berthahenson

Archive for the ‘Money’ Category

CPF – Completely Perplexing Fund

In Money, News Reports on July 9, 2014 at 4:54 am

So two ministers have spoken on the CPF system, probably the most extensive elaboration we’ve heard in recent years. Funny how the CPF system has been in place for so long and it is only now that we’re told the ins and outs of its operation. I don’t suppose we have to thank blogger Roy Ngerng for this? Or would the explanation have come in any case because people no longer take increases in the CPF minimum sum as something that just sorta happens every year?

The pity is that the G’s explanation is not going to reach many people. Its feedback arm says that while eight in 10 have heard of the CPF system, too many do not know how it works. Half of the 1,000 plus people polled don’t even know that CPF Life will give them a monthly sum from age 65. But why would anyone really bother so long as the money goes to them, in full and in time? No one has received a bounced cheque from the CPF have they? In fact, the fund is ticking away just fine compared to other retirement funds elsewhere where benefits have to be cut or where there’s a risk of the funds going bankrupt. Why the kerfuffle now?

At the risk of over-simplifying, people simply want more/all of their own money back earlier. They think they know how to deal with their own money to plan for their retirement and can the G please butt out, thank you. Also, there’s this desire to want all their own savings to themselves before they die. In fact, what I would really like to know is, how much do people leave behind in their CPF when they die? Nothing? Very little? A lot?

I suppose the trigger was the increase in the Minimum Sum to $155,000. You know, this really affects those who turn 55 this year but many other people are hopping around thinking it applies to them too. Hmm. Well, the bad news is that it will get higher given rising cost of living. It has to, to be able to provide between $1,000 and $1,200 pay out every month after age 65.

Then the G makes it plain that people shouldn’t be panicking at the $155K figure. It’s really just half that because you can use the property to pledge the other half. The figure I would really like to see is whether this current cohort of 55ers do have the Minimum Sum, in cash and kind. I don’t see the figure anywhere although it must exist. But last year, just 15 per cent of the 55ers put up property pledge. That sounds not too bad; most still can handle the cash portion.

There’s a point that I am confused about regarding this property pledge. So we have CPF Life which is like an insurance scheme pooling everybody’s retirement accounts (which I gather will include the property pledges) So what happens to our “property’’ if something untoward happens to CPF Life? Is this so as to provide room for us to finally sell our homes if need be? Or forced into doing some kind of reverse mortgage? (Okay, my questions might be seem silly, but I really don’t mind an education)

BTW, I thought Finance Minister Tharman did an excellent job explaining the workings of the CPF system. There will of course be queries, like why set the CPF interest rate to a formula involving G bond yields anyway – and not closer to projections of how much GIC can make, which might be higher than the 2.5 per cent for Ordinary Account and 4 per cent for Special? After all, the G is confident of guaranteeing rates of return and has a buffer of “net assets’’ if GIC underperforms. Too volatile to do so? Too much dependence on market vagaries?

But what IS this thing about net assets? So the G sells stuff and uses the money to subsidise the CPF in the GIC’s bad years? It seems to have done so for eight years – and no one noticed or recorded it?

What I also found interesting is his explanation of why the CPF fund can’t be managed as a standalone fund but needs to be co-mingled with other assets to be invested. It’s to give GIC a much bigger base to play with so that it won’t be TOO conservative about investing simply to meet CPF interest rates.

Manpower Minister Tan Chuan-Jin also gave some interesting statistics.

a. 20 per cent of last year’s cohort of 55ers – about 12,000 people_- didn’t withdraw their excess OA even though they could. So I guess this was pushed into the Retirement Account which gives higher interest. I wonder who these people are. Probably those with enough money to spare and can’t be bothered to take it out to invest elsewhere. So they leave it to the G to make money for them. It would be good to hear from some of them

b. 10 per cent of those 55 years and older are still using their CPF to service their mortgages. I guess this is from the Ordinary Account. Half of them have to put out cash as well. How many exactly? Don’t know but Mr Tan said it was a “small group of people’’. I wonder why they still haven’t owned their homes by then. Because they have been upgrading homes through the years and been enjoying the asset enhancements without figuring that their CPF might run out?

c. Every year, about 500 of the post 55ers ask to be able to use their Retirement Account to service mortgages, that is, they’ve already exhausted their Ordinary accounts. About two-thirds are approved. The other one-third will be given other “financing’’ or “housing’’ options. I wonder what they are. Will they be asked to take a reverse mortgage or a lease buy back scheme? It would be good to know if people have had to do so.

