that, “the younger generation now has higher pay so we want to do more to help the older Singaporeans, especially with healthcare costs”.

Today also reported that Tanjong Pagar GRC Member of Parliament (MP) Chia Shi-Lu, who sits on the Government Parliamentary Committee (GPC) for Health, had “added that the Ministry of Health is looking into greater differentiation between help with healthcare costs for the pioneer generation vis a vis other Singaporeans.”

Yesterday, Today had also reported that the Government Parliamentary Committee for Health, chaired by Member of Parliament Lam Pin Min and comprising seven other MPs — “released a report with a slew of recommendations aimed at improving healthcare affordability”. One of the key recommendations was to “ensure affordability of MediShield premiums, especially for elderly, possibly by getting the young to pay higher premiums”.

Today also reported that, “citing a Today report last month which surveyed 50 young working adults and found an overwhelming majority were willing to pay higher premiums to reduce the burden on the elderly, the committee also proposed a “reversed premium structure” where an individual pays a lower premium as he gets older. A Singaporean or permanent resident aged between 21 and 30 currently pays an annual premium of S$66. At the other end of the spectrum, a Singaporean or PR aged between 86 and 90 pays S$1,190 a year.”

First off, let me state that I believe that older Singaporeans should not be made to paid such high premiums for their Medishield. It doesn’t make financial sense as they should be expected to retire by then and wouldn’t have enough money to pay for such high premiums.

However, what I am concerned about is this – where is the government’s role in subsidising for older Singaporeans?

Let me bring out some statistics to let you understand the reality of the situation.

Acting Manpower Minister Tan Chuan-Jin had said that “entry-level salaries for Singaporeans had been stagnant over the past five years” (Chart 1).


Chart 1

Also, for Singaporeans who earn lower wages, they would see their wages stagnate or drop over time (look at the lines towards the bottom in Chart 2).

Incomes Of Low Income Earners Drop Over Lifetime

Chart 2: Ministry of Manpower Report on Wages in Singapore

Which is why I am uncomfortable that the very first solution that the government could come out with was to ask younger Singaporeans to cross-subsidise the premiums of older Singaporeans.

For the young in Singapore, they have not seen their wages grow and over their lifetime, they would receive lower and lower wages. Wouldn’t the government’s recommendation of cross-subsidising create further challenges for them?

Should the government not uplift their wages first, or in fact, uplift the wages of low-wage Singaporeans first, before proposing such a solution?

But does that mean that the young shouldn’t subsidise for the old? No, in fact, we should! Because it should be the responsibility of the young to take care of the old. But before that happens, what other considerations need to take place?

What the government needs to consider before asking the young to cross-subsidise the old is to look at (Chart 3):

  1. First, how much more can the government subsidise for healthcare?
  2. Second, how should the rich subsidise for healthcare for the poor?


Chart 3

Let me show you some more statistics.

The Singapore government spends the lowest proportion of our GDP on healthcare as compared to the other developed countries, and in fact, as compared to even many developing countries (Chart 4).

photo 3 (9)

Chart 4: World Health Organisation World Health Expenditure Database

The Singapore government also spends the lowest proportion on the total health expenditure, as compared to other developed countries (Chart 5).

photo 2 (8)

Chart 5: World Health Organisation World Health Expenditure Database

Do you think the Singapore government should do more before asking the people to do more?

If you are worried, like how the government had kept saying, that Singapore doesn’t have enough money. Let me show you more statistics.

Do you know that the GIC and the Temasek Holdings, which are CPF are invested into, are ranked the 8th and 10th largest and richest sovereign wealth funds in the world (Chart 6).

photo 1 (10)

Chart 6: Sovereign Wealth Fund Institute Sovereign Wealth Fund Rankings

Do you also know that Singapore has the highest reserves per capita in the world (Chart 7).


Chart 7: The World Bank Total reserves

So, can the government do more?

Next, I wonder too why the government would be so willing to ask the young to cross-subisidise for the old, when it hasn’t even broached on asking the rich to cross-subsidise for the poor?

