Govt should review subsidy for implants

Jul 16, 2011

50% subsidy for lenses, stents and replacement joints may be too low
 
By Salma Khalik

PATIENTS in C-class wards in public sector hospitals, the most subsidised of wards, generally get about 80 per cent of their bills paid by the Government - except when it comes to implants.

The subsidy for any implant at a public hospital is 50 per cent of the cost of the implant. This subsidy is capped at $1,000, regardless of the subsidised patient's ward class.

Until April this year, the subsidy was still 50 per cent, but the cap was even lower, at only $500 for all subsidised patients.

The rest has to come from the patient's insurance, Medisave account, or his own pocket.

In announcing the higher cap, the Ministry of Health (MOH) said 90 per cent of implants cost less than $2,000, which means only 10 per cent of subsidised patients will need to pay more than 50 per cent of the cost of their implants.

The raised cap is expected to cost the ministry $3 million more annually. The total amount in implant subsidies the Government hands out yearly is not available.

The move to increase the subsidies on implants, which can range from lenses following cataract surgery to stents to keep blocked arteries open, is commendable.

But is it enough?

Two questions come immediately to mind.

The first: What about the 10 per cent of subsidised patients for whom the cap means they have to pay more than 50 per cent of their implant's cost?

The second, and perhaps more important, question is: Why is the subsidy for implants capped at 50 per cent?

Poor patients in C-class wards get 80 per cent of their hospital bills subsidised by the Government. If they opt for B2 class, 65 per cent of their bills will be picked up.

This is obviously not the case when it comes to paying for the implants they need, which makes one wonder about the rationale for the lower subsidy.

In a reply to this query, the ministry said that government subsidies are formulated based on several factors, such as 'the cost of care, patient needs and long-term sustainability'.

Said the spokesman: 'By and large, an 80 per cent subsidy applies across the various services and treatment received by inpatients in Class C. However, a different subsidy framework applies for implants, similar to certain other items such as drugs.'

The ministry added that patients in need can turn to Medifund, the health safety net for the very poor.

But that doesn't explain why implant subsidies are pegged at no more than 50 per cent - unless the worry is the long-term sustainability in giving out such subsidies.

But one can argue that implants such as stents to prevent heart attacks can be as crucial as chemotherapy for cancer patients.

As the population ages, more implants will be used. Some, like heart stents, will save lives, while others, like knee replacements or eye lenses, will improve a person's quality of life.

These are all basic medical needs, which should enjoy the maximum 80 per cent subsidy for C class and 65 per cent for B2 class.

It would be a pity if older people suffer from pain and are unable to enjoy a better quality of life in their twilight years simply because of the cost of such implants.

While there are no figures on the number of implants used by patients here, a check indicates that tens of thousands of such operations are performed annually.

Four of the more common implants used, said MOH, are lenses following cataract operations, artificial knees, stents to hold arteries open, and parts for hip surgery following a fracture.

A check with the Singapore General Hospital (SGH), which replaced 1,500 knees last year, showed that the implants cost between $2,500 and $3,500.

This means that a C-class patient would still have to pay from $1,500 to $2,500 for the implant. That is no small sum.

Those who are insured can rely on insurance to take care of the bill. But not all C-class patients are insured. In 2009, one in three elderly subsidised patients warded in public hospitals did not have any insurance coverage.

Furthermore, those needing such implants tend to be older, and MediShield currently stops coverage once the insured person turns 85.

Nationally, more than 2,000 knee replacements are done per year.

SGH surgeons also did 150 hip replacements, with the cost of the implants needed ranging from $3,000 to $6,000. Regardless of their ward class category, subsidised patients would have to fork out between $2,000 and $5,000 for them.

The 550 SGH patients who had hip fractures paid less for their implants, with costs ranging from $3,500 to $4,500. But again, subsidised patients needed to fork out from $2,500 to $3,500 for their implants.

In all cases, the higher government subsidy of $1,000 didn't cover half the cost of the hip implant.

These are three of the four most commonly used implants. The most common are lenses following cataract operations - with about 25,000 such operations a year.

If the 80 per cent subsidy for C-class patients applied to implants, such patients would need to pay a maximum of only $1,200 for a $6,000 hip replacement - a far cry from $5,000, which could easily deplete their Medisave accounts.

In 2009, the average Medisave balance of members aged above 65 was $9,369, said the MOH spokesman.

She added that 'this is enough to pay for six Class C hospitalisations and five Class B2 hospitalisations'.

But not if the patient has to pay $5,000 for the implant, plus 20 per cent of the cost of surgery and hospital stay, under the 80 per cent subsidy on hospital bills he enjoys.

One hopes that in his review of the health-care system, new Health Minister Gan Kim Yong will look into the subsidy of implants, as this will have a big impact on the lives of Singapore's rapidly ageing population.

salma@sph.com.sg

China Aircraft Carrier Dreams

Jul 16, 2011
special report

Iron fists on the high seas

China's stature as a maritime power will get a major boost when its first aircraft carrier undertakes its sea trials soon. Straits Times correspondent Jonathan Eyal tells why these vessels pack a punch

THE giant, grey-painted ship docked right behind an Ikea superstore in the north-western Chinese seaport of Dalian has no official name or designation. But it has already attracted the attention of countless spy satellites. For it is China's worst-kept military secret: the country's first aircraft carrier.

