For years, it has been common to hear individuals and groups talk in self-focused terms about the Budget and the "goodies" it is expected to dispense. But Members of Parliament, like Mr Sitoh Yih Pin and Mr Alex Yam, were right to point out the peril of fiscal profligacy. Instead of using precious resources to help stock the larder, one might wind up just raiding it repeatedly till all is depleted. From a broader perspective, "each Budget must build on the previous ones to carry forward the momentum to future budgets", as Finance Minister Heng Swee Keat noted in wrapping up the debate on the Budget statement.
A sound budget philosophy must keep broad goals in sight and pick the best means to achieve economic and social outcomes, not just over the near term but over the long term as well. For example, the transformation support package is an integrated attempt to reinvent the economy through a slew of measures that link the two timeframes. The key to the success of the transformation will lie in the awareness of Singaporean workers and companies that the comforts of the existing economic model will soon become a thing of the past. Hence this Budget and others to follow will be judged by their ability to facilitate the transition to the next economic phase.
If budgetary provisions are overly generous, Singapore's economic prospects could be weighed down by well-intended but ultimately market-distorting moves, such as the demand for bigger retrenchment benefits, to say nothing of redundancy insurance. Such interventions would be difficult to sustain without undermining market efficiency and a spirit of self-reliance. Instead, it makes sense to support small and medium-sized enterprises in their efforts to restructure themselves. This would create better jobs for Singaporeans in the future. Here, the temptation to subsidise uncompetitive companies must be avoided, with the resources saved being directed at SMEs most likely to survive the Darwinism of the global market.
If the near term is to be a preparation for the long term and not become an obstacle to it, fiscal prudence must be maintained so that government spending does not outrun the productive capacity of the economy. Pragmatic economic policies underpin the fundamentals of governance that have seen Singapore through domestic and global economic crises in the past 50 years. Economic clarity must continue to underpin national strategies at a time when the cyclical and the structural are coming together with a vengeance.
Mr Heng's metaphor of a journey that Singaporeans are collectively taking towards the future is pertinent to the philosophy of his Budget. They must act as supportive fellow-travellers eyeing the same horizon and not scour individually for budgetary pickings along the way.
