No clear sign it's an election Budget
The generous slew of goodies announced by Finance Minister Heng Swee Keat in last Monday's Budget has sparked talk about whether a general election could be held as early as later this year.
Among the measures are the Merdeka Generation Package, for which the Government will set aside $6.1 billion to help nearly 500,000 Singaporeans born in the 1950s with their long-term healthcare costs, and a $1.1 billion Bicentennial Bonus with a focus on those on lower incomes.
But panellists at a Straits Times-UOB Budget Roundtable were unable to say if this was indeed an election Budget. The next election must be held by April 2021.
During the hour-long discussion on the Government's financial plans for the next fiscal year, panel moderator and ST associate editor Vikram Khanna asked the experts: "If you were to design an election Budget, would it look something like this (the 2019 Budget)?"
UOB economist Barnabas Gan said it is "50-50" that this was an election Budget.
Noting that the earlier Pioneer Generation Package had a projected cost of $9 billion, Mr Gan said the Merdeka Generation Package - estimated to cost more than $8 billion over its beneficiaries' lifetimes - is a "generous" initiative.
The $1.1 billion bonus shared with Singaporeans for the bicentennial - marking the 200 years since Stamford Raffles landed in Singapore in 1819 - also has a "nice ring" to it, Mr Gan noted.
But he said while a deficit of $3.5 billion is projected for the 2019 financial year, the current term of Government has accumulated about $19.1 billion of surplus in the first three years of administration.
There is still more the Government can do with the surplus, Mr Gan said.
Singapore Business Federation chief executive Ho Meng Kit said it did not feel like an election Budget, pointing out: "If it was an election Budget, we kind of expect a little bit more giveaways, handouts... after all, they've got $15 billion still stuffed in the reserves. So the powder is dry."
Mr Ho noted the Merdeka Generation Package had been talked about for some time. The package was first announced by Prime Minister Lee Hsien Loong at the 2018 National Day Rally.
Singapore University of Social Sciences economist Walter Theseira demurred to say whether it was an election Budget.
But he did say responsible governments should acquire the reputation for dealing fairly with the Budget based on the fiscal position and long-term spending needs.
They should try to design the same Budget year on year, without "pandering to the public, or pandering to try to get re-elected", Professor Theseira added. "And, by and large, I think this Government tries to do that the best it can."
In answer to Mr Khanna's question, Labour MP Patrick Tay drew attention to the Government's strategic measures in the Budget, saying: "I think the message is clear, not just this year, as well as the last couple of years - because of the various challenges we are facing as a country and what is panning out in the global economy, the things we are doing are strategic."
The NTUC assistant secretary-general added: "The narratives and the message have been very clear: we need to transform, we need to keep pace and, like I said, we don't just need to keep afloat, we need to keep ahead of the competition and to really stay ready, relevant and resilient."
Panellists' take on...
OTHER SOCIAL PRIORITIES
We cannot take our eye off the ball. Children from disadvantaged families don't pay anything out of pocket for their formal schooling but we have to look at the other disadvantages they face - access to the same kind of market-paid enrichment programmes and tuition as children of middle-and higher-income families.
Retirement adequacy - we could afford to look more seriously at whether we can provide some kind of minimum retirement benefit topped up by the Government.
So it's integration in Silver Support with the CPF scheme more formally. And how we build up CPF savings for lower-to middle-income workers, see whether we can give them more of a headstart in building up their savings.
- SINGAPORE UNIVERSITY OF SOCIAL SCIENCES ECONOMIST AND NOMINATED MP WALTER THESEIRA
INVESTING IN SKILLS UPGRADING, DESPITE NO TOP-UP TO THE SKILLSFUTURE PROGRAMME
The half-life of skills is five years, so gone are the days where you learn and you work and you retire. The new adage should be learn, work, learn, work, learn, work and then you retire.
So there are a lot of measures from the SkillsFuture perspective to encourage, that has to be really one key focus for the Government in many years to come.
- LABOUR MP AND NTUC ASSISTANT SECRETARY-GENERAL PATRICK TAY
We're underselling Singapore if we settle for just 2 to 3 per cent economic growth.
So Finance Minister (Heng Swee Keat) mentioned a very important vision - Singapore as the global Asia hub for innovation, technology and enterprise.
Second, if we are able to develop many more local companies into growth companies, they will offer good jobs and good potential for Singapore.
Third, growth in the region. Asean is still doing well, 5 to 6 per cent growth. China is still 6 per cent - not a small number. So plenty of opportunities.
- SINGAPORE BUSINESS FEDERATION CHIEF EXECUTIVE HO MENG KIT
LOWER QUOTAS FOR FOREIGN WORKERS IN THE SERVICE INDUSTRY
The share of GDP of services to the overall GDP itself makes up almost 70 per cent.
So with the tightening of the DRC (Dependency Ratio Ceiling) for the service sector, there are only two things firms could do. Either scale down or increase cost to attract more local employees. And that pushes up the cost of services in general.
And if we just look at the inflation basket, a good part is being made up by food and also recreation. There's inflation risk in the coming years once the DRC is reduced from 40 per cent to 38 per cent and subsequently to 35 per cent.
- UOB ECONOMIST BARNABAS GAN
What's behind diesel tax increase?
The diesel tax increase from 10 cents per litre to 20 cents might be a way to correct an older policy on light passenger-use diesel vehicles that cause pollution in a dense city, said Singapore University of Social Sciences economist Walter Theseira at a roundtable last week to discuss the Budget statement.
"The only reason why we're going after diesel is it's been shown that diesel fuel usage has a lot of negative externalities, mostly because of the particulate matter, the nitrous oxide pollution," he said.
Some years ago, diesel was embraced and encouraged for passenger vehicles because it was seen as a good solution to carbon emissions, he added. "This move to increase diesel taxes is a way of trying to correct this policy issue that we and other governments made, perhaps (as) a mistake in the past."
Enabling mums to get back to work
Mothers who quit their jobs after giving birth but whose children are now older should be given more opportunities to return to the workforce, said experts.
Their participation in the workforce - together with that of older workers - could potentially increase labour supply and boost economic growth, UOB's Mr Gan noted.
SBF's Mr Ho said the participation rate in the workforce for women past their childbearing age is "not as high", although many want to return to employment. The lack of relevant skills and the issue of reintegration might be challenges, he said.
Ensuring help and fairness for older workers
More can be done by employers to ensure older workers are retained and get fairly paid, experts said at the roundtable following Monday's Budget.
While the Budget rolled out initiatives to help the older generations, experts weighed in with their wishlist for mature workers.
Singapore University of Social Sciences economist Walter Theseira said there should be more flexibility in tailoring working conditions for those who are older.
Other ways to increase revenue
Government expenditure is projected to be higher by 1.6 per cent in the next fiscal year, and spending on healthcare is also expected to rise in the coming years because of an ageing population.
While a goods and services tax (GST) hike of 2 percentage points will take effect between 2021 and 2025, what other options does Singapore have, in terms of raising revenues?
Moderator Mr Khanna threw up possibilities such as wealth taxes, higher income taxes, estate duties and higher contributions from the Net Investment Returns Contribution.