Measures to Mitigate Increasing Cost of Living

2 Mr Liang Eng Hwa asked the Minister for Trade and Industry (a) whether the general cost of living in Singapore has increased significantly and is a cause for concern; and (b) what are the measures that the Government will take to address further cost increases and minimise their impact on the low- and middle-income households.

The Minister for Trade and Industry (Mr Chan Chun Sing): Mr Speaker, Sir, the Government understands and shares Singaporeans' concerns with cost of living issues. This is a multi-dimensional issue. Let me explain.

There are absolute measures of how the prices of a particular basket of goods and services change over time. There can also be relative and evolving interpretations of what constitutes an essential basket of goods and services for different groups of Singaporeans. Yet, cost of living pressures can also be an expression of the gap between one’s aspirations and one's anticipated means to fulfil them.

Different groups of Singaporeans have different concerns, needs and wants. Elderly Singaporeans, retirees and their families will be more concerned with healthcare affordability. Families with young children and infants may be more concerned about the prices of milk powder and educational programmes. Yet other families may be aspiring to buy their dream house or car.

As such, no single measure will express an individual's "cost of living" pressures fully, given the different needs and wants, the evolving aspirations and the potential gap between aspirations and anticipated means. Furthermore, we are also aware that some price items, while not the biggest in absolute impact, can have a disproportionate psychological impact on consumers. For example, water and transport fares fall into this category because they are items consumed daily. The "bunching" of price increases, like the increases in water and electricity prices this month, can also have a disproportionate psychological impact.

Mr Speaker, Sir, may I have your permission to distribute the first set of charts to Members of the House?

Mr Speaker: Yes, please. [Copies of Annex 1 were distributed to hon Members.]

Mr Chan Chun Sing: Mr Speaker, Sir, our Consumer Price Indices capture the absolute price changes of different baskets of goods and services for different groups of Singaporeans.

Last year, the Consumer Price Index (CPI)-All Items inflation was +0.6%, lower than the average of +2.3% between 2007 and 2017. In fact, inflation over the past five years between 2012 and 2017, at an average of +0.6% a year, was significantly lower than the preceding five years between 2007 and 2012, which averaged +4%. If we consider the CPI-All Items less imputed rental, the figure was 1.7% for 2017.

The 2017 inflation figures for the various household income groups with their respective baskets of goods and services were -0.1% for the lowest 20%, +0.5% for the middle 60%, and +0.8% for the top 20%.

Beyond these numbers, I have also asked the Ministry of Trade and Industry to do a check on certain groups of households. Specifically, I asked them to look at the retiree households.

For retiree households, the figure last year was -0.4%. However, I asked them to strip out the imputed rental for owner-occupied accommodation from the CPI, because this will give an indication of the inflationary pressures that they might feel from the cash outlay. And inflation for retiree households was +2.1% last year, higher than the other household income groups.

We know that inflation is a concern for retirees with no active income from work. This is why the Government has focused much attention on help schemes for our seniors, starting with the Pioneer Generation Package. In addition to transport and healthcare subsidies for the elderly, we are also encouraged to see our social enterprises and businesses stepping up to help ease cost pressures on them by giving our seniors additional discounts.

We also monitor the inflation for key categories of goods and services, for example, food, healthcare and utilities, because they can have a big psychological impact on the daily lived experience of Singaporeans. In the graphs, Members will be able to see that the inflation rate was lower over the recent five-year period between 2012 and 2017 for all household types, as compared to the five-year period from 2007 to 2012. Inflation rates were also lower for the key components of food, healthcare, and utilities and fuel for these household types. However, we should note the sharp pick-up in inflation rate for utilities and fuel last year, and this was largely due to higher oil prices. Last year, the oil price went from $50-plus per barrel to $70-plus per barrel – a significant increase.

CPI-All Items inflation is expected to remain low this year, between +0.5% and 1%. However, rising global oil prices are projected to increase fuel costs and electricity prices. This, coupled with an increase in global food commodity prices, could impact domestic food prices. Consumer prices could also rise moderately alongside a faster pace of wage growth and pickup in domestic demand amidst improvements in the labour market. Accommodation costs are expected to continue to decline with a sustained fall in rentals, thereby dampening inflation.

Mr Speaker, Sir, let me move on to some other factors that influence prices. We closely monitor prices to ensure that Singapore remains an affordable home for Singaporeans. There are some factors not within our control. And there are other factors that we have to work hard to constantly manage.

