Relief loans to replace loss of earnings

First posted on 18 Nov 2008

PM Lee said that our finances are sound. The Government will implement measures to stimulate the ecoomy.

The recent methods to stimulate the economy are:
a) Spend on infrastructure works (i.e. Singapore and China approach)
b) Give money to the people to spend (i.e the US stimulus package)

These methods are good. I wish to suggest a third method:
c) Allow each person to apply for a relief loan for the loss or reduction of earnings

Here is how the relief loan works:
1. The borrower can apply for a relief loan to replace the loss or reduction of earnings.
2. This loan will carry interest at 2.5% p.a.
3. The total borrowing can be subject to a cap of say $50,000
4. The loan can be repaid at any time, when the borrower has excess earnings.
5. It will be a first charge on the sale or your property or CPF savings
6. The CPF savings cannot be withdrawn for investments, while there is an outstanding relief loan

The relief loan will help the affected person to pay the mortgage and carry on the daily life with dignity. This facility will provide the assurance for the employed people to carry out their daily life without cutting back on their expenditure drastically, although they are expected to be more careful and frugal. They will follow SM Goh's advice to continue to spend and keep the economy moving.

If mortgages continue to be paid, the property values will be somewhat protected. The fall will be modest. The lower price will encourage other people to buy properties.

How does the Government manage the task of assessing and approving these relief loans? I suggest that they outsource it to the banks and the financial adviser firms, who will carry out the assessment to the expected standard in return for an agreed fee. They have many representatives who can be retrained to process these relief loans. It will create useful jobs for these representatives.

This concept is especially relevant to Singapore, as we do not have any unemployment benefit. A relief loan can be a good alternative to help the affected people.

TOC: Social Justice and Fairness

First posted on 7 Dec 2008 - rally organised by The Online Citizen

The theme for this rally is “Social Justice and Fairness”. I like to talk on two points:

1) Our society should be more egalitarian.
2) The elected leaders should represent the people.

Wages
What is being egalitarian? It is being more equal. It means that the gap between the rich and poor should be narrower. In the past 10 to 20 years, the gap has widened.

We know how much the high income earners earn each year. Salaries of $1 million, $2 million, $5 million or $10 million are quite common in Singapore, in the business sector. Even our government leaders earn more than $1 million in salaries, as they are benchmark against the top earners.

I do not mind people earning higher salaries, if they are able to build the economic pie. But, the economic pie must be fairly shared with the other members of society.

I am worried that the low income earners are not earning enough to make a decent living. Many people have to work hard on two jobs, and they hardly earn enough to survive, to meet their monthly expenses. It is important that the salaries of the low income earners should be raised.

In many countries, there is a minimum wage that is tied to the cost of living. Everybody working a decent day’s work should receive a wage that is sufficient to pay for their living expenses, at a frugal level. They are not well off, but they should not starve.

Apart from an adequate wage, we must also give people some security against unemployment, especially if they fall victim without any fault of their own.

In some countries, there is unemployment insurance to give them some benefit for 12 to 24 months. It allows them to adjust a period to adjust. This type of payment ensures that they can continue to pay their mortgage and meet their living expenses for a period of time. They do not have to borrow on credit cards or from loan sharks and pay a high rate of interest, which adds to their burden.

Even America, which is the champion of the free market system, has a minimum wage for their workers. It also has an unemployment insurance scheme that makes payment for 12 months or slightly longer.

Singapore has schemes such as the workfare and assistance given by the community development council. We need to review the effectiveness of these schemes to make sure that they are able to address the real problems. I suspect that these schemes take a lot of work to administer and do not provide adequate assistance to the people in need.

Represent the people
Our elected leaders can represent the people and be the voice of the people. This requires the leaders to be freely elected at the general and by-elections. We should move back to the old days when most elections are contested and the candidates have to go out to win over the votes of the people.

The trend in recent years, where many elections at the group representation constituencies (or GRCs) are won through walkovers is not satisfactory. Some members of parliament have never been directly elected for several rounds, as they continue to win through walkovers.

We should move towards smaller GRCs and eventually to move back to the single member constituencies, which was the case in the 1970s and early 1980s. A free election will bond the leaders to the people. It will lead to a more united country. It will go back to the old days when the people are proud to be Singaporeans.

In recent months, more than 10,000 people have lost their hard earned savings by being misled into investing in the mini-bonds and other credit linked notes. They have signed a petition for the authority to carry out an independent investigation into the possible wrong doings by the financial institutions that created and/or marketed the products.

I hope that the authority will act on this petition, which has been signed by nearly 1,000 people. The signatories need to know if their appeals have been heard and have been fairly considered. They also like to know the progress and outcome of the investigation. As the goes, “justice has to be done, and seen to be done”.

Let me wish the very best for the future of our people and nation, and for Singapore.

Tan Kin Lian