Does the National Day Rally gel with the statistics?

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The National Day Rally speech does not seem to gel with the statistics?

I refer to the National Day Rally speech.

It states that “wages have gone up.

But there is a caveat – people are still feeling cost of living pressures, and that their earnings “never seem to be quite enough”” – about 1 in 4 resident workers earn less than $2,000 monthly (after the 20% employee CPF contribution) or are unemployed, and cleaners median basic salary is still only about $1,100.

With regard to “Housing, healthcare and education – PM Lee lists these three as the major expenditure items Singaporeans are most concerned about, adding that the Govt will make sure all of them are affordable so Singaporeans don’t have to worry about them” – our public housing is the most expensive in the world  (ratio of price to income).

In respect of “Electricity tariffs – Next, PM Lee talks about electricity tariffs, which he describes as a more complicated issue.

He asks the audience if today’s tariffs have gone up or come down, compared to 10 years ago.

He then reveals that the tariffs, which have gone up and down over the years, are actually lower today – at 23.65 cents/kwh compared to 25.07 cents/kwh in the third quarter of 2008.

He adds that the Govt cannot control tariffs because almost all of Singapore’s energy is imported. And because natural gas is used to generate electricity, tariffs are adjusted in step with changes in oil prices” – According to the Energy Market Energy’s (EMA) annual report – its surplus before contribution to the Government Consolidated Fund (GCF) was $2.8 million for the year ended 31 March 2017.

There are at least nine power generation companies.

The profits of just one of them – YTL PowerSeraya (the third largest power generator with 17.7 per cent of the market share in 2016) which is a wholly owned subsidiary of YTL Sdn Bhd – was $41 million for FY2016/2917.

So, how much are the profits of all the power generation companies? – About $230 million ($41 million divided by 17.7 per cent)?

In this connection, YTL PowerSeraya was one the three power generation companies that were sold to foreign entities by Temasek Holdings.

According to Singapore Power’s annual report 2016/2017 – its profit for the year ended 31 March 2017 was $948.8 million, an increase of 2.7 per cent over the previous year’s $923.5 million.

Singapore PowerAssets’ profit was $433.6 million.

So, in totality – how much profits are being made from providing electricity to the people? – About $1.6 billion (EMA $2.8 million + Power generators $230 million + Singapore Power $949 million _ Singapore PowerAssets $434 million)?

As to “PM Lee says the Govt will do its part to alleviate people’s cost of living concerns, but each Singaporean also has a responsibility to “look after our own wallets”.

He will address this concern using three examples:
– Smartphones
– Infant milk formula
– Hawker centres” – So many price increases? – The Government and government-linked entities have increased so many prices in just the last 2 years (2016/2017) alone.

Price increase justified? Quantum justified?

Some of the price increases may not only be unjustified, but in regards to the magnitude of the quantum also.

Here are some articles and analysis of these “price increase” issues:

Water – “PUB: $1.1b profits last 7 years – how much last 53 years? (Feb 24, 2017)

Service & Conservancy Charges – “S & CC: A truly caring Govt?” (Feb 17, 2017)

Gas – “City Gas prices to rise by 4.5 per cent from Feb 1” (Jan 31, 2017)

Electricity – “Electricity: One of the highest in the world? (Jan 1, 2017)

Childcare fees – “Fee hikes at 200 childcare centres this year” (Jan 1, 2017)

Parking – “HDB car park rates increase 60%? (Dec 16, 2016)

Rubbish fees – “Rubbish fees up: NEA surplus up 32.9%? (Nov 8, 2016)

University hostel fees – “University hostel fees up 6.8% p.a. despite $1b surplus?” (Jun 28, 2016)

Taxis licensing – “Taxi drivers hit by triple whammy?” (Jun 24, 2016)

Hawkers’ misc fees – “Hawkers’ misc fees increased by ? %? (Jun 22, 2016)

So, there were at least price increases for 10 things in the last 2 years or so.

“Keeping a close eye on business costs” or “keep increasing prices”?