The government had always been resistant towards having more progressive taxes.

But looking at Chart 2 again, if you are the government, what would you realistically do first?

In Chart 2, which is the group which keeps seeing growth in their wages?

Sensibly and logically, would you first ask the rich to subsidise for the poor first, or would you ask the young, who if they are in the lower-wage group would see their wages drop, to subside the old first?

So, are there fundamental flaws in the government’s first solution to solve Medishield’s problems be to first make the young pay more for the old?

What I would do is to first increase the government’s subsidy for older Singaporeans, and also for poorer Singaporeans, then implement more a more progressive premium structure, where the rich pay more, before finally asking the young to pay more higher premiums for the poor.

I will be very worried if at the rally this Sunday, all Prime Minister Lee Hsien Loong would suggest would be to ask the young to pay higher premiums for Medishield.

What I want to hear is that the government would either top up the premiums of older and poorer Singaporeans, or to increase the payout for older and poorer Singaporeans.

Let me show you some more statistics to give you a clearer picture.

Our CPF Ordinary Account now pays an interest of 2.5% whereas the Special and Medisave Accounts pay interest rates of 4%.

Do you know that the GIC and the Temasek Holdings, which our CPF is invested in, is earning 6.5% (Chart 8) and 16% (Chart 9) respectively?

photo 3

Chart 8: GIC Medium-Term Investment Results

photo 2 (1)

Chart 9: Temasek Review 2013 Total Shareholder Return

So, can more interests be returned to at least the older and poorer Singaporeans?

What do you think?

Another thing that got me worried was what Associate Professor Sean Flynn had said. Today had called him “a visiting American economics professor, who is a strong advocate of the Singapore healthcare system” and that he is currently “writing a book called The Singapore Solution as part of his efforts to push for a reform of the US healthcare system”.

Assoc Flynn had said that, “a way to “get rid” of any bed shortages for a particular class of ward would be to raise the prices of these beds. “But this is difficult for politicians to do and if they had to vote on it every year, politicians don’t like to raise the price of anything … So a simple way to solve this problem is to just have everything indexed to inflation, so the prices of things would just go up automatically every year with the inflation rate … that relieves the polticians of having to make that decision every year.”

Assoc Prof Phua Kai Hong, of the Lee Kuan Yew School of Public Policy had also suggested to adjust the “Medisave amount” according to the rate of inflation.

But in the first place, the wages of the workers in Singapore have actually not kept pace with inflation. You can see in Chart 10 that inflation has actually risen faster than wage change.

photo 1 (1)

Chart 10: The Straits Times

If the government wants to pursue such a policy of pegging the prices of beds or our Medisave Minimum Sums to inflation, then the government would also need to implement an explicit policy of pegging wages to inflation. Otherwise, if the prices of beds and healthcare prices keeps increasing while the peoples’ wages have not been rising in tandem, as it has not, then how can the people continue to afford the ever-increasing prices of healthcare?

So, at the rally this Sunday, if PM Lee doesn’t say that the government will do more to spend more to subsidise the healthcare of Singaporeans, then this PAP-led government has truly become irrelevant. Also, if the government would even think of pegging prices of beds to inflation, then the government has truly not been in touch with the peoples’ needs.

And as I’ve written before, “Health Minister Gan Kim Yong had announced that, the government will increase its “share of national spending … from the current one-third to about 40 percent and possibly even further, depending on various factors such as demographics, and our ability to manage healthcare costs and target our subsidies.”

As I’ve also mentioned, 40% is simply not something to shout about, not when it’s still considerably lower than the 48% that the United States spends on and the 58% that South Korea spends on, especially not when these two countries have lower GDP per capita than Singapore.

For a fair comparison on a country which has a similar GDP per capita, Norway spends 84% of the total expenditure on healthcare. So, if the Singapore government increases their expenditure to 40% or 45%, will you even consider this to be a significant move for Singaporeans?


