Louis Chua raises concerns over inflationary pressures, income security, and housing market

Louis Chua raises concerns over inflationary pressures, income security, and housing market

During the parliamentary debate over President Halimah Yacob’s address at the opening of the second session of parliament, Mr Louis Chua, Workers’ Party Member of Parliament for Seng Kang GRC, delivered a speech highlighting concerns over inflationary pressures, income security for workers, and the housing market.

Mr Chua, in his speech on Wednesday (19 Apr), expressed concern about the impact of global trends, such as economic nationalism and obstacles to global trade, on the Singaporean economy.

He noted that these trends are inflationary and highlighted the latest Monetary Authority of Singapore (MAS) data showing that core consumer prices rose by 5.5% year on year in February, with food prices up more than 8%.

Mr Chua argued that the projected rise in core consumer prices of 3.5 – 4.5% over 2023 as a whole and for headline inflation to average 5.5 – 6.5% is still elevated compared to recent history and out of the comfort range for many Singaporeans.

Mr Chua also expressed concern over the impact of the second Goods and Services Tax (GST) hike in January 2024 on working Singaporeans’ earnings power, especially given that wage growth for those employed full-time barely outpaced inflation in 2022.

He argued that the Government’s support measures should consider intergenerational equity to address younger Singaporeans’ anxieties about their future and seniors’ worries about the impact of higher living costs on their children.

Redundancy insurance and worker protections

WP has consistently been pushing for a redundancy insurance scheme since 2011, and also published a consultation paper on this back in 2016.

In his speech, Mr Chua once again raised the issue of income security for workers who may find themselves displaced if labour market conditions deteriorate, especially given the risk of a recession.

He argued that Singapore needs a nationally defined social protection floor for workers and a law mandating retrenchment benefits, which could help displaced workers and their families meet basic living needs during periods of recession and labour market weakness.

He expressed hope that the Government would study how to extend support schemes similar to the COVID‐19 Recovery Grant beyond the pandemic and adapt administrative arrangements for the grant for a wider redundancy insurance scheme.

Mr Chua argued that a redundancy insurance scheme could raise efficiency in the labour market, reduce underemployment, and provide displaced workers with immediate income security, allowing them to reskill and find a stronger job fit without being pressured into choices that could hamper their longer-term career mobility.

Housing: unanswered questions remain

Mr Chua also raised concerns about the housing market, noting that the root cause of much of the housing woes today relates to supply.

He cited President Halimah’s speech and Prime Minister Lee Hsien Loong’s assurance that the Government knows how to find enough space to build enough flats and keep homes affordable for Singaporeans.

However, he argued that manifestations of the demand-supply imbalance in the housing market continue to persist, with house prices continuing to climb.

“House prices have continued to climb, where based on flash estimates for the first
quarter of 2023, private residential prices rose 3.2% in the quarter, while HDB resale
prices rose 0.9%, with both public and private prices rising for 12 consecutive
quarters now,” noted Mr Chua and added that HDB rents shot up 27.7 per cent in February compared with a year earlier – a rate of increase not seen in 15 years.

Mr Chua also shared that Sengkang, which he represents, saw rents rise the most across HDB estates, at 40.4% over a one-year period, with median rents now at $3,200 a month compared to around $2,200 a month last year.

He expressed hope that the Government will consider intervening in the market sooner than later, rather than continue monitoring the market, in order to preserve open market rental affordability.

Mr Chua also highlighted the issue of the lease decay of HDB flats, which will eventually reach zero at the end of the 99-year lease.

He raised concerns about the trap of ever-spiralling expectations in the housing market and the impact on all stakeholders, especially older Singaporeans hoping to leave their residential property to their children.

Mr Chua referred to WP’s proposal of a universal sale and leaseback scheme that provides a floor price for HDB resale prices, where the HDB is the buyer of last resort for all lessees where each individual lessee is empowered to exercise the scheme and not be subject to a voluntary process which is out of the hands of the individual lessee.

While Mr Chua noted that Senior Minister of State for National Development Sim Ann shared the same notion of having the Government coming in as the purchaser of last resort, he questions how the proposed Voluntary Early Redevelopment Scheme (VERS) can pan out in practice as it is voluntary and subject to voting by residents in the precinct.

He also questioned how the PAP Government could honour its promise to all Singaporeans that their HDB flat would be both a good home for them and their family and a valuable nest egg as he “struggle(s) to see how amid all of these concerns and the eventuality of
the value of HDB flats reaching zero at the end of the 99-year lease.”

Speaking in response to President Halimah Yacob’s recent remarks that political parties can aggravate rifts rather than bringing people together, Chua stated that he and his fellow Workers’ Party colleagues will speak to advance the larger public interest and make constructive contributions to policy debates.

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