My views on Budget 2019 can be summed up in two words - BORING, DISAPPOINTING.

A BORING BUDGET
The first word is - BORING. It is boring because it is like the budget for previous years.

Veteran journalist P N Balji, wrote in Yahoo News. The headline is - Budget 2019 - unimaginative, all too familiar.

Yes - there were two new items - the $6.1 billion Merdeka Generation Package and the $1.1 billion handout to celebrate our Bicentennial. But they looked very much like the packages and handouts given in past budgets.

MERDEKA GENERATION PACKAGE
$6.1 billion is a lot of money. It comes out of the high taxes that they citizens had to pay last year.

This package will be used to fund the bits and pieces, largely related to health care,  for 500,000 people classified under this generation.

What will each beneficiary really get? $100 top-up in PAssion card $200 top- up in medishield accounts over the next few years. And subsidy towards the fees paid to visit the doctor.

Will it help to bring down the health care cost for the elderly?

Yes, but a little. But it will not address the big ticket items for health care that the elderly have to incur during their lifetime.

Recently a 71 year old patient wrote to the newspaper to complain that he was quoted a fee of $19,000 for a cataract operation by a public hospital. He sought a second opinion from another public hospital and received a quote for $9,000.

I cannot understand why two public hospitals should be quoting fees that are so far apart. This is worse that the prices that are being charged in the marketplace of a third world country.

Whether $19,000 or $9,000, the fee is too high. A large part of the fee is not covered by insurance. It has to be paid out of medisave savings or out of pocket.

A cataract operation is common. Many elderly people need this surgery at some stage of their life.

Recently, an elderly woman had a heart attack. She was treated in a private hospital for 5 days and passed away. The family received a bill of about over $50,000 from the hospital for the operation. The fees for the specialists are separate.

If it was carried out in a public hospital, the total bill would probably be more than $50,000. This is still a lot of money.

The family has private insurance. But you can be sure that a large part of the hefty bill will not be covered by insurance and has to be paid out of pocket.  Our insurance schemes have many kinds of limits, sub-limits, caps and exclusions.

The high cost is called “end of life” treatment. Many families have suffered from the large bills of an elderly parent.

The Merdeka generation package will not address these large items. The insurance schemes does not address them fully, to the surprise of the patients.

There are better ways to use $6.1 billion to help to reduce the health care cost of elderly people.  The approach adopted in Budget 2019 is not going to help much.

BICENTENNIAL HANDOUT
The handouts to celebrate the bicentennial of the founding of Singapore by Sir Stamford Raffles was computed to be worth $1.1 billion.

Some people asked why we should be celebrating the colonisation of Singapore by an imperial power. But we will not debate about this issue.

If the sum of $1.1 billion divided by the estimated 3 million recipients, the average per person is less than $400.

And it comes in bits and pieces - tax rebate, GST vouchers and top-ups. Each of the items has a complicated formula and is subject to a cap.

Nobody knows for sure what he or she will be getting. Some will get more and some will get less.

When it comes to these complicated formula that nobody understands, we will face the risk of mistakes and fraud.

Recently, there was a report that the medical subsidies under the CHAS scheme was wrongly computed for 19,000 recipients.

We do not know how the error occurs and if similar errors also happen elsewhere that were not reported.

There is also the risk that some dishonest software programmer might manipulate the calculation to transfer some of the money into some unauthorised accounts. We will never know.

This is the risk that comes from applying complicated formula to calculate many bits and pieces payments.

YAHOO POLL
How well was the budget received by the people.

A Yahoo poll attracted 1,600 participants. The poll  reported that only 11% found the budget to be great or good. 34% found it to be average and 49% found it to be bad.

This is a self selected sample but it represents the people that are well read and active in social media. They probably reflect the views of the thinking people.

The survey carried out by the mainstream media will probably bear a different result. The mainstream media tends to present the perspective of the government to a gullible audience.

A DISAPPOINTING BUDGET
The second word that I will use to describe Budget 2019 is - DISAPPOINTING.

I am disappointed by the budget.

I expect the budget to set out the key challenges that face the people  and the strategies that the government intends to adopt to address these issues.

I did not get any comfort from the finance minister that he or his cabinet colleagues have any inkling of what these challenges are.

I will identify six challenges.

a) Cost of living
b) Health care cost
c) Birth rate
d) National service
e) Central Provident Fund
f)  Declining value of HDB flats

Cost of living
We have perhaps the highest cost of living in the world. This is largely contributed by the high cost of housing, the high cost of cars and the high cost of health care. But there are many other factors that contributed to it.

The high cost has been around for many years. We have been rated the most expensive city and the most expensive country by various studies and for many years.

This rating reflects our failure, not our success. It is not something to be proud of. It shows the inability of the government leaders to provide an affordable cost of living for the ordinary people.

The high cost of living brings several negative aspects - a high stress level, an inconsiderate people, an ugly people.

Apart from a few hundred dollars of handout here and there, the finance minister is not addressing this challenge of bringing down the cost of living.

Is it possible to bring down the cost of living? What can be done?

My view is - abolish GST. I am not suggesting that GST be lowered. I am suggesting that it should be abolished totally.

