After the results of last week’s General Elections, some of you may be emotionally affected. Especially if you were making informal bets about the voting margins at each of the Constituencies. But let’s put aside the accusations of conspiracy theories and feelings of disappointment. In fact, let’s not stop there. Let’s also forget about the fact that it’s SG50, that it would have been Mr Lee Kuan Yew’s 92nd birthday, and just focus on the facts.
These are the policies that have been introduced by the Government over the past 4 years. We’re not saying that there was a direct causal effect to the way Singaporeans voted, but amidst all the mudslinging and emotional speeches, here’s a view what was actually done that might have had a rational impact on how voters made their decision:
Healthcare costs for the elderly may not have been the biggest issue in General Election 2011, but several schemes were introduced over the past 4 years. One could argue that introducing these policies took the wind out of the opposition’s sails, for the most part.
Pioneer Generation Package
At last year’s Budget announcement, it was announced that $8 billion dollars would be given out to the elderly in the form of the Pioneer Generation Package. This Pioneer Generation Package was expected to benefit 450,000 people, with the majority aged 65 and above. We did the math for you, that’s an average of almost $180,000 per person.
This funding comes in several forms – Medisave top-ups, outpatient treatment subsidies, and subsidies to MediShield Life.
MediShield Life was first mentioned back in 2013, but will only kick in later this year. If you’ve been living under a rock and are still safe from the government’s massive marketing machine, MediShield Life is the new, improved MediShield and offers universal coverage, unlimited lifetime claimable limit, and lower co-insurance payments.
Although the health insurance premiums will be higher, the government also announced subsidies amounting to $4 billion dollars over the next 5 years.
Escalating property prices was a big issue at GE 2011. However, several measures were introduced in the past 4 years to dramatically cool the property market.
Firstly, the supply of HDB flats was increased. The government built more than 77,000 HDB BTO flats over a 3-year period between 2011 and 2013. This comes up to almost 25,000 flats a year. This ramp-up shows no signs of stopping either. In the first half of this year, HDB has already released almost 14,000 flats, including May’s record number of flats in a single sales exercise.
At the same time, the government has also introduced measures that make it more difficult to purchase properties for investment purposes, ensuring that these new properties go only to those who need it – for living in.
Total Debt Servicing Ratio
The most effective of these measures was the introduction of the Total Debt Servicing Ratio or TDSR, which took effect in June 2013. The TDSR restricts the monthly debt repayments to 60% of your income, effectively forcing you not to spend more than you are able to. This slight modification to the previously-used Mortgage Servicing Ratio (MSR) also takes into account other debt like credit card debt and other loans.
This has severely reduced the amount that people can spend on property, especially in the resale market. This is quite scary, if you think about it, because it just shows how much other debt people have. But it might go a long way to preventing a property meltdown like what happened in the US.
Also, the more arbitrary resale costs, such as the Cash-Over-Valuation amount have been dramatically reduced, in some cases even to a Cash-Under-Valuation.
Additional Buyer’s Stamp Duty and Seller’s Stamp Duty
The increase in the Additional Buyer’s Stamp Duty and Seller’s Stamp Duty were implemented in 2013. These essentially penalised both Singaporeans and foreigners who were buying multiple properties for investment purposes. By heavily discouraging these transactions, it severely reduced the demand for properties.
As a result of the combination of all these policies, housing prices declined for the full year in 2014, the first time in 13 years.
Housing grants and raising the income ceiling
In addition to forcing the property market to cool over the past few years, the government has also introduced more lucrative HDB housing grants, as well as raised the income ceiling in order to give more Singaporeans the option of living in subsidised housing.
While it still remains to be seen what the long-term effects of these policies are, the more immediate effect is that housing has now become even more affordable for Singaporeans.
3. Public Transport and Immigration
The issues of public transport and immigration remains a difficult situation where policies were implemented that seemed more like stop-gap reactionary measures rather than long-term solutions. Perhaps it’s appropriate to mention them both in the same breath because of how closely they’re often related.
Over the past four years, the government has, in PM Lee’s own words – “slowed down the inflow of foreign workers, tightened up on PR and citizenships applications, made sure that Singaporeans are fairly treated at work”. While that’s definitely eased the burden on our property market, transport networks and labour market, at the same time it’s caused some business to call foul as their cost of labour began to increase.
When it came to transport, the past four years actually saw the consequences of past policies. In turn, we got several stop-gap measures such as upgrading the MRT lines, as well as carrying out repair and replacement work in the meantime. At the same time, transport Bills were introduced in Parliament to completely overhaul the existing public transport systems with the introduction of a new government-owned centralised bus contracting model.
So how effective were these policies in changing the game at last week’s General Elections?
It would seem like Singaporeans really appreciated the policy changes taken by the government over the past several years. The results of the General Election, though surprising to many, seemed to be a stamp of approval for the way these policies were implemented and the confidence in the government to sustain them.
But what can we expect moving forward? Like us on Facebook for an upcoming article about our predictions for where the next 5 years will bring us.
What other money matters do you think won the PAP this year’s Elections? Share your thoughts with us.
Pasir Ris One
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