I hope the above isn’t too hard-going. Oh. I didn’t give the mechanics of how CPF works because I did so in an earlier post. Read The Old Lady and her CPF Part 2.

Medi-Shielding the civil service

In Money, News Reports, Politics on July 5, 2014 at 1:46 am

So I know that civil servants had some pretty good news today on medical benefits but I pity the poor civil servant who has to wade through all the words in MSM to find out what the good news is all about. And what’s in it for them.
So here’s a dumbed-down version:

First, remember that everybody, including civil servants, will get 1 per cent more from employers that will go into their Medisave account from next January. This extra will help to pay for the Medishield Life premiums which will be higher than it is now under the current Medishield.

Second, there are two groups of civil servants.

The first group is a big group, 85 per cent of the 82,000 civil servants. For this group, the G ALREADY puts in extra money – 1 per cent – in their Medisave every month so they can buy current shield plans or other types of approved medical insurance. That is, they have portable medical insurance something which the labour movement wants employers to give to their workers. This means that even if workers quit the service, they can still bring their benefits along with them.

(Okay, I know it’s a far cry from the days when retiring from the civil service still means pretty good or even free access to healthcare. But it’s a lot better than most workers in private sector who are left in the medical lurch when company health benefits expire when they quit or retire)

Anyway, from January, this group will get 2 per cent, capped at $140 a month. This seems a pretty good deal given that monthly premiums will go between $3 and $6 every month when Medishield Life kicks in.

What about those who don’t earn as much as won’t ever be able to get as much as a $140 top-up? If they earn, say, $2,500 a month, the 2 per cent will amount to $48. Well, the G says those who earn $2,500 a month or less will get at least $50.

(Note to civil servants: you get this if you are on the Medisave-cum- Subsidised Outpatient (MSO) scheme)

The second group is on a different medical scheme, a much older scheme known as Comprehensive Co-payment Scheme which heavily subsidises health-care costs, including inpatient treatment at public hospitals and polyclinics. Mainly for the older and senior people. These people will get 1 per cent extra.

The third group comprised the retired civil servants, some 32,000 people, who are themselves divided into those who are on the scheme above and those with the really, really super duper medical benefits. Those who are on the scheme above will similarly get 1 per cent extra.

The rest will get their Medishield Life premiums paid for by the government. Lucky devils number about 19,200.

I don’t know how much this is costing the G because the news reports don’t say. But it looks like people who enter the job market or change jobs should be looking out for more than just what prospective employers pay in terms of salaries and bonuses. The question to ask should also be: What about medical benefits? This is something most people don’t pay much attention to, especially young job-seekers. They are more interested in the cash as well as whether they need to work shifts or weekends and the number of days of annual leave. I know of enough people who enter retirement with even more worries than while they were working. Suddenly, the comfortable corporate healthcare rug has been pulled out from under them. And they never thought to buy themselves any medical insurance while they are hale and hearty. So they enter retirement with their blood pressure even higher and find that they can’t be insured or would have to pay sky-high premiums if the insurance companies give the nod.

The good thing about Medishield Life is that those with pre-existing illnesses will be covered, yes, at greater cost. It’s relief to the sick although I am also hoping that this wouldn’t suddenly bankrupt us when the time comes to pay for their bills. There is a reason the private sector WON’T insure them.

The private sector should move quickly to having portable medical insurance. The small and medium sized companies have come up to say that it would be tough for them to give up an extra 1 per cent to Medisave accounts; it will add to employment costs. Fair point. I’m not even sure if most already provide medical benefits…

But what about the bigger companies who have company health benefits and group insurance schemes? Is it only inertia that is stopping the move to something that is clearly more beneficial to the individual, both in the long and short term? The issue deserves further airing. It seems the public sector unions were involved in the discussions with the civil service on topping up Medisave accounts. Maybe they should help their private sector union counterparts to come up with a plan to move the big corporations to do the same.