And when it finally sets sail on its first operational mission - which could happen within weeks, says a China Daily report on Tuesday - it will serve as a vivid reminder of China's great power status.

Chinese officials have sought to play down its importance. 'It is a symbol of deterrence,' says retired general Xu Guangyu. 'It says: don't mess with me, don't think you can bully me.'

But the aircraft carrier does much more than that, for it gives China the ability to project its power far away from its shores. And, over time, this is guaranteed to transform Asia's strategic map.

China's quest for an aircraft carrier goes back half a century. The issue was first debated in 1958, when Mao Zedong tabled a plan for what he called the 'railways on the high seas'. Characteristically, Mao's dream was gigantic: it envisaged the construction of fleets of merchant ships, escorted by 'proletarian' aircraft carriers.

Nothing came of this idea, but scaled-down programmes to construct an aircraft carrier were subsequently raised in Beijing. At one point during the late 1970s, party boss Hua Guofeng made a decision to purchase a 'light' vessel of this type, but this also petered out.

Daunted by costs

THE reasons for the hesitation were, invariably, costs, bureaucratic infighting and broader policy considerations. When Mao dreamt of aircraft carriers, an average Soviet-built battleship would have devoured a quarter of the Chinese navy's then-procurement budget.

Furthermore, the Chinese navy lacked the political influence enjoyed by the ground or air forces to lobby for bigger funding.

And, as Deng Xiaoping became China's paramount leader, the main priority was domestic development; aircraft carriers were dismissed as platforms which would raise global concerns about Chinese intentions, for little practical benefits.

But the Chinese navy ultimately got help from an unexpected quarter: none other than the United States. When Taiwan's then-President Lee Teng-hui held the island's first open elections in 1996, China thought it could influence the ballot's outcome by holding missile-firing tests in waters adjacent to Taiwan. The strategy backfired spectacularly. The US responded by scrambling two of its aircraft carriers - one from the Middle East and another from the Pacific - to patrol the Taiwan Strait. The Chinese could do little more than watch the ships with deep frustration, and back down.

At the time, then US President Bill Clinton was hailed for this masterful use of sea power. Yet, with the benefit of hindsight, the 1996 Taiwan episode can be seen a classic example of a strategic victory with unintended consequences. For the humiliation which China experienced persuaded its leaders that aircraft carriers were a unique political asset, a huge iron fist which is both easily deployable and flexible - precisely what Chinese naval commanders have argued for decades. In effect, Mr Clinton made the case for China's aircraft carrier.

What followed was a saga worthy of the best spy novel. Seemingly out of the blue, a group of Chinese investors offered US$20 million to buy the Varyag, a disused Soviet-era aircraft carrier with no engines, which lay rusting in a Ukraine port. The investors, who by sheer chance just happened to include some retired Chinese military officers, claimed they wanted to use it as a floating casino in Macau, despite warnings from the territory's then- colonial masters that no such casino would be allowed, and that Macau's port was not deep enough to accommodate the beast. Strapped for cash and eager to rid itself of a problem, Ukraine accepted the offer in 1998.

But Turkey, whose consent was required for the ship to pass through the Dardanelles Strait, refused to cooperate. So the Varyag spent 18 months being towed aimlessly around the Black Sea, before the Turks were persuaded to let it through, in return for Chinese economic favours.

Egypt, which owns the Suez Canal, proved harder to please: It banned the Varyag. As a result, it had to sail all the way through the Mediterranean and around Africa, an odyssey during which it once caught fire and was twice almost broken up in storms.

Needless to say, it never moored anywhere near Macau. It was taken straight to Dalian and was swiftly painted a dull grey, not the colour usually favoured by casinos.

Western intelligence services knew all along what was happening, and official Chinese protestations - made as late as 2007 - that Beijing had 'no intention' of acquiring an aircraft carrier, were never taken seriously. Besides, even before the Varyag arrived at its new home port, Chinese sailors were already observed exercising on dummy replicas of the ship, while naval variants of Chinese aircraft were developed.

The acquisition of the Varyag is largely unimportant; it merely saved the Chinese some time and money, for the real essence of an aircraft carrier is to be found in the ship's propulsion, electronics and the jets deployed on its decks, rather than the hull itself. On all these counts, Chinese technology remains far behind that of the US.

Still, this is just the beginning of a bigger programme which, according to US assessments, may cost China about US$20 billion (S$24.4 billion) over the next four years. This will entail the development of many additional escort ships, as well aircraft and electronic warfare equipment. In effect, the launch of the first aircraft carrier is just a statement of intent.

The Chinese move comes at a time when the usefulness of carriers is increasingly questioned in the West. In a seminal article published last month in the authoritative journal of the US Naval Institute, two American experts jokingly dismissed their country's plans to build huge carriers as '$UPERfluous', arguing that they are too expensive and vulnerable to be effective. 'In past gun and aircraft eras, there was a linear relationship between size and reach. Now, in the missile era, a small combatant can reach as far as a large one,' the authors concluded.