Is the Government “keeping a close eye on business costs” or arguably, “keep increasing prices”?

“Keeping a close eye” or “closed eye”?

With regard to “A nation cannot just be pursuing economic growth and achievements

PM Lee says what holds Singaporeans together are also the tangibles such as values and shared memories.

He cites this year’s National Day Parade, which featured five individuals who shared their life experiences.

Among them was Madam Woo Yun Sum, an 88-year-old samsui woman who came to Singapore to earn a living.

PM Lee says Madam Woo’s words – “when there is rice, eat rice; when there is porridge, eat porridge” – remind Singaporeans of the importance of staying positive and being content even as we seek to improve quality of life” – Household income so low? – according to the Department of Statistics’ Household Income Trends 2017 – the average monthly household income from work per household member was only $554 for the bottom decile of employed households.

Since it includes the employer CPF contribution, the income excluding employer CPF contribution may be about $474 ($541 less 17 per cent).

Excluding CPF – $379?

The take-home pay or disposable income may be about only $379 after the maximum 20 per cent employee CPF contribution ($474 less 20 per cent).

Household take-home pay $1,098?

So, can you imagine a family of three (couple with one child) trying to make ends meet with a monthly net take-home pay of only about $1,137 ($379 x 3 persons)?

Similarly, the computed net take-home household pay for the 11th-2oth percentiles was only about $2,242.

Lower income have more children?

Since every study has shown that the lower income generally tend to have more children than the higher income – is it any wonder why our total fertility rate (TFR) is so low and has fallen again?

In respect of “Chas to be extended to all Singaporeans with chronic conditions, regardless of income: PM Lee

The benefits will continue to be tiered according to income, says PM Lee.

MOH will announce the details later, he says” and “Govt will work out a “Merdeka Generation Package”

The package will help this group meet their medical expenses. Details will be announced next year, says PM Lee.

It will cover similar areas as the Pioneer Generation Package, namely –

  • Outpatient subsidies
  • MediSave top ups
  • MediShield Life premium subsidies, and
  • Payout for long term care” – will Singapore’s public healthcare spending as a percentage of GDP, at just over 2 per cent now, continue to be probably the lowest in the world and the lowest among the developed countries?

Singapore workers contribute” up to 10.5 “percent of their wages to mandated savings accounts (Medisave account) that may be spent on health care” and “insurance””.

This is I believe is in a sense from a cashflow perspective – probably the highest national health insurance contribution (pre-pay basis) in the world.

From a cashflow perspective – does it mean that the Government  may still not be spending any money on healthcare, as total annual Medisave contributions plus the annual interest on total Medisave accounts’ balances may exceed total annual government spending on healthcare and withdrawals for medical expenses and insurance premiums?

As to “In recent years, MediShield was upgraded to MediShield Life. In 2017, close to 200,000 Singaporeans benefitted fro MediShield Life, amounting to over $800m” – $2.4b MediShield fund’s assets? – according to the report on the “MediShield Fund“ – “As at end-2013, the Fund assets stood at $2.4 billion.

Over the past five years, on average, about two-thirds of the MediShield Fund comprised reserves to fund the expected scheme liabilities.

The remainder is capital which meets the same standards required of other insurers under the Monetary Authority of Singapore (MAS)’s risk-based capital framework”.

What about the accrued % since inception?

In Table 1 – the insurance premiums of $372,132, 385,563. 404,732, 421,297 and $770,039 million, from 2009 to 2013, adds up to a total of $2,353,763 billion shown in the same table.

So, does the “Fund assets of $2.4 billion” include the interest that should normally accrue on the annual surpluses of premiums less claims, every year since the MediShield scheme started?

Surpluses before 2009?

Also, does the “Fund assets of $2.4 billion” include surpluses prior to 2009?

We have calculated from the table, that the claims to premiums ratio is 59 per cent (claims $1,395,382 billion divided by premiums $2,353,763 billion).

Most profitable scheme in the world?

Does this make MediShield the most profitable national health insurance scheme in the world?

