NTUC Chief Lim Swee Say warned that stagflation is the worst case scenario Singapore can face at this time. During a visit to Sengkang West on Sunday, he added that this can arise if Singaporeans are unable to survive the high costs of living while facing a stagnating economy.
Mr Lim observed that half a year ago, Singaporeans and many citizens in the Asia Pacific region were enjoying a buoyant economy. But that changed with the sub-prime crisis in the United States. But Mr Lim said cutting taxes or giving broad-based subsidies will not solve the problem of inflation. Instead a targeted approach would be used to help those struggling with higher costs of living.
With a slowing global economy, residents at the dialogue session expressed their concern with rising costs such as ERP charges.
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Mr Lim said: "It's not the purpose of the government to make the people suffer more. It doesn't make sense that our government wants the people to suffer under high inflation. The purpose of ERP increases is not to increase revenue for the government. The one and only purpose of ERP increases is to manage traffic congestion in Singapore. If there is no traffic congestion, there will be no ERP increases."
Mr Lim said the government is trying to lighten inflationary pressures but will not offer popular solutions.
He said: "You did not see us cutting taxes or reducing GST credits because we adopt the approach where we subject everybody to the proper market discipline. If the market, oil or food costs this much, then everybody pay the market rates"
Mr Lim explained that the best way to cope with inflation is to understand the fact that not everyone is affected by inflation the same way. That’s why it makes sense for the government to have a targeted approach in assisting the different segments of Singapore society to cope with high inflation and the high cost of living.
This includes the three billion Singapore dollars in growth dividends and other forms of assistance which the government's been giving out. - CNA/vm
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