Rein in Property Prices to Reduce Social Inequality

This speech was given in response to the COVID-19 (Temporary Measures) (Amendment No. 3) Bill,and delivered on 12 May 2021.

Mdm Deputy Speaker, this Bill is to provide financial relief to help our local construction companies or contractors to defray the increased migrant worker cost as a result of the further tightening of our border controls.

We empathise with the difficulties faced by our contractors who have been severely ravaged by the COVID-19 pandemic but there are also other considerations to be made before we can support this Bill.

First and foremost, who is going to pay for the financial relief?

Under the Bill, an independent assessor is appointed to assess the foreign manpower cost increase as a result of the tight migrant worker situation and the assessed cost is to be paid by the property developer, mainly. However, with the surging property market now, the property developer can easily pass on the increased cost to the property buyers, many of whom are Singaporeans. If this happens, we will be imposing another indirect tax on our people who are already suffering under the COVID-19 pandemic.

The way to prevent this is to, first, dampen the bullish sentiment in the property market. Reining in property prices is what we need to do now in order not to exacerbate the social inequality in our country.

In addition, for our people, especially the younger couples planning to start a family who are facing a housing shortage and a long Build-To-Order (BTO) queue at the moment, it would also be good policy to rein in the aggressive property purchases by foreigners.

Hence, a more appropriate solution is to increase the Additional Buyer Stamp Duty (ABSD) to reduce foreigners’ demand, dampen the property market and raise revenue to pay for the financial relief for the contractors. In this way, foreigners and property developers who may have to lower prices to retain buying interest will be the ultimate payers.

The Government may also not want the contractors to sit on their laurels after the new measures kick in. The current problem is partly caused by contractors having relied on foreign labour for far too long. So, the relief assistance we give to the contractors must come with commitment from them to accelerate process redesign and automation. The Government can integrate the relief measures into the built environment sector strategy.

This is also a great opportunity to attract some of our Singaporeans to rejoin the construction sector because contractors can now pay higher wages as the wages of migrant workers have shot up significantly. But the Government has so far not taken any initiative to encourage this, as far as I know.

If the Government dares to take the bold move to make a bigger increase in the ABSD, there may even be enough additional fiscal revenue to provide for rental units for our Singaporean couples who are waiting for their BTO flats. In this way, we can also tackle another problem and, that is, maintaining our family formation rate and total fertility rate, preventing a COVID-19 gap in our future population structure, which may become another problem in the future.

Mdm Deputy Speaker, this Bill is a single objective policy. It is defeatist in a sense because we are succumbing to the effect of a migrant worker shortage, inflicting damage to our contractors and then worsening the housing shortage, which directly impact our lives.

However, this need not be the case if we are prepared to bear with short-term inconveniences to shake ourselves off the addictive reliance on foreign labour with the right policies over time.

If we increase the ABSD, restricting the number of migrant workers will not worsen livelihoods that much. Instead, our contractors will have more time to adjust to a new supply chain and may increase employment of our local workers. Our young Singaporean couples get their rental flats and all these, paid by the foreign buyers of our local properties. Mdm Deputy Speaker, in Mandarin, please.

(In Mandarin). Mdm Deputy Speaker, the purpose of this Bill is to provide financial assistance to help local construction companies and contractors pay for the increase in wage costs incurred as a result of the further tightening of foreign workers coming into Singapore. We sympathise with the difficulties faced by our contractors, who have been severely affected by the pandemic, but there are other issues to be considered before we support this Bill.

First, and most importantly, who will pay for this financial relief? According to the Bill, an independent assessor will be appointed to assess the increase in the cost of foreign workers due to the tightening of the foreign labour market, and the assessed cost will be borne by the developers. However, with the current surge in property prices, it will be easy for developers to pass on the increased cost to buyers, many of whom are Singaporeans. If this happens, it will be equivalent to an additional indirect tax.

The way to prevent this from happening is, first of all, to curb optimism in the property market. Curbing property prices is also what we need to do now to avoid exacerbating social inequality. In addition, Singaporeans, especially young couples planning to start a family, are facing a housing shortage. Hence, it is a good policy to control excessive buying from foreigners. Therefore, the appropriate solution is to increase the ABSD to reduce the demand from foreigners, curb the property market and use the collected ABSD to pay for the financial assistance to contractors. In this way, foreigners and property developers will be the ones who, ultimately, foot the bill.

Next, the Government may not want contractors to be just enjoying the cake. The current problem is that contractors have long relied on foreign workers, so we have to urge them to speed up the re-design and automation of their work processes. The Government can incorporate relief measures into its strategy to transform the construction sector. This is also an excellent opportunity to attract some Singaporeans to rejoin the construction industry, as contractors now can pay higher wages to Singaporean workers, considering the substantial increase in foreign workers’ wages. However, the Government has not taken any actions to encourage such development.

Mdm Deputy Speaker, this Bill is a defeatist policy with a single objective, because it casts us in the shadow of foreign labour shortage, which, in turn, causes loss to contractors and then aggravates housing shortage, directly affecting our lives.

However, if we apply the right policies, this may not necessarily be the case. With our proposed increase in ABSD, limiting the number of foreign workers will not worsen our lives. On the contrary, contractors will have more time to adapt to the new supply chain and increase the employment opportunities of local workers. At the same time, young Singaporean couples can be allocated housing, which is paid for by foreigners and property buyers.

(In English): This view is one more opportunity for us to reaffirm our confidence that Singapore can survive and do better with a different economic model. This model will focus on developing and training our well-educated local human resource and strategically bringing down the number of foreign workers over time. We urge the Government to consider our proposal seriously and amend this Bill.

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