Support for their position is provided by China itself, which is known to be developing a missile designed to hit aircraft carriers. Admiral Robert Willard, the US Pacific commander, recently admitted that China's new weapon, dubbed the DF-21D, may have reached 'initial operational capability'.

Hitting aircraft carriers at long distances is very difficult. Although the ships are big, they may be too small to be detected by satellites. While they may move slowly, their speed is still sufficient to prevent accurate missile targeting. Furthermore, incoming warheads can be intercepted and destroyed and, even if some hit, this may not be enough to sink a carrier.

Still, while an aircraft carrier may be tricky to detect, its massive electromagnetic footprint could be tracked by space-borne sensors. China's over-the- horizon radars could also help in this respect. Homing devices attached to missiles may improve their accuracy, and the possibility of firing many missiles simultaneously could overwhelm a carrier's defences. The question of whether China has perfected these capabilities will preoccupy the US intelligence community for years to come.

Either way, one conclusion seems obvious: China's entry into the aircraft carrier age will usher in a new naval arms race. The US is unlikely to abandon its programme, domestic critics notwithstanding. Some other Asian countries will beef up their own navies. And there will be keen interest in anti-carrier weapons.

Former commander of the Chinese navy Liu Huaqing, who spent all his professional life arguing in favour of aircraft carriers, never lived to see his dream come true: He died earlier this year. It is now up to his successors to carry on the programme, in the hope of achieving what no other nation accomplished in a century: to prevail against the US in what is guaranteed to be a furious technological competition.

jonathan.eyal@gmail.com

 
Symbol of the dragon's might
First aircraft carrier takes Beijing closer to its goal of becoming regional naval power
 
By Nilanjana Sengupta

THE unveiling of China's first aircraft carrier - which will reportedly be called the Shi Lang - is symbolic of Beijing's ambitions to become Asia's pre-eminent naval power, analysts say.

The ship - a refurbished former Soviet vessel - is not expected to have any immediate impact on the South China Sea dispute and on Sino-US relations, given its limited operational capacity, they add.

But 'it is a portent of China's plans for regional, and eventually global, power projection', says Mr Michael Richardson, a maritime security specialist and a visiting senior research fellow at Singapore's Institute of Southeast Asian Studies (Iseas).

Analysts say reaction from countries in South-east Asia, which has seen tensions rise recently over territorial claims in the South China Sea, has been fairly muted, probably because regional militaries are aware of the carrier's limited operational abilities.

It is 'based on old technology, it is not fully networked with other PLAN (People's Liberation Army Navy) surface and sub-surface vessels, and the Chinese fighter pilots have yet to master take-off and landings from a vessel at sea', Dr Ian Storey, an expert on South-east Asian security issues and a fellow at the Iseas, told The Straits Times.

'It will be used by the Chinese Navy as a training platform. Aircraft carriers are among the most complex pieces of military hardware in existence, and it will take time for the Chinese to become proficient in carrier operations.'

It is unlikely, therefore, that the carrier will play a major operational role in the South China Sea, he said.

The United States will also not see it as posing a credible threat to its supremacy in Asian waters, although the US Navy will monitor developments, the experts add.

But China's first aircraft carrier has symbolic significance for other regional players, including Taiwan and South- east Asian states locked in dispute with China over the Spratly and Paracel islands.

Tensions have gone up in recent weeks, with Vietnam and the Philippines accusing China of increasingly aggressive action in the waters around the Spratly islands.

The carrier 'is a signal to rival claimants of the South China Sea islands that Beijing is serious about upholding its sovereignty claims in the disputed waters', said Mr Richardson.

Professor Koichi Sato of J.F. Oberlin University in Tokyo noted that Admiral Liu Huaqing, one of the first to propose a Chinese aircraft carrier, had stressed the necessity of aircraft carriers to defend PLA warships against air raids in the event of a naval battle for the liberation of Taiwan. Some other PLA officer also stressed the importance of aircraft carriers to 'retake' the islands of the East China Sea and South China Sea which were 'illegally deprived by the foreign countries', he added.

Prof Sato also pointed to the significance of the name that some say will be given to the ship: Shi Lang was the name of a 17th century Qing Dynasty admiral who retook Taiwan from the kingdom of Tungning ruled by the Zheng family. It may point to the PLA's ambitions for its aircraft carriers regarding modern- day Taiwan, the Spratly Islands, and the Senkaku Islands, he said.

China is planning to follow up the flattop with a series of all-new aircraft carriers that it is building in its own shipyards.

If these new carriers are brought into service over the next decade or two and operated effectively, it would tilt the balance of power in the disputed waters more decisively in China's favour and perhaps tempt it to use military muscle to enforce its claims, unless regional states show greater cohesion and receive support from the US, Japan, South Korea, India and Australia, Mr Richardson said.