If we can abolish GST, we can bring down the cost of living by up to 10 percent.

7% comes from the GST that is paid to the government.

But consumers have to pay a higher price to cover the cost to the business of calculating, collecting and accounting for GST. This is a heavy cost. It is hidden. But you can be sure it is added to the price that consumers have to pay.

Can we afford to abolish GST? In my view - yes.

GST brings $11 billion to the budget each year. Where can we plug this gap, if GST is abolished? We can plug this gap by adopting the correct accounting approach. We can adopt  the international standard approach recommended by the International Monetary Fund.

I do not know why Singapore should adopt a non-standard approach and ignore the land sale in the budget. This figure, which is a large sum, disappears into the national reserves and is not accounted.

If the land sale, which some people estimate to be between $10 billion to $25 billion a year, is accounted according to IMF guidelines, we can abolish GST and still be in surplus.

Instead of doing the right thing, which is to implement the standard accounting system which allows us to abolish GST, the finance minister is talking about increasing GST from 7% to 9% within the next few years. This will add to the stress level and increase the cost of living further.

Can we find a bold finance minister who will abolish GST totally and bring down the cost of living by up to 10 percent?

Health care cost
Several international comparison actually showed that Singapore has a high quality of healthcare and, surprising, the cost is quite modest compared to other countries.

But this is not the perception of many people. They are are worried about the high cost of health care. Why is there this gap between perception and statistics?

The main cause is our complicated system of medisave, medishield, medifund and careshield.

Although the public put in a lot of money into these schemes, they find that these schemes do not cover for the total cost of treatment. They have to pay a significant portion of the bill out of pocket.

There are so many complicated rules about how much can be paid out of medisave and from the insurance scheme. These rules take a lot of effort to calculate and are confusing to the general public. Even the hospital staff find them to be quite difficult to explain.

The accounts of the insurance schemes called medishield and careshield showed big surpluses. They schemes receive large inflows in premiums but relatively some outflows in benefits. Some people describe them as money making schemes for the government.

What can be done to fix this problem?

We need to review our approach towards the control of health care cost.  We cannot allow the medical fees and charges to be determined solely by the hospitals and doctors.  We need a more effective system to control these fees.

We do not need to reinvent the wheel. Many countries have addressed this problem and found better solutions.

We can study what is being down in Japan or in Taiwan.

In Japan, the health authority negotiate with the medical providers on the fees that are charged for each treatment. This negotiation is carried out annually.

The final fees is fixed at a level that is adequate for the providers and affordable to the payers. Ultimately, the fees have to be paid by the patients through taxes, insurance premiums or out of pocket.

However, we need a mechanism to ensure that the fees are reasonable and not out of control.

Taiwan introduced its national health insurance system in 1995. Prior to deciding on their system, they sent their people to several countries to study their health insurance systems. They also visited Singapore. Our health authorities proudly explained to them our 3M system of medisave, medishield and medifund.

Taiwan decided to adopt a national health insurance system. It is one system, and is not made of three separate components.

I read a report from a Singaporean who had recently migrated to work in Taiwan for a few years. He compared the health insurance system of Singapore and Taiwan. He found the Taiwan system to be better. The people do not have to worry about paying for high fees for treatment. The cost to them is much lower than in Singapore.  I suspect that the quality of healthcare in Taiwan may not be up to the same standard and luxury as in Singapore, but it is probably adequate

Taiwan has made the right choice in not adopting our broken down system. We should now study from them.

I was amused and saddened to read a report in the international press about the budget for Singapore. It described the budget as good news for healthcare providers. It meant that they will make more profit and earnings. It does not talk about reducing the burden for the patients.

Low birth rate
We have one of the lowest birth rate in the world. This problem has been with us for over three decades.  However, there was no mention about this challenge in the budget in recent years.

Our low birth rate is largely caused by the high cost of living, insecurity of jobs, inadequacy of wages, high cost of raising children and the delay in getting married due to national service.

We have tried various ways to address this problem since 1985. We have adopted many baby packages in past budgets. These packages comprised on several bits and pieces incentives to encourage families to have more children. They have largely failed.

In my view - the packages failed because they were too complicated and were largely inadequate. Many people were not sure what they will get and how they can use the benefits.

They do not have the time to figure out the complications. They decided to have fewer children.

We need a new approach to address this issue. It should be a priority measure in the budget. We cannot continue to have a low birth rate and a decline in our local population.

We cannot continue to rely on immigration to meet our population targets.

What can be done? We can follow the successful practices adopted in some countries. They do not provide the full solution but they do have a much higher birth rate compared to Singapore.

In my view - we have to adopt a different approach. We should provide an adequate allowance to the family to raise each child. I suggest that this allowance be $500 a month for each child up to a maximum of three children up to age 16. This should also be  and reduce the cost of medical and child care.

National Service
We now spend $15.5 billion a year on defense. The backbone of our defense strategy is an active reservist force of 1 million trained soldiers.

We require our male citizens to serve two years of full time national service to be followed by ten years of active reservist training.

