NSP Statement on Budget 2015

NSP Statement on Singapore Budget 2015 

1. The Singapore Budget 2015 was announced by the Deputy Prime Minister and Finance Minister in Parliament on Monday, 23 February 2015.

2. The Minister declared that the focus of the budget is on building Singapore’s future [1] and announced a slew of measures that consists of top-ups, rebates, waivers and concessions under a variety of schemes [2]. The measures further include changes to the CPF rate, petrol duty and increase in the income tax rate for high-income earners.

3. The National Solidarity Party (“NSP”) welcomes the measures to provide greater financial support and assistance to the elderly, families and the working class. However, it has certain reservations and sentiments about some of the measures and the overall impact of the budget. These reservations and sentiments are set out in this statement.

Support for the elderly – A Matter of Urgency

4. The Silver Support Scheme provides financial support for the poorest elderly Singaporeans and is in fact, long overdue. Cash payouts on a regular and permanent basis to the bottom 20% of Singaporeans aged 65 and older are more than just a boost to social security net. Hence, they matter a lot to this needy group of citizens and are a lifeline to them.

5. The scheme may have been inspired by Hong Kong government’s Old Age Allowance (or “fruit money”) Scheme which is a social security scheme which started in 1973 and provides Hong Kong residents who are at least 65 years old with a monthly cash allowance on a monthly basis to meet their needs arising from old age [3].

6. The Silver Support Scheme starts only in the first quarter of next year, pays a comparatively lower amount quarterly and is further subject to a means testing which consists of a 3-factor criterion: flat type, the amount of household support that the elderly person has, and lifetime wages as reflected in Central Fund contributions.

7. NSP believes that as the payouts represent a lifeline to many of the poorest elderly, it is imperative that the scheme takes effect without any delay and those payouts are made every month instead of every 3 months. 

8. Further, since those under the Pioneer Generation Package do not even receive any such cash payouts, the Silver Support scheme should live up to its name and all means testing should be removed so that all Singaporeans aged 65 and older shall be entitled to the payouts in recognition of their contributions in building our nation and reserves. Higher taxes for top income earners but Higher Petrol Duty – Indirectly taxing the lower income group

9. NSP sees the increase in the personal income tax for high income earners as a step taken towards more progressivity in taxes. This is a sign of the recognition and acceptance by the government of the need to look at income redistribution so as to address the undesirable effects of a serious widening income gap.

10. Singapore’s income inequality is amongst the highest in the world [4] and a continuing effort is required to narrow the gap. The increase in the personal income tax rate of the top 5% of income earners takes effect from 2017 is one small measure but necessary. NSP believes that more effective measures can be taken by the government to lessen the income divide. Address the real issues - Cut the costs of living for lower and middle income groups

11. For the middle income group, the objective of extending financial help comes in terms of childcare and education, maid costs, GST vouchers, rebates on service and conservancy charges, training and continuing education grants and subsidies and personal income tax rebate. However, the increase in petrol duty, which takes immediate effect, effectively counteracts this objective.

12. Domestically, Singaporeans from the low and middle income groups are facing multiple challenges daily as a result of over-population and rising cost of living. Overpopulation has led to an intense competition for jobs, housing, food and transportation. Many Singaporeans have been displaced from their jobs as a result. Many more have missed out on their promotions, bonuses and pay increments. They are emotionally upset and are frustrated at having to compete with foreigners for jobs in their own country especially when they are equally competent and skilled.

13. The cost of living has been rising dramatically across the board. Even middle income earners are beginning to feel more insecure by the day [5]. Prices of food continue to increase unabatedly and now eateries are even charging 30 cents to 80 cents for a glass of plain water [6], Not too long ago, plain water was provided free of charge. 

14. Divorce rates are on the rise [7] and the corollary of that is that there are more single-parent families whose plight has been largely overlooked. These families are often faced with greater financial challenges and their children are mostly unhappy and troubled [8].

15. Whilst top-ups, rebates, waivers and concessions are good as they always provide a welcomed reprieve for the ordinary citizen, they are often treated as government “hand-outs”. By their very nature, government handouts are not permanent and are invariably subject to conditions. Further, government handouts often invite public suspicions of the motivations behind them, especially in or approaching an election year.