Need 80% more?

Why would a national health insurance scheme that will insure 100 per cent of the population (including those not residing in Singapore) which has been made compulsory for every resident, need to have a capital adequacy ratio that is 80 per cent more than the expected minimum for private insurers?

Make actuarial report public?

Can the actuarial report for MediShield Life be made public?

The Government should spend more on healthcare to help Singaporeans.

By the way, are there any countries in the world, whereby the mandatory national health insurance scheme is apparently, making money?

With regard to “Financial support improved for long term care

MOH has revamped ElderShield fundamentally, and CareShield Life to start soon in 2020″ – it has been claimed that the scheme is not making “profits” even after it collected $3.3 billion in Eldershield premiums and only paid out $133 million and said: “This balance amount is not profit, it is to meet future liabilities.””

Does the “$3.3 billion in Eldershield premiums” collected include the accumulated interest on the investment returns from the excess premiums to claims over the years?

If not, how much is the accumulated surpluses (reserves) – about $4 billion?

Is this probably the most profitable national long-term care insurance scheme in the world, if not in the history of the world?

With regard to “If HDB owners have to return old flats at the end of lease, Govt will help them get another one

PM Lee says it may be a BTO flat from HDB with a fresh 99-year lease, if you are eligible, it may be a resale flat on a shorter and cheaper lease, or it may be a 2R Flexi flat for retirement.

This will depend on your needs and what you can afford, but you will have to pay for the new lease – whichever option you choose”, “Home Improvement Programme to be expanded, benefitting another 230,000 flats – The Home Improvement Programme will include blocks built up to 1997, benefiting another 230,000 flats, says PM Lee

Among the estates benefitting will be Pasir Ris, Jurong, Yishun and Tampines”, “Second round of HIP – HIP II

There will also be a second round of the HIP, to upgrade flats a second time, says PM Lee. HIP II will take place when the first HDB flats reach 60-70 years old.

He says the Govt is determined not to let public housing degenerae into ragged slums, which has happened in many other cities.

The first HIP will cost more than $4 billion, while HIP II will probably cost even more because the flats will be twice as old by then.

But it is well justified, he says, and it will done so long as the Ministry of Finance has the money” and “New scheme, Vers, to be introduced to allow more households to benefit from redevelopment before their leases expire

PM Lee notes that Selective En Bloc Redevelopment Scheme or Sers injects vitality into ageing estates but it is a very limited scheme.

As HDB towns grow older, the estates need to be redeveloped. Hence, the introduction of Voluntary Early Redevelopment Scheme or Vers.

This is a long-term plan. Residents will be able to vote on this scheme. If they say “yes”, the Government will buy back all the flats and redevelop the precinct and residents can use their proceeds to help pay for another flat.

Singapore will not start doing Vers for another 20 years. However, the Government will start planning for Vers now.

Issues to be resolved include how to select the precincts and how to pace the redevelopment process”

– do all these “HDB announcements” during the National Day Rally substantially address the obvious “catastrophic” question – if the value of HDB flats decline to zero at the end of the typical 99-year lease – does it mean that all the CPF used plus accumulated interest will also become zero?

As to a media report which said – “For four-room flats in Toa Payoh, the price gap can be as high as 65 per cent, according to OrangeTee” – isn’t there an urgent need now for the HDB to review their policies, as the HDB flat may generally be the biggest asset of many Singaporeans.

This may be akin to a time-bomb ticking faster by the day and growing bigger as more flats decline in value to zero at the end of their 99-year lease.

In a nutshell – we may seem, arguably, to have forgotten the crux of the issue – which is

HDB less than 60 years lease

the terms for granting HDB loans and the use of CPF funds for the purchase of HDB flats with remaining leases of less than 60 years – have been tightened  (details of this measure are in Annex IV).

In the final analysis,  does it mean that we are still not reassessing our policies of – from a cashflow perspective –  not spending any money on pensions (CPF), healthcare or public housing (HDB – charging land at market rates)?

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.