Cut off a few heads

In Money, News Reports, Politics, Society on March 9, 2013 at 11:10 pm

There was an interesting feature in The Sunday Times today about COE prices by ex-ST editor Han Fook Kwang. In essence, he recounted how various changes to Singapore’s car ownership story has caused the explosion in COE prices. The earth should have moved within the G ranks, he said, when COE prices shot up. It didn’t.

Here is his list of how this happened:

In 2003: car loan restrictions which had been in force from 1995 lifted.
In 2002: ARF reduced from 140 per cent of the open market value of a car to 130 per cent, part of a planned reduction in the tax which was brought further down to 100 per cent in 2008.
In 2009: COE numbers reduced to slow down the growth rate of the car population from 3 per cent a year to 1.5 per cent, and to 0.5 per cent this year.

“Should anyone be surprised then that COE prices exploded, hitting the $90,000 mark?
“In its defence, each of these changes could be justified on its own grounds, as indeed they were. But taken together, it was a recipe to break COE price records. It shows how important it is for policymakers to be clear about what they want to achieve and to be wary of unintended consequences.’’

What he wrote sounded a bit like what National Development Minister Khaw Boon Wan said about housing policy during the budget debate. So many tweaks over the years that we’ve lost sight of what is the G’s role in providing public housing – hence high HDB prices.

In 1971: HDB flats can be resold for a profit.
In 1989: HDB flat owners can keep their flat, even when they buy a private property.
In 1993: Buyers can take loans based on the prevailing market value of the flat,instead of HDB’s historical selling prices.
In 2003: HDB flat owners can sublet their flats.

In between, the housing policy is used as a social tool for everything from making sure families stay together, encouraging the formation of families, raising the value of housing assets by subsidising upgrading, catering to the accommodation of foreigners and PRs, ensuring the spread of races…You name it, the housing tool can be used to fix everything so much so that the myriad renovations might well damage the supporting beam structure.

So Mr Khaw as well as other MPs are asking for a back to basics look at housing policy.

The trouble is, the genie is out of the bottle. Going back to basics and first principles mean that some groups which had benefited from the changes which made housing policy so complicated will be affected.

Mr Khaw raised the example of the income ceiling for HDB flats.
Should it be lowered, raised or lifted. Should executive condos continue to be offered? (Now we have to remember that ECs were in response to the housing needs of a sandwiched class who were priced out of both public and private property.)

Another example he gave was whether the HDB should return to pre-2003 days of strict owner-occupation. Then what would happen to the many retirees who rely on income from subletting or the younger homeowners who use it to help support their lifestyle?

A third example: Return to pre-1989 days when HDB flat owners have to sell off their flats when they buy a private residential property. What to say then to Singaporeans who aspire to live in a private condo and use their HDB flat for additional rental income?
Mr Khaw has been fighting fires (his words). He’s delinked BTO flat prices from the resale market to make them more affordable although he very cleverly said that those who want to figure out the discount should do the sums themselves (which property analyst will do this please?)

So housing will now be part of an in-depth conversation within the National Conversation. Mr Khaw’s back to basics re-look should apply to other policies as well. For example, have we lost sight of the G’s role in public transport (why should it subsidise transport operators?) and education (with calls now to nationalise pre-school education)?

In fact, one important facet of this discussion is what we, the citizens, want from the G in these areas. Our record is not good – we want the G to do everything. Every segment of the population wants something different that is in its interest, and policies are tweaked to cater to demand. The result is a many-headed monster of a policy. It is a Hydra that will eat the next generation, not mine or my parents’ – since we probably would have got most of what we wanted over the years.

Maybe, we should just do this: Come to an agreement on the G’s role in each area and state its mission and vision in the provision of housing, transport, education and healthcare, plus the underlying principles that will underpin its operations to fulfil its vision. Then we should look at the monster with a view of cutting off some of its heads and making sure they don’t grow back. It’s easier said than done of course.

But it would be an interesting political and intellectual exercise.

Why is my salary STILL so small?

In Money, News Reports on March 4, 2013 at 2:07 am

I don’t think anyone is going to object to getting a bigger pay packet and it seems that seven in 10 workers might well be made very happy with the Wage Credit Scheme going by what ST reported today.

