Five political hot potatoes of 2017

1. Counting the cost of looming tax hikes

Public debate over government spending was stirred last month after Prime Minister Lee Hsien Loong signalled an impending tax hike.

Speaking at the People's Action Party annual convention, he had noted that investments and social spending are costly, and forewarned that "raising taxes is not a matter of whether, but a matter of when".

While there are no details yet as to which tax may be raised, or by how much, some analysts have suggested that the goods and services tax (GST), which is now 7 per cent, could be raised to 8 to 10 per cent.

There has also been speculation that while the announcement for the hike may be made by the next Budget, it may take effect only later, such as after the next general election, which is due by 2021.

At a dialogue earlier this month organised by government feedback arm Reach and the Finance Ministry to discuss the upcoming Budget, Reach chairman and Minister of State for Manpower Sam Tan said that the Government does not take decisions on tax increases lightly, because such hikes come with a very high political cost.

"But if we have to raise it, that is because the reason is stronger than the political cost," he said.

Political observers tell Insight the ruling party has a degree of latitude as to when to introduce the increases, since the next election is not due yet - and revenues are sufficient for this term of government.

But people may call on the Government to be more transparent about how much money is exactly needed to prevent a deficit in future Budgets.

Full-time investor Vincent Tay, for example, says it is hard to argue against the logic of raising taxes, "but we don't know the full picture".

The 35-year-old father of three, with another child on the way, says he will have to bite the bullet and try to make more money to cope with the higher costs.

Looking ahead, Associate Professor Bilveer Singh of the National University of Singapore says he expects the cost of living to be a major political issue next year, due to the uneven distribution of wealth and economic uncertainties.

While the Government has managed the cost of living issue through packages to help the lower-income group, the middle class is feeling squeezed - and this is a key group politically, he notes.

"Anywhere in the world, once you lose this group - and it is usually through economic policies and costs of basic essentials - then the political price will have to be paid," he says.

Deciding on the quantum of the tax hike will also involve treading a fine balance.

Increasing GST by 1 percentage point, for instance, may not be worth the political effort, notes Dr Lam Peng Er, a senior research fellow at the East Asian Institute.

Nominated MP Randolph Tan, an economist at the Singapore University of Social Sciences, adds that people may question the need for a tax hike when a major economy like the United States can appear to afford to do the opposite.

"As scrutiny of public finances heightens, the Government will be challenged on many programmes at a more detailed level and its responsiveness and engagement will determine the level of acceptance of the need for tax changes," he says.

While raising taxes is clearly an unpalatable idea, providing a longer runway before any hike is implemented would help prepare those who are affected, he says, adding: "If there is anything we can learn from the debate on the water price hikes, it is that the apparent speed with which the decision was imposed brought a very negative reaction."

2. Uncertainty over who will be the fourth PM

(From left) Finance Minister Heng Swee Keat, Minister in the PMO Chan Chun Sing and Minister for Education (Higher Education and Skills) Ong Ye Kung are seen as potential PM candidates. PHOTOS: ONG WEE JIN, BH FILE

As the nation approaches the midpoint of the current term of government, speculation is rife as to who is set to take the reins from Prime Minister Lee Hsien Loong as Singapore's fourth prime minister. While 2017 did not offer obvious clues as to who this would be, what became clearer is who is out of the running.

In September, then Minister for Social and Family Development Tan Chuan-Jin left the Cabinet to take up his current role as Speaker of Parliament, which is not a key policymaking position.

Mr Tan had been seen as a core member of the fourth-generation (4G) leadership and a possible candidate for the top post, alongside Finance Minister Heng Swee Keat, Minister in the Prime Minister's Office Chan Chun Sing, National Development Minister Lawrence Wong, Minister for Education (Higher Education and Skills) Ong Ye Kung and Minister for Education (Schools) Ng Chee Meng.

The field has since narrowed to three clear contenders: Mr Heng, Mr Chan and Mr Ong.