    • Suri

      How ironic to have someone who claims to represent the silent majority speaks? For your info, the silent majority can’t give a hoot about what you write anyway 🙂

  1. B

    Wow.. Another article that makes non-relevant comparisons, coupled with meaningless statistics as an aid to show nothing. 40% is nothing? Stop making comparisons with over arching countries when it suits you. Previous articles brought in Norway, Canada and Australia. Now another two. It is sad that you waste your time government bashing instead of actually making a difference. I really hope for your sake that this is not your day job.

      • SDrone

        What I think is that the statistics you present are really meaningless unless you can show that more spending = better healthcare which you have failed to do. There are many articles online which argue this point, usually in comparison with the US which you have conveniently included in your ‘statistics’. Since you’re so good at finding stats, please go and do more research on healthcare expenditure.

        Second point, comparing SWFs just by pure numbers is equally meaningless because none of the others are city states with relatively meaningless endemic economic output. BTW, these SWFs happen to be our reserves as well and contributes to our economic resilience. Our economy is our lifeblood. No economy = no jobs = you can forget about any subsidies, young or old.

        Thirdly, you seem to be under the impression that money will magically keep flowing into Singapore, that the rich will always be around. Just exactly who are these ‘rich’ of which you speak of anyway? If they go, then all their accrued benefits will go as well and your system will collapse. Plus, the young will get old too, so when they are paying your so-called ‘subsidies’ it is themselves who will benefit in the long term. The reality is that most of your arguments are based on snapshots without serious consideration of longer term implications.

        oh yeah, 🙂

      • Roy Ngerng

        (1) It has been said before that Singapore has quality healthcare but isn’t being equally accessed. What use is quality healthcare when the poor and elderly cannot afford to access it or do not dare to do so because they cannot afford it. Only the government has this data. Would you like to ask the government?

        (2) There is at least $800,000,000,000 in our reserves. But do you know exactly how much there is, so that we can know how to use it, and to plan for the future? Only the government has this data and the government has refused to reveal this. Would you like to ask the government?

        (3) Don’t be silly. Of course everyone knows money will end at some point. We are not asking to dry the reserves. We are asking for a little to help the poor. Is this too much to ask for? If we shouldn’t be paying so much to help the poor, then why is it we pay millions to the ministers – now many hundreds of millions are we paying them per year? And if we shouldn’t spend so much to help the poor, why are we paying so much to the rich as the rich get richer, while the poor have seen their real wages decrease since 2000?

        Really, if you want to talk about how we will not have enough money at some point, go ask the government again. Ask them why they are willing to bleed our money dry with the millions and millions we are paying them. Ask them why it’s fair to pay them millions while lifting a finger to help the poor and elderly can be so damned. Do you know how many people their millions can help? Well, only the government has this data. Would you like to ask the government?

        Go on, tell me again.

      • SDrone

        So you admit that the problem is inequality in access to healthcare and NOT the healthcare expenditure/GDP ratio. That’s a complete different argument. And don’t go all generalising and say that there’s no way that the poor or elderly can access it. And the issue of anyone not daring to (if such actually exists) has no bearing on the GDP ratio OR inequality in access, which, if I may remind you, is not specific to Singapore.

        There is data based on estimates available for your perusal. As for the reasons on why they are not made public, the reasons are there as well and I find them to be sound. If such data was to be made public, our government (whatever the flavour may be), will certainly NOT be the only ones to make use of it. I feel safer that there are responsible people in the boards to govern our reserves, than to allow any TDH to view it just so they ‘we’ can help ‘plan’.

        Are you implying that the poor receive no help? I know that even you know that is not true. Also, your use of the phrase ‘hundreds of millions’ reveals to me that you have not bothered to go through Singapore’s budget. The amount is all stated very clearly in the respective budget reports. Go educate yourself and reveal the truth for once, even if just to yourself. Btw, I am looking at the reports as I type this so I know that your figure of ‘hundreds of millions’ to ministers is completely false.

