Budget 2017

A budget for today - and tomorrow

The Budget speech kicked off with MPs thumping their seats in a show of support for Mr Heng (above), who spoke for the first time in Parliament since suffering a stroke last May and making a remarkable recovery.
The Budget speech kicked off with MPs thumping their seats in a show of support for Mr Heng (above), who spoke for the first time in Parliament since suffering a stroke last May and making a remarkable recovery.ST PHOTO: LIM YAOHUI

• Water prices to go up 30% • Carbon tax from 2019 • Income tax rebate • Fund to help firms go global

Against a backdrop of rapid technological change and global uncertainty, Finance Minister Heng Swee Keat delivered a Budget yesterday that addresses Singaporeans' immediate concerns while laying the groundwork for future growth.

The speech kicked off with MPs thumping their seats in a show of support for Mr Heng, who had made a remarkable recovery to speak in Parliament for the first time since suffering a stroke last May.

The Budget offered several talking points of its own. These included an increase in water prices to fund the higher costs of desalination and Newater production, the first rise in 17 years; this was offset, for some, by a permanent increase in the GST Voucher - Utilities-Save (U-Save) rebate for eligible HDB households, ranging from $40 to $120, depending on flat type.

Young home buyers received cheer in the form of generous hikes of up to $20,000 in the CPF Housing Grant for resale flats from a Budget in which expenditure is expected to touch $75.1 billion.

But underpinning it all is a message Singaporeans should find familiar - the Republic has to adapt and thrive as the world undergoes deep shifts that will create new challenges, but also open up new opportunities. It continues the theme of the report by the Committee on the Future Economy (CFE), co-chaired by Mr Heng, released earlier this month.

The Budget speech kicked off with MPs thumping their seats in a show of support for Mr Heng (above), who spoke for the first time in Parliament since suffering a stroke last May and making a remarkable recovery. ST PHOTO: LIM YAOHUI

"It is critical that we take decisive action to re-position ourselves for the future," Mr Heng told MPs in a packed House, noting that the Budget would take a "learning and adaptive approach", trying new methods, keeping those that worked and learning from experience. "That is the Singapore way."

Mr Heng noted that while the economy grew 2 per cent last year - from 1.9 per cent in 2015 - there was an "uneven performance" across sectors. Similarly, overall unemployment remained low at 2.1 per cent, but redundancies rose.

The Budget measures, he said, aim to see Singapore through this period of transition. "We can aim for quality growth of 2 per cent to 3 per cent, if we press on in our drive for higher productivity and work hard to help everyone who wishes to work, find a place in the labour force," he said.

Workers will be offered programmes to help them retrain and find new jobs. Businesses struggling with tough times will receive immediate relief. The construction sector, for example, will benefit from $700 million worth of infrastructure projects brought forward.

Companies will get help to embrace digital technology and innovate. A new $600 million International Partnership Fund will see the Government co-investing with Singapore-based firms in opportunities to expand overseas.

In all, the Government is setting aside $2.4 billion over the next four years to implement the strategies set out in the CFE. This is on top of the $4.5 billion earmarked last year for programmes to transform industries here, he said.

There will also be a personal income tax rebate of 20 per cent of tax payable, capped at $500, for income earned in 2016.

The Government will spend an additional $160 million in the next five years on community mental health efforts. Medifund will get a $500 million top-up.

There were also measures to make Singapore more environmentally sustainable - a new carbon tax to be introduced in 2019 will levy between $10 and $20 per tonne of greenhouse gas emissions by heavy emitters - and measures to encourage a move to greener vehicles.

It was, in short, an expansionary Budget, with ministries' expenditures expected to be $3.7 billion, or 5.2 per cent, higher than last year. However, it included a permanent 2 per cent downward adjustment to ministry budget caps from this year on.

 

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Responding last night, the Singapore Business Federation said it was disappointed with the "inadequate short-term support" to lower business costs. But it welcomed steps to boost innovation and help firms go international.

Others were more upbeat. "It creates opportunities for Singaporeans to chase their dreams and excel internationally, while also providing protection in the current uncertain climate," said Mr Low Hwee Chua, regional managing partner for tax, Deloitte Singapore and South-east Asia.

Parliament will debate the Budget and government spending plans over two weeks from next Tuesday.

A version of this article appeared in the print edition of The Straits Times on February 21, 2017, with the headline 'A budget for today - and tomorrow'. Print Edition | Subscribe