As a small and open economy that imports most of our items, we are subject to global economic forces. Electricity and fuel costs which are influenced by global oil prices are one such example. The prices of certain products are also affected by our market size. Major companies determine their pricing strategies based on the purchasing power and relative bargaining power of different markets. The price of certain medicine is one such example.

To manage the various pressure points, we must adopt a multi-pronged strategy. Let me elaborate on our eight-pronged strategy. After this, I will distribute a set of infographics for Members to share with your residents.

First, we need to keep our economy competitive. At the macro level, the Government will aim to establish the conditions for companies to create good jobs with sustained income growth that outpaces inflation. Over the last five years, resident households’ income had risen faster than consumer price inflation. Median resident household income from work per member grew by 4.2% per annum in real terms between 2012 and 2017, while that for the lower income deciles rose between 4.2% and 4.6% per annum.

In the long run, real wage growth is determined by our ability to raise productivity. Schemes, such as the Productivity Solutions Grant, aim to help companies to do so. Other schemes like the Special Employment Credit support employment opportunities for low-income and older Singaporeans, while the Workfare Income Supplement (WIS) Scheme helps low-wage workers supplement their incomes and build up their retirement savings. We also need to constantly monitor the wages of workers in industries facing significant disruptions. The best way for us to help our workers facing low or stagnating wage growth is to equip them with new skills to take on new jobs ahead of time. This is where schemes like Adapt and Grow come in to help our workers.

Let me move on to the second strategy, that is, to carefully manage the strength of the Singapore dollar. We carefully manage our Reserves and the strength of our dollar to contain imported inflation. The Monetary Authority of Singapore's (MAS’) exchange rate-centred monetary policy, through a gradual appreciation of the trade-weighted Singapore dollar in line with the economy’s underlying fundamentals, helps to preserve our purchasing power.

Third, diversifying our sources of supply. We do so from food and water to fuel and raw materials for production to ensure that we are not held ransom by any single source. This bolsters the security and resilience of our resource supply chains, and avoid sharp price hikes when there are disruptions to our primary sources.

Fourth, promoting competition in our markets and lowering barriers to entry where possible, to allow Singaporeans to enjoy competitive prices for comparable products. For example, the Energy Market Authority of Singapore (EMA) has progressively opened up the electricity market to competition since 2001. In April this year, EMA commenced the soft launch of the Open Electricity Market in Jurong, allowing 108,000 households and 9,500 small businesses the option to buy electricity from a retailer with a price plan that best meets their needs. Consumer feedback so far has been positive, with thirteen electricity retailers offering a good range of competitively priced plans. I am happy to announce that EMA is working on extending the Open Electricity Market to the rest of Singapore from the later part of this year for all Singaporeans to enjoy the benefits of the open electricity market.

Another example is the market for mobile telecommunication services, where the Infocomm Media Development Authority's (IMDA’s) regulatory measures to facilitate greater competition in recent years have led to an increasingly vibrant and competitive mobile market. New mobile operators are offering competitive and innovative mobile plans, including plans that allow for unlimited data, or those that start from zero dollars.

Fifth, we must manage the cost of doing business in Singapore. We must continue to simplify our processes and reduce business costs to minimise the pass through of costs to consumers. To keep domestic sources of inflation contained, we will continue to carefully manage domestic supply-side constraints. For instance, the Government will ensure an adequate supply of residential, industrial and commercial space to relieve price and rental cost pressures as demand grows. We will also carefully monitor property market trends and take necessary actions to avoid sharp price changes that are not supported by market fundamentals.

As a general principle, we price services fairly to recover costs and discourage over-consumption. However, our Government agencies are also frequently reminded and are committed to keeping our costs under control to avoid imposing additional burden on businesses and consumers.

Various agencies are now using the price-quality model for tender evaluations to moderate the excesses of pure price competition. This can be seen in the case of new hawker centre tenders. Since 2012, the National Environment Agency (NEA) has removed reserve rental in the tender for stalls in hawker centres, and 52% of stalls are awarded at bids below reserve rental today. The National Environment Agency (NEA) has also announced that 20 new hawker centres with approximately 800 stalls will be built by 2027 and the managing agents appointed to run these new centres, some of which are social enterprises, will also be required to provide affordable food options in each of these hawker centres. Another example is the Early Childhood Development Agency’s (ECDA's) use of the Anchor Operator and Partner Operator Schemes to provide quality early childhood care and education at affordable prices.

