Mr Speaker Sir, I support many of the initiatives proposed by the government, particularly measures directed at the social well-being of Singaporeans, especially the elderly and the disabled. I am going to speak on two issues covered in the Minister’s speech.
Firstly, the measures introduced to unlock the wealth older Singaporeans host in their HDB flats. I note the Finance Minister’s concern about the older generation of Singaporeans who have very limited cash savings and low CPF balances – because wages were much lower 20-30 years ago, and because of the lower Minimum Sum then. I would however caution that low CPF balances ought to remain a permanent concern of the government as future wage increases is likely to be moderated by inflation and the cost of living.
More importantly, the high cost of public housing relative to wage growth is likely to result in mortgages that are marked by a longer pay-back period, inevitably compromising the ability of Singaporeans to grow their nest-egg. Nonetheless, I commend the government for raising CPF contribution rates. While I empathise with SMEs who already face short and medium term difficulties with regard to labour-related overheads, the national interest dictates that the post-retirement well-being of all Singaporeans – including those very employees that keep the SMEs competitive — must remain a primary social objective of any Singapore government.
I am encouraged by the Silver Housing Bonus of $20,000 which will be extended to older Singaporeans who wish to sell their existing flats. I do ask that the government consider extending the policy to all HDB households, so as to give retiring Singaporeans more options. Equally, it is also noteworthy that the government has sought to make the Lease Buyback Scheme more attractive by doubling the incentive from $10,000 to $20,000.
I see the enactment of policies that allow older Singaporeans to monetise their flats as a central pillar in ensuring Singaporeans live out their retirement years with reasonable dignity, as they stand to receive a larger CPF Life payout.
Like many Singaporeans, I am disturbed when I see older Singaporeans having no choice but to work because they cannot afford to retire. Their health may not allow them to stay on their feet for hours on end, but they have no choice, as they need the money to survive. While I admire the drive, determination and self-respect of such Singaporeans, I feel the government needs to introduce more policies that ensure as many of our elderly live out their retirements with a sense of accomplishment, with full-time post-retirement employment – a choice not a necessity. For that reason I think the goevrnment has done well with the Silver Housing Bonus and Enhanced lease buy-back scheme.
However, I am not certain how the Silver Housing Bonus and the enhanced lease buyback scheme will work out in practice. In fact, I note that the initial response to the HDB lease buyback scheme was not encouraging. Introduced in March 2009, the take-up rate has been low — in fact, according to HDB statistics, it stands at less than 2 per cent of all total eligible households – or 446 households.
Mr Speaker Sir, the government may want to keep an extra close watch on both the Silver Housing Bonus and Enhanced Lease buyback scheme and consider publicizing a yearly report card on the take-up rate of both initiatives. The public character of such a report card, apart from signalling a robust attitude to accountability, would also reinforce and institutionalize the importance of the government’s elderly policy in the public consciousness.
Greater awareness of the government’s elderly policies is also likely to have positive effects on nation-building and our national identity. If the take-up rate is poor, it would be clear that the government would need to do more, and I for one would support the government wholeheartedly in this endeavour. If the take-up rate is good, it would simply reflect positively on the government’s 2012 Budget. I sincerely hope both the Silver Housing Bonus and the Enhanced Lease-back scheme are closely tracked as their success potentially portends how Singaporeans can expect to live in their retirement years, especially in terms of financial security, in a Singapore that is already one of the most expensive cities in the world.
Moving on the second issue Mr Speaker, I would like to register my concern about the Bus Services Enhancement Fund as announced by the Minister. No one I have met since the Minister’s speech really disputes the benefits of additional buses on the road, particularly if in the Minister’s words, it will serve to reduce crowding and waiting time. But there nevertheless remain some very serious questions about this $1.1b “one-time” commitment to help fund the purchase 550 buses.
Mr Speaker Sir, many Singaporeans are asking why the shareholders of our publically listed bus operators are being extended this unusual generosity by the government. According to both their 2010 annual reports — both of which are available online – SBS Transit has a market share of 75% and has around 3000 buses on the road, while SMRT has slightly less than 1000 buses.
In the case of SBS Transit, the top 5 shareholders of the company hold 83% of all the shares of the company. The largest shareholder of SBS Transit ComfortDelgro owns 75.11% of the company, while the next four largest shareholders of SBS Transit are BNP Paribas Securities Singapore, DBS Nominees Pte Ltd, United Overseas Bank Nominees Pte Ltd and Citibank Nominees Singapore Pte Ltd.
In the case of SMRT, its top five shareholders account for 73% of all the shares of the company. The largest shareholder is Temasek Holdings which owns 54.33% excluding its deemed interest, while the next four largest shareholders are DBS Nominees Pte Ltd again, Citibank Nominees Singapore Pte Ltd, DBSN Services Pte Ltd and HSBC (Singapore) Nominees Pte Ltd.
