Singapore Budget 2014: Relief for the elderly, CPF boost for all workers
Finance Minister Tharman Shanmugaratnam's Budget had good news for workers, students and especially the elderly.
The much-anticipated package for the Pioneer Generation was the centrepiece and it did not disappoint: Its three components will work to ensure that the 450,000 Singaporeans who were at least 16 years old in 1965 will receive help with health-care costs for the rest of their lives.
And all pioneers, regardless of income or wealth, will get the same package because the Government's objective is to honour the contributions of the whole generation, said Mr Tharman.
First, each pioneer will receive annual Medisave top-ups of $200 to $800 depending on their age group. They will also get a further 50 per cent off bills at specialist outpatient clinics and polyclinics and get eligibility to join the Community Health Assist Scheme (CHAS), which subsidises private GP and dentist visits.
There will be cash assistance of $1,200 a year for pioneers who are disabled or immobile - or their nominated caregivers.
Finally, pioneers will pay a subsidised rate for the upcoming MediShield Life universal health insurance scheme. Their premiums will be offset by 40 to 60 per cent.
For those 80 and older, the Government intends to fully cover their MediShield Life premiums.
The Pioneer Package will be financed by a special $8-billion fund that will be ring-fenced so benefits will be paid out regardless of the finances of future governments.
But it was not just pioneers who received a boost for health-care costs. Mr Tharman announced a surprise 1 per cent increase in Central Provident Fund contributions from employers for all workers, which will go entirely into their Medisave accounts.
This will lift CPF contribution rates for workers up to 50 years old to 37 per cent, of which 17 per cent will come from employers and 20 per cent from workers.
These will be the last change to CPF rates for a while, Mr Tharman said. The Government will also spend about $300 million offsetting the rate increase in its first year to ease employers' transition.
Older workers aged 50 and above will also see their CPF contribution rates rise from January next year.
Lower- and middle-income Singaporeans will also receive permanent subsidies for MediShield Life premiums and higher offsets for their bills at specialist outpatient clinics.
In line with the social assistance bent of the last few Budgets, Mr Tharman expanded on or extended a range of subsidy schemes.
Singaporeans with disabilities will get greater subsidies for early intervention education programmes and transport costs, while students from lower- and middle-income families will see larger offsets for kindergarten and tertiary education fees.
Singapore's "major, multi-year undertaking" to boost productivity and restructure its economy away from cheap foreign labour was a major feature of the speech as well.
The Productivity and Innovation Credit, which gives tax deductions and cash grants to firms that invest to raise their capabilities, was extended for three more years and its expenditure cap increased from $400,000 to $600,000 per area of spending.
The Government will also boost financing and bear more risk for smaller firms looking to get off the ground or expand overseas.
But the screws continue to tighten on companies that rely on cheap foreign labour.
The annual levy for a foreign construction worker with basic skills will rise in July 2016, while Mr Tharman cautioned that construction firms may eventually be required to have a minimum proportion of higher-skilled workers.
And in a unexpected move towards the end of his speech, Mr Tharman raised "sin" taxes on alcohol, tobacco and lottery betting.
For more news and analysis on Singapore Budget 2014, click here for ST's Big Story coverage.