The Pro-Enterprise Panel will also work with businesses to find meaningful and effective ways to help lower regulatory costs for businesses, which include improving regulatory efficiency, simplifying processes and removing unnecessary licences.

Sixth, focusing our help schemes to do more for those with less. This is an accepted principle by most Singaporeans. But we also understand that various groups of Singaporeans would like to see more being done for them, be it in the areas of education, housing, healthcare, transport or other policies. Ultimately, we must forge a social consensus of how much we want to tax the general public to support the desired groups in a targeted manner.

For example, we do not subsidise electricity or petrol prices upfront. That would disproportionately benefit wealthier households as they tend to consume more of such goods. Instead, the Government provides U-Save rebates, with households living in smaller Housing and Development Board (HDB) flats getting a higher amount. In Budget 2017, the Government announced a permanent increase to the Goods and Services Tax (GST) Voucher U-Save rebate to offset some of the increases in utility bills for the lower- and lower middle-income households following the water price revisions. With the additional U-Save rebates, 1- and 2-room HDB households, including most 3-roomers, will not see an increase in overall water bills on average.

While this strategy is economically and socially sound, it comes with two challenges. First, by not subsidising prices upfront, consumers may experience a "higher sticker price". This may create a disproportionate negative psychological impact because the backend subsidies to help lower-income groups reduce the actual prices paid, is not as obvious or visible. Second, it is always politically more difficult to carry the ground when different groups of people receive varying levels of assistance because they are assessed to have different needs. Regardless of the method of needs assessment, it will often be fraught with debate and challenged by those who receive relatively less help. However, the alternative to give the same help to all without discrimination also cannot be the wisest way to expend our finite resources to help those who need it most.

Seventh, enabling consumers’ choice. We will work with the National Trades Union Congress (NTUC) to strengthen CASE's capabilities to better promote consumer awareness and empower consumers to make informed purchasing choices to stretch their hard-earned dollar. One way is to improve price transparency on common household items like groceries and cooked food so that consumers can be more informed. Today, with technology and crowd sourcing platforms, consumers should be much better able to make informed choices on where are the best deals in their local neighbourhoods. We will work with NTUC and CASE to see how best to bring about such platforms for our consumers, tapping on the local networks. We will also work with NTUC and CASE to establish a panel comprising relevant stakeholders, such as merchants’ associations, unions and grassroots leaders, to help oversee this effort and look into ground feedback to help consumers stretch their hard-earned dollar, while deterring unfair pricing of consumer necessities.

Last but not least, our eighth strategy, leveraging our social enterprises. The Government will continue to work with social enterprises like NTUC to benchmark the prices of various essentials. This was the origin of the WELCOME supermarkets for groceries many years ago. NTUC FairPrice continues to expand its House Brand product range of affordable value-for-money alternatives. We will work with NTUC to establish more NTUC FairPrice Shop stores in our neighbourhoods to make affordable products more accessible to all. NTUC Social Enterprises have, over the years, extended its offerings to include basic insurance, childcare, eldercare services and cooked food options to meet the evolving needs of Singaporeans. By helping to moderate the prices of essential goods and services, social enterprises, such as NTUC, play an important role in benchmarking prices across the board.

Mr Speaker, Sir, with your permission, may I distribute the infographics to the Members now before I conclude?

Mr Speaker: Yes, please. [Copies of handouts were distributed to hon Members.]

Mr Chan Chun Sing: We should be getting a set of three. One in yellow for the senior citizens, one in pink for families with school-going children, and one in blue for young couples. There will be more of these in the Members' Room for Members who wish to have more copies to distribute to their residents to help reassure our residents that we will do what we can to help everyone manage their cost of living issues.

Mr Speaker, Sir, let me conclude. Cost of living pressures will always be present in various forms. Managing the challenges is never-ending work. There are many factors that drive price changes. There are also real and perceived gaps between Singaporeans’ aspirations and anticipated means to fulfil these aspirations. More importantly, we recognise Singaporeans’ evolving aspirations for a better life for themselves and their families, and the associated stress of achieving real income growth in a volatile economic environment.

The Government remains committed to helping all Singaporeans manage and achieve their aspirations. Beyond creating opportunities for Singaporeans to enjoy real wage growth to meet their aspirations, the Government is also committed to helping Singaporeans stretch their hard-earned dollar. At the same time, we are also cognisant that, with finite resources, support must, first and foremost, be given to those most in need.