Writing in Foreign Policy magazine last month, Mr James Holmes of the US Naval War College said: 'Some Chinese-claimed islets in the Spratlys and Paracels are too small to fortify; carrier groups would provide a forward, mobile airfield from which to defend the islands, the adjacent waters, and the rich natural resources thought to lie in the seabed beneath.'

nilasen@sph.com.sg

With additional reporting by Tokyo Correspondent Kwan Weng Kin


Why carriers rule the waves
 
AIRCRAFT carriers are considered the jewels in the crown of any navy, partly because of their size and cost, but also because of their ability to project power.

The idea of using a ship's deck to launch objects into the air is not new. A British vessel catapulted propaganda leaflets into France as early as 1806, and an Austrian ship attempted - with comic results - to bombard enemies with balloons in 1849.

So, when aviation was invented, it was inevitable that ships would be adapted to carry planes. The first efforts by the United States navy in the early 20th century were not very successful, but the advent of seaplanes - aircraft which could take off and land on water - changed the equation.

During World War I, both Britain and France possessed primitive aircraft carriers; these were often converted commercial vessels with floats, which allowed seaplanes to be lowered into the water before they took off.

Interestingly, however, the first successful attack from an aircraft carrier was executed by Japan in September 1914, when seaplanes launched from the carrier Wakamiya bombed Chinese territory. So, although the aircraft carrier is a Western invention, it claimed its first victims in Asia; British carriers did not go into action until December 1914.

Disarmament treaties after the end of World War I limited the development of heavy ships. Yet, by 1918, Britain acquired the first carrier with a completely flat deck, the HMS Argus; the US and Japan followed suit, with the Americans pioneering techniques for the launch and landing of aircraft on ships.

But the aircraft carrier truly came into its own during World War II when, again, it was Japan which proved its awesome capabilities: Six of its 10 aircraft carriers struck Pearl Harbour, crippling the US Pacific fleet in one day. Ironically, the Japanese failed to destroy America's carriers, and these proved crucial in clinching the subsequent US sea supremacy.

The vessels have always been hugely expensive to build: One US 'super carrier' of the Gerald Ford class, scheduled to enter service in 2015, is estimated to cost US$23 billion (S$28 billion), including research and development.

And they are equally expensive to operate. Because their size and slow movement make them vulnerable to enemy attack, aircraft carriers require a protective escort of other ships and submarines, usually referred to as a 'battle group'. They also need specially adapted aircraft.

And no nation wishing to have a truly global reach can do with just one vessel: at a minimum, two are required in order to ensure round-the-clock availability. That is why, at any given point over the last century, only a handful of nations has ever possessed aircraft carriers. China has been the only country with a permanent seat on the United Nations Security Council never to enjoy such a capability.

The appeal of these huge beasts to those who can afford them remains undeniable. For, apart from long-range missiles, there is no other military platform which can deliver a quick strike at a long distance, and in a sustained manner.

Strategic planners love them, because aircraft carriers can be moved around at short notice, and therefore do not require prior guessing as to who the enemy may be. They also dispense with the need to establish ground bases in other countries: The latest generation of nuclear-powered aircraft carriers can operate over a long period of time, with relatively few supply or maintenance problems.

And, since they can carry jets, helicopters and troops, aircraft carriers are suited for every mission, from major strikes to small humanitarian missions, or the occasional commando raid. The US elite forces that killed Osama bin Laden returned to the USS Carl Vinson aircraft carrier; it was from its deck that the body of the Al-Qaeda leader was consigned to the sea.

The advent of ground-based missiles specifically designed to hit aircraft carriers has prompted some military analysts to claim that the golden age of these platforms is now drawing to an end.

Clearly, China does not share this view.

Neither does Britain, which pioneered the weapon: It recently decided to sacrifice many existing ships in order to spare the cash for two new aircraft carriers. And Japan is also operating the platforms, although, at least for the moment, it still portrays them as just helicopter carriers.

JONATHAN EYAL

Bersih rally deepens Malaysia's social divide

Jul 12, 2011
commentary

All eyes now on how PM Najib will soothe inter-racial tensions and woo voters back
 
By Leslie Lopez

PRIME Minister Najib Abdul Razak successfully deflected one of the biggest challenges to his government's authority at the weekend, when security forces put down street protests demanding greater electoral reform.

But analysts say Datuk Seri Najib and his ruling Umno party have emerged badly bruised, largely because of the use of excessive force to block the rally, organised by a loose coalition of opposition parties and non-governmental organisations called Bersih.

What is more, they add, the defiance displayed by the thousands who braved a security lockdown of Kuala Lumpur was a clear demonstration of how much Malaysian society has been polarised by the country's divisive politics.

What began as a call for electoral reform by Bersih has grown to mean something more, particularly in the face of furious attacks against it by Utusan Melayu, the Umno-owned Malay language paper, and Perkasa, the Malay supremacist group that had earlier warned of race riots and issued threats of a counter-demonstration.

In effect, the Bersih rally has come to be a proxy for those in Malaysia - whether from the Malay community or otherwise - who want a break from the old system of race-based politics; in their view, electoral reform and other problems need serious attention, but not through the usual prism of race and religion, with its tendency to descend into an 'us versus the rest' contentiousness.