        Bleed our money dry? I seriously beg to differ. Look at any shopping centre on weeknights and weekends and tell me that the people are being bled dry. Go take a look at the budget and know that social development forms the largest portion of government expenditure and amount that goes into the various initiatives for the poor and elderly, even if purely in terms of dollar value. I think its completely fair that they are paid to keep Singapore as a nation a viable proposition. I haven’t had to ask the government because the government has provided me with the information I seek without me having to ask. Do YOU know how many people the millions have already helped? I say now sincerely that I believe you don’t.

      • Roy Ngerng

        Erm. Singapore spends the lowest public spending in the developed world, even though we are the richest.

        Erm. Singapore spends the lowest of healthcare in the developed world.

        Erm. Yeah. Singapore is the richest country in the world. People earn the lowest wages. Pay the most out of pocket. Least support from government, so yeah. I’ve got the stats too.

      • SDrone

        Erm, why? Can’t stand the peer review process? Or just wearing a blindfold?

        I have seen your stats and I laugh at them, and only because I have read the fine print and clarifications which you almost always completely fail to include. btw, just to remind you, FMI.

      • Roy Ngerng

        I’ve always included sources and links. Similarly, many have agreed with what I’ve written. Like I say, to each his own. I seek to share what I know. If its not something you agree with, take it as a joke, laugh at it. As long as it serves some purpose.

      • SDrone

        Yes, and I have read them, which is why I laugh. And please, if your definition of agreement is simple one liners or another round of anti-gov’t rants, then those are low standards indeed.

        I also note that when shown flaws or contradictions in your argument by more knowledgeable respondents, therefore showing what you know to be wrong or misinformed, you do not even bother to issue retractions or clarifications, other than your standard M.O. of “Thank you for your reply but I stand by my (whatever you call it)”. I see no reason to see it as a joke if you take it to be serious. As for the purpose…

      • Roy Ngerng

        I’ve at times clarified and rewrote what I’ve misunderstood. And when I do believe that I’ve made a genuine point, I will stand by it.

        And this is how I’ve always operated. I will stand by what I say and believe in. And people are free to say what they want, as you are.

      • SDrone

        Well, you don’t seem to understand that an argument is only as good as the evidence. What you have is an opinion, which your ‘stats’ fails to back up.

        You stand by what you say, that’s good. Because that also makes you accountable.

  2. B

    You mean the statistics that you have “painstakingly” derived from other organisations and our own government sources? I really wish you lived in another country for 5 years. Then you will understand the beauty of the Medishield scheme. Do a light read on Switzerland or any other developed country. Will be more than happy to discuss with you if you like.

    • Roy Ngerng

      I think you fail to understand what the article is trying to say. Does the article criticise the Medishield scheme?
      What is aims to say is that more financial support should be given to the poor and the elderly, and the government should boost its contribution first and foremost, before asking the people, who have largely seen their real incomes remained stagnant or even drop.
      This is on top of healthcare prices which have been rising, for which the people have been mainly footing, but which the government had continued to subsidise at a low rate.
      The premise of the article is to ask – can the government do more, before asking the people to do more? And clearly, it can.

  3. B

    Roy, i failed to understand your article. Just like how numerous others have failed to understand your other articles. Your needless comparisons with countries that have biting tax rates have clouded your points. Your erratic proportion comparisons do not prove or show anything. What is the healthcare requirement of Singaporeans? How does it compare with the countries you have mentioned? Did it occur to you that we might be subsidizing theexpensive treatments to a larger extent? Again, this article is just an attempt to fault find with another “subsidy” solution.

    • Rocky Tan

      The Government possess the financial resources to do more to help the people but for some unknown reasons chose or decided not to do it. Instead, she made the decision to pay herself the highest salary as compared to G8 countries just to govern a small red dot.

  4. Suri

    Hi Roy, well done! You have gotten the attention of not one but three ball carrying lap dogs. It goes to show what you are doing is correct. They are just trying to wear you out by asking nonsense and picking on non-issues. This is their standard tactic. Nothing new really. If I were you, I wouldn’t reply some of their non-sensical remarks. Save your ammo.

