From The Gallery

Coronavirus: Solidarity Budget is fiscal equivalent of a CPR for economy

In exceptional times, better for fiscal policy to err on the side of doing more rather than less

The world economy, like it or not, is experiencing cardiac arrest from the scourge of Covid-19.

If February's Unity Budget can be likened to preventive medicine - and the Resilience Budget in March, intensive care - then the Solidarity Budget announced yesterday is the fiscal equivalent of cardiopulmonary resuscitation (CPR).

Three rounds of support measures in six weeks is a national record. Even during the severe acute respiratory syndrome (Sars) outbreak in 2003, a second supplementary budget was announced only in the second half of the year.

But there is no time to lose. A record 120 more Covid-19 cases were announced here on Sunday, of which four were imported and 116 local.

To stem the growing community spread of Covid-19, most workplaces and retail outlets will be shuttered for one month from today, except those in key economic sectors and essential services. All schools will move to home-based learning from tomorrow.

Countries around the world are attempting a high-wire act of slowing their economies down to deal with a health shock, while not holding things too far back that a rebound becomes impossible.

Singapore is no exception. As Deputy Prime Minister Heng Swee Keat said in Parliament yesterday, the country must take short-term pains to avoid even sharper pain later. "Otherwise, if the outbreak escalates, the impact on lives and livelihoods will be even worse," he said.

It was inevitable that more government support would be needed to cushion the blow of widespread closures. Just what this looks like, was revealed yesterday:

For households, more direct cash in hand - $600 per adult Singaporean - and earlier.

For firms and workers, additional support for wage costs, cash flow and credit.

Firms in all sectors will have 75 per cent of their local employees' wages subsidised for the month of April. The subsidy applies to the first $4,600 of wages paid this month.

The monthly foreign worker levy due this month will be waived. There will also be a foreign worker levy rebate of $750 for each work permit or S pass holder.

A Bill will be tabled today to compel landlords to pass on property tax rebates in full to tenants.

Support for self-employed persons will be broadened to cover those who earn a small income from employment work, including some who live in private property.

The additional boost will draw upon another $4 billion of the nation's past reserves, on top of the $17 billion announced on March 26.

The broad-based Solidarity Budget, crafted with feedback from concerned industry and citizens, is certainly welcome.

Could the Government have done more to pre-empt the economic devastation? Of course, given the substantial reserves at hand. But it has already shown a willingness to scale up its fiscal stimulus significantly in just over six weeks.

The pandemic is evolving by the day. Much remains unknown about the disease's trajectory, or the full repercussions of containment measures applied around the world. A measured approach now is therefore appropriate.

Should the pandemic be prolonged, however, policymakers may be forced to reckon with the need to think out of the box.

Rebates, wage subsidies, cash transfers and bridging loans may be tried-and-tested policy tools, applied during almost all of Singapore's past economic crises.

But as the months - even years - drag on, can the public service bear the administrative load of assessing individual cases on a needs basis?

Already, civil servants are working round the clock to handle queries from affected companies and citizens. A whopping 100,000 have applied for the Temporary Relief Fund (TRF) since it was launched less than a week ago.

Can automatic disbursements work without being abused? Means testing could take too long for those whose earnings have dried up overnight.

Nominated MP Anthea Ong suggested such a mechanism for the TRF and Covid-19 Support Grant, using self-declaration or proxy indicators like changes in Central Provident Fund contributions.

More fundamentally, the Covid-19 outbreak has laid bare the truth that society is only as strong as its weakest link.

Foreign workers housed in crowded living conditions have created a perfect storm for rapid infection. Nearly 20,000 workers in two dormitories, which account for 90 of the Covid-19 cases so far, will be quarantined in their rooms for 14 days.

Meanwhile, rich parents have clamoured for schools to be shut, while poor parents appealed for them to remain open, as they did not have the option to work from home, said Mr Ong Teng Koon (Marsiling Yew-Tee GRC).

Will recent measures, such as grocery vouchers for the poor and protection for the self-employed, represent a new policy normal?

With cleaning, security and other services hobbled by lockdowns in neighbouring countries, can more locals fill such positions so that there are fewer disruptions when the next crisis comes around?

After all, as Mr Ong pointed out, the pandemic has shown that cleaners, nurses, caregivers, utility workers and delivery workers are the real heroes who ought to be rewarded in a manner commensurate with their worth.

Said Workers' Party chief Pritam Singh (Aljunied GRC): "A thorough review of what a living wage in Singapore ought to be, for Singaporeans who man our critical infrastructure and keep the country's heart beating, would be appropriate and timely.

"Only then can we say we are a people who leave no one behind."

No policy or distribution channel works perfectly. Despite the best of efforts, reaching those who need it the most can be difficult.

The implication is that, whatever combination of delivery is chosen, it is better for fiscal policy right now to err on the side of doing more rather than less. Providing immediate relief is essential to prevent extreme suffering and permanent damage to the economy.

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A version of this article appeared in the print edition of The Straits Times on April 07, 2020, with the headline Coronavirus: Solidarity Budget is fiscal equivalent of a CPR for economy. Subscribe