Many Singaporeans are spending the weekend on Chinese New Year festivities, giving or receiving the ubiquitous red packets or hongbao stuffed with cash that adults give to unmarried juniors.
Top on many people’s minds is another question: Will the Budget statement to be announced on Monday, Feb 23, contain nice big hongbao for citizens and businesses?
In the past couple of weeks, The Straits Times has run many articles on what people desire or expect from this year’s Budget. Here are five things to look out for when the Budget is announced on Monday.
1. Will there be a special SG50 cash handout?
Singapore celebrates its 50th year of Independence this year, after all. Many Singaporeans are hoping for a cash bonus. After all, government coffers are overflowing.
The budget surpluses since 2011 are said to be in the region of $10 billion (Credit Suisse estimate) to $12 billion (OCBC estimate).
The Government has been in the habit of giving cash bonuses or dividends, in good years. This is especially marked in election year Budgets. For Budget 2011, announced three months before elections were held in May, the Government gave out $1.5 billion worth of “growth dividends”, with 80 per cent of Singaporeans getting $500 to $700 each. Some predict this will be the last Budget before elections are called, raising expectations of a whopper hongbao.
Expectations may be one thing, but so far there have been few indications from the government that there will be a mass handout. It might be that the Budget’s largesse won’t be frittered away in the form of a couple of hundred dollars spread out over 3 million people, but focused on key programmes the government has already announced.
2. How generous will the Silver Support scheme be for retirees?
For example, if there is one group the Government can afford to be generous to, it is the poor elderly.
Prime Minister Lee Hsien Loong promised last August that poor elderly Singaporeans will get a Silver Support annual allowance to help with their living expenses, if they have no assets or family support.
This would be the closest Singapore comes to a national pension allowance.
Two writers called for the Silver Support to be less restrictive, so more elderly will benefit. They even worked out some numbers and said it would cost just $180 million a year to top up incomes of 30,000 recipients, or 15 per cent of the current population aged 65 years or above, to $500 a month. This made up only 0.3 per cent of government expenditure in Budget 2014.
Apart from the Silver Support, the Budget could also have measures to help Singaporeans save for retirement, which a survey by government feedback unit Reach this week found was the top concern among Singaporeans.
How about tax relief for higher contributions to the Supplementary Retirement Scheme (SRS) as argued by my colleague Goh Eng Yeow.
Another writer, PWC actuarial specialist Marcus Kok argues for tax benefits for employees’ contributions to employer retirement savings plans.
Other nice to have tax reliefs would be relief for mortgage interest.
3. What will go into the “SkillsFuture” initiative?
The Government has said it wants to do more to help workers master job-relevant skills and engage in lifelong learning, dubbed the SkillsFuture initiative. Deputy Prime Minister Tharman Shanmugaratnam, who is also Finance Minister, chairs the 25-member SkillsFuture Council, a national panel set up in September to develop a system of education, training and career progression for Singaporeans.
What Budget measures will help support SkillsFuture?
Will the Government take up the labour movement’s proposal for individual training accounts that employers and Government can help top up? If so, there might be top-ups to such accounts, rather than cash giveaways to citizens.
Will there be tax reliefs for training programmes for workers, and for education expenses for taxpayers and their children?
4. Will Budget 2015 go big on helping companies cope?
Expectations are high that the Budget will be as pro-business as it is pro-people.
On the business front, costs are spiralling; labour curbs are biting; and they are operating in a slowing global environment with uncertainty in Europe and a sputtering recovery in America.
Straits Times Money Editor Lee Su Shyan says Budget 2015 should include boosts for companies. She argues persuasively that the Budget focus should move to growth, after so many years of going big on social spending.
Many people also want the popular Productivity and Innovation Credit incentive for companies to be extended. But Randolph Tan, a labour economist and Nominated MP, says the Government should track usage of the PIC, and see if companies that used the grant had gains in productivity.
Professor Ivan Png says the PIC has become like a subsidy to get fat people to exercise, when productivity measures should tackle the root cause - which he thinks is poor management.
As he points out, five years after a high-profile productivity push in 2010, the productivity data is dismal.
Take multifactor productivity (MFP), a measure of output that looks at gains over and above that expected from putting in more labour and capital. “In tandem with labour productivity, MFP grew by 9.7% in 2010, and 1.4% in 2011, and then fell by 2.3% in 2012, and a further 0.7% in 2013.”
5. What’s in it for me?
At the end of the day, many people will just want to know: How will I benefit from this year’s Budget?
If you don’t run a business, and aren’t a poor retiree, can you benefit from the Budget?
Chances are, yes you can.
This year’s Budget will likely prove generous, although not necessarily not in the way people expect, with a straight cash bonus.
Instead, its goodies are more likely to be spread among key initiatives like SkillsFuture, Silver Support, and various tax reliefs for the middle-income.
A straight income tax rebate would be nice for taxpayers, but the Finance Minister has hinted that tax reliefs, not tax rebates, might be forthcoming this year.
If so, one can just hope for higher tax reliefs for those who support their parents, pay for children’s education fees, and those who want to take up a training course.
And to go back to the title of this piece - how big a hongbao to expect?
I’m not sure there will be a SG50 cash bonus in the way there was a straight Growth Dividend in the past.
But the hope is that many of the elderly poor, the less wealthy and the sandwiched middle-income will sit down with their calculators and count the savings and top-ups and find cheer in Budget 2015.