$1.5b package to help Singaporeans cope with inflation

A $1.5 billion support package targeted at helping lower-income families and vulnerable groups amid rising prices was announced by Deputy Prime Minister Lawrence Wong yesterday.

They will receive an additional Goods and Services Tax Voucher - Cash Special Payment of up to $300 in August.

This will blunt the impact of global inflation for about 1.5 million lower-income to middle-income workers, as well as retirees without income.

The package will also provide a $100 utilities credit to every Singaporean household, and extend more help to workers and firms to deal with rising energy costs.

For instance, eligible taxi main hirers and private-hire car drivers will get a one-off relief of $150 in August, while a new energy efficiency grant will provide local small-to medium-sized enterprises in the food services, food manufacturing and retail sectors with up to 70 per cent support to switch to energy-efficient equipment.

The Government will also provide a one-month waiver of the foreign worker levy for Singapore's 11 chicken slaughterhouses, which have been directly impacted by Malaysia's chicken export ban.

There will be no further draw on past reserves to fund the support package, in part because the Government collected more revenue in fiscal year 2021 from a stronger than expected economic recovery, Mr Wong said at a media conference.

He said the Government had anticipated rising prices at the start of the year and had responded with a comprehensive package of measures in Budget 2022. Some measures were also brought forward in April, such as the $100 in Community Development Council vouchers for households, he noted.

But the ongoing war in Ukraine and protectionist measures by countries have disrupted supply chains, resulting in higher energy and food prices.

Prime Minister Lee Hsien Loong said that while the war and disruptions to international trade are beyond Singapore's control, the Government is prepared to help.

"We can and will give an extra hand to those hit harder by this bump in our post-Covid recovery," he wrote on Facebook yesterday.

Mr Wong, who is also Finance Minister, said that Singaporeans have to prepare for global inflation to remain high for some time and possibly to increase further, before stabilising and getting better.

Help in the latest package is tilted towards the less well-off as the effects of inflation disproportionately impact the lower-income and vulnerable groups, he added.

As such, ComCare assistance schemes will be enhanced permanently, while the allowance and monthly pension ceiling for pensioners who draw lower pensions will also be increased.

To ensure that employers continue to hire and better pay their lower-wage workers, the Government will also enhance the Progressive Wage Credit Scheme announced in this year's Budget by co-funding a larger part of eligible wage increases.

The new package was designed carefully so that it does not in itself worsen inflation in Singapore, said Mr Wong.

This "can easily happen because you give more stimulus, that stimulus creates more inflationary pressures", he said.

"That is why the package is weighted towards helping the lower-income and more vulnerable segments in our society, who will bear the higher brunt of increased prices in our society," he said.

Despite some dark clouds on the horizon, Singaporeans should draw confidence that the Republic is tackling these challenges and moving forward from a position of strength compared to many other countries, he added.

For instance, Singapore moved earlier than most central banks in tackling inflation, and the economy is still doing well.

"We have to make sure that we are not only dealing with the here and now and the immediate issues of cost of living and inflation, but we must accelerate our momentum for reforms and ensure Singapore emerges from this crisis with a stronger economic and fiscal position," he said.