Parliamentary Snapshots — 03 Feb 2009

February 4, 2009 by admin
Filed under: Parliament

EDITOR’S NOTE: The Parliamentary debate on Budget 2009 kicked off on Tuesday, 03 Feb. Key highlights of the debate on Tuesday include a heated debate on the Jobs Credit scheme, MPs lauding the use of reserves but also raising concerns, and five MPs suggesting that measures to stimulate demand are also important in addition to supply-side measures. Two of their suggestions, namely cutting GST and giving out consumption vouchers, mirror those proposed by the Singapore Democratic Party (SDP) last Sunday (01 Feb) on its web site, http://www.yoursdp.org/

Heated debate on the Jobs Credit Scheme

Six MPs — five of whom were from the labour movement — took on (opposition) MP Low Thia Khiang over his criticism of the Jobs Credit scheme.

The debate was sparked off by Mr Low questioning whether the $4.5 billion initiative would be effective in staving off retrenchments. He questioned if this system would save jobs in companies where sales could not sustain overhead costs.

“Between waiting three months for $900 cash rebate from the Government versus saving $7,500 immediately by retrenching a worker, which choice does the Government think a struggling employer will make?” Mr Low asked.

Mr Low also suggested that the scheme will simply benefit profitable companies that have no intention of retrenching workers.

PAP MPs were quick to respond.

Josephine Teo, MP for Bishan-Toa Payoh GRC and NTUC assistant secretary-general, said: “Sir, I’d like to ask the Member: Is he saying that because the Jobs Credit scheme has not proven its effectiveness, it’s better for us not to have the Jobs Credit scheme and forget all about it?”

Lim Swee Say, NTUC secretary-general and Minister in Prime Minister’s Office, said: “If the choice is between implementing a S$4.5 billion Jobs Credit versus a 9 per cent cut in CPF, which one would the Workers’ Party go for? Which option?”

Replying, Mr Low Thia Khiang said: “Our position is that we will never cut the CPF. But the question is: whether or not, must it be Jobs Credit? Could there be other forms available to cut costs? There may be other forms, but to me, Jobs Credit, I look at it, I don’t think it’s effective.”

Mr Yeo Guat Kwang (Aljunied GRC) asked if Mr Low was aware that the savings from the scheme will spur companies like Sheng Siong to open more outlets, each one creating 80 more jobs.

Ms Jessica Tan (East Coast GRC) asked if he was aware that the scheme was targeted at making Singaporeans more attractive to employers.

But Nominated MP Siew Kum Hong agreed with Mr Low Thia Khiang that the Jobs Credit scheme would not save jobs. Mr Siew said: “Businesses facing collapsed demand will still retrench. Businesses doing well will reap a windfall benefit. The question must be whether spending S$4.5 billion on the Jobs Credit scheme produces the most bang for the buck for Singaporeans.”

Other MPs also agreed that the scheme was too employer-oriented.

Lim Wee Kiak (Sembawang GRC) said: “There is no guarantee that the water will reach them in time as some may be siphoned away by employers for personal gains rather than saving the business and saving jobs.”

Ho Geok Choo (West Coast GRC) told Parliament that while the Jobs Credit scheme helps to keep companies afloat, it does not target firms most likely to lay off workers.

Madam Ho suggested that a feedback mechanism be set up to allow all companies to inform the government ahead if they are laying off workers. She said the government could then devise specific measures on how to better assist such companies, such as referring them to other business assistance schemes that the firm might not know of, or to business consultants who can help manage their costs better.

“If companies do retrench staff, we can stop or reduce the Jobs Credit payments to them. We can monitor their staff levels on a monthly basis through the CPF payroll,” she suggested.

She also suggested an “Older Worker Jobs Credit Scheme” to encourage the hiring of older workers.

Firms could be given double the government contribution if they hire an older worker; this works out to a contribution of 24 per cent of a worker’s pay, capped at $2,500, she said.

“To prevent companies from abusing this scheme, I suggest we make it only applicable for new recruits and not people who have been retrenched from the same company,” she added.

With the recession biting deep, Madam Ho also said that the retention of jobs undertaken by Singaporeans and Permanent Residents should be encouraged, such as by “requiring the employment of a certain number of them before foreigners can be hired”.

“Yes, foreigners contribute to Singapore’s economy as well, but we as a government have a duty, first and foremost, to assist our citizens and permanent residents in all ways possible,” she said.

Citing news reports about growing number of people applying for Permanent Residency status, Madam Ho suggested that the the eligibility criteria be tightened.

“If we don’t, Singaporeans and PRs will be even more hard pressed in the competition for jobs at this critical juncture, and pay could be even more reduced,” she said.

MPs laud use of reserves but also raise concerns

The Government’s move to tap past reserves to combat Singapore’s worst recession was lauded by MPs on Tuesday. At least 18 of the 24 MPs who addressed the House touched on the issue, with many calling it bold, decisive and a watershed decision.

“Had we depleted our reserves in early years, today we would be losing hope and hope is something Singaporeans cannot afford to lose,” said Mr Inderjit Singh, who is the chairman of the Government Parliamentary Committee (GPC) for Finance and Trade and Industry and an MP for Ang Mo Kio GRC.

Zainul Abidin Rasheed, Senior Minister of State for Foreign Affairs and MP for Aljunied GRC, said: “It must be that bad for the normally tight-fisted and prudent Singapore government to release its hold on our national reserves, a sacred cow held dearly and closely to our hearts.”

Halimah Yacob, MP for Jurong GRC, said: “I support the use of our past reserves as I think that the situation we are in is truly exceptional and nothing like what we have seen in past recessions. We should not wait until companies are flat on their backs or Singaporeans are truly suffering before we consider it prudent to use our past reserves.”

But several MPs cautioned that it might set a dangerous precedent and asked the Government to provide more information about how the historic decision was reached. MPs also asked what constituted the exceptional circumstances for the government to resort to such a move.

Halimah Yacob said: “Where is the threshold point when we start dipping into our reserves? Some have also raised the question whether there is really a need to dip into our past reserves, considering that we have enough surpluses to pay for the S$4.9 billion needed to fund the Jobs Credit and the Special Risk-Sharing Initiative for Bank Lending.”

Others MPs wanted more information on the process adopted before the President gave his approval.

(Opposition) MP Low Thia Khiang said: “Past reserves are supposed to be protected by a two-key system. The government holds one key, while the President holds the second key. But the speed at which the two-key system can unlock the reserves is too fast for comfort … … I want to know when was the request for the S$4.9 billion made? How long did it take the President to give the in-principle approval? Does the President or the Council of Presidential Advisors know for certain what the government intends to do with its substantial current reserves before allowing it to draw down on past reserves. Can a pre-emptive spending rationale be a compelling reason for the President to unlock the reserves?”

Nominated MP Siew Kum Hong said: “There has been precious little information about the deliberations of the President or of the Council of Presidential Advisers in giving in-principle approval to use the reserves. The government should ask the President and the Council to publish detailed reasons for their decisions. This is the first time we are using the reserves. It is therefore a golden opportunity to set the principles for doing so.”

MPs such as Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Dr Lim Wee Kiak (Sembawang GRC) wanted the Government to provide clear ground rules for drawing on past reserves as a guide for future governments.

Dr Lim wanted to know if Singapore’s reserves had been reduced by the global financial meltdown and, as a result, how much of it is left after spending on the two initiatives — the Jobs Credit scheme and the Special Risk-Sharing Initiative. He said: “Our reserves and investments must have also taken a hit and decreased just like all asset classes in the global market. How much of our reserves is left after the spending on these two programmes? Can the Finance Minister assure the House that our goose that lays golden eggs year after year will continue to do so after this withdrawal and after this financial shock?”

Tampines GRC MP Irene Ng asked: “Can I ask the finance minister for an estimate of how long would it take for the government to reinstate this projected S$4.9 billion drawdown from the reserves? Or are we quite comfortable at the rate that the reserves have been accumulating over the years, providing more than enough for any life-and-death contingency?”

Five MPs say stimulating demand is also important; two proposals made mirror those proposed by the SDP last Sunday

The 2009 Budget largely tackles the downturn through supply-side initiatives like helping to save jobs. But five MPs said that stimulating demand is also important.

Their suggestions range from a cut in the goods and services tax (GST) to giving out “consumption coupons” for Singaporeans to spend at retail outlets.

As MP Jessica Tan (East Coast GRC) put it: “Keeping jobs is important but not sufficient if demand is also not forthcoming. We must also… find ways to drive new markets and increase confidence and spending.”

Added Madam Ho Geok Choo (West Coast GRC): “As a government, we should also use other ways such as priming consumption to stimulate demand and bolster the economy.”

MP Inderjit Singh (Ang Mo Kio GRC) asked for a temporary GST cut to 5 per cent. This, he argued, appears to be “the most effective way to stimulate local demand”.

Mr Singh, the government parliamentary committee chairman for finance as well as trade and industry, cited a Straits Times article by economics professor Basant Kapur, who calculated that the 2007 GST hike to 7 per cent raised the Consumer Price Index by 1.5 per cent — resulting in a $6.6 billion capital spending loss.

Compared to this, the additional GST credits of $580 million announced in the Budget “appear small”, said Mr Singh.

“The GST increase has produced a negative effect on spending and if a cut can produce even a modest stimulus to consumption, it should be considered,” Mr Singh argued, adding that it would also stimulate tourist spending.

Another way to get people spending is for the Government to distribute what Mr Ang Mong Seng (Hong Kah GRC) calls “consumption coupons”. He suggested giving everyone about $300 worth of coupons to be spent in six months.

“Apart from tobacco and alcohol, people can use them in department stores, neighbourhood shops, hawker centres and restaurants. I think this will help our retail shops’ business,” he said.

The proposal to cut GST and give out consumption vouchers was also proposed by the Singapore Democratic Party (SDP) on its website last Sunday, 01 Feb.

Govt tracks finances

THE Finance Ministry tracks the financial position, including any contingent liabilities, of all ministries, statutory boards, as well as holding companies owned directly by the Government.

Senior Minister of State (Finance) Lim Hwee Hua said her ministry compiles annual returns from all ministries and organs of state on any guarantees they have provided. This includes “promissory notes issued, outstanding contributions to international organisations, as well as statutory obligations under the Acts,” she noted.

Mrs Lim added: “Any guarantees provided by the Government must be approved by the President.”

She was responding to questions from Nominated MP Dr Loo Choon Yong in Parliament on Tuesday.

He had asked whether the Finance Minister was kept informed of the real or potential contingent liabilities of all Government agencies, government-linked companies and investment entities, and whether his ministry keeps a register of all such contingent liabilities.

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3 Comments on Parliamentary Snapshots — 03 Feb 2009

The Singapore Daily » Blog Archive » Daily SG: 4 Feb 2009 on Wed, 4th Feb 2009 11:45 am

[...] Budget 2009: Speech on Budget Statement, 3 February 2009 [Vid][Thanks craven] – Sgpolitics.net: Parliamentary Snapshots — 03 Feb 2009 – Diary of A Singaporean Mind: The TRUTH about Jobs Credit! – Everyday’s Life in a Snapshot: [...]

PM and PAP MPs adopt SDP’s economic ideas : Sgpolitics.net on Thu, 5th Feb 2009 9:45 pm

[...] In the recent Budget debate in Parliament, not only were SDP’s ideas to eliminate or reduce GST and reduce ERP rates pilfered by PAP MPs, their idea to give out consumption coupons was also pilfered. See here. [...]

The Singapore Daily » Blog Archive » Weekly Roundup: Week 06 on Sat, 7th Feb 2009 12:34 pm

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