16. NSP believes that the need for government handouts would be greatly diminished if substantive measures are taken to effectively lower the cost of living such as reducing indirect taxes like the Goods and Services Tax. In this vein, the increase in petrol duty is a completely misguided. Such a move unwittingly adds to the woes of the lower income group that the budget seeks to help.

17. Transport cost has always been a heavy component for low and middle income earners as well as businesses. The increase in petrol duty reduces the amount of ready cash that is needed to meet day-to-day living expenses. Indubitably, it will bring about a spiral effect that leads to higher inflation and cost of living, which will be aggravated further when fuel prices rise again. Plight of low-income earners – Relieve burden of high motorcycle COEs

18. One of the key components of rising inflation is the premium for Certificate of Entitlements (COE). The COE system is intended to control the vehicle population. Whilst owning a car may arguably be a luxury, such an argument may not hold when one speaks of a small capacity motorcycle. And the majority of these motorcyclists are low-income earners who deserve some attention in the budget.

19. For people engaging in delivery work such as despatch riders and those working in remote locations that are inaccessible by public transport, a motorcycle becomes indispensable. According to one source, the majority of motorcycles (73%) in Singapore are of small capacity under 200cc (Class 2B) and the owners are low-income earners who cannot afford a car [9] and they are the ones who are hurt most by higher COE premiums.

Remove Evening ERP charges– Encourage family dinners

20. The purpose of having evening ERP charges has never been fully appreciated by the motoring public. Motorists hoping to avoid paying evening ERP charges will have to either leave work early or return home much later. In the latter case, family bonding time is reduced.

21. In line with the government’s recent call to build strong family ties with the government’s support [10], NSP believes that it is timely for evening ERP charges to be eliminated so as to encourage parents and working children to get home early to join their family for dinner. Save businesses from closing down – Help lower rental costs

22. The high costs of doing business in Singapore remain a major concern [11]. Besides high manpower costs, prohibitive high rental has led to many local businesses, including several old restaurants, closing down [12] [13].

23. The impact of these businesses closing down or may have to close down because of highly unfavourable rental conditions is that many low and middle income earners lose their jobs. The government, being the largest landlord in Singapore, can take the lead by lowering rent substantially for properties that are owned by the government or government-linked companies. This will help to save jobs for low and middle-income families.

24. As a further measure, the government may consider initiatives to support businesses that seek to maximise customer satisfaction and not maximise profits as their corporate philosophy. This will promote a positive business environment that augurs well for our economy in the long run. As the saying goes, what goes around, comes around.

Control Government Spending – Spend more on the people

25. NSP notes that the total government expenditure in the current budget will run into S$ 68.2 billion, which is S$ 11 billion or 19.3% more than the previous year’s budget.

26. This expenditure will see a bumper deficit of $ 6.7 billion (which is equivalent to 1.7% of gross domestic product) mainly due to S$ 6 billion set aside for investments in Changi Airport, research and productivity and not because of social welfare spending.

27. NSP further notes the heavy expenditure for Defence to the tune of S$ 13.1 billion which includes additional funds for the expanded scale of the SG50 National Day Parade. There is also a provision of S$5 billion for new buildings for new buildings under the Home Affairs Ministry.

28. A sum of S$2.7 billion has also been set aside for the Culture, Community and Youth which includes provisions for SEA Games, Asean Para Games and again, SG50. Surprisingly, this sum is the same as that set aside for the National Development Ministry to finance higher grants to the Housing Board to build more flats.

29. As a matter of principle in spending taxpayers’ monies, NSP would like to urge the government to exercise greater frugality whenever possible and to curb wastages and excesses [14] so that more funds can be channelled to help lower the cost of living for the low and middle income groups and to provide a stronger social safety network for those in need.

Pursue knowledge for the love of knowledge

30. The budget provides for the waiver of fees for major examinations – the Primary School Leaving Examinations (“PSLE”) as well as O, N, A-level examinations.

31. Learning for the love of knowledge is the key to developing a resilient and sustainable economy. Learning for the sake of passing examinations destroys the joy of learning. Fostering a culture of life-long