Tuesday, May 8, 2007

Competitive Salaries for Head Hunted Cabinet Members

Singapore operates a meritocratic system where politicians' performance is rewarded, unlike that of Finland, Denmark and Switzerland where they are political coalitions by nature. Hence, it is no surprise that these ministers' pays are far less than ours. Putting the issue of values and sacrifice aside, a small and nimble country like ours needs to attract top talent to ensure that the economy continues to prosper and achieve high growth rate and hopefully to reach Swiss living standards.


I strongly support Prime Minister Lee Hsien Loong's decision to go talent hunting just like many multi-national corporations are doing in this business world.

Since many young Singaporeans are pragmatic and ambitious, unlike the past generation of able, dedicated Singaporeans who willingly stepped forward to serve in the public service, this serendipitous state of affairs will NOT continue unless they are paid salaries comparable to what their counterparts are earning in the private sector. In fact, they should be paid relatively higher as they make more sacrifices, in terms of the loss of privacy and time they could spend with friends and families. Hence, to benchmark their salaries to the top professionals is a wise decision to ensure sustainability of the nation's growth rate.

Comparisons in the light of PM Lee Hsien Loong’s disclosure on increasing top ministers’ salaries (related article)…

Annual salaries of heads of government:

1. Singapore Prime Minister US$1,100,000 (S$1,958,000) a year
2. United States of America President: US$200,000
3. United Kingdom Prime Minister: US$170,556
4. Australia Prime Minister: US$137,060

Annual salaries of Ministers of government:

1. Singapore Minister: US$819,124
2. UK Minister: US$146,2993
3. US Cabinet Secretary: US$157,000

Source: Asian Wall Street Journal 10 Jul 2000


See: The Cabinet Appointments (2007)

Posted by Ms Chin Chiew Fong

Wednesday, May 2, 2007

University Education - Whither More Subsidies

Economic reasons for subsidies

In many countries, including Singapore, public and private university education institutions exist side by side. However unlike in private universities, students in public universities pay fees that are heavily subsidized. This means that their course fees tend to be only a small fraction of the actual cost of running these programmes. Why are governments willing to subsidize fees in public universities?

The main reason behind this is that university education is deemed as a good where total social benefits from it are larger than the total private benefit. Social benefits include the private benefits enjoyed directly by the individual, such as the higher lifetime earnings from higher education. However, it also includes external benefits, that is, benefits that society derives from higher education over and above those enjoyed by the individuals. These include having more well-informed vote-casting citizens, a larger pool of capable businessmen and workers who can expand the economic pie and political leaders who can understand the local conditions and lead the economy in a fast changing world.

Given that an individual would not consider the external benefits but only his or her own private gains, there tend to be a situation where enrolments in university education is less than desired. Thus government subsidies come in handy in getting more people to enroll in such institutions to reap the full social benefits that such education brings. Of course, the ideal solution is a targeted subsidy that directs funds only at people for whom the subsidy makes a decisive difference. The difficulty lies in our imperfect ability to distinguish those for whom the subsidy is decisive and those who would opt to go for university education anyway. Due to this, subsidies tend to be across the board for public universities.

Competing uses of government funds

However, over time, as competition gets stronger with globalisation, people do recognize that university education is getting more important and their returns getting higher. In the case of Singapore, more students also qualify for university. If subsidies remain status quo, with the expansion of university places, the government will be forced to squeeze resources elsewhere from the economy to continue the heavy financing of university education. This may not be the best thing to do and I do agree that the Singapore government should control its expenditure on university education.

Government involvement in other aspects

The reasons for my stand is simple: The government needs to spend more on primary and secondary education to help the majority attain a standard of education which will allow them to find suitable jobs in this very competitive world. If we are successful in doing so, it will substantially reduce the burden on taxpayers having to assist the low-income earners in the future. In addition, there are also substantial medical and other social needs to be provided, especially for the poor, as well as the economic expenditure needed to ensure a sustained growth for the country. Our public funds may not be deep enough to spend lavishly on every item unless we keep adjusting our GST upwards.

Do not be mistaken; I am not advocating that the government should wash their hands off in making additional contribution to university education. Conversely, as mentioned above, there are great social benefits from university education and the government should be involved in ensuring high-quality, updated and relevant programmes for study. This is especially so as Singapore moves into a knowledge-based economy and many of our niche areas require highly-skilled personnel.

