Good things come in BIG packages
Updated: Mar 20
By Bertha Henson
ILLUSTRATION: LORAINE LEE
I had expected the usual Budget Statement to start off with the “winds of change’’, “geopolitical shifts’’ and “technological disruptions, but no. Mr Heng Swee Keat launched straight into measures. What a stroke of genius, I thought, until he spoke about his ministry officials having to condense all the contents to fit parliament’s time. Necessity begets brevity.
As I continued to hear the big numbers roll off his tongue, I thought to myself: Where are we going to get the money from? Is he going to, gulp, raid the reserves? The Deputy Prime Minister and Finance Minister had posted something intriguing last night about being grateful for “deep reserves’’ which immediately led some people to conclude that he would be unlocking the kitty that requires a presidential key. But no, he would be using surpluses that had been accumulated over this term of Government, that is, post GE2015.
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And what big surpluses we have, pumped up by statutory board contributions and stamp duty collection! Statutory board contributions for 2020 are expected to come in at $2.49 billion, a 44 per cent jump from last year. Mr Heng didn’t say how much surpluses the Government has collected but the kitty must definitely be more than enough to fund the billion-dollar packages.
This is where everybody got their numbers wrong. All the estimates, ranging from $500 million to $1 billion, put up by expert types on what they thought the government will spend to help business tide over the Covid-19 outbreak were too paltry. The Sars relief package of $230 million in 2003 proved to be a bad comparison. Perhaps, they figured that the Government will use the same sort of measures as before, mainly a combination of tax rebates. The Finance ministry said at that time that it was a “focussed effort to provide immediate relief for the most directly and adversely hit sectors, namely, the tourism and transport-related sectors’’. “It is not intended as a general stimulus package for the whole economy.’’
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What we’re getting now isn’t just a relief package and it isn’t even just for businesses. And here’s where we can see Mr Heng’s affinity for the word “packages’’. Never mind that he doesn’t like that the Budget is seen as a hamper of goodies. He was still the man who packed the packages to be unwrapped.
So we have:
The $4 billion Stabilisation and Support Package
Like the Sars relief package, there is the combination of property tax rebates and waiver or tweaking of rentals and specific help for the aviation industry.
But the more significant measures are those designed to keep workers employed. Under the new Jobs Support Scheme, the government will offset 8 per cent of the wages of local workers, up to a monthly cap of $3,600, for three months. This scheme alone will cost a whopping $1.3 billion for 1.9 million people.
The Wage Credit Scheme is being extended to more people. In case you’ve forgotten, this is the scheme, which ends this year, in which the government co-funds an employer’s wage raises for those who earn less than $4,000 a month. The income ceiling is going up to $5,000, along with a rise in the government’s funding. Estimated cost: $1.1 billion.
Put the two together, along with corporate tax rebates and other measures and your boss has fewer reasons to let you go.
The $1.8 billion Care and Support Package
This was a bit of a surprise. Households will be getting help to cope with cost of living in this economic slowdown and the “uncertainties’’ of the virus outbreak. It’s a pity we can’t see what the Budget statement crafted before the virus outbreak looked like.
Every citizen above 21 will be getting CASH of between $100 and $300. It’s not a Medisave or CPF top-up or some kind of share. It’s cash. If you have a child below 20, you’ll get another $100, in cash as well. No strings attached. Low wage workers on Workfare will get another $100 cash, at the minimum as well as grocery vouchers worth $100 for this year and next.
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The $8.4 billion Transformation and Growth “package’’ (Okay this is my word but there is an Enterprise Grow Package and an Enterprise Transform Package under this umbrella.
This is the part where those of us who don’t run businesses fall asleep. But keep awake because there are plenty of announcements regarding SkillsFuture, you know, that $500 credit given to you to spend on courses.
You’ll be getting another $500 top-up but this has an expiry date of five years. I guess that this has to do with how there are many who hadn’t used their first $500. Those aged between 40 and 60 will get another $500, which they can use for re-skilling programmes. And if companies hire these older workers from the re-skilling programmes, they get 20 per cent support for six months.
In other words, the government is paying you to re-train and paying or subsiding the company to hire you.
The $6 billion GST Assurance Package
This is the weird thing. The ministry seems to have crunched other numbers for Mr Heng to be able to say that $6 billion will be set aside to offset the impact of a rise in GST. Except that we still don’t know when. What we know now is that the projected rise from 7 to 9 per cent won’t happen next year.
You can expect the new answer on “when’’ to be “between 2022 and 2025’’. Which is very interesting because this means a new Government will be presiding over the GST rise, since the general election must be held by April 2021. Mr Heng said: “We will assess carefully the appropriate time for the increase. But rest assured we will provide Singaporeans sufficient lead time.’’ Goodness! This is like the dance of the seven veils!
Besides a more generous GST permanent voucher, payout is in cash: of $700 to $1,600 over five years.
Mr Heng didn’t introduce a Climate Change “package’’. But he gave a lot of time to the use of “green cars’’ and incentives to get motorists to switch to cleaner fuels. This, however, would mean that fuel tax revenues would come down over the years so there must be different ways to configure a tax on vehicles and for using the road. Oh! And to stop Singapore sinking, there’s a new Coastal and Flood Protection Fund, with an initial injection of $5 billion.
There’s nothing not to like in this Budget. It exceeded all expectations. In fact, it’s trying to do so much that it’s difficult to keep track of what measure is for what purpose. Everything is so intertwined: to make sure people are employed, households can cope, the elderly will have retirement income, children can get the best education, firms can continue doing business… It’s a monumental exercise.
Thank you Mr Heng.