Mr Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, I would like to thank the Minister for a very comprehensive reply. I am heartened that the Government is paying attention to this issue and harnessing the whole of Government, whole of society, to deal with this ongoing concern. I have a further question for the Minister.

While I appreciate the efforts that are targeted primarily at our low-income Singaporeans to cope with the increase in cost of living, I would like to ask the Minister what more can the Government do to help the sandwich middle-income group. This group is unlikely to qualify for most of the schemes, or the subsidies are always often tiered lower due to their higher income. Understandably, they do aspire to live well and they also want to have a better lifestyle, whether it is wants or needs. They are feeling that the household expenditures are also rising as their financial commitment increases.

I would like to ask the Minister how can the Government help this group deal with the "money-not-enough" cost pressure that they are facing.

Mr Chan Chun Sing: Mr Speaker, Sir, I thank Mr Liang Eng Hwa for his supplementary question. Let me, first, make a clarification. The Government is concerned not just with the lower-income. That is the reason why I have asked the Ministry of Trade and Industry (MTI) and the various agencies to look across the entire spectrum of families in Singapore – retirees, middle-income group – because they all face different pressures. Of course, as a general policy, we try to do more for those with lower income and, perhaps, the retirees first.

Having said that, the Government is very aware of the aspirations and the needs of the middle-income group. That is why we have a broad-based swathe of measures that I have alluded to, to help everyone in Singapore. But specifically for the middle-income group, there are also various schemes that the Government will extend to help them. It may not be in the same quantum as the lower-income group but, generally, they do get different forms of help and different tiers of help.

Members might recall that, once upon a time, when I was in the Ministry of Social and Family Development (MSF), I showed everyone a chart, a diagram, which is now euphemistically known as the kueh lapis chart. We try to help everyone in Singapore by making sure that those with the least get the most. But that does not mean that those with more did not get anything. It is just a tiering of the different help schemes that they have. So, for many of the middle-income, I think their concerns would be the education for their children and, perhaps, the utilities bill that they have to face. Also, many of them will be taking care of their elderly parents as well. We are very aware of this and the way we help them is as follows.

First, we try to do as much as we can to take care of our seniors to relieve the burden from the middle-income households with elderly parents.

Second, we want to make sure that the children's education remains affordable and everyone will have similar opportunities to excel and to fulfil their potential. Our promise as a Government is that, so long someone is capable and committed, they need not worry about their means, their family's circumstances. That is why we give away as many scholarships/bursary awards as possible to help our students excel. So, by relieving the pressures from the older folks and the younger folks, we hope to relieve the pressures on the middle-income middle-aged families.

And I would like to add one more point. We were all looking at the averages. I have personally asked my staff to look at each of the decile band because, while our averages are moving up, we are obviously conscious that not everyone will move up at the same pace or the same rate. And we have to pay particular attention to the group that I mentioned just now who have lower wage increases or stagnating wage increases because their industries are going through rapid transformation. This is where we will work closely with the Ministry of Manpower (MOM) and NTUC to help our workers transit to a new industry, to acquire new skills and take on new jobs before they are displaced.

Finally, I would like to share the story that my grandmother used to tell me. Members would probably know that I came from a single-parent family, so my mother had to work two jobs when we were young, so I was brought up by my maternal grandmother. There were three things that I always remember her teaching me about managing our family's finances.

First, she always reminded me that I must get a good job. I must make sure that I earn enough to take care of the family. It is a reminder to urge us to study hard, to acquire the correct skills and that, so long as you are prepared to work hard, there will be an opportunity in Singapore for us to succeed. And this is also the same philosophy and commitment that I bring with me to MTI, NTUC and MSF, that we must help our workers, first and foremost, to have those opportunities to realise their aspirations and ambitions.

The second lesson that my grandmother always drummed into us is that we should aim high. Singaporeans, like all of us here – it is not a sin to aim high. We should all aim high but yet, at the same time, we must know our own strengths and weaknesses so that we do not stress ourselves or overly stress ourselves and our families. We must know what our capabilities are, what we are good at. But as we aim high, we must also be realistic in how we achieve those ambitions, like the Chinese say 适可而止 – knowing our own limits.

