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Who’s to blame for Singapore’s cost of living crisis? A demand for clarity and accountability
Khush Chopra criticises PM Lawrence Wong’s shifting stance on Singapore’s cost-of-living crisis, from blaming wage hikes for low-income workers to global inflation. Chopra argues PAP policies, like high taxes and land costs, are major drivers of inflation and demand greater accountability.
Published
22 hours ago on 27 November 2024
By Op-Ed Contributor
Prime Minister Lawrence Wong and Khush Chopra
by Khush Chopra
Prime Minister Lawrence Wong’s shifting narrative on the cost of living crisis in Singapore highlights critical inconsistencies.
Initially, he implied that higher wages for low-income workers would drive up costs.
In 2023, PM Wong attributed rising costs to efforts to raise wages for low-income workers, stating that consumers must be prepared to pay more for goods and services to ensure fair wages for low-income workers. Speaking at an Institute of Policy Studies (IPS) conference, he stated:
“Basically, we cannot demand for services delivered by our fellow citizens to be priced cheaply and in the same breath, lament their wages are too low.”
Now, he blames “global inflation” for the rising cost of living.
At the PAP’s 70th Anniversary and the election of its 38th Central Executive Committee (CEC) on 24 November 2024, Prime Minister Lawrence Wong shifted the narrative by attributing Singapore’s rising costs squarely to “global inflation.”
While acknowledging the financial strain many Singaporeans face, he framed global inflation as the primary driver, sidestepping the deeper role of domestic policies.
This inconsistency raises questions about whether PM Wong is avoiding a deeper issue: the impact of PAP’s own policies in entrenching high costs across Singapore.
This inconsistency demands scrutiny of the PAP Government’s role in driving up costs and its responsibility for the pain of the high cost of living that Singaporeans endure.
PM Wong went so far as at the PAP Conference last Sunday to say emphatically that the PAP Government is doing its best to shield citizens from the worst effects of global inflation, alleging that opposition parties in Singapore have tried to exploit cost-of-living concerns to turn sentiments against the ruling party,
Similarly, about a month ago, on 2 October, PM Wong addressed Singaporeans’ cost of living concerns on social media, attributing the rising costs here to “global inflation,” which he claimed impacts Singapore just as it does “many other countries”.
He said: “Inflation has been a significant concern for many, directly impacting our day-to-day expenses. My team and I are committed to doing everything we can to help cushion the impact.”
Is the Prime Minister and his team really “doing their best” or “ doing everything” they can to “help cushion the impact” or are they the source of our pain?
You be the judge.
May I respectfully suggest to my fellow Singaporeans that you cannot discuss your malaria with your mosquito. Do not expect the solution to your problems from those who created it in the first place.
The reality is that Singapore’s high-cost structure is predominantly shaped by factors under government control.
Domestic Pressures vs. the “Global Inflation Excuse”
PM Wong’s narrative attempts to shift responsibility for the cost-of-living crisis by asserting it is a “global problem affecting many other countries.”Don’t blame the PAP; it’s a global problem affecting “many other countries”. But does inflation affect other nations the same way it does Singapore?
Are they ranked among the “most expensive cities in the world”?
According to the Economist Intelligence Unit’s (EIU) annual Worldwide Cost of Living (WCOL) survey, Singapore consistently ranks as one of the most expensive cities globally. While the PAP dismisses this ranking as applying to expatriates rather than locals, this argument sidesteps the core issue: the disproportionate burden of inflation on ordinary Singaporeans.
While global inflation affects both Singapore and ”many other countries”, Singapore’s unique economic structure, government policies, and taxes contribute to a higher cost of living.
The Strong Singapore Dollar: A Shield That Fails to Protect
PM Wong’s narrative that “global inflation” is the main driver of Singapore’s rising costs seems contradictory, given Singapore’s strong Singapore dollar (SGD).A robust SGD is designed to shield the economy from global inflation by making imports cheaper, mitigating the impact of rising international prices. So why is Singapore still facing such severe inflationary pressures?
The reality is that global inflation does not explain the full picture.
While external factors like rising food and energy prices impact all open economies, Singapore’s consistently high cost of living is driven largely by domestic factors.
Policies such as high indirect taxes (GST and ERP), exorbitant land and rental prices, and foreign worker levies significantly exacerbate inflation, disproportionately affecting ordinary Singaporeans.