Analysts like Mr Ibrahim Suffian, a director of the Merdeka Centre, one of Malaysia's premier opinion research outfits, believe that the government's heavy-handed response to the rally may have provoked some among Malaysia's growing middle class who were previously fence-sitters to take a more partisan role in opposition politics.

'The incredulity of the government's response with fear, the banning of yellow T-shirts and linking the movement to communism has further distanced the government from voters, particularly the younger electorate,' he says.

Dr Bridget Welsh, associate professor of political science at the Singapore Management University, adds: 'There is no question that the government lost a large chunk of support from the multi-ethnic middle ground and chattering classes.'

Mr Najib's multi-racial ruling Barisan Nasional (BN) government also staged a march on the same day. But the group, numbering in the hundreds, comprised only members of Umno's youth wing. Conspicuously missing were representatives from the ruling coalition's Chinese and Indian component parties.

Although the turnout for the Bersih rally was not as big as its organisers had hoped, the tens of thousands of people who turned up still amounted to a setback for Mr Najib, who has worked hard to regain public trust in his BN coalition.

The BN leadership will also surely not forget that the coalition took a severe hit in the March 2008 election after the first Bersih rally was held months earlier. Then, too, the rally drew thousands of protesters.

The challenge now for Mr Najib's government is how to claw back the support of disenchanted voters. His next moves will be watched keenly.

Economists, for instance, will be keeping a watchful eye on whether Malaysia's political woes will distract the government from efforts to deal with critical issues such as inflationary pressures.

Then, there is the impact on the delicate racial balance that has kept Malaysia together since independence in 1957.

Whether it is ultra-Malay Perkasa or the opposition Democratic Action Party standing up for the minority races, all parties have become more vocal and more assertive in standing their ground.

How Mr Najib manages inter-racial tensions while trying to woo back voters from across the ethnic divide will be a big challenge in the months ahead, particularly if he plans to call for a snap election.

There is yet another big worry for the Umno-led government: The deepening split within the politically dominant Malay Muslim community.

Of the thousands who took part in last Saturday's rally, most were Malays. They form more than 60 per cent of Malaysia's population, and are the source upon which Umno's power rests.

But Umno's position as the Malays' favoured party has been steadily undercut since the 1998 falling out between then Prime Minister Mahathir Mohamad and his deputy Anwar Ibrahim, the current leader of the opposition.

The opposition under Datuk Seri Anwar has focused on issues such as corruption and good governance. The high rally turnout among Malays suggests that this is having an effect on the community's support for Bersih's demands on matters such as electoral reform and overhauling the security and justice institutions.

This is significant because stability and bread-and-butter issues have long been Umno's way of getting Malay voters, especially rural ones, on its side.

Clearly, the old ways are not working as well as they used to: Malaysia's voters have become more assertive and fragmented along new lines.

Mr Ibrahim says: 'The Malaysian government needs to be more imaginative to deal with the changing political environment. Brute force is not a long-term solution; engagement is.'

ljlopez@sph.com.sg

Australia's untapped renewable energy

Jul 12, 2011
 
By Benjamin K. Sovacool

AUSTRALIA continues to promote renewable sources of electricity the wrong way, with implications for Singapore and other Asian exporters of technology.

Consider a few striking statistics. Australia has more solar energy potential than every country outside of those in northern Africa, yet uses solar photovoltaic panels to produce less than one-tenth of 1 per cent of its electricity needs.

Indeed, if distributed equally to every home in Australia, the country's roughly 200,000 small household systems would not even provide enough juice to cool a single beer in everyone's refrigerators.

Australia needs to do five concerted things to get back on the path to promoting renewable energy so that this potential can be tapped, improving energy security, reducing greenhouse gas emissions, and creating thousands of regional high-paying and highly skilled jobs.

First, the country needs consistency. I have evaluated the energy policies of more than 50 countries around the world, and never before have I encountered the ad hoc, slipshod, inconsistent, constantly changing policies found here.

New South Wales, for example, recently made drastic changes to their feed-in tariff scheme with less than 12 hours notice for businesses and manufacturers to adjust. The Solar Homes & Community Plan, which gave A$8,000 (S$10,500) in rebates for 1kilowatt solar photovoltaic systems, was closed with less than 24 hours notice.

The Renewable Remote Power Generation Programme, which covered up to 50 per cent of the cost of renewable energy systems that displaced imported diesel fuel use in off-grid parts of Australia, was cancelled with no notice whatsoever.

The photovoltaic industry now employs almost half as many people in Australia as the coal industry. Would the coal industry be given that little, or no, notice?

These sudden and unexpected changes make it difficult for investors to make prudent decisions to locate factories and renewable energy facilities in Australia.

Second, Australia needs better standardisation of renewable energy installations, especially solar ones, as well as more rigorous inspection and enforcement. Investments in testing, standards and safety require government facilitation as market forces can sometimes prioritise short-term profits over long-term quality.

Third, and quite likely the elephant in the room: ongoing energy subsidies. These include rebates and concessions to all energy fuels that cost taxpayers and households.