The question is whether employers will bite – and why not, you say? Well, the worry about what happens after the three years of wage subsidy is up will be on their minds. Can they afford to take up that 40 per cent portion of G-funded wage rises, especially if productivity efforts did not work? Will they clamour for a continuation of that gigantic $3.6 billion package, given that, hmmm, the next general election will be due then? The political pressure will increase for continued help with even more dire scenarios of companies closing shop painted.

Another issue that hasn’t been quite canvassed: The reaction of workers. I think we can expect pressure of another kind, this time on employers to raise pay. Expectations of seven in 10 workers will rise. All will be scrutinising the size of their wage packet and doing their sums on whether they should have got more, given that the G is giving bosses a helping hand. Employers will be doing their sums too with an eye on Year 3, and might well be more careful in doling out pay raises. So expect dashed expectations.

I guess some workers will also argue that since the G is already willing to give 40 per cent and the employer has already thought about a pay rise, then the pay rise should be more than 100 per cent. That way, wages are definitely raised – which is what everyone likes, no? They might not view the G subsidy as an effort to help the companies use the money for productivity improvements. The argument will be: since the G is giving you money, you can afford to give us more.

This will be a pretty short-term view, but mightily important to those earning less than $4,000 a month with children to raise and bills to pay. After the three years, then what? If the company cannot sustain its wage bill on its own steam, then woe betide those who have enjoyed three good years. I can hear the clamour: the scheme should continue or you’ll see how I will vote come 2016.

I think the objectives of the wage credit scheme should be clarified for the common man, to contain expectations that their wages will increase dramatically because of this help. That the effort is more about helping employers to restructure and re-skill their workers so that at the end of three years, both employer and employee will be comfortably off. This means workers must have a clear idea that they in the scheme along with their employers, that they have a stake in making the company work smarter so that they don’t find themselves worse off after three years. It means that within the three years, you don’t going looking for another job because it pays a bit more, that you have an obligation to the taxpayers, really, who are funding your pay increase to give your companies some respite.

Therefore, the objective of the Wage Credit Scheme must be clear and not only directed at employers, some of whom might well game the system for their own ends. It is important as well to reach those seven in 10 workers, not a small number, who will be waiting for a fatter wallet.

READ http://www.breakfastnetwork.sg for a Chef’s Special on how EMPLOYERS might react to the Wage Credit Scheme

Shift gears = New fears

In Money, News Reports, Politics on February 27, 2013 at 12:19 am

I reckon that the best thing about the debate on the Population White Paper is that most of us will be able to comprehend the Budget 2013 much better than in the past, when we will probably be zooming in to see what’s in it for us.
So many reactions now, so here’s a summary of some new points that have emerged following DPM Tharman’s speech yesterday culled from media reports.

- The construction sector, that really unproductive part of the economy, is going to be hit so hard that it will be a wonder if we can get our infrastructure plans in place. Construction companies which have been going around the quotas by paying a $650 monthly levy for every additional foreign worker will have to pay more, $950 next year and $1,050 in 2015. Now that’s a psychological barrier that’s being breached. Smaller companies are expected to fold or merge.

- The retail and restaurant business people are extremely angry that they have been hit so heavily with higher levies and lowered quotas on foreign workers. Some operations simply cannot be automated, they say, and no matter how much you pay, Singaporeans just won’t do certain jobs. Seems though that there is some kind of workaround: A flexible job scheme that was piloted in the hotel sector to get foreign workers to multi-task will be extended to the whole services sector. So a waiter can double as a dishwasher in this new scheme (hate the word!) that will have its own quotas? Seems we’ll hear more about this later.

- That Wage Credit Scheme in which the G foots 40 per cent of pay rises for those earning less than $4,000 a month might well prove to be a double-edged sword. Bosses may feel compelled to pay people more than they are worth; people would start expecting higher pay even though there is no increase in productivity. And what happens after Year 3, when these credits stop? Can companies afford to foot the wage bill? Would their companies have had enough time to re-structure and raise productivity by then to justify the cost of manpower? The opposition parties, the Singapore Democratic Party and Reform Party, have weighed in too, suggesting a minimum wage law would be a better instrument.

- Some real drama is playing out in car companies. First, they had to deal with last minute orders with people started shopping on Monday night to beat the clock – higher cash payments, ARF etc will kick in. Now, people who had ordered cars are calling to cancel because they don’t know how the new figures will play out. There’s a shift of gear here: the G seems to be moving from curbing car usage to restricting car population. Not fair, the car people say.