The third thing that my grandmother always reminded me was that, regardless of our family's circumstances, we must always have a care for those who are less fortunate than us and who may need a bit more help than us. During my time, I never knew that there was something called "MPS" – to go and see the Member of Parliament (MP). We did not have Social Service Offices (SSOs). We had 福利部 but I was always reminded that, that is really for those who really, really need help and we should always try to take care of ourselves and, at the same time, take care of other people.

And I think these three rules are quite instructive in how we approach this issue of cost of living. First, we must make sure that every Singaporean has good jobs that can allow them to fulfil their potential. Second, we must help Singaporeans stretch their hard-earned dollar, that while pursuing their ambitions and aspirations, that we are also realistic about our options and how we should distinguish the needs and the wants, so that our families can have a better quality of life that is sustainable. Last, but not least, with the resources that we have, either as a family or as a society, we must make sure that we give the most help to those who need it a bit more than us.

Mr Speaker: Er Dr Lee Bee Wah.

Er Dr Lee Bee Wah (Nee Soon): Mr Speaker, Sir, I thank the Minister for his very inspiring sharing of his stories. I have three supplementary questions. I would like to ask the Minister the item on food prices. How is it being computed? Because it shows that there is a decline from 2007 until 2017. But then, if you are to look at the price at the coffee shop, it is definitely not the trend. The second question – I have residents who keep telling me that food prices in some of the coffee shops have gone up even before the effect of water price increase or electricity tariff increase. And each increase in the food price is a lot. Each increase is 50 cents – from $3.00 to $3.50, from $3.50 to $4.00, unlike previously, when the increase was 10 cents or 20 cents. I would like to ask the Minister if his Ministry would set up a committee to look into anti-profiteering. Please do not ask my residents to go to CASE, because it affects all Singaporeans.

The third question – I also got feedback from residents, because in Nee Soon South, we have NTUC and we also have Sheng Siong. I heard from residents that – giving due respect to our colleague Mr Seah Kian Peng and those who are in NTUC – the food or the price of those things sold in NTUC nowadays are not necessarily the cheapest. So, I would like to urge the Minister to look into this.

Mr Chan Chun Sing: I thank the Member for the supplementary questions. It is actually a valuable opportunity for me to clarify some things. I would not speak on behalf of NTUC FairPrice. I would share my experience as a previous and immediate-past NTUC Secretary-General. And I think this is important.

Let me first share on the charts that I shared. The way to read the chart is that it is not that the food prices are decreasing. The rate of increase has come down. The lines show the rates of increase. The one that the Member referred to, I think, is the second chart, right? That means food prices are still increasing but the rate has come down from what used to be 3.3%, to 2.1% to 1.4%. It is an increase but a slower rate of increase.

Then, how is this computed? That is why I mentioned at the beginning of my speech, some of the food items and the prices will have a disproportionate impact because, in our psychological perception, we use it every day. For example, coffee prices at coffee shops will be one very clear example. But in the overall basket of goods, coffee is but one item in a basket of goods. So, how a basket of goods is constituted statistically is by the spending pattern of the different household types. Different household types have different baskets of goods. So, the first clarification is that it is not that the prices are not increasing, but they are increasing at a different rate and it also depends on the basket of goods if you look at the charts, for example, in the top chart. That is why we have broken it down into the bottom 20%, middle 60% and top 20%. Each of the three groups, including the retiree households, also have a different basket of goods because their consumption patterns are different. That is the first thing.

The second thing, whether we will set up the Anti-Profiteering Committee, I have thought long and hard about this and we have previous experiences on how to be more effective, which is why for strategy No 7, I have proposed to do things a bit differently to give us better and faster results. If you set up a committee to go and look at coffee price in one coffee shop, and there will be many of these places, the speed is just not fast enough. And you ask a committee to decide whether the price is fair or not, it is also quite difficult.

But today, we have a better platform that can do this for us. Today, with the crowd-sourcing platforms, when people put their prices there, you can do an instant comparison. I think this is even more effective in deterring those merchants that may be pricing their goods unfairly. For example, in Yishun, our favourite constituency, supposing we can set up an area to tell people where in Yishun is the cheapest coffee, the cheapest kaya toast and, if your residents can access the information easily and people can freely put and make available the prices that they are offering in Yishun, then it will help consumers to stretch their hard-earned dollar; and it will be a much faster process than trying to submit a coffee price increase to someone else and come back later in that process.