A transparent accounting system has to be set up so taxpayers know what types of energy subsidies exist, and where their money goes. The mountains of subsidies for fossil fuels - and they exist in Australia, in many forms - distort energy markets leading to sub- optimal investments. They need to be accurately identified: from accelerated depreciation of power plants and tax relief for coal miners to reduced rates for coal transport and government guarantees for purchasing fossil-fuelled electricity. The Australian Bureau of Agricultural and Resource Economics (Abare) could improve its annual Energy in Australia report by tracking trends in government interventions and tax advantages.

Fourth, electricity prices must move towards more accurately matching costs. Most obviously, greenhouse emission permits need to be properly valued in the market. Furthermore, many of the other social costs of energy production need to be included. Renewable energy technologies should be given credit for, among other things, displacing pollutants like mercury that cause neural damage in humans; for relieving electricity grid congestion when strategically deployed; for avoiding the deleterious impacts of water consumption and water contamination; and for reducing wholesale electricity prices. Everyone benefits from these positive aspects of renewable energy, not just those lucky enough to own their own solar or wind system.

Fifth and lastly, a true, national, gross feed-in tariff - a scheme that pays local, residential forms of renewable energy - needs to be implemented. This feed-in tariff would require electric utilities to purchase the power produced from renewable resources at a fixed, premium regional rate. It would pay tariffs irrespective of the owner's actual power consumption. Network and transmission operators would provide those wishing to take advantage of the tariffs access to the grid.

Until these five elements - consistency, standardisation, accounting for subsidies, accurate electricity prices, and properly designed feed-in tariffs - are combined into a synergistic package, Australia's renewable energy potential will likely remain just that.

The writer is an Assistant Professor at the National University of Singapore.

Enjoy what's here, not just mourn what's gone

Jul 9, 2011
 
commentary
Preserving only physical monuments cannot replace a lost heritage
 
By Grace Chua

ALL of Singapore wants a piece of the Keretapi Tanah Melayu (KTM) railway action, it seems.

For weeks, crowds turned up at the now-defunct Tanjong Pagar train station, sweating and jostling. Some nights, there were more trainspotters, shutterbugs and gawkers than passengers, and more joyriders than actual travellers.

Young people want to be part of an organic movement, rather than experience history spoon-fed to them in school. So those who have never taken the train as a traveller, hopped on board for excursions to Johor Baru or Kuala Lumpur, for personal memories.

But amid the outpouring of feeling and flurry of activity, we might ask ourselves: Did we care about the station when trains still ran out of it?

And should the railway land, station and their accoutrements be preserved, for how long will we come back?

The Tanjong Pagar railway station, built in 1932, has been gazetted as a national monument, and the one at Bukit Timah, a conserved building.

But not all the physical components will be preserved. For one thing, the tracks and platform may not be part of the national monument, explained architectural conservator Yeo Kang Shua in a previous interview. He questioned the value of keeping the station without the trappings, arguing they should be taken as a whole. At least keep some vestige of the Tanjong Pagar tracks, he said.

At a photo and video exhibition at the station one night in its last week, after the food stalls had gone, I bumped into architectural historian Lai Chee Kien, of the National University of Singapore. He thought the terminal should be turned into a transport museum.

Will people visit, I asked.

'The physical infrastructure is there, but the software and information are not there yet,' he said, meaning that there should be information panels that go beyond the superficial, and that there must be a public hungry to find out more.

'Oh, and...'

He paused.

'The teh tarik was legendary.'

Mr Lai has a point.

National monuments - buildings or public places - are just a shell. Heritage involves more than preserving the physical; there is an organic living component to heritage, which is why we preserve oral histories, rituals and cultural knowledge.

A number of national monuments, for example, are churches, temples and mosques. Those who visit St Andrew's Cathedral or the Sri Srinivasa Perumal Temple to join in worship, are not mere tourists, but are participants in the civic life of the place. So long as congregations do not dwindle, those national monuments will go on living.

It may be easy enough to preserve the train station. But intangibles like Mr Hasan's drink stall and the legendary teh tarik are harder to preserve. You can set up another teh tarik stand with the same recipe, but the food is given personality and flavour by the man's personality, by the ambience of a mouldering train station.

Every day for years, people worked at the station and along the railway line; some lived there; others transited there.

But how many of us had an interest in, let alone took a part in, the daily life of the station at Tanjong Pagar before it was about to be made scarce? Singaporeans are notoriously kiasu - imminent scarcity immediately increases value.

Later on, how many will come back?How many will linger long enough at this new monument and once train station to engage with it and converse with its history?

Conservation can coexist with urban renewal. It has worked, for instance, at the Red Dot Traffic building in Maxwell Road, which in colonial times housed the traffic police headquarters and today is home to design firms, offices, restaurants and a design museum.

It has worked at the Old Hill Street Police Station, now the brightly painted headquarters of the Ministry of Information, Communications and the Arts.

For the Tanjong Pagar train station, perhaps that option remains.

Right now, there is another quiet civic campaign, conducted on Facebook and in letters to the newspapers, to save the sprawling Bukit Brown cemetery off Lornie Road. I would love to see that cemetery kept another hundred years: my great-grandparents are buried there.