- The Workfare Income Supplement to give cash/CPF support to those with low-paying jobs should be extended to part-timers, said an economist. Calculate the income support on a per hour basis, he suggested. This might well bring in more workers into the fold and up the resident workforce numbers.

I’m looking forward to the debate. Stay tuned to this blog and http://www.breakfastnetwork.sg

A ground level look at Budget 2013

In Money, News Reports, Politics on February 26, 2013 at 2:30 am

What’s there not to like about Budget 2013? That depends on what’s your instinctive reaction after hearing/reading DPM Tharman speech yesterday?

Aspiring first-time car owner: “What? Forty per cent cash down for a car? How can? Can those China-made cars please come back? Wait, the COE will be higher than the price of the car..’’

Rich guy: “How dare they tax my second home at the Sail, my third at Sentosa Cove and my fourth in Bukit Timah! Time to buy a building at Iskandar.’’

Befuddled economist/pseudo economist: “The government is paying employers to pay workers who get a pay rise? Why not just implement a minimum wage scheme?’’

Sandwiched class: “Damn! More income support for the lower-income. From MY taxpayer money. Why don’t just cut GST and everyone will be happy since it’s most regressive tax around and G made so much surplus already?’’

Big -flat homeowners: “Again five-roomers and executive flat people lose out. The Government think we all not poor just because we live in bigger places ah? Better downgrade and use the Silver Housing bonus – but I love my big place!’’

About-to-be bankrupted restaurant owner: “I will now close my restaurant. I can’t get foreign workers and the Government not even doing anything about my rent. At least can tahan if rent not so high.’’

Earning below $4,000: “My boss had better give me a pay rise now since the Government is subsiding 40 per cent. Actually it means my pay rise can be higher BY 40 per cent from whatever my boss thought. But I bet the stingy fella will just save the money for himself.’’

Panicked mother: “At least got more kindergartens than just the PAP and NTUC one. MOE also starting its own. I think everybody is going to go to the MOE one. Sure got standard, got subsidy. Better queue now while Ah Boy is six months old.’’

I don’t mean to pour cold water over the Budget which I think is pretty cool. This is a G with ideas taking a big picture look at the present and the future. The budget is characterised as a shifting of gears and I so agree. We’ve been in cruise-control for too long – or running ragged at top gear?

How people react will depend on what bit bit them most. Hard to look at the big picture when you see your new car disappearing into the distance. That promise to fix the transport infrastructure MUST come true! Hard to be happy when you are facing the prospect of closing down your business. I mean, which retailer or restauranteur will say: Actually, this isn’t for me. I should change lines. (And become a cigarette smuggler: sure got demand! Kidding ok…)

I liked that steps are being taken to address income inequality; whether they are bold enough is the question of course. But, at least, something is being done to raise their incomes while at the same time sustaining the smaller enterprises who scream about lack of foreign manpower.

My worry about such handouts have always been whether the enterprising enterprises will find a way to “game’’ the system, not just the Work Credits scheme but also Workfare Income Supplement and Productivity Innovation and Credits scheme. Big money is being paid out, what are the checks and balances and at the end of the day, how do we measure results?

A healthcare begging bowl

In Money, News Reports, Society on February 25, 2013 at 2:02 am

We’re all talking about healthcare these days and whether we can afford to get sick in our silver years. Economists are wondering if the healthcare system should be reformed – why save so much money in Medisave when some of us need it now? Can’t the G share of the bill be higher? And my own favourite question: Has anyone ever been bankrupted by a medical bill?

So I read with interest The Sunday Times story on Medifund, that last safety net in our 3M system. I gather that this is for those who have depleted their Medisave (and those of their immediate family members?) and who didn’t sign up for Medishield. At least, that’s what I think the criteria is since it hasn’t been publicised with the G seeming to prefer a “case-by-case’’ basis.

I have friends who have been helped by Medifund, for which they are grateful to the G. It’s good that people are “grateful’’ but should it be the case that they look to G largesse to foot medical bills. I mean, no one intentionally gets sick. So I read about Health Minister Gan Kim Yong vowing that no one will be denied healthcare because they can’t afford it. He’s said it before, probably more than twice, and so has every Health minister before him. The ST led with this assurance – again, although the news should really be how many people have been helped by Medifund. I can’t help but think that the problem can be fixed at the root, but I will leave that to health economists.