Conclusion

When limited government funds have many competing uses, there is really a need to prioritize. For those who are richly endowed with high intellectual capacities and moved on to the universities, perhaps they should pay a little more on their road to success. For those needy, there is always the availability of scholarship, bursary and interest free loans to assist them……..Don’t you think so?

Related Article: http://www.moe.gov.sg/parliamentary_replies/2005/pq28022005.htm

Posted by: Mrs Chua Siew Hong

Tuesday, May 1, 2007

An Earthquake in Singapore?

What is earthquake to Singaporeans? Will it 'reach' Singapore?

In known history, Singapore has not experienced an earthquake.

Singapore is located in an area sandwiched by the Java trench in the west and south, and the Philippine plate and trench in the east.Thus Singapore is located in a seismically stable zone, free from earthquakes.Most of the shallow and bigger earthquakes are in western Sumatra and Java because of the deep subduction zones to the west-east and south-north of the Java trench. Earthquakes that occur near Singapore are usually deep focus weak earthquakes. (Refer to Figure 1).

Figure 1

However on 6th March 2007, certain parts of Singapore including the Central Business District felt tremors that were the result of a Sumatran earthquake that measured 6.6 on the Richter Scale. Buildings in the affected areas swayed, not to mention the people in them.

Responses from Singaporeans taken from local blog sites include:

'tremors only ma.. don't think need to take any cover. Unless next time an earthquake strike Singapore'.

'I didn't feel anything. Xin Li Zhuo Yong (psychological effect)…'

'…The swaying was very obvious. I felt the work station was moving and I thought it was my colleague who was pushing the work station but when it started swinging back and forth slightly it was obvious that it wasn’t the workstation that was moving but it was the building…'

'…We were doing our work on our computer when the building started shaking. So we grabbed our bags and just evacuated by the normal fire evacuation procedures. Everyone was panicking. I think one of my colleagues was crying because she had never felt such effects before. And we were all rushing out of the building. But no fire alarm was sound. We took precaution and left the building ourselves…'

Although the responses varied and the blog site could not sustain this thread after just 2 days, some questions were asked on why Singapore experienced the tremors. This is because the next one may be nearer or more intense, yet I wonder how powerful it must be to seriously affect our people, to get them to sit up, pay more attention and awareness to it.

After all, how many Singaporeans know what to do or what not to do if Singapore is to experience an earthquake? For example, do we run to open space in the event of an earthquake? (The answer is no if you are surrounded by buildings but yes if you are not) We are just being lucky as we are 'shielded' by surrounding nations; remote from earthquake zone and tsunami 'walls' sheltered up by the Indonesian Archipelago in the west and south and the Philippines in the east. Yet there were inhumane calls from the public suggesting that we stop sending rescue teams to help these victims.

However, we seem to have some evidence that along the subduction zone of the coast of Sumatra do happen in phases. In the early nineteenth century there were a number of earthquakes in relatively quick succession and we are maybe entering a phase where we have a series of earthquakes where one earthquake triggers another one further along the fault line.

Sometimes when a large earthquake occurs on parts of the fault line, the stresses are transferred further up the fault line and that may then lead to a second earthquake. We saw this happening after the original tsunami earthquake in 2004. About three months later, there was a very strong earthquake a little bit further south.

'So what?' Some might ask but the issue is that mankind do not know enough of earthquakes such as predicting the next one. Moreover, not all the factors on how the magnitude of the earthquake itself affects the felt effect on earth's surface are known.

Of course, what we do know is that when two earthquakes have the same magnitude, the deeper earthquake will have less felt effects than the shallow one. However, there is another factor which is very important but under appreciated. It is the intensity of the felt effects which is the nature of the immediate sub strata of the place or building where that earthquake is felt.

In general, a solid rock will have less shaking potentially then an area built on unconsolidated material.

This is the potential danger where almost twenty percent of Singapore’s surface area is reclaimed land. Scores of buildings that include houses, factories and hotels are located there. In the event of an earthquake, buildings will be shaken up more violently as compared to those on non-reclaimed land, which is solid and will not be liquefied by the shake.