In this open and transparent platform, I think it will help to deter those people who may want to price their products that is out of the norm. This is why I asked to work with NTUC and CASE to proliferate or promote this platform so that we can get a faster response time. Surely, as the Member said, we do not want the situation where for one coffee shop, we send the matter to CASE then wait for two weeks and come back with the result. That would not be very useful. And you also want a certain deterrent effect that people do not spread false rumours. For example, what the Member has suggested, some people said that "I am increasing my price because of the GST hike", but the GST hike is not even coming in yet and not for a few years' time! So, that is obviously not the right reason that they do what they are doing. I hope that through such open platform and open sharing, we can have a faster response to some of these ground issues.

Last but not least, I hope I am not stealing the thunder from the Member Mr Seah Kian Peng. This is a common question which I have always been asked: "Why is it that, once in a while, NTUC, as a social enterprise, has other companies which beat their prices?" On behalf of Mr Seah Kian Peng, from what I understand from him, NTUC FairPrice has a basket of 500 items. And NTUC FairPrice monitors the 500 items every day – their own 500 items and what the market is selling. They will make sure that, on average, their 500 items will be 4%-5% below the whole basket of goods. But that does not mean that every item is 4%-5% below the market price.

On the other hand, if we study marketing, we will also know that from part of the sales strategy, it is in my interest as a competitor to NTUC FairPrice to make sure that, every day, I have a few items below NTUC's prices, in order to attract people to go there because, when you are there, you would not just buy the few items that are on discount. This is quite common in the Fast-Moving Consumer Goods (FMCG) market.

Having said that, I am quite sure NTUC FairPrice will be working very hard to source from multiple agencies to try and reduce the prices, including the recent effort on milk powder, the number of house brands as they continue to expand their products and so forth. So, I think that is the commitment of NTUC.

One very interesting question that I have always wondered in my mind is not so much whether Sheng Siong or Dairy Farm is able to meet and beat NTUC prices. The question is that, if we do not have social enterprises to benchmark some of these things, would the other competitors still charge those prices? That was actually the story of the "Welcome Supermarket" in the 1970s. It was not that they just meet or try to beat NTUC prices once in a while, but it was because of the benchmark. And this is not just groceries. Today, NTUC in the sector of eldercare, early childhood education also performs the same role, which is that they help and work with the Ministries to understand the benchmark and the drivers for those services. And because of that, the entire market has an anchor point, if you like, in their pricing strategy and will not be carried away with just price competition.

Mr Speaker: Mr Saktiandi Supaat.

Mr Saktiandi Supaat (Bishan-Toa Payoh): I thank the Minister for his comprehensive explanation earlier with the charts. I just have one quick question. In terms of the impact of economic forces, such as the interest rate outlook, going forward, what will be the Minister's view on that, because with the Fed probably raising rates, it would have an impact on Singaporeans in terms of cash outlay in the future, and what is probably the transmission mechanism, taking into consideration our exchange rate policy regime, but what will be the impact of the interest rate outlook going forward and the impact on Singaporeans?

Mr Chan Chun Sing: I thank the Member for the supplementary question. Let me answer this question the following way. Yesterday, when we talked about the impact of the trade wars, I briefly mentioned this. Likewise, for any interest rate hikes across the global markets, there is the direct and indirect impact. The direct impact is that it adds to the cost of doing business and the second impact is that it will affect the relative exchange rate, which will then affect the strength of the Singapore dollar to contain imported inflation.

But the most important third-level impact of any interest rate hike across the world is the impact on global business confidence. If, because of the trade wars and because of the interest hike, it leads to an overall dampening of the global confidence level and people's investment, then what affects us most severely is job creation. If we cannot continue to create good jobs for our people, the rest of these other help schemes are actually secondary because, first and foremost, we must have good jobs for our people. When our economy grows, our people have jobs and we have the means to help one another by redistributing some of the gains from this entire economic system. But if the economy shrinks because of the downturn in global market confidence, then there is a significant impact.

So, there are three levels of impact: (a) the direct interest rate cost that the Member mentioned on business; (b) the impact on the exchange rate which affects our ability to contain imported inflation; (c) and most importantly, and together with the headwinds that we face in the global trading environment, how it affects our economy and our ability to continue to create good jobs for our people to earn good incomes.

Mr Speaker: Mr Seah Kian Peng.

