Singapore Budget 2015: Economists detect further shift to the left in national policy

Economists have detected a further shift to the left in national policy in this year's Budget.

The Budget, unveiled on Monday, made the income tax system more progressive and brought in a scheme to help the bottom 20 to 30 per cent of elderly Singaporeans, they said.

The Silver Support Scheme gives quarterly payouts averaging $600 to the poorest seniors.

It is "conditional on need, not work", and goes further than the Public Assistance safety net as eligible seniors are enrolled automatically, said Nanyang Technological University economist Giovanni Ko at a post-Budget forum organised by the Economic Society of Singapore at the Grand Hyatt Singapore yesterday. "Each of these characteristics is possessed by some existing scheme and the amounts here are not groundbreaking, but goes quite some way towards implementing a basic pension.

"It's a huge step forward in terms of inclusiveness... and indicates a slight softening of the ideological stance of the Government," he said. "Until now, the Government was very much focused on talking about the need to be self-sufficient."

In his Budget speech on Monday, Deputy Prime Minister Tharman Shanmugaratnam spoke of "collective responsibility", and of "strengthen(ing) the Government's redistributive role... to benefit lower- and middle-income Singaporeans".

OCBC economist Selena Ling also called the Silver Support Scheme "a further step to the left", though she added that Singapore's model of social security is unlikely to go down the path of Western welfare models.

"Over the last five years, the Government has taken steps that ideologically would have been taken as sacred cows," said Ms Ling, citing schemes such as Workfare and the Wage Credit Scheme which top up the incomes of lower-wage workers.

But she disagreed it was a "Robin Hood Budget", as some have called it, as it helps not just the poor but also the middle class. Also, businesses still got "much bigger" transfers than households.

"(The Government) hasn't forgotten the business-friendly side of things," she said.

And while Robin Hood steals from the rich to give to the poor, "$400 million isn't going to get you very far when you're staring at a deficit position of over $6 billion", said Ms Ling, referring to the $400 million additional tax revenue the Government expects to collect yearly from the rise in income tax rates for top earners.

A major part of the projected deficit is due to the development of Changi Airport Terminal 5, and top-ups to the National Productivity Fund and National Research Fund.

CIMB economist Song Seng Wun said that Singapore could sustain a move towards more progressive policies that "squeeze the wealthy... primarily because Singapore remains quite an attractive place to do business in".

Such a move would continue a process that started in 2013 when property tax rates for expensive homes were raised, said Mr Song.