The expansionary fiscal stance evident in yesterday's Budget will help Singapore companies, particularly small and medium-sized enterprises (SMEs), deal with the challenges of the near term. Concrete steps include the $1.9 billion that firms will receive in 2016 for qualifying wage increases under the Wage Credit Scheme; the corporate income tax rebate increase; and the working capital loans for SMEs. Cyclical problems facing the economy, with the consequent threat to jobs, make it imperative to help a sector which employs 70 per cent of the workforce. However, this support should not turn into a crutch but must encourage competitive SMEs to survive the downturn and emerge stronger and more innovative.
This is where the maiden Budget by Finance Minister Heng Swee Keat moves deftly from the near term to the longer future. Policies to transform enterprises include the Automation Support Package of more than $400 million in the next three years to help firms scale up automation projects. This package, and the more than $450 million set aside in the next three years to enhance the development and adoption of robots, underlines the crucial advantage technology provides in countering the constraining effects of a small labour pool on Singapore's economic potential. The Jurong Innovation District, on its part, is an inspired move that can act as an incubator in bringing together researchers, students, innovators and businesses, much as Silicon Valley does on a larger scale.
Even as it seeks to guide the country through economic change, Mr Heng's Budget explores additional novel ways of building a caring and coherent society. Investing in a sustainable demographic future, darkened by low birth rates now, has shaped the introduction of the Child Development Account First Step grant for all Singaporean children, while the KidStart initiative recognises the crucial importance of the early years of a child's life in influencing his or her physical, mental and social abilities. At the other end of the spectrum are the elderly, among whom many are economically vulnerable. They will benefit from better retirement support. This is a gesture of appreciation for those whose hard work helped to make Singapore's first 50 years successful, and enabled today's young to even contemplate the next five decades.
Notwithstanding this slew of policies, the Budget adheres to fundamental principles of fiscal prudence. Unlike the global economic crisis, when emergency measures were called for, the situation today is not as dire. At the same time, however, the Government must not exhaust its financial capacity for corrective intervention should the economic situation worsen. What is necessary is a partnership that draws state, market and society closer together - a theme that ran through Mr Heng's Budget - even as his Committee on the Future Economy sets the direction of Singapore's development. Singaporeans can look forward to the results of its work being reflected in future Budgets.