  5. Suri

    Oh yes, since this is your blog, you can check if these dogs actually come from the same ip address. Very easy to expose their trick. And links like the first post should be deleted. No need to give these fake “silent majority” any air space. Remember silent means no views Got views means not silent.

  6. Sgcynic

    It is supreme shame that a government that purports to be transparent, account (who are we kidding? We are not daft nor blind) would set up a covert arm of nameless individuals that seek to engage in DRUMS! Where are the junzi (gentlemen) of yore? Oh, they are either retire or dead right?

  7. leon

    So we spend the lowest proportion on the total health expenditure, as compared to other developed countries. I’m not sure if its a good indicator to start off with, since other countries’ GDP might be lower/higher and their population could be more/much much more. A better indicator would be a comparison of health expenditure per capita, or something to that extent, no?

    Regardless of what indicator we use, I agree that we need to spend more on healthcare, especially with rising healthcare costs and an ageing population. So who should pay? Your suggestion is interesting and warrants more thought. How much do we have to draw down from our reserves to subsidise healthcare? maybe we should also draw down abit for social assistance? or for other national priorities? Where do we draw the line? Will we risk going down the slippery slope? It is indeed attractive to take out a trickle from our reserves to address high priorities such as the rising cost of healthcare. Is that the best method? I’m not sure.

    Do you know how our Budget is financed every year? The traditional method, of course, is through a variety of taxes. Corporate taxes contribute the most to our govt coffers, followed by GST, then personal income tax. There is a lesser known revenue source “Net Investment Returns Contribution” (NIRC) which can be seen as ‘dividends’ received from our reserves through GIC and Temasek. In fact, NIRC would be tied at #3, with personal Income tax, in terms of contribution to Budget 2013. Put it this way, if not for NIRC, all of us will be paying double our personal income tax today.

    To me, the theory of growing our reserves and ensuring we have ‘dividends’ that contribute to our annual Budget in the long run is a sound one, vs if we start drawing down on our reserves to meet our Budget, which sounds more of a short term solution. If we activate our reserves to spending more on healthcare, it is not a one off expense, it requires an annual drawdown. No matter how large our reserves are, it will slowly and surely be depleted.

    Maybe we can raise corporate tax? My gut is we will lose our competitiveness to Hong Kong, who has a similar tax and economic competitiveness. Increase corporate tax and Singapore will be a less attractive destination for MNCs to base their operations in and shift their regional offices to HK. How about GST? I am generally against GST or any hikes in GST since it is a regressive tax in its current form. Not to mention it just makes my grocery shopping more expensive.

    Our government has signalled a slight shift towards a more progressive tax system from this year’s Budget. Some examples include the new taxes introduced on cars and houses. Did we like it? No, everyone complained when these taxes were introduced. But that’s what some people are advocating now, let’s be ‘fairer’ to the low income. Let’s tax the rich more. If you can afford to buy new cars, and private houses, you certainly do not belong to the low or middle class? So where is the sense of fairness when progressive taxes like these were introduced? I can predict the same reactions if we were to make our personal income taxes more progressive.

    This is something we have to consider carefully. If we want government to spend more, where is the money going to come from? Can we really live with more progressive tax regimes? Or what other alternatives are there? Maybe we should seriously consider a no sacred cow policy and look at reducing our defence budget without compromising on security???

    • Suri

      The defence budget has never been scrutinized. Do we really need to spend such big proportion of the budget on defence? Who decides this figure? Before we equate a cut in defense budget to compromising security, I would like to see some figures to justify that we are not over-spending. Some money could have been better spend instead of on pixellated uniform for navy and airforce. And i hope they do not order those F35s when upgrades can still be done.

  8. nameshy

    While it is possible that more needs to be spent, I don’t think SWF comparisons are the best measure of potential spending, since theirmain purpose stabilising our currency. If we have too little reserves in comparison to the holdings of the many, many banks that operate in Singapore, we might end up like Iceland…

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