Anyway, Medifund disbursements have increased from$78.7 m in 2011 to $90.8 m last year. Number of applications approved shot up from 480,869 to 518,389. The rise is attributed to greater flexibility to medical social workers to say yes to applications, although I still don’t know what is “flexible’’. As compared to what?

I tempted to say “wah, so generous now…’’ but I won’t. Because the figures are troubling. So many people need help with their medical bills, so much so that there is a “shortfall’’ – Medifund, an endowment fund, paid out more than its income for the first time. There is one more figure which appals me: That 96 per cent of the applications were for out-patient bills. I mean, so many people cannot afford out-patient bills? Something is wrong somewhere no? Especially since an in-patient received $1,295 while an outpatient get $103. So many people cannot pay $100 or so? How come? Is it because the medical problems aren’t covered by Medisave in the first place? Or they really, really are destitute?

I really think we need to look hard at the figures..

Then I read today in ST about medical centres in the Orchard Road belt. It’s an exclusive by ST I believe, so I’ll just sum it up here: Basically, the Raffles Medical Group wants to convert seven podium floors of Thong Sia building into a medical centre and applied to the URA to do so. As usual, there was a bureaucratic gobblededook response: “We evaluated the new proposed use taking into consideration specific site context, the impact of the proposed use on the amenity and surrounding uses, and the local road infrastructure capacity in that area, and decided to turn down the proposal.” In other words, the URA said no.

The ST has an interesting graphic on all the medical centres in the Orchard Road belt. Go buy ST. Did you know Pacific Plaza is converting the top seven floors of its 12-storey building into 22 medical “suites’’? The private medical centres are everywhere in the shopping district. Raffles wants to use Thong Sia to serve the “significant number of patients who live in District 9, 10 and 11’’ and foreign visitors, its spokesman said.

I don’t know why the URA said no. Apparently no parking space and complaints of residents have something to do with it. I don’t want to be envious, but I am. Nor do I want to say that private sector initiative should be stifled given Singapore’s bid to be a medical hub. But this story coming after the Medifund story really makes you think about the healthcare system in Singapore. Can we look after our needy sick in a better way than have them go with a begging bowl to the G?

Popping the Population myths

In Money, News Reports, Politics on February 23, 2013 at 12:34 am

A story in Today caught my eye: It was about reactions to two commentaries on the Population White Paper which appeared on the Institute of Public Policy website over the past fortnight. The pity is that the article didn’t give me enough of what the commentators said, before zooming into the reactions. The article should have been excerpted for wider circulation, especially the one by four economists writing in their personal capacities on the four economic myths in the population debate.

I’ll try to sum up the myths here and my apologies to the four authors if I didn’t capture everything or over-simplified stuff.

Myth #1: If we don’t have sufficiently large injections of foreign labour, business costs will rise, some businesses will shut down or move out of Singapore, and Singaporean workers will be laid off.

The economists say that this is akin to protectionism and subsidising inefficient companies which should really shut down so that more resources can be freed for higher value-added work. Direct help to those who are laid off with one-off transfers, unemployment protection and get them to re-train. Why protect the companies which rely on cheap labour to stay afloat?

Myth #2: Economic growth is a zero-sum game

The economists say that it is not necessarily true that Singapore must maintain a certain growth rate or will stagnate and become irrelevant if other countries sped up. More likely, other countries’ growth will spur our own. And if foreign investments won’t come to Singapore, it might not be a bad thing if they are investments we wouldn’t want anyway – like those which require plentiful cheap (foreign) labour.

Myth #3: Denser, larger populations create significant economic benefits for cities

The economists say there is some truth in this, but it really depends on the type of population. If more brains are clustered together, then innovation is spurred. But what is being advocated is the inflow of foreigners to fill lower end jobs. How is this good?