Mr Seah Kian Peng (Marine Parade): I thank the Minister and former Secretary-General of the NTUC for his answers. I just have a few questions for the Minister. Indeed, the cost of living is a big issue, and the eight-pronged approach that he has outlined, the strategies, are all very important. I just want to say that, in addition, one key aspect – perhaps, it is within the eight but I did not hear it – is about consumer education.

Frankly, I think all of us know that eating-in is a lot cheaper than eating-out, wherever you may go. So, things like that may be simple tips. But I think they are useful tips which could be incorporated within the eight tips that the Minister has.

Speaking as an employer, too, the cost of doing business is, indeed, something which needs to be addressed. I know the Minister has outlined some of them. In the case of at least my business at NTUC FairPrice – labour, rent and utilities – these are the three biggest cost levers. On utilities, we all look forward to the opening up of the electricity market that will help all businesses and individuals alike. But on the part of labour and rent, these are areas which the Government is in a position to see how it can continue to effect a dampening of that. During the tea break later, I will explain to Er Dr Lee Bee Wah on some of the things she raised. I will fill her in on other details.

My final point is that I am wearing the hat – again declaring my interest – as Chief Executive Officer (CEO) of NTUC FairPrice and also part of the NTUC Enterprise network. I think the Minister's eight strategies about leveraging social enterprises is something that the NTUC Group and the NTUC Enterprises will certainly be keen to work on and to play our part in seeing how, as a group, we can address this very important issue for all of us.

Mr Chan Chun Sing: I thank Mr Seah Kian Peng for his questions and comments. First, consumer education is my strategy No 7. That is why we work closely with CASE to enable consumer choices. Let me say this. We are not here to judge whether somebody should buy this or buy that and what should be necessary for your particular lifestyle. If you can afford it and want to do it, by all means. But I think our job is to enable consumer choice through consumer education.

Let us take the recent example of milk powder. I was the one who sent Mr Seah Kian Peng – I think he still has the photo. One day, when I was shopping at NTUC FairPrice, I was very perturbed because when I walked down the food aisles, the only food item, single item that costs more than $100 for some of the products was milk powder. And I was very intrigued. Why is it that milk powder – same size, same volume – can cost $30-something, $80-something and $120? I took a photo and sent it to Mr Seah Kian Peng and I asked him which is the most popular brand, that means, from sales. It was, on average, the $80 brand.

And I was very puzzled what is the difference between the $30 brand, $80 brand and $120 brand? So, the $120 brand was because some children might be allergic to some ingredients and that is why there is a special formulation. So, I can understand that. Then what about the $30 brand versus the $80 brand? I asked Mr Seah Kian Peng if he could bring in more of the $30 brand. His answer was also quite telling. They have tried before but it did not sell well. Why? I did ask some consumers and parents. Maybe because we will always want the best for our children and we wonder should we stinge on that $50 extra for one can of milk powder. And we ask, "What if there are real benefits which my child is not getting?" We can understand that kind of psychology. But, over time, through consumer education, we have been able to expand the market share of the $30-plus brand, including some of the house brands that NTUC FairPrice has brought in. But today, if I am not wrong, the $80-plus brand is still the most popular range segment. It has come down but it is still quite high. That shows that, actually, all of us can play our part to assure family members of the quality of the products. And NTUC FairPrice has a lot of house brands. But, again, when I was the NTUC Secretary-General, they would not always sell the most or be the most popular brand. But it is okay. So long as we have a variety of choices for our consumers, we let them choose within their means to see what best suits their family needs. So, consumer education is very important.

We agree with Mr Seah Kian Peng's second point that utilities, rents and labour will be concerns for businesses, which is why we are extending the open electricity market to more consumers and small businesses. For rents, as I have mentioned, we will closely monitor the trend to make sure that their rents do not spike because of insufficient space for our businesses to do their business.

Last but not least, we thank NTUC Enterprises for continuing to show leadership in the pricing of its many products and services beyond groceries today, including healthcare, eldercare and also childcare.

Mr Speaker: Mr Lim Biow Chuan.

Mr Lim Biow Chuan (Mountbatten): Mr Speaker, this is a point of privilege because CASE was mentioned. I was hoping Minister Chan would also say something about CASE, but he only defended NTUC FairPrice! [Laughter] So, if I may just clarify for the hon Member for Yishun, to provide feedback, you do not need to be a member of CASE. You only need to be a member of CASE if you want CASE to represent the consumer to liaise with the business.