Next year, a major Cabinet reshuffle is expected and all eyes will be on the post of deputy prime minister. Going by precedence, promotion to that position would be a clear indication as to who is next in line. The finance minister and defence minister roles are also key portfolios.

PM Lee, who took up his role in 2004, was deputy prime minister for 14 years before that, from 1990. Emeritus Senior Minister Goh Chok Tong was first deputy prime minister for five years, from 1985 to 1990, before taking over from founding Prime Minister Lee Kuan Yew.

With PM Lee - who turns 66 in February - saying he wants to step down by age 70, in 2022, Singapore's third leadership transition is the most uncertain, at least to the public, to date. It also means the fourth PM will have the shortest run-up phase before assuming the mantle.

Observers say openly identifying a successor soon is important so that Singaporeans and the other core leaders have time to get to know him and his leadership style.

"The next general election is not very far off and Singaporeans will want to suss out who their new leader is," says Dr Felix Tan of SIM Global Education. "Moreover, whoever takes over the heavy responsibility of being PM will also need to ensure he or she will be able to connect with the citizens as well as to prove his or her competence on the regional and international front," he says, adding that 4G ministers could be tasked with managing Asean matters as Singapore takes over the leadership of the grouping next year.

While the group of potential prime ministers may not have as much experience in the Cabinet as their predecessors - given that PM Lee has said he intends to step down by 2022 - Dr Norshahril Saat, a fellow at ISEAS - Yusof Ishak Institute, says PM Lee has devised other mechanisms to coach them, such as the addition of more coordinating ministers who can mentor younger ministers.

Despite the importance of this issue, several Singaporeans tell Insight they have not been focused on it this past year. Retiree Vivienne Tan, 67, says she is not concerned as whoever is picked will not be making policy decisions on his or her own - because the Cabinet works together as a team and major decisions need to be approved by Parliament.

However, she feels the current group touted to be in the running has not been given a long enough runway yet. "The next PM should have a major role in the Cabinet, as a full minister, for some 10 years. Five or six years doesn't seem like enough. PM Lee needs time to nurture his successor," she says.

Others like Mr Sammy Sang, 50, are paying close attention. He hopes a new PM will bring with him a fresh approach to governing.

"I hope the fourth-generation leader will be someone who will fight for the people, and be more transparent about government processes and governance," says Mr Sang, who is self-employed.

He wants to be given a clear idea of the successor soon, so that he has more time to assess the person before the next election. The father of three boys aged seven to 22 adds: "It's an important issue because it affects my children's future."

3. Some unhappiness over reserved election

President Halimah Yacob taking the oath of office, flanked by Prime Minister Lee Hsien Loong and Chief Justice Sundaresh Menon. PHOTO: REUTERS

When President Halimah Yacob was sworn in on Sept 14 this year, she became Singapore's first woman president.

The former unionist and Speaker of Parliament has had a busy start to her term - visiting social service organisations and hosting Singaporeans and foreign dignitaries at the Istana.

But in the days leading up to and following Sept 14, there was palpable unhappiness and anger among some groups about the way in which she had come into power.

Hashtags such as #notmypresident were used in online discussions and a silent protest was held at Hong Lim Park.

This year's election was the first to be reserved for Malay candidates following changes passed by Parliament last year to ensure the highest office of the land reflects Singapore's multiracial society.

Two others had applied to contest the election - businessmen Salleh Marican and Farid Khan - but they did not qualify, and Madam Halimah won in a walkover.

Former presidential candidate Tan Cheng Bock had also challenged the timing of the reserved election in court.

Prime Minister Lee Hsien Loong has said that he knew the reserved presidential election would be unpopular, and would cost his party votes. But he said at a dialogue in September that he strongly believed it was the right thing to do because Singapore has "not yet arrived at an ideal state of accepting people of a different race".

Some Singaporeans tell Insight they feel the walkover did not give Madam Halimah a chance to prove herself to the nation.

Says Mr Henry Ng, 68, a retired logistics team leader: "The process was not very tactful. It seemed like the decision-making process was very one-sided."