Myth #4: Spending on healthcare and social services are costs which have to be financed by higher taxes, and are therefore a drain on the economy

The economists say that healthcare and social services shouldn’t be viewed as costs. Someone’s costs is someone else’s income. Why isn’t spending on MRT lines and public housing viewed as costs then? They are viewed as productive investments although they are likewise financed by taxpayers. We can afford higher healthcare costs since we have large surpluses and if incomes and productivity increase. But the real issue is who should pay for rising healthcare costs? If the G “knee-jerks’’ and shifts most of the costs to consumers, then sure it would be a problem. The economists didn’t quite say it, but they seem to be calling for a review of the current healthcare financing scheme to make sure out-of-payments won’t kill the patients.

Here’s what the four said in their conclusion: “These myths exist because they seem to be intuitively correct. They appeal to our everyday experiences, and are consistent with popular accounts of the economy. These popular accounts include the idea that cities or countries are locked in economic competition with one another, or that jobs must be protected in order for workers to be protected. Our experience with health and social care as costs we try to avoid also explains our intuition that at the national level, this must also apply. But these stories, although consistent and coherent to us, are neither correct nor valid. As cognitive psychologists have found, people tend to rely on explanations that are consistent with their own experiences or with conventional wisdom, rather than on careful deliberation and reasoned analysis.

“Economics is not, and should not be, the only lens through which we examine, analyse and debate our country’s population policies. But when we do apply economics analysis, we should try to get it right.’’

Ouch!

But what an interesting paper! Here’s the link http://www.ipscommons.sg/index.php/categories/featured/118-economics-myths-in-the-great-population-debate It was published on Feb 8, just a day before the Parliamentary debate on the Population White Paper ended. I wish it was out sooner so that MPs can mull over it and raise questions beyond: Why 6.9million? Today captured some reactions to the paper. Generally other economists agreed with its contents and “proposed revisiting fundamentals needed for future economic growth and greater focus on building local talent’’. Hmm. Now what?

In any case, thank you Donald Low, Yeoh Lam Keong, Tan Kim Song and Manu Bhaskaran. Now why don’t you do us all a favour and take a look at the Department of Statistics latest Household Income report released earlier this well and tell us what the hell is happening.

See http://www.breakfastnetwork.sg for a Chef’s Special on City Harvest Church versus Commissioner of Charities.

A letter of complaint

In Money, News Reports, Society on February 22, 2013 at 1:38 am

So the old standby/enduring Singapore icon, the Merlion, is now stamped onto the face of a $1 coin, as part of the Monetary Authority of Singapore’s Third series of coins. I actually find the third series quite beautiful looking, but I suppose like any legal tender, we have to touch the coins, feel it, you know, to feel comfortable with it.
Anyway, I thought I’ll have some fun today with this piece of news. So enjoy this letter of complaint.

Dear Mr Mas Mint,

RE: Use of my image on the $1 coin.

I refer to yesterday’s announcement by your esteemed organisation, the Monetary Authority of Singapore, on the issue of the Third Series of Singapore coins. While I am pleased to be acknowledged as a Singapore icon (which I always have been incidentally), I am writing in to complain that my permission was not sought.

Please note that I impose a fee for the use of any image, whether my front or side profile or a bit of my mane. My fee is $1 per coin.
Please apply to me directly at Fullerton with the exact number of $1 coins that you intend to use me for. I believe there would be hundreds of thousands of the coins issued. But my bookie tells me that you would have no problem minting some more to meet my charges. I also levy a late penalty charge of 10 per cent for every day that my permission is not sought.
You are, therefore, late.

I am resorting to this letter of complaint, which I will cc to the Prime Minister, because I am frustrated at recent and not-so-recent instances of people and organisations riding on my name and fame. I have been stamped on plastic bags, adorned key rings and stuck on refrigerators. I have been turned into chocolates and eaten. I have been borrowed as a logo for the Singapore Tourism Board and made a mascot for the Youth Olympics. In 2008, I was even turned into a dress for Ms Singapore/Universe, not that I mind enveloping the female form. Please do not get me started on that travesty of my image on Sentosa.

Now, I am about to be crushed in people’s smelly wallets and purses, man-handled by fishmongers and stallholders who don’t wear gloves and swallowed by vending machines. It’s enough to make me puke.

I serve notice that I have consulted a lawyer, a Senior Counsel no less, on how I should go about protecting my intellectual property rights. He is advising me to take the matter to court, failing which I should engage a debt collector to splash graffiti on the front door of your building. If I succeed in the pursuit of my cause/case, please note that you will have to foot my legal fees. I hope your mint has spare capacity and is not suffering undue strain like our transport infrastructure.

