SG2015: Insight, hindsight

Shifting left, moving ahead

Then-Finance Minister Tharman Shanmugaratnam, wrapping up the Budget debate, said the Government had "embarked on major moves to build a more inclusive society and mitigate inequalities". PAP MP Vikram Nair noted that Singapore had moved beyond the n
A closer look at the Jubilee Budget shows it balanced what many billed as a leftward shift with strong support for those in the middle class. In particular, the Government is pouring a lot of money into schemes that help the elderly and the poor, as well as increasing subsidies for the lower middle class.ST FILE PHOTO
Then-Finance Minister Tharman Shanmugaratnam, wrapping up the Budget debate, said the Government had "embarked on major moves to build a more inclusive society and mitigate inequalities". PAP MP Vikram Nair noted that Singapore had moved beyond the n
Then-Finance Minister Tharman Shanmugaratnam, wrapping up the Budget debate, said the Government had "embarked on major moves to build a more inclusive society and mitigate inequalities". PAP MP Vikram Nair noted that Singapore had moved beyond the notions of "left" and "right" to embrace ideas from both sides. A closer look at the Jubilee Budget shows it balanced what many billed as a leftward shift with strong support for those in the middle class. In particular, the Government is pouring a lot of money into schemes that help the elderly and the poor, as well as increasing subsidies for the lower middle class.ST FILE PHOTO
Then-Finance Minister Tharman Shanmugaratnam, wrapping up the Budget debate, said the Government had "embarked on major moves to build a more inclusive society and mitigate inequalities". PAP MP Vikram Nair noted that Singapore had moved beyond the n
PAP MP Vikram Nair noted that Singapore had moved beyond the notions of "left" and "right" to embrace ideas from both sides. ST FILE PHOTO

Budget 2015 aimed to empower people and let them earn their own success, while ensuring no one is left behind

British boyband One Direction performed to screaming fans at the National Stadium in March, but the one direction that had Singapore MPs all abuzz during the Budget debate in the same month was the shift to the left in the country's social policies.

People's Action Party MP Alex Yam even invoked pop superstar Beyonce's 2006 ditty Irreplaceable - "To the left, to the left, everything you own in a box to the left" - to caution against overspending.

Fellow PAP MP Vikram Nair, however, noted that Singapore had moved beyond the notions of "left" and "right" to embrace ideas from both sides.

The Jubilee Budget may have been Singapore's largest ever, but a closer look shows it balanced what many billed as a leftward shift with strong support for those in the middle class.

The total expenditure for financial year 2015 is an estimated $68.2 billion, a near 20 per cent increase from FY2014's $57.2 billion.

This was largely due to two factors: transport spending going up considerably with such projects as Changi Airport Terminal 5 and new MRT lines, as well as a 16 per cent bump in social development expenditure to $32.1 billion from $27.6 billion the previous year.

In particular, the Government is pouring a lot of money into schemes that help the elderly and the poor, as well as increasing subsidies for the lower middle class.

The reason for the shift was laid out by Deputy Prime Minister and then-Finance Minister Tharman Shanmugaratnam in his speech wrapping up the Budget debate.

The Government, he said, had "embarked on major moves to build a more inclusive society and mitigate inequalities".

"The system is not just about redistributing from the rich to the poor, it's also about the middle-income group," he said. "Very importantly, the middle-income group in Singapore are net beneficiaries of our system."

Political watcher Eugene Tan, an associate professor of law at Singapore Management University and a former Nominated MP, tells The Sunday Times the redistributive policies are motivated by the widening income and wealth gaps.

They are also "undergirded by a conviction that sustaining political legitimacy entails this need for a revitalised social compact" between the Government and the people.

The two key policies in Budget 2015 that are symbolic of the shift to the left are the permanent Silver Support Scheme and SkillsFuture initiative.

Silver Support aims to forge a new compact in what Mr Tharman calls "fairness in retirement".

The scheme will support the poorest 30 per cent of Singaporeans aged 65 and older through payouts of between $300 and $750 every three months. This will cost the Government about $350 million in the first year, and is set to grow as more Singaporeans turn 65.

SkillsFuture is billed by Mr Tharman as a "major force for social mobility". From next year, Singaporeans aged 25 and above will get $500 worth of SkillsFuture credits that can be used to pay for about 10,000 courses. More than $1 billion has been set aside to fund this national effort to encourage Singaporeans to pursue lifelong learning.

The credits will not expire, and will be topped up periodically.

Other policy measures in 2015 include major changes to the Central Provident Fund (CPF) retirement scheme to offer greater flexibility to members to customise their savings and payouts on retirement.

Middle-income workers will be able to grow their nest egg as the salary ceiling for calculating CPF contributions will be raised from $5,000 to $6,000 on Jan 1, 2016.

Older workers will get a boost in their retirement savings, as CPF contribution rates for those aged above 50 will rise by between 0.5 percentage point and 2 percentage points.

Other Budget measures to help the middle income include an expanded childcare subsidy scheme, reduced maid levies and the waiver of national examination fees for their children.

This bumper crop of policy announcements comes a year after Budget 2014 made major moves to address concerns over the cost of healthcare; namely, the introduction of the $8 billion Pioneer Generation Package for Singaporeans aged 65 and older, and MediShield Life.

MediShield Life, which took effect on Nov 1, covers all 3.9 million Singaporeans and permanent residents from birth to death. Claim limits for hospital bills and some outpatient treatments are now higher, and the lifetime cap of $300,000 claimable under MediShield was lifted.

Meanwhile, lower- and-middle- income citizens on the Community Health Assist Scheme were given larger discounts on subsidised medicine at polyclinics or specialist outpatient clinics.

When Singapore was shrouded by the haze, the Government was moved to give those under the age of 18 or over 65, as well as low- to middle-income earners, subsidised treatment at more than 450 general practitioner clinics and polyclinics for haze-related ailments.

About 50,000 people benefited from it over two months.

At this year's National Day Rally, more incentives were also offered to nudge couples to have more babies to lift the low birth rate. These include enhancing the Baby Bonus scheme, a higher Medisave grant for newborns and an extra week of paid paternity leave funded by the Government.

The Singapore approach to income redistribution was vividly described by Mr Tharman at a special Economic Society of Singapore lecture in August. He said: "No government can have a hands-off strategy, where people are left to fend for themselves. Neither should we have handouts all along the way, because that just takes the dignity out of people.

"Let's instead keep providing hand-ups, especially for those who start with less, helping them develop their strengths and have a real chance of doing well. Empower people, and enable them to earn their own success."

For most Singaporeans, these policies go beyond the labels of "left" or "right". What matters is having ample chances to earn a better income and have enough for retirement.

As PAP MP Denise Phua puts it: "Whether we're going right or left, as long as we're not going backwards, we're going forward."

A version of this article appeared in the print edition of The Sunday Times on December 20, 2015, with the headline 'SG2015: Insight, hindsight Shifting left, moving ahead'. Print Edition | Subscribe