Sometimes I'm wondering what do people actually expect if Singaporean opposition ever took power.
Two biggest topics - rightly or not - are costs of life and costs of housing. Now, setting aside the fact that they are objectively not high compared to other cities, I would like to ask - and understand - how exactly does any opposition party propose to reduce them?
In case of HDB the government has direct control only over BTO.
Alright, so here's a question: how do you make new HDB cheaper?
You need money for that. Either in the form of subsidies, which would further reduce prices. Or, like some proposed, removing or reducing the cost of land included in the prices.
But that still costs money, because those billions in land sales go into reserves and reserves are invested for profit. The more money there is in reserves, the higher the NIRC, which already finances 20% of spending every year.
If you don't put money in, you can't take money out – so by reducing revenues from land sales you're still hurting the budget.
This means that either some public services would have to be reduced or taxes increased – if not today then in the next few years.
If you increase taxes on everybody, then living costs increase. If you increase taxes on the rich, you gradually drive them away, risking losing instead of gaining funds in the national budget.
Tackling general living costs is even harder, because the government can't really impact prices of goods or services very much. The only direct way would be to reduce or outright abolish GST – but that's close to S$18 billion each year.
But let's say a selective system could be established, in which most of the society (let's say 80%) doesn't pay any GST on anything they buy. That alone would immediately reduce their living costs by 7-8%, right?
This, by the way, ignores the fact that through various programs Singaporeans ALREADY receive over S$5000 in government transfers per household member per year. Far more than most pay in GST and income taxes combined.
So, if we wanted to further exempt 80% of all Singaporean residents (citizens + PR, broad lower and middle class) from GST (so that only the richest 20% pay) that would cost at least S$7-8 billion per year, for a living cost reduction of just 8% – basically, just last year's inflation.
Again, this money has to come from somewhere (where?) and, secondly, it does not prevent prices from continuing to rise (the government doesn't control global cost of goods after all).
So, we have at minimum $7 billion in GST cut for all but the richest and we still have to add HDB to that.
Depending on the year HDB sells about $4-8 billion worth of housing. In 2022 it sold $4.5 billion – what was still considered insufficient given the high demand.
If we cut all prices by 1/4 then the government, as I said, would have to find another $1-2bn annually, depending on the sales volume.
As you can see we're already in the range of at least $8-10 billion that would have to be found somewhere EVERY SINGLE YEAR, to only modestly reduce living expenses.
Raiding reserves, as some oppies propose, is unrealistic legally, since it would require changing the Constitution which needs 2/3 support in the parliament.
But even, EVEN if we assume that they were able to do it, it would still only generate additional $4 billion per year if the ratio was changed from 50/50 to 60/40. What about the rest?
And it would end up reducing NIRC in the long run (less money in reserves = lower future returns), forcing the government to raise taxes eventually to make up for the shortfall resultant from excessive spending today.
So, you may enjoy a few good years followed by a hangover when chickens finally come home to roost.
If you wanted to pursue a more meaningful reduction – let's say all BTO prices cut in half and 20% reduction in living costs for 80% of Singaporeans – then such a program would cost in excess of $20 billion per year (using simple math and ignoring macroeconomic consequences).
How?
That's why, you see, any dreams of some radical change are just that – dreams.
Nobody is immune to economic reality and the government in Singapore is already doing so much to insulate the entire society from real hardships, that there are no easy windfalls to be found by anybody else (least of all THIS opposition).
So, really, tell me, what do you expect to happen if people in charge change, hm?