On a more personal note, may I enquire why that pansy, Vanda Ms Joaquim, was stamped within my spitting distance? I am not xenophobic I assure you, but I do not like other species invading my space. I am now making enquires on the use of Hong Lim Park to launch a protest rally.

Thank you for your time.

Yours sincerely,
Mr Merlion
Born-and-bred Singaporean

PS. My lawyer has reminded me that my visage is also imprinted on the smaller coins. To demonstrate my good faith, I have decided to waive my charges for your use on them. Such small change after all.

An inefficient look at the Gini coefficient

In Money, News Reports, Society on February 21, 2013 at 1:11 am

I’ve never really liked reading “breaking’’ news online because they seldom give you the full picture. So it was with yesterday’s “breaking’’ news on household incomes and income inequality. On http://www.breakfastnetwork.sg, I took a bite at both ST and Today online versions which zeroed straight on the rise in median household incomes, which is pretty good news.

But dig deeper and the picture is not so pretty. I’m glad that both newspapers gave more insights today, although I found the statistics pretty hard-going despite the use of charts. This is because some numbers are given in nominal terms, some after factoring in inflation. Yet others go by average income per household and then gets subdivided into per person. Sigh. BT, ST and Today all used so many different figures that it’s hard to piece things together.

So what is the news that people really want to read? I’ll give it a go…but don’t trust me, read the reports yourself okay? My apologies to all economists and statisticians for dumbing stuff down.

Q: How much did median monthly household income (the mid-point in a range) go up from 2011 to last year?
A: From $7,040 a month to $7,570 a month – a 7.5 per cent jump. Hooray!

Q: But that’s just nominal terms, what happens after taking into account inflation?
A: Oh. Then the jump is smaller. Only 2.7 per cent. We did better in 2011, it’s a 5.6 per cent jump from 2010.

Q: Okay, so how did our top 10 per cent of earners fare?
A: Very well! The average monthly income of the top 10 of households is $30,379 last year, compared to $27,867 in 2011 (from BT). You want per household member? Then last year’s figure is $11,552. It’s a 5.6 per cent jump in real terms (from ST).

Q: So much ah…Then the bottom 10 per cent?
A: Not good. Their median pay package actually shrank to $440 per household member; it dipped by 1.2 per cent. MINUS sign! But if you took into account inflation which will minus out the “rent’’ part of the computation, it goes up slightly to 0.8 per cent. Plus sign.

(Don’t understand this rent thing? I think it’s like this: people own their homes, so a “rent’’ is like a proxy. But most people don’t pay “real’’ rent, so if you take this out, numbers look better. Still, some of the lower income do pay real rent, so inflation does hurt them. I welcome a better account from anyone out there….in layman language please)

Q: So bad ah? You mean the top 10 earn so much more than the bottom 10?
A: You know the Gini-coefficient which measures income inequality? It’s gone up from 0.473 to 0.478 over the two years. But if you take into account G help in terms of Workfare etc to boost their income, then the numbers are smaller, from 0448 to 0.459. Even so, the gap is actually wider.

Q: How come wider?
A: Today reported that UOB senior economist Alvin Liew said it could be due to less transfers last year, compared to 2011. On average, resident households (including unemployed ones) received S$1,340 per member through various Government schemes last year, down from S$1,660 in 2011. Households without working persons living in one- to two-room HDB flats received the most – over S$8,000 in Government transfers last year. Bigger households always receive the least.
So if you compare the gap between top 10 per cent and bottom 10 per cent, it comes down from the richest earning 9.14 times more than the poorest to 7.87 times. Actually, ST has MPs saying that the poorest actually get more that is not taken into account, like free medical services and food rations.

Q: You think the bottom 10 per cent will get more help this year?
BT reported that experts had put the fiscal surplus at $4billion to $5billion, much more than the official projection of $1.27billion. With this kind of savings, the G can be expected to give more out to the bottom group in the coming Budget. I mean, makes sense right?

Q: What about the people in the middle?
A: Go read yourself lah. I got a headache liao. Go buy ST.

Follow

Get every new post delivered to your Inbox.

Join 742 other followers