At the same time, cities must evolve as needs and land uses change. Some areas with a vivid past that have been redeveloped are now important sites in their own right.

For example, the Five Points slum neighbourhood of Manhattan, immortalised in the film Gangs Of New York, is now the island's civic centre and part of its Chinatown.

Even as we fret over what we might lose tomorrow, we should consider the wonders of today.

All life, in Singapore and elsewhere, is tenuous, yet enduring - as tenuous as that railway station whose life is ebbing away, as tenuous as the old kampungs that made way for soaring Housing Board flats. And yet those same places live on. The old railway station may yet become a hub of new activity; the old kampungs are now teeming HDB estates.

If they remain as mere monuments to memory, spaces and buildings will always be inadequate - only a shell. They come to life only when people colonise the spaces, jostling, sweating, and breathing life into them.

We can be more than tourists or spectators. We can be participants or worshippers. We can inhabit those places that are not yet burdened by the stamp of official heritage and not yet about to disappear.

And to the train tracks, to the teh tarik, to neighbourhood hairdressers and provision shops - to ordinary life as it is lived - we can bear witness and remember.

caiwj@sph.com.sg

[Sentiments. Memories. Ideals. Lacking the essential life.]

Zero GST for basic goods? Bad idea

Jul 8, 2011

ASK: NUS ECONOMISTS
By Mukul Asher

What would be the effect of implementing a zero per cent Goods and Services Tax (GST) rate for basic commodities? Would it help to lower the cost of living for lower-income families in Singapore? What other measures should be implemented to help Singaporeans cope with high inflation?

Singaporeans are experiencing inflation higher than what they are used to. In April, the Consumer Price Index ) was 4.5 per cent, higher than a year ago, and inflationary pressures are expected to continue in the coming months.

Many people assume that doing away with the Goods and Services Tax on basic commodities such as rice and bread will help low-income households to cope with inflation.

But the case for excluding these commodities from the tax is weak. If this were done, there would be three major consequences:

First, GST revenue would drop. To make up for the shortfall, the current GST rate of 7 per cent would need to be increased. The Government might also cut the GST-related packages designed to help households.

Second, households will switch from the commodities subject to GST to the items that are not taxed. This shift in demand could push up the prices of basic commodities, partially defeating the purpose of exempting them from the tax.

Third, the change would further complicate GST administration and auditing. This is because GST is levied only on the value added (sales minus purchases) at manufacturing, wholesale and retail levels.

Making basic commodities GST-free would not only increase the cost of administering the tax but also make it more expensive for businesses to comply with GST regulations.

The average rate of GST/VAT (value-added tax) in member countries of the Organisation for Economic Cooperation and Development last year was 18 per cent.

Singapore's GST rate of 7 per cent is low by international standards. It is only when the standard rate of GST exceeds 10 per cent that a lower - or zero - rate for basic commodities may be worth considering.

What else can be done to help households deal with inflation? Here are a few suggestions.

Public-sector agencies, many of which operate in markets with limited price competition, affect the prices of many goods and services significantly. There is merit in reviewing in a more rigorous and integrated manner the pricing decisions that these agencies make.

The Competition Commission of Singapore, set up to enforce provisions of the 2004 Competition Act, including promoting and sustaining competitive pricing, could play a major role in such a review.

The second measure concerns the range of choices for consumers. There should be greater efforts to preserve cheaper options. For example, is there a need to redevelop hawker centres, wet markets or older parts of the city if this increases business costs and, therefore, prices?

Finally, households should not wait for the authorities to introduce measures to cushion the effects of inflation. By paying attention to what they buy, consumers can get better value for their money.

The writer is professor of public policy at the Lee Kuan Yew School of Public Policy.

Sino-US relations in a time of transition

Jul 6, 2011

By Frank Lavin

I HAVE had the privilege of spending much of my professional life dealing with China and China-related matters. Maybe that is what makes me, in a broad sense, an optimist about China and US-China relations. But the size of China, as well as the size and complexity of the United States, means that this relationship may become the most complicated diplomatic relationship in the world.

China is now, by virtue of economic success and other elements of state policy, more consequential than it has ever been. This presents a challenge to China and the US in terms of foreign policy.

The core of foreign policy management for China is external equilibrium: How do you achieve your goals in a peaceful setting? But the policy decisions are driven by internal equilibrium. In other words, a primary determinant of China's foreign policy decisions is domestic political and bureaucratic requirements.

Let me touch on five things that constrain China's policy formulation: internal cohesion, personalities, silos, amplification and the Internet.

The No. 1 criterion in the Chinese government is internal cohesion. One could argue that there is essentially one question during a job interview with the Chinese government, and it is a very simple one: Are you one of us? A capable Chinese government official essentially spends his entire life demonstrating that his answer to this question is 'yes'. Life is a job interview.

The raucous nature of the US political process might strike the Chinese as perplexing. In China, you must be able to demonstrate that you will be a responsible member of the team. The first question is not how capable you are or how creative you are or what your ideas are. The first question is: Are you one of us?

