While Workers’ Party MP Jamus Lim said he was glad that the government will be releasing a new support package to help Singaporeans deal with higher living costs, he wrote in a Facebook post that “it makes sense for the government to act” now to address inflation, which Deputy Prime Minister Lawrence Wong had previously assured it would do.
The Sengkang GRC Member of Parliament opened his Oct 15 Facebook post by stating that “it doesn’t take a genius to observe that stuff is still frighteningly expensive” and noting the “scorching” 7.5 per cent in August.
He warned that if such inflation persists, this would mean prices doubling in less than ten years.
“This makes us poorer. Over the past 6 years, inflation was sufficiently contained that our real wages grew by almost 3 percent annually. But if inflation had grown at the rate it did this past 6 months, our incomes would have shrunk instead.”
The MP, an Associate Professor in Economics at ESSEC Business School, acknowledged that the Monetary Authority of Singapore, which already tightened monetary policy again, is “in a bit of a bind” because further tightening would likely increase unemployment.
“This would mean a double whammy for our workers: a right jab from rising prices, a left hook from lost jobs. If we add to this potent mix another GST hike in January, we risk this being a shoryuken (Dragon Punch) move that could well kick our economy into recession (yes, I was a child of the 80s, and Street Fighter references are not beyond me),” he added.
Assoc Prof Lim then offered solutions, including taking the “windfall tax revenues” from last year, which he said was an increase of more than 22 per cent, which could be rebated back to the people.
“Beyond natural justice (government should not be making money while citizens suffer), this also gives a nice little boost from expansionary fiscal policy.
DPM Lawrence Wong had previously assured us that the government will address the inflation threat, should it get worse. It is now worse, so it makes sense for the government to act,” he added.
The MP added that he had proposed other options in Parliament earlier this month, including making use of over $7 billion in “extraordinary surplus.”
He also again proposed postponing the GST increase, which would buy two years of “precious breathing room for the economy” or giving out GST vouchers.
“The government had promised, when it announced the GST hike, that such vouchers would cover GST expenses for between 2.5 and 20 years (depending on your income). But inflation has eroded the value of the original vouchers, by between 1 and 12 months. Giving out more GST vouchers restores the government’s original promise,” he added.
Yet another option would be to provide another support package, which would help everyone, regardless of income.
“Yesterday, the government announced that it would make a special cost of living payment, albeit with different payout amounts for different income groups. I’m glad it has chosen to do so,” wrote Assoc Prof Lim.