During the Meet The People hosted by the Progress Singapore Party (PSP) on a Facebook Live on 4 June, several questions were raised for the PSP panellists to opine on. Apart from welcoming their fairly new faces like Tan Meng Wah, Kumaran Pillai, Harish Pillay and Gigene Wong.
Two of the topics that were being discussed were about the impending hike of GST to 9 per cent as well as the wealth generation.
Regarding the subject of GST, a question was submitted to PSP, asking if the Party will fight to scrap the impending raise of GST from 7 to 9 per cent when the Party candidates are voted into the Parliament in the upcoming General Election.
“When PSP candidates are voted into the Parliament in the upcoming 2020 GE, will you fight for the scrapping of the impending 9 per cent GST height after the said GE? As we are already statistically known to be living the most expensive country in the world.”
PSP’s Assistant Secretary-General Leong Mun Wai responded that according to PSP’s policy paper, the Party will definitely be proposing against a GST hike, as well as other public services fees for the coming five years. He expressed that there is no need for the Government to raise taxes and public services fees at this moment.
Noting that the Party still needs to assess the situation, Mr Leong revealed that PSP had tentatively decided to propose for a five-year stop for the GST hike and other fees.
He had also expressed that the economy is facing “unprecedented problems” due to the COVID-19 pandemic and that there is a global economic shift towards the direction of the Great Depression back in the 1930s. Warning that the nation will have to reflate the economy “a lot” to move forward, Singapore must be “very careful” about “taking money away from the economy”.
“The economy is facing unprecedented problems now with COVID-19, and what is more important is that the whole world is moving in a direction that could be as bad as the Great Depression in the 1930s. So we must be very careful about taking money away from the economy. We have to reflate the economy a lot going forward. So definitely, we are against the increase of the GST to 9 per cent.”
Tan Meng Wah’s take on Singapore’s wealth generation
Apart from the issue regarding GST hike, another question was submitted to Tan Meng Wah, requesting him to explain more on why he believed wealth generation isn’t a good thing.
The question went: “You’ve mentioned in your opening introduction that the Government is now focusing on generating wealth, how is that bad? Is it not good that people are getting wealthier as a result of wealth generation? Could you explain a bit more?”
In response to that, Dr Tan provided a detailed explanation by comparing Singapore pre-2000 and post-2000, along with the two resources the Government had control over — people and land.
He expressed that the Singaporean population was young, “hopeful and happy” with how the economy was progressing before 2000. According to him, Singapore had a “demographic dividend” due to the young population.
He stated that the Government was growing the economy using the “demographic dividend” to generate GDP and the increased GDP would create jobs. Therefore, the people in the 70s and 80s got to benefit from economic growth.
“Singapore government was growing the economy using this “demographic dividend” to generate GDP, and the increasing GDP creates job and allows SIP to grow as well. As a result, during the 70s and 80s, everybody was benefitting from economic growth.”
By the 1990s, land prices and values began to grow due to economic growth. As a result, Dr Tan expressed that Singapore was losing the “demographic dividend” because of the ageing population. Thus, the emphasis had been switched from “demographic dividend” to using land generate wealth.
Back onto the topic of “wealth generation”, he highlighted that it will only be true if we get to keep the wealth. To support his point, he mentioned that wealth is being “transferred” from household to the state because of the high land costs and public housing.
This particular “wealth generation” is only going to benefit a small portion of people, leaving the rest to suffer from high housing costs and living costs.
Buying houses pre-1980s and post-1980s
Dr Tan managed to address Singapore’s situation by starting out with the Government’s repositioning of public housing from affordable public housing to investment assets.
From this point onwards, land costs were being included in public housing, resulting in a rapid increase in the housing prices within the following 10 to 20 years.
Despite the rising prices gave the people the impression of growing wealth, Dr Tan mentioned that it would only apply for the first few generations of Singaporeans who bought houses before the 1980s. These people would get to benefit from the “land dividend”.
Whereas for the people who purchased houses after the 1980s, they paid very high housing costs and all of their CPF savings got transferred to HDB for the high land costs. He added that the people will not realise the growing value of the house until they sell it.
“For those who bought houses after that, they were paying very high housing costs for the public housing. So, all the savings in the CPF got transferred to HDB to pay for the high land costs.”
“You have the house as a growing value, but you will not be able to realise it until you sell it. The worst thing is, there’s a lease expiry. You have a 99-year lease. Your wealth is declining year after year. You think that you’re benefitting from the wealth generation, but you’re not. That’s high housing cost.”
He also noted how increased rentals for malls and commercial industrial properties had impacted consumers, leaving the people to live with high living costs.
“Another aspect is that, after the year 2000, all the malls and commercial industrial properties will be purchased over by real estate investment trust. Because it monopolised the supply, they push up the rentals. Eventually, the high rentals had to be transferred to the consumer, resulting in high living costs. So what we’re seeing in Singapore are high housing costs and high living costs.”