Curriculum manager Phebe Poon, 33, sees the walkover as "a big embarrassment overseas", running counter to efforts to portray Singapore as a world-class country.

Others such as Ms Winda Shahani, 40, a cashier, say the election did not bother them much. "As long as Singapore is a safe country, and (we are) happy, I'm okay," she adds.

The event divided Singaporeans, including Malays, says ISEAS - Yusof Ishak Institute fellow Norshahril Saat, although he notes that what was said on social media cannot be assumed to be representative of the entire population.

Political watchers say the anger was directed not at Madam Halimah but at the election process and the speed with which the legislative amendments were made.

"They could have made the constitutional amendments and had them take effect the next round," says National University of Singapore political scientist Reuben Wong.

Observers say voters felt a sense of powerlessness, as the reserved election and the raising of the bar for private sector candidates made the walkover seem like fait accompli. But whether unhappiness will spill over to next year is in doubt. Attention will likely turn to bread-and-butter issues, like the economy, the cost of living and terrorism, the analysts add.

"It helps that Madam Halimah is not a token figure and has credibility, experience and the temperament for the role," says Associate Professor Wong.

Dr Felix Tan from SIM Global Education reckons the issue is likely to crop up again in the campaign trail leading up to the next general election. "In the long run, the ruling party might face some political fallout due to its decision to change the elected presidency, but I highly doubt it will, for instance, lose a constituency or some parliamentary seats (because of it)," he says.

He adds that on a more positive note, the reserved election has made Singaporeans more aware of the presidency and its roles and responsibilities.

4. MRT reliability takes a hit

SMRT officials examining the two trains on the East-West Line which collided at Joo Koon MRT station last month, injuring 38 people.
SMRT officials examining the two trains on the East-West Line which collided at Joo Koon MRT station last month, injuring 38 people. ST FILE PHOTO

MRT disruptions this year have caused students to be late for exams and workers to be late for work. For some, the stakes were even higher.

Nurse Katherine Wong, 32, says there have been instances of surgery being delayed because some colleagues were held up. "The patient is there but the nurses are not, so the procedure cannot start," she says.

Frequent and frustrating delays aside, things seemed to go from bad to worse this year for public transport operator SMRT.

It faced several high-profile incidents, such as the flooding of an MRT tunnel, a train collision and a lightning strike.

In October, a poorly maintained pump system resulted in flood waters up to waist deep that shut down a large segment of the North-South Line till the next day, affecting 231,000 commuters.

A month later, two trains on the East-West Line collided at Joo Koon MRT station, injuring 38 people. It was the first such incident in over two decades.

Serious questions were raised about work culture and internal accountability in the company, after the investigation following the flooding incident revealed that some staff had falsified maintenance records over a seven-month period without doing the work.

The issue has become a political hot potato because it irritates many Singaporeans, not just commuters, as breakdowns have the potential to impact work and the economy, and tarnish the Singapore brand, says East Asian Institute senior research fellow Lam Peng Er.

Beyond that, political observers tell Insight that SMRT's woes, if not resolved, have wider implications on how Singaporeans view the Government's ability to keep the country running smoothly and efficiently.

"The social compact in Singapore is the trade-off of Western political freedoms and the assertion of individual rights for good governance and political stability, so we expect things to run like clockwork here," says Dr Lam.

Agreeing, Associate Professor Bilveer Singh of the National University of Singapore (NUS) says that when the trains break down, "the performance legitimacy of the ruling party gets a dent".

Going forward, people may expect the Government to step in further to improve the situation.

"Rightly or wrongly, some Singaporeans think that the Government's troubleshooting has not been on the ball enough," says Dr Lam.

A fundamental question needs to be answered, adds Prof Singh: "At the end of the day, are the trains running only to make money or are they a public good on which almost everything else depends?"

So far, a committee has been formed by the Land Transport Authority (LTA) and national water agency PUB to prevent tunnel flooding incidents from recurring.

Last year, LTA bought over all of SMRT's operating assets under the New Rail Financing Framework. This gives the Government more control over the network, as it can replace and upgrade ageing assets promptly to enhance reliability.