Apart from this high cost, we require our male citizens to spend about 30 months of their lives over a period of 12 years. This is a heavy burden on their time. It impacts their careers and delay their marriage and starting a family. A high proportion do not get married.

In recent months seen many death of NS men and reservists during training.  

I want to state clearly that, like most Singaporeans, I consider our national defense as very important. As a small country, we need a strong and adequate defense capability. We need to protect our sovereignty against bigger countries that try to bully us.

But we need to discuss the question of what is adequate. Do we need an active reservist force of 1 million people? Would a smaller number be adequate?

Do we need to spend $15.5 billion a year on our defense?

How much are other countries spending on their defense? How big is their military force?

Our defense needs should also be kept up to date with the times. We face different challenges in 2019, compared to the challenges when we became independent in 1965.

Our relationship with our neighboring countries have changed over the past decades. They have also change their national priorities and their approach towards military matters. They have their own challenges to addresses.

I met someone in his 50s. He was a NS officer during his years of active service. His son has started to serve full time NS.

The father told me that he was found that his son was being trained by NS officers and NCOs of about his same age. During his time, he was trained by regular soldiers.

The father objected to the new method of training NS recruits by young inexperienced NS officers and NCOs. Being around the same age as the recruits, they do not have the experience to judge the physical and mental capability of the recruits.

I wonder if this is the reason for the high number of deaths during training in recent years? Is this a good way to train our NS recruits?

I have carried out some research into the military strength and budget of several countries that are suitable as models for Singapore. Based on this research, I conclude that we need a defense budget of $15.5 billion and to take away 30 months from our male citizens.

We need to review our defense strategy. We should not continue to pour in so much resources that exceeds our actual needs. We have other social and economic priorities to consider as well.

Central Provident Fund
The CPF system used to be the pride of Singapore. It was a good and fair system. It was popular. It helped to build up the economic backbone of Singapore during our early years.

However, the CPF system has become quite unpopular in recent years. Some of the complaints are:

a) Low interest rate paid on the savings
b) Frequent changes in the rules on the use of the CPF savings
c) Delay in withdrawal of the savings at and beyond 55.
d) In spite of the high contribution to CPF, many people find the retirement income from CPF to be inadequate.

Many people have started to distrust the CPF system. They consider it another scheme by the government to take away their savings.

We need to revise our approach towards CPF. We need to rebuild the trust in the CPF and let the citizens know that they are getting a fair deal.

We need to allow the citizens a choice in investing their CPF funds. We need to allow them to earn a market rate of return if they are willing to take the market risk. But we have to provide them a small number of suitable options.

We should allow them to withdraw their savings at 55, which was originally promised to them. Some of them need to take out the savings earlier to pay off debts or to put to some suitable use.

But we should also help them to avoid making disastrous decisions in investing their savings. Too many people have bought the wrong investments or made losses in running a business.

This is a difficult policy decision. Both options - to allow or to disallow early withdrawals, have their risk and benefits. We need to find an approach that works best for most people.

We cannot solve this problem by ignoring it. This is a matter that should be addressed in the budget.

Declining value of HDB flats
The HDB system was also a pride of Singapore in the early years. It allowed a high proportion of the people to be home owners. They were proud of the HDB system.

In the old days, the HDB flats were sold at an affordable price.

But times have changed. Since the mid 1980s, the prices of HDB flats have increased under the Asset Enhancement policy.

The increases went too far. The HDB flats are no longer inexpensive. They have become very expensive, relatively to the earnings of the average wage owner.

Many HDB flat owners paid a high price for the HDB flats. They may find the flats to be affordable if they have access to government grants. But the market price of resale flats are too high.

Still many people are willing to pay the inflated prices, because they thought that the property will continue to appreciate in value. Their views were reinforced by assurances from government leaders that the HDB flats is a good investment.

The HDB owners have now come to a rude shock. They have found that the resale value of HDB flats have dropped sharply after it passed the 40 year mark.

There are no buyers for many of these old flats. Buyers can be found only if the sellers are willing to accept a sharp drop in value, of up to 30 percent.

The HDB flat is no longer a good investment. It has become a high cost of living.

The finance minister failed to address this issue in the budget.

I wish to give my views - there is nothing much that can be done about the fact that the HDB flat will have zero value at the end of the 99 year lease. However, we can make changes to allow the values to decline gradually and avoid the sharp drop in price when the flat passes the 40 year mark.

We can prevent this sharp drop if the buyer is allowed to use the CPF savings to pay for the old flats in the same manner that they are now allowed to pay for new flats.

We have to get away from the concept that the remaining lease must last for the lifetime of the buyer.

We should also allow younger families the choice of renting a flat, instead of owning a flat at an inflated price.

Conclusion
I am disappointed that the finance minister had failed to address the key concerns of the citizens in Budget 2019

We have many challenges that need to be addressed. They affect the future of our country and the livelihood of the people.

The many institutions that we were proud off in the early years of our independence, such as the CPF, HDB, National defense, Health care system, have deteriorated over the years due to neglect and incompetence.

The Budget is an important occasion for these issues to be brought up and for a national focus to find the solution.

The finance minister has failed in this task.

Tan Kin Lian