On the point made by the Member Er Dr Lee Bee Wah that complaining to CASE has no effect because price —

Er Dr Lee Bee Wah: I did not say that!

Mr Lim Biow Chuan: — that you do not want the consumer to go to CASE because price has gone up. The reality, as Minister Chan has mentioned, is that every business has different price pressures. So, their rental may be more expensive because they are in a better locality, they may have to pay more for their staff. So, CASE finds it very difficult really to be able to decide which business is profiteering because it sets higher prices. CASE would be happy to work with MTI to try to provide better transparency so that consumers would be able to know which businesses provide the best value to consumers. So, thank you, Mr Speaker, for allowing me to raise that clarification on behalf of CASE.

Mr Speaker: Er Dr Lee Bee Wah.

Er Dr Lee Bee Wah: Thank you, Mr Speaker, Sir. I did not say that it is not effective to bring the matter to CASE. What I meant is that the cost of living or the profiteering issue affects every Singaporean. We do not want every Singaporean to go to CASE, same as we do not want every o-Bike victim to go to CASE, because it would be flooded by all these cases. We would like MTI to set up a committee to look into specific cases because if one stall increases its price by 50 cents, the next day, another stall will also increase its price by 50 cents. It has its chain effect.

Mr Speaker: Er Dr Lee Bee Wah, you can settle with Mr Seah Kian Peng and Mr Lim Biow Chuan later at tea. Mr Yee Chia Hsing.

Mr Yee Chia Hsing (Chua Chu Kang): Mr Speaker, to the Minister for Trade and Industry, I would like to highlight this rental issue again. I brought up this issue during the Opening of the Second Session of this Parliament. I think a lot of businesses, because they signed short leases of three years, every time the lease is due for renewal, they face a big surprise from the landlord saying the rental going forward would increase by a huge amount and, if they do not renew, they would have to reinstate. The landlord is actually using this friction of having to incur reinstatement costs to their advantage. All these actually feed into the cost of living because the businesses suffer the higher costs on renewal of rental rates and, because of that, they have to charge consumers higher. So, I hope MTI will look into my suggestions of having longer lease periods as well as mandating that landlords should not put their reinstatement "clause" into all their tenancy contracts.

Mr Chan Chun Sing: Mr Speaker, Sir, just two comments in response to Er Dr Lee Bee Wah and Mr Yee Chia Hsing. First, on the issue of the leases, I think we cannot mandate the length of the leases because it is a commercial decision between the commercial entity renting out the place and the one taking it up. But we accept the point and I think Mr Yee Chia Hsing has made the point during the Committee of Supply that the contract must be fair to both sides, and I think that is something that we will certainly encourage and look into. But I think we cannot mandate every lease to be of a certain length because the businesses also require certain flexibility because of their different business models.

On the other issue, I would just like to reassure Er Dr Lee Bee Wah that when there are issues that have to deal with anti-competitive behaviour, then MTI, together with the Competition and Consumer Commission of Singapore, will make sure we take these up. But in all these things, we will have to strike a balance between protecting the consumer and facilitating the business and innovative practices, especially in the current era whereby there is a proliferation of new business models, including the ones that the Member has mentioned. We will have to strike the right balance to make sure that we protect our consumers and yet, at the same time, not stifle innovative practices. We have to find a balancing point as we continue to go along.

Mr Speaker: Mr Leon Perera.

Mr Leon Perera (Non-Constituency Member): Mr Speaker, Sir, I thank Minister Chan for his explanation. Just one supplementary question. Would MTI consider measuring and publishing the CPI based on different demographic groups? I know it is published based on income groups, but there could be other demographic groups, such as the three groups where the Government has presented its measures, for example, young couples, parents with young children, and retirees. Would the Government consider publishing a CPI based on these groups because there could be certain factors, for instance, price of milk powder could be one example, which affect certain groups by demographic characteristics, rather than just by income characteristics, and that may enable us to have more well-informed debates about policy?

Mr Chan Chun Sing: Mr Speaker, Sir, MTI already does that. So, as Members can see from the charts, we do have various ways to look at the data differently. One dimension would be by income, the bottom 20th percentile, the middle 60th and the top 20th percentile. That is one dimension. The other dimension that Mr Leon Perera mentioned, for example, is retirees, because they generally have no income from work and may be living on their savings. So, we are particularly concerned. That is why MTI started monitoring the data. But it takes us some time to build up by different demographic groups, and we will make available those data when we have them.