Transport Minister Khaw Boon Wan has promised to raise rail reliability to one million MKBF - or mean kilometres between failure - by 2020, up from the current 400,000 MKBF.

The issue of reliability will continue to play on people's minds next year, says NUS political scientist Reuben Wong, adding it casts a spotlight on the whole of Singapore Inc.

For Ms Wong, the buck still stops with SMRT, for now, as she feels it should have the engineering expertise to carry out proper maintenance of the rail network.

But she says the Government should take firmer action if things do not improve. "The incidents may affect tourism also and that affects Singapore's economy," she adds.

5. Steamed up over water price hike

Madam Yeong Soh Yeng, a freelance pre-school teacher, and her Indonesian maid, Madam Fatimah Dulhadi, save water from the washing machine's rinse cycles to wash the floors and flush toilets.
Madam Yeong Soh Yeng, a freelance pre-school teacher, and her Indonesian maid, Madam Fatimah Dulhadi, save water from the washing machine's rinse cycles to wash the floors and flush toilets. ST FILE PHOTO

Singapore's first water price hike in 17 years was hotly debated after it was announced in the Budget in February.

After an increase on July 1 this year and a second on July 1 next year, water prices will be 30 per cent higher, which the Government said is necessary due to rising costs and for investments in water infrastructure for production and sewerage.

Higher Utilities-Save rebates were unveiled to help families cope. To reduce water wastage, national water agency PUB has also been replacing water closets in eligible households with newer models that can cut water use by half.

Still, the hike attracted public criticism. Netizens dug up PUB's annual report and highlighted the profits PUB made last year. The authorities said there were profits only because of government grants. Without the grants, PUB ran an operating deficit, it noted.

About 100 people turned up at Hong Lim Park in March to protest against the hikes. Also, government feedback arm Reach found that 43 per cent of those it polled about the Budget disagreed that it was reasonable to increase water prices to fund higher costs of production and encourage conservation.

Mrs Claire Goh, 45, a housewife, says that she sees the price increase as a big issue because water is a necessity.

"If electricity prices increase, I can decide to use the fan instead of the air-conditioner, but there's nothing much else we can do about water, we can't not drink water or not wash our hands."

She says she already takes steps to conserve water at home, such as collecting rainwater. She would like to see greater incentive for households that make such an effort.

Part-time banquet worker Chung Soon Seng, 59, is worried about prices going up across the board when businesses face higher water costs. "For people with money it will not be a problem, but for people like me with less money it will be a problem, especially if the (Goods and Services Tax) also goes up."

He adds, however, that he understands the need to invest in increasing water production as the population has grown. "We can try to do our part by conserving water."

But not all Singaporeans seem to feel the same way, and Singapore University of Social Sciences economist Randolph Tan says that some have questioned the need to increase prices. This is despite the fact that pricing water too low may result in wasteful behaviour - which in turn threatens long-term water security.

"While the public has understood and accepted the fact that water is a scarce resource in Singapore, there is less appreciation of the fact that the problem of scarcity could easily worsen," he says.

Associate Professor Tan, who is a Nominated MP, also says that while the first round of the increase has been implemented well so far, debate on the issue will likely be revived next year when the second phase kicks in.

In the second phase, the price per cubic metre will go up by 35 cents. This is bigger than the increase of 29 cents for the first phase.

But he notes that a continuing debate may not be a bad thing. It may be what is needed to change behaviour - such as by discouraging excessive and wasteful usage - which the hike was designed to do in the first place, he says.

Political analyst Mustafa Izzuddin adds that while the water price hike is unlikely to be a political hot potato on its own next year, related issues, like rising cost of living and social inequality, will be hot.

"A much improved communication strategy - as well as rolling out programmes and schemes to cushion the impact for the lower income and most vulnerable in our society - could help to mitigate the unhappiness," he says.

A version of this article appeared in the print edition of The Sunday Times on December 31, 2017, with the headline 'Five political hot potatoes of 2017'. Print Edition | Subscribe