B stands for Budget

This piece first appeared in the Insight section of The Straits Times on Jan 10, 2015. It was part of a package of stories looking at key political milestones to note in 2015.


As always, there will be a Budget this year - Feb 23 is the date - but the question on everyone's lips is: Will it be a Jubilee Budget and, if so, of what sort?

That is, will it be a Budget that ties in with the jubilee sense of making history, so people talk about it for years to come?

Or will it announce some birthday largesse to add to the party mood?

Or will it simply be business as usual?

A looming general election and 50 years of success mean Singaporeans of all stripes will be looking to receive a hongbao this year, says political scientist Lam Peng Er of the National University of Singapore's East Asian Institute.

"You want to tweak Central Provident Fund - what about housewives? You've provided for the pioneer generation - what about the young?" he asks. "The challenge lies in fine-tuning how they distribute the benefits so Singaporeans perceive it to be fair."

Just before the last general election in 2011, the Government disbursed a one-off raft of goodies worth $3.2 billion in that year's Budget. Partaking of what was called the Grow & Share Package, a majority of Singaporeans received about $800 in growth dividends, while those who had completed national service received $100 more.

However, if this year's Budget is to be one that has something of the landmark about it, this could be the year of significant CPF adjustments.

With the Government now soliciting feedback on how to enhance the CPF system, and Manpower Minister Tan Chuan-Jin recently mooting the idea of having different Minimum Sums to cater to different needs, changes to one of Singapore's most enduring social policies appear inevitable.

As Mr Tay Hong Beng, head of tax at KPMG in Singapore, puts it: "The introduction of Workfare and MediShield Life addresses two key structural issues in the economy: income inequality and medical coverage", leaving financial security in retirement as the final "critical structural issue" to be addressed.

The Government could also be thinking of enhancing the Supplementary Retirement Scheme to boost savings and retirement adequacy, he adds.

"As the second pillar of the retirement framework for Singaporeans, the Government can consider allowing such contributions to be used for the payment of housing loans and medical costs," he says.

As for the business-as-usual approach, this year's Budget is likely to continue the Government's "new way forward" of providing greater social support for Singaporeans, as well as pressing on with restructuring the economy and making workers more productive.

Recent Budgets have introduced initiatives to give more aid to various groups in society - including people with disabilities, young families and the elderly - and to spur local companies to become more productive.

Support for the elderly was a particular focus of last year's Budget, when the $8 billion Pioneer Generation Package was announced. A Silver Support scheme providing low-income elderly folk with an annual payout will be introduced in this year's Budget, PM Lee said in his National Day Rally speech last year.

With these segments of the population covered, political watchers and economists said this year's Budget - likely to be debated over the first two weeks of March - will perhaps focus on the middle-income, particularly the "sandwiched class" squeezed by rising costs.

The Government might do this by adjusting policies to provide higher child tax relief, maid relief for singles taking care of their parents, and cash allowances for families based on number of children, and by broadening temporary financial assistance schemes to cover unemployed professionals and help them cope with home loans and medical expenses, says KPMG's Mr Tay.

So business as usual - but with benefits? Only time will tell.