And you haveeffects on small parts of the economy.You have a big effect on the home buildingindustry, where you’ve got approvalsdown to 9,000 today I think it was.But you have a big effect on the homebuilding industry, you have a big effecton anything that’s financed by credit,car purchases and so on. But it’s a veryuneven effect across the economy.If you vary the SG rate, you’ve got90 something percent of working-agepeople who are in employment. So tohave the same effect on the economyas you will have with an interest rate increase, you’ve only got to have abouta third as much of a variation in the SGto have the same effect. So I start offon the basis that we ought to be ableto vary it for economic policy reasons.

But it’s also a social policy tool, so thegovernment needs to set a band withinwhich it will be, and an average whichit should achieve over a rolling five yearperiod. Then an independent agency– preferably the Reserve Bank so it’snot working at cross-purposes withmonetary policy – can present any casefor going outside those bands.Rob Goodlad: I put a call into

Singapore yesterday to follow up on theletter that was written by the economists,on the question of the Singaporemodel of varying contributions to theCentral Provident Fund, the nationalsavings scheme for everyone over there.

It was just to get an idea of what itwas all about and whether or not it’sactually worked. And apparently whenthis scheme started well before the1987 crash, it was designed so that theemployer kicked in 25 per cent of amonthly salary, employees kicked in 25per cent of a monthly salary. And it wascapped out that each year the maximumyou could get out was about $5,000.Now in 1987 after the stock marketcrash, it was decided they wanted to doeverything to keep people in jobs. Andin doing that they decided to make thecost of doing business in Singaporecheaper.So they reduced the employercontribution down to 20 per cent from 25 per cent.

And the money that was inthis fund was used for all sorts of socialinfrastructure, housing, education. Itwas designed to capture everyone thatworked in between that 20 to 80 percent wages bracket.But now after all this time and aftera bit more tinkering with the ratios,they’re down to employees contributing20 per cent, employers contributing14.5%. And if you ask people over there,‘well how’s it all going?’, they considerthat they still have a major long termadequacy issue.

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