This does not always get you the best outcome, and it militates against people who want to try a slightly different direction. Thus, China does not have much in the way of bottom-up experimentation. And people have a need to demonstrate to a broader audience that they are part of the team.

A related phenomenon is the end of the personality-led system and the emergence of a bureaucratic state in China. In some respects, this could be reassuring because of the excesses of historic personality-led systems, but it can also augur a foreign policy drift because it can require a strong personality at the top to help shape outcomes that are in China's best interests.

Think for a second what classic international relations theory teaches about ascendant powers: that if you are a country on the rise, it is best for you to defer challenges and problems for as long as possible. There is no strong argument for prematurely forcing an issue if your capabilities are on the upswing.

Yet when we look at the issues that have bubbled up over the last year or two, it looks as if there is almost a deliberate pattern of surfacing issues that did not need to be surfaced: harassment of US ships in the South China Sea, the overly hostile reaction to US arms sales to Taiwan, some of the un-neighbourly remarks by Chinese officials to Asean foreign ministers, the ramming of a Japanese Coast Guard vessel by a Chinese fishing boat. Any one of these actions from the Chinese side could have been stopped by a dominant personality but, unfortunately, I think, for China, what transpired over the past few years was a series of arguably minor steps that cumulatively created a perception of a country taking an aggressive posture in the region.

There are different theories as to why China abandoned its charm offensive which, to my mind, helped it a great deal in South-east Asia. I believe there has been a combination of factors, some of which I have articulated above, along with the role of silos and the amplification effect.

By silos, I am referring to the fact that the Chinese government is more compartmentalised than other large governments, with ministries responsible for relatively narrow areas and without many inter-agency mechanisms for coordination.

It is not always easy in the Chinese system to think through and argue the costs and benefits of various government initiatives. There is a particular challenge if there are short-term or nominal benefits for one ministry and perhaps long-term costs borne by another ministry. For example, if a People's Liberation Army (PLA) naval vessel harasses a foreign ship in the South China Sea, that might help the naval command demonstrate that it is committed, that it is part of the team. However, this action could work very much to the long-term detriment of China's foreign policy. Still, the Foreign Ministry cannot countermand a PLA navy decision.

There is also an amplification effect, by which I mean that people tend not just to echo established policy but also to amplify it in order to signal their allegiance to that policy. Thus, bad policy gets amplified through the system, not toned down as one would hope.

Take what transpired in China after activist Liu Xiaobo was awarded the Nobel Peace Prize. From the Chinese point of view, the award was a severe public insult, and their starting point was they wanted to respond in kind, by criticising Mr Liu and the Nobel Committee.

But how did that help or hurt them? What other steps did they take and what were the eventual consequences of this for China's foreign policy? After the public criticism, the Chinese authorities conjured up their own international prize, the Confucian Peace Prize, and awarded it to a Taiwanese dignitary who had not even been informed that he had won. It was a somewhat embarrassing moment, I believe, for the people who orchestrated that event and even worse for Beijing - it just kept the issue alive. The amplification effect made matters worse.

The emergence of the Internet in China provides more latitude for discussion than we have ever seen there. But it may also serve as a constraint on policy because Internet chatter in China tends to be a bit unbalanced. On some issues, open criticism of government policy is prohibited so the audience receives only one point of view.

Beyond that, the Internet itself tends to be a medium which promotes comments that tend to be emotional and maybe even a bit nationalistic. So, instead of thoughtful examination of an issue, you can get this cheerleading effect.

Some of this emotional response is to be expected because it is the Internet, not a graduate school seminar. But I do think that, cumulatively, this kind of emotionalism does not help China move to more productive outcomes in foreign policy.

My conclusion is that China and the US face twin challenges when it comes to foreign policy management. As China emerges into this new major power role, it is going to enhance its own prospects for a successful foreign policy, showing the subtlety and restraint that all great powers have to show, and I think this is difficult given China's domestic political environment. For its part, the US needs to display flexibility and goodwill in trying to work with China.

I think the biggest mistake China could make in foreign policy would be to simply assert its goals without regard to other parties. An assertion of a point of view is not the same as the adoption of policies that will help you reach your objectives. Sometimes, the two concepts are blurred in China. We can understand that, domestically, they may be somewhat the same. You have a top-down system and, if you assert a domestic policy goal, that is an important step to achieving it. But it does not work that way in foreign policy as there are other parties involved.

The United States has responsibilities as well. I think the biggest mistake it could make in dealing with China would be to view China through a deterministic lens, that China's economic rise inevitably means hostility. Given the size and complexities of the two countries and the many differences between the two governments, it is no surprise that there are different points of view and even occasional points of friction, but I also see significant progress in the relationship. If there is as much positive movement over the next 40 years as in the past 40, the leaders in both countries should be congratulated for their statesmanship.

The writer is chairman of public affairs for Edelman Asia Pacific. He was US ambassador to Singapore from 2001 to 2005 and was undersecretary for international trade at the US Department of Commerce, where he was lead negotiator for China. This article is edited from a speech he delivered at US think-tank, The Heritage Foundation, on April 20.

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