Worse, as seen from Figure 2, Singapore is an SIA (not the airline itself, but sedimentary rocks in the Jurong formation, igneous rocks in the central and old alluvium in the east). Hence, unconsolidated sediments, which are sediments which have accumulated in buried river channels, are more likely to amplify the seismic waves as they move through them. And we find these kinds of sediments in the Central Business District, in areas to the east of Singapore and along some of the main valleys. Not to mention the softer sedimentary rocks found in the Jurong formation.

Now, if an intraplate earthquake strikes Singapore (Intraplate earthquakes occur in the middle of presumably stable tectonic plates which scientists currently do not understand the cause of this rare hazard), I am not so sure how Singapore will take to it.

Figure 2

For interest sake, a quick summary on the geology of Singapore as taught by Mr Kenneth Lim from NIE:

Singapore rides on the Eurasian plate, and this is less dense than the Indo-Australian plate which is converging against it. The great heat and pressure caused results in part of the Indo-Australian plate margin melting, releasing magma which is forced up towards the crust.

Very near the destructive boundary, the magma has enough energy to melt its way right through the Earth's crust, till it emerges as the volcanic islands of Java and Sumatra. Further away (about 400 kilometres) from the convergence zone, where Singapore presently is, the magma had lost most of its energy by the time it got near the surface because it had started from very deep within the mantle.

As a result, the magma was unable to melt its way completely through the crust and instead cooled and solidified midway. That is, the magma was intruded into the crust. The crust bulged up, forming what we now know as Bukit Timah hill. So now we know why Singapore will never experience any volcanic activity, at least in our lifetime, simply because we are too far away from all the action.

There is another main group of rocks which were being formed at around this time. Continued uplift of the batholiths beneath Peninsula Malaysia mountain range (Refer to figure 3) increased the potential energy of the overlying rocks. Their rate of erosion thus increased, and the eroded material was deposited in shallow freshwater and coastal basins. Over the years, they were compressed into sedimentary rocks called sandstones and mudstones, and in Singapore, they are termed the Jurong Formation.

Figure 3


The last main group of rocks we come across is known as the Old Alluvium (shown in peach in the east of figure 2).

The Old Alluvium consists of sand, pebbles and gravel. The average thickness of the Old Alluvium is generally believed to be about fifty metres. The deposits are believed to have been eroded from granitic rocks from south Johor. It was deposited when sea level in this part of the world fell due to global cooling.

As sea level began to rise back to its present day level, the Straits of Johor were flooded and Singapore became an island. Even today, the Straits east of the Causeway are about twelve metres deep, while some parts of that west of the Causeway are as shallow as five metres!)

Earthquakes have also been responsible for another kind of natural disaster, Tsunamis. The 2004 Indian Ocean Earthquake had its epicentre in the west coast of Sumatra. It triggered a series of devastating tsunamis that killed large numbers of people across South and South East Asia. During that period, there was a theory put forward that at some point Singapore could be affected by a tsunami in view of the shifting tectonic plates.

Now, the tsunami was generated by an earthquake which resulted in a sharp drop in the seafloor elevation. However, Singapore was not affected because Sumatra was blocking the direction of the tsunami.

But in terms of shifting plate boundaries, the plates that are formed on the earth’s surface have been moving for long periods of geological time. So the position of continents is changing over long periods of geological time. If we roll that forward, we would expect there to be a continuing shift of where the fault lines occur and where the volcanoes form and so on. Furthermore, simulations have suggested that in about fifty million years time, Australia will crash into South East Asia. We will then see volcanoes and earthquakes occurring in different positions. Singapore by then could possibly lie much nearer to the fault boundary where we might be prone to earthquakes and Bukit Timah hill erupting lava (Compare between Figure 4 which shows the current world and Figure 5 fifty million years later).

Figure 4

Figure 5

I would like to hear your views based on the two questions posed. Looking beyond the tremors and concerns, one can also draw a rather important lesson for mankind from earthquakes such as these. The world is not only connected or linked through communication channels such as the internet and mass media and modes of transportation such as air travel. We have been historically connected by something called geography (Basically how space/place changes over time). What happens in one area can have an impact on its neighbourhood.

Therefore, let us not be so ignorant just because we are in a 'peaceful' environment.

Posted by Mr Eric Goh