The public unhappiness over the Bus Services Enhancement Fund since Minister Tharman’s budget speech has been very apparent. Part of the reason for this I hazard is because this government has traditionally been quick to urge Singaporeans to choose the path of self-sufficiency, reminding ordinary Singaporeans that there are no free lunches and no one owes us a living.
It would be useful for this House to remember that both SBS Transit and SMRT pay their top management market-rate salaries, pay their shareholders regular dividends, while operating in near-monopolistic conditions. By any stretch of the imagination, these are not broken-back companies.
In particular, the SBS Transit 2010 Annual Report also stated the company’s intention to purchase new buses in addition to funding additional capital expenditure. For that purpose, it launched a note program in May 2010, issuing a $100m fixed rate note, which is due in 2015. So not only is the company not a broken back entity, it clearly knows how to raise money too. And FY 2010, SBS Transit paid it shareholders dividends amounting to $27m, while SMRT paid out $102m to its shareholders.
Unsurprisingly, discerning and sensible Singaporeans have been quick eschew the government’s $1.1b windfall for the top shareholders of both SBS Transit and SMRT Corp. While I appreciate the government’s intentions to put buses on the road quickly, I would urge it to claw back the $1.1 billion of taxpayer dollar expended on these bus operators over a fixed period of time, after consultation with SBS Transit and SMRT Corp. There ought to be nothing unusual about this as the government already extends many direct and indirect financial subsidies to both these profit-generating private operators.
For e.g. they are exempted from bidding for Certificates of Entitlement, and they are also exempt from the Additional Registration Fee, the main vehicle tax and the duty on diesel. In addition, both these operators are allowed to keep their buses on the road for 20 years, twice as long as almost all other vehicles. They are also charged a nominal rent for the space their interchanges take up, while reaping the profits their advertising revenue generates.
Mr Speaker Sir, I am reminded of a resident who runs a SME, who spoke to me on the back of on the Aljunied Constituency Committee’s lunar new year dinner celebrations earlier this month. He implored me to petition the government in parliament to reduce or subsidise the COE of goods vehicles for SMEs. As members would know, the COE for goods vehicles and buses are classified under Cat C COEs.
While our two profit earning operators do not pay a cent for their COEs, small time businessmen will pay in excess of $50,000 for his COE based on today’s market rate. While this is not an apple for apple comparison, it says something about the perception the man on the street has about this government’s lack of desire to communicate why our bus operators are being extended this $1.1b gift. I understand the Transport Ministry will address this issue in the upcoming COS debates and I certainly hope it fully addresses the genuine misgivings many Singaporeans have over the Bus Services Enhancement Fund.
Mr Speaker Sir, I have a second query about the figure of $1.1b for the Bus Services Enhancement Fund. I had to learn from the media that the figure includes the total operating cost for the vehicles for 10 years, and it also includes the salaries of bus drivers.
According to the 2010 SBS Transit financial report, in that FY, SBS Transit placed an order for 600 buses, comprising 300 award-winning Euro-5 compliant Mercedes Benz low-floor single deck buses and another 300 Volvo double-deckers, all for the price of $268m dollars. Taking into account inflation over the two last years, I hope the government gives the public a detailed breakdown of the operating costs and the salary component that was set aside for the Bus Services Enhancement Fund, in addition to all other components that have not been publically revealed so far. Too much of this dispensation of taxpayer dollar to these two profit generating monopolies is currently unknown to the public beyond the big figure, and some transparency is in order.
Mr Speaker Sir, a third concern I note that dominated the online media in particular, concerns the unspoken of implications of 800 additional buses on the road. The routine questions are – is the government planning for another spike in immigrant arrivals, if so how many are being planned for? And what sort of planning parameters is the government working with? Is this $1.1b a harbinger of things to come in terms of an even larger population size?
It would be apposite for the government to answer these queries because there is already a sense of an over-crowded Singapore where public space is at a premium.
Other questions also dominate the public realm about this $1.1b gift. What will this cash injection do for bus fares going forward? Are both operators going to use the profits generated and invest them overseas? Should Singaporeans anticipate similar ostensibly one-time gifts to other publically-listed entities or companies of national consequence such as companies in which Temasek Holdings or GIC own a stake? And can the taxpayers now demand greater transparency from all companies like SMRT and SBS Transit which receive taxpayer injections? Beyond just educating the public on how their taxpayer dollar is spent, I believe such accountability would generate greater trust between citizens and the government.
Mr Speaker Sir, $1.1b is a whopping sum by any stretch of the imagination. The government should set out clearly how the figure was arrived at and what this policy move of extending cash injections to publically listed entities that perform a public function implies for policy-making going forward.
Mr Speaker, I support the motion.