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SDP launches economic policy paper for reform and sustainability

SDP New Economic Vision Feb2015 07By Howard Lee

The Singapore Democratic Party (SDP) launched its latest economic policy paper on 7 February, which aims to address social inequality, help local firms compete, divest state-owned companies and foster innovation and productivity.

Titled “A New Economic Vision: Towards Innovation, Equal Opportunity, and Compassion” 105-paged paper had eight key focus areas, which also included recommended changes to the Central Provident Fund retirement scheme, calling for the abolishment of the minimum sum, and to decouple healthcare and housing expenditure from the retirement scheme.

Describing the policy document in a brief, SDP said:

“Our programme emphasises fairness and promotes equal opportunity, it focuses on cultivating an innovative and productive community, and it establishes a society that inspires compassion.

It is an alternative that is people-centric and has as its prime objective the well-being and happiness of the people. Most of all, it is a plan that is fresh and exciting—one that Singaporeans deserve.”

The paper is a mainly a collection of earlier separate proposals made by the party, which include replacing gross domestic product (GDP) with a genuine progress index (GPI) as a measurement for economic well-being, greater transparency for state-owned GIC Pte Ltd, minimum wage and retrenchment insurance.

What is new about the paper was that it consolidated the party’s position on the economy without the nitty gritty of Budget figures – something SDP has been doing annually with its Shadow Budget, which it intends to dispense with this year – and instead focus on broader concepts of accountability, civil liberties and worker rights.

SDP's treasurer, Ms Chong Wai Fung
SDP's treasurer, Ms Chong Wai Fung

Ms Chong Wai Fung, SDP’s treasurer and economics lead, outlined the party’s focus when developing the paper.

“What we have gotten is not only undesirable, but unsustainable,” she said, describing the growth-at-all-cost policies of the PAP government and advocating a move from a market economy to a market society. “The role of a good government is to care for citizens who need assistance, and then getting out of the way when they are up and running.”

“Democracy makes good economic sense,” she added. “Businesses who value transparency and accountability cannot ignore democracy, which is the very ideal that promotes these values. Encouraging democratisation in Singapore is therefore good for business.”

It was this democratic process that the SDP hopes to bring to governance in Singapore, as part of its election campaign, to be “Your Voice in Parliament”.

“If you should look at the bigger picture, you will find that trying to tweak one policy here and fine-tune another policy there is not going to cut it,” said SDP’s secretary-general, Dr Chee Soon Juan.

He noted that the ruling People’s Action Party had since the last general election tried to introduce bits and pieces, such as Medishield Life, “without tackling the bigger problem”, and he felt that this is “not going solve the situation”.

SDP secretary-general Dr Chee Soon Juan
SDP secretary-general Dr Chee Soon Juan

“In this paper, what we have done was look at the problem from a bigger standpoint, and see where every section needs to be reformed, so that everything can complement each other,” Dr Chee said.

One such proposal was the retrenchment insurance scheme, RESTART, which is expected to run on an annualised budget of S$2 billion, which Dr Chee proposed can be funded mainly from tax reforms, such as increasing income tax to 28% for the top 1% of earners.

Dr Chee also addressed the issue on why RESTART did not appear to have a retraining component, noting that the party intends for it to be part of the package.

Nevertheless, citing examples of retrenched workers he had personally met, the broader issue was “you can have all the retraining you want, but if you are going to continue the re-employ foreign workers, they are going to compete with re-trained workers, what good is it going to do?”

The paper seeks to achieve five overarching goals that cut across all policy proposals:

  • Change our economic philosophy and approach
  • Build a fairer and more compassionate society
  • Make our political-economic system transparent and accountable
  • Improve innovation and productivity
  • Free the people’s minds

“Our goal is to achieve a more gracious society where GDP growth is not the end-all and be-all of our existence,” wrote the party. “Living a higher quality of life where there is less stress, where we have more time to spend with our families and loved ones, and where we are compassionate towards those less fortunate than us is the kind of society we want to build.”

The complete policy paper is available on SDP's website.


 

Eight-point plan behind SDP’s “A New Economic Vision”

Re-define economic progress. We have to find another indicator of economic progress. The PAP has almost exclusively relied on Gross Domestic Product (GDP) growth as a measure of society’s wellness. The problem is that the GDP is an insufficient—and even misleading—indicator where the cost (social, environmental and financial) of production is not taken into account. With an alternative index, such as the Genuine Progress Index (GPI), that comprehensively measures the cost and benefit of economic growth, we can better gauge the efficacy of our policies. Under our programme, the quality of life and overall happiness of our citizens is the guiding factor for economic growth.

Reduce income inequality. As our GDP growth rate rises, so has income inequality and poverty. To ensure that workers are not exploited, we propose the legislation of a national minimum wage. Retrenchment insurance will also be introduced to provide retrenched workers support while they look for re-employment.

Encourage entrepreneurship. The productivity rate of our workers has been falling to a dismal level. To address this problem, we must ensure that our society is free and open so that innovation can thrive. Our workers must be intrinsically motivated so that they excel in whatever they do and add value to the goods and services they produce. In addition, we need to cut down on importing cheap foreign labour and ensure that employers employ Singaporeans first. Only when local talent cannot be found should foreigners be employed.

Divest GLCs, increase SMEs. We can also encourage enterprise by divesting inefficient Government-linked companies (GLCs) which are competing and slowing down the growth of our small- and medium-sized enterprises (SMEs). One effective way to help local SMEs grow is to reduce land costs and rentals. We must also wean ourselves off our addiction to multinational corporations (MNCs).

Re-make the GIC/Temasek model. Our reserves are, effectively, kept with the government through two conglomerates: the Government of Singapore Investment Corporation (GIC) and Temasek Holdings (TH). These entities are run in a less-than-transparent manner. Our strategy should be one where our reserves work for the people, not the other way around. To do this, TH should be divested while the GIC’s operations must be made transparent and its accounts public. The GIC must function independently of the ruling party which means that no member of parliament or their relatives should hold governing positions in the company.

Increase social spending. We also need to allocate more resources to help our most vulnerable segments of society. Social welfare assistance for the poorest of our poor must increase to reduce poverty. The SDP does not advocate deficit spending on a continual basis. However, we must increase the national budget for social programmes and for healthcare to support the needy and elderly.

Abolish the Minimum Sum Scheme. Retirees depend on their CPF savings to meet living expenses when they retire. Witholding their savings through the Minimum Sum Scheme is not only impractical but also immoral. The scheme must be abolished and the savings returned to members when they retire.

Empower workers. Beyond a certain level, no amount of coercion can bring about higher-quality output and productivity. We must empower our workers and upgrade their minds and attitudes by returning to them their freedom so that they feel a sense of belonging to society where they contribute beyond what is asked of them.