Adding to this, the irony is stark: despite a strong SGD, which should offer relief from global inflation, Singaporeans face spiralling costs because government-driven domestic inflation compounds the burden.
The irony lies in the fact that the strong Singapore dollar, which is designed to shield the country from global inflation by making imports cheaper, has not meaningfully alleviated the cost of living pressures for ordinary Singaporeans.
Instead, PM Wong continues to attribute inflation primarily to global factors, while domestic policies—such as high indirect taxes, land costs, and government-driven price mechanisms—compound the burden, leaving the strong currency’s supposed benefits largely ineffective for the population.
Unlike neighbouring countries such as Malaysia, where lower taxes and subsidies ease cost pressures, Singaporeans bear the brunt of a system that prioritises government revenue over affordability.
Thus, Prime Minister Lawrence Wong’s argument that global inflation is the sole or even primary driver of rising costs falls apart under scrutiny.
It is government policies, not just external trends, that have entrenched a high-cost environment in Singapore, leaving everyday citizens to carry the heaviest load.
Cost of Living Index
For context, Singapore is significantly more expensive, with a cost of living index that is more than double that of Malaysia.This means Singapore’s expenses are about 82% of the USA’s, whereas Malaysia’s are roughly 30%. Living in Singapore is far more expensive than in Malaysia.
Housing, groceries, transportation, and dining are pricier in Singapore, but its higher wages offset some of the expenses. Malaysia offers a lower-cost alternative, ideal for those with modest budgets or looking for better affordability.
Self-Inflicted Domestic Inflationary Pressures
Singapore’s high-cost structure is predominantly driven by four key factors:- Exorbitant Land, HDB, and Rental Costs: The government’s control over land supply has driven up prices for housing, rentals, and properties. High property costs dominate business expenses, with these being passed on to consumers as higher costs of goods and services.
- Indirect Taxes and Fees: Policies such as the Goods and Services Tax (GST), Certificate of Entitlement (COE), Electronic Road Pricing (ERP), and inflated utility bills significantly increase costs. The recent GST hikes from 7% to 8%, with another planned increase to 9%, have compounded domestic inflationary pressures, affecting every aspect of daily life.
- Foreign Worker Levies: These levies, imposed on employers, increase labour costs, which are ultimately passed on to consumers. These measures raise business operating costs without directly improving workers’ wages or benefits.
- Regulatory Costs and Over-Governance: Over-regulation in industries like healthcare, and construction has led to increased compliance costs and unnecessary administrative burdens. In healthcare, strict regulatory requirements and inefficiencies have pushed up treatment costs. Similarly, excessive bureaucracy in construction inflates construction costs, which in turn drives up housing prices. These regulatory costs are ultimately passed on to consumers, significantly contributing to the cost-of-living crisis.
PM Wong’s focus on global inflation ignores the systemic factors driven by PAP Government policies that add significantly to our domestic inflationary cost pressures.
GST Hikes: A Costly Misstep
Let us not forget the PAP’s role in increasing GST by two 1% hikes to 9%.The government’s recent GST hikes represent another self-inflicted wound. Despite public outcry and concerns about the impact on the poor, the government dismissed such fears as “completely unfounded.”
However, the reality is stark: essential goods and services have become even more expensive, leaving ordinary Singaporeans struggling.
The decision to raise GST during a global inflationary period was poorly timed and worsened inflationary pressures instead of mitigating them—sheer madness.
Conclusion: No More Deflections
So, who will PM Wong blame next for this crisis?
Wage increases for low-income workers surely cannot be blamed for our higher cost of living.
The PAP Government should not blame wage increases for low-income workers for the high cost of living. They should equally not pass off “global inflation” as the main driver for our cost of living crisis.
Singaporeans deserve better than shifting narratives and political deflections. The evidence is clear—PAP policies are a major contributor to the high cost of living in Singapore.
It is time for the government to take responsibility for the domestic inflationary pressures it has created. Singaporeans deserve real solutions, not evasions or finger-pointing.
Only through comprehensive policy reforms can the high-cost structure and cost-of-living crisis be addressed urgently and effectively.
Khush Chopra is a respected observer in Singapore, whose views on politics and policy matters are widely shared and valued.
Knowing this government, we wait for pofma to be issued. Civil servants are now working overtime to piece together the "facts".
