The Bridging Budget

Budget Day is probably one of the most significant days in the political calendar for most countries in the Commonwealth. It’s a time when even the most politically apathetic citizen becomes glued to the media watching events in parliament. Why? This is the one day in the political calendar when you get to find out how your personal finances might be affected by the government. The Finance Minister (Chancellor of the Exchequer in the UK) gives a report on national finances and you get find out who ends up paying more or less taxes and who gets what subsidy.

Singapore’s Budget has just been announced. The Finance Minister, Mr Tharman Shanmugaratnam , a highly regarded economist (high enough for the IMF to make him chairman of the   International Monetary and Financial Committee), delivered a two-hour speech outlining the state of government finances and how he was going to manage the finances for everyone’s benefit.

What was particularly striking about this year’s budget was the fact that it seemed so obviously aimed at political issues. Generally speaking, politics in Singapore is a very technocratic affair. Election results are obvious and politicians, to use a PAP phrase, have been focused on doing “What’s right instead of what’s popular?” It’s argued that Ministers can afford to take the “long-term” view and things like immediate voter emotions are of very little concern.

Well, if this budget was anything to go by, things have changed. Mr Tharman’s budget was directly aimed at addressing “hot-button” political issues. Issues like the supply of foreign workers and growing income inequality were addressed in the budget.

Most strikingly was the announcement that he was going to raise property taxes on “investment” property – that is the property that only the mega-rich can afford. While the tax itself is not high or at least high enough to make the mega-rich squeal, the very announcement that he was going to tax “wealth” rather than “income” and that it was “fair” was earth shattering.

 The Singapore Government has taken great pains to send out the “right” message to the super-rich. We've spent the last decade selling ourselves as a place that welcomes the super-rich and a place that’s immune from populist measures of wanting to tax the rich out of existence. Singapore takes pride in welcoming billionaires from around the world. The Singapore Government is very tax friendly (I've never had a tax bill of more than $800 a year on an income of a shade over $40 grand and I have the whole year to settle my tax bill). Not only does it sell itself to the rich, the government also makes it a point to tell the population that being a playground for the rich is exceedingly beneficial.

So, its earth shattering for a Singapore Finance Minister to talk passionately and firmly about raising a tax on wealth and arguing that it’s the fair thing to do. He even went as far as to say that this was not something that could be avoided with efficient tax planning.

So, why is Mr Tharman going down this road? Well, the answer is politics. Talk to enough Singaporeans (I’m included) and most of us will inevitably tell you that we find that the cost of living is becoming ridiculously expensive. The public sentiment is such it believes that the government is rolling out the red carpet for the superrich and the expense of the ordinary wage earner.

It’s clear that Mr Tharman has read the ground well and he’s doing the politically astute thing by making a visible effort to do something about the ‘concerns of the people.’ He’s even defied various pressure groups – namely businesses or employers. The “foreign worker levy” is being raised significantly. This is something businesses are against. However, instead of caving into the demands of employers, the finance minister of the world’s most employer friendly country has proceeded to carry on his course.

All this sounds very good to me as an ordinary pleb. I don’t think I’m going to be able to afford a house in Singapore anytime soon. However, I am assured of the fact that my restaurant worker persona is going to stay employed for quite some time. Suddenly, a job that has traditionally been shunned by people with any sense (low wages and long hours) is going to look a bit more attractive.

While I am happy with Mr Tharman’s efforts and gestures, I wonder who is going to ultimately benefit. Will things actually turn out for the better?

I take the newly announced “Wage Credit Scheme.” This is a scheme that is meant to encourage employers to raise wages, particularly of the lower income group. The idea behind it is deceptively simple. If an employer raises a monthly wage, the government will pick up 40 percent of the tab. So if an employer raises a wage by S$200 a month, the government will give that employer S$80 a month for the next three-years. (http://www.singaporebudget.gov.sg/budget_2013/pc.html)

While this should provide an incentive for employers and employee’s to become more ‘productive’ on paper, the question remains, is it enough to work on the ground.

Let’s take the issue of the “jobs credit” scheme, which was announced in the 2009 budget. The idea behind this scheme was to encourage companies to keep jobs instead of outsourcing them or sacking workers. The scheme involved providing a 12% cash grant on the first $2,500 of each month’s wages for each employee on the CPF payroll (http://www.mof.gov.sg/budget_2009/key_initiatives/jobs.html)

Well, I don’t doubt that some jobs were saved. However, there were companies that simply didn’t know how to work the scheme. Take the SMRT Corporation as an example. Back in November, 2012, the SMRT Corporation got a nasty slap in the face when 100 of its bus drivers from China went on strike to protest against low pay.

The drivers were duly arrested and the system went into over drive about how the drivers had disrupted our social harmony and so on.

However, the online media decided to talk about the low wages that the SMRT Corporation was paying the bus drivers. The question of why can’t give equal pay for equal work was raised (An issue which the trade union leader promptly described as being “more complicated than that). Then the more crucial question of why we needed to hire bus drivers from China and elsewhere instead of hiring Singaporeans was raised.

The SMRT Corporation proceeded to talk about the high cost of hiring Singaporeans or the fact that Singaporeans were not interested in the wages that were being offered. The corporation also went onto talk about how it was losing money on its bus services, thanks to high wages and diesel prices.

This was an interesting claim to make. The SMRT Corporation has a virtual monopoly on a service that everyone has to use.  The company controls valuable real estate and has vast sources of income. How can it have insufficient funds to pay Singaporeans half way decent wages?

More interestingly, the SMRT Corporation has been a happy recipient of “jobs credit” vouchers.  If you look through the summary reports of their financial performance from 2009 – 2011, you’ll see that the company received this grant from the government. In the 2011 report, it even goes as far as to state that it’s wage cost went up because of “lower jobs credit.”  (http://smrt.com.sg/Portals/0/PDFs/About%20SMRT/Investor%20Relations/Annual%20Report/2011_SR.pdf)

So, here’s an interesting question. What happened to all that “jobs credit” grant? Not only does the corporation make monopoly providers profits, it also receives a subsidy from the tax payer.  That subsidy is given on the understanding that the company will not sack people and keep Singaporeans in a job.

So, how is it that the company has no money to hire more Singaporeans, particularly those at the lower end of the social ladder?

The government has come up with another scheme to help businesses improve productivity and get working. One has to question whether some of our biggest government owned companies will keep in line with the government’s objectives.  

Some Thing About Names

One of the first things that Westerners have to adjust to when moving to a Chinese-dominated society is dealing with names. There are cultural differences when dealing with names.

For a start, the Chinese start with the family name while in the West, the family name follows the given (Christian) name. For example, Tang and not Li is my surname. However, many Chinese, particularly the Western educated ones are fairly flexible with their names when dealing with Westerners. Many take on Western names. Lee Kuan Yew (Family name is Lee), Singapore’s founding Prime Minister goes by “Harry Lee” when he’s with friends and family.

Many Chinese also reverse their names so as to not confuse Westerners. One of Asia’s most prominent film directors went from being “Lee Ang” to “Ang Lee.” When I lived in the West, I was “Li Tang” (It took several years to accept that I had to reverse my name – mum said I had to be flexible so the Westerners wouldn’t get confused – I didn’t see why I had to reverse my name in the West when Westerners don’t do the same in Asia. However, I’ve adjusted and I accept my Western friends and family calling me “Li Tang” because that’s who I’ve been to them for so many years.). When I moved back to Singapore I became “Tang Li” (I’ve had to bite my lip from screaming abusive terms at business partners who have called me “Li Tang” at client meetings. – They’re Asian and we live in Asia.)

The other thing that stumps Westerners when dealing with Asian names is their pronunciation.  Chinese names are tough as many of the names break the rules of English. The example that comes to mind is “NG” (how do you pronounce something with no vowels.) If Chinese names are tough for Westerners, Indian and Southeast Asian ones are worse.

What I’ve just described is what you’d call the material that provides you with enough material for a slapstick comedy based on cultural misunderstandings. There easy ways to get round these issues.

There is, however, a more serious issue when dealing with names – namely the issue of trying to figure out relationships between various parties. While the Western world has a seeming number of surnames, the Asian one seems fairly limited. I suspect that many Westerners suspect that we’re highly inbred because you find that there are lots of people walking around any given Asian city with the same surname.

I think of how it’s considered quite a rare event for Grandma Millie (Step Dad Lee’s mother) to marry a man with the same surname. By contrast, in my father’s family we’ve had two generations of Tang’s marrying Wong’s (Grandpa and Grandma and one of my uncle’s married a Wong). If there seems to be lack of Chinese surnames, there seem to be even less of them in Vietnam – the place was filled with “Nguyen’s” and “Vu’s.”

Well, we aren’t that inbred. With Chinese names, a lot of it tends to be found in the way a name is “romanised.” Had to explain to step granny Joan (step mother Nora’s mother) that my family “Tang” was not related to the “Tang Emperors,” even though the names are spelt the same in English. The Chinese character for my family name is different from the ancient emperors. If you use the ‘pinyin’ of spelling my family name it would be closer to “Deng” I have an Aunt who lives in the USA. She has ‘pinyinized’ her family name to “Deng.” By contrast the rest of us are still on the Wade Giles form of Romanizing our name – hence we remain ‘Tang.’

So, I guess when you understand things this way, you’ll find that Asians are not as inbred as one might initially imagine.

Time to Go

The Chinese Year of the Snake has started out with a bang. The Vatican announced that Pope Benedict XVI would be resigning on February, 2013. His Holiness will be the first Pope in 600 years to voluntarily resign and the world’s 450 million Catholics will have to look for a new Pope.

Cardinal Joseph Ratzinger who became Benedict XVI was a theological conservative. You can say that his conservative views coloured his Papacy. He was hit hard by events. The scandal involving the abuse of children by priest will undoubtedly mar his time as head of the Catholic Church. Then there were controversial moments – quoting a Byzantine Emperor’s remarks about Islam and pardoning a Bishop who openly denied the existence of the Holocaust come to mind.

Much will be said about his time as head of the world’s largest Christian Denomination in the years to come. For me, I would rather focus on one of the most crucial acts of his Papacy – his resignation and the reasons for it.

In his statement, the Pope said, “I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry.” In other words – he was too old to carry on. You have to applaud him for this single sentence for several important reasons.

Let’s start with the fact that he’s admitting that he’s human and suffering from the consequences of age. You might argue that there’s no big deal here. However, he’s doing so from a position of power (As well as being revered by 450 million Catholics around the world, the Pope is considered a Head of State by International Law). History is littered with examples of old men in positions of power who forgot that they were human and prone to declining with age. Such men have done great things in their younger days and then undone their good work by hanging onto power when their time was up. Mao comes to mind as one of these figures. Thankfully for the Catholic Church, Pope Benedict XVI is not going to be one of these men.

Giving up “office” isn’t exactly easy, especially when “office” grants you lots of power and very nice trappings. As mentioned earlier, people who have these offices often try to hang onto them until they need to be forcibly removed. The obsession of holding onto office ends up becoming so powerful that the person trying to hold on ends up damaging the “office” and the people that the “office” was supposed to serve.

Say what you like about this Pope but his act of resignation allows the Catholic Church the chance to choose a new leader, who may or may not be the right person to lead the Church in the next era. This Pope has admitted that he doesn't have the strength to do it and keeping him would only prolong the status quo. A new leader provides the Church with a chance to have a breath of ‘proverbial’ fresh air.

There is no guarantee that the next Pope will be drastically different from the current one. The Conclave of Cardinals selects one of their own and most of them have been brought up in the same traditions. However, who’s to say that the next Pope won’t have the energy required for the task ahead.  

Resigning has also helped ensure that the Church and the office of the Papacy will be separated from the man of Joseph Ratzinger. While the Papacy has survived its incumbents for nearly two thousand years, things are different in the age of the internet. The “office” like many others has come under constant scrutiny and people see and view “offices” by the people who fill them. Our expectations of the office are tied to the people.

Let’s just look back at Benedict XVI’s predecessor, John-Paul II. He was Pope for so long that he ended up personifying the office. It was so much so that everyone ended up associating the office of the Papacy with an old man who was practically drooling during every liturgy.

Benedict XVI by contrast will be leaving the Papacy while he’s still relatively healthy. It’s rare for Pope’s to do so. The last Pope who resigned did so 600 years ago. Pope’s tend to die in office. Perhaps this was fine when people didn’t live for a long time and didn’t have to perform in front of the TV or internet channels.

You might argue that the Papacy is a different institution from say the US Presidency. As such, it’s OK to keep a man in the same position for eternity. However, Papacy is a position of leadership. The Pope is a Head of State and there is a case that you should have Pope’s who are healthy and strong.

Benedict XVI may have made mistakes as Pope. However, the decision to admit his frailty and give up office is not one of them. This act of voluntary resignation may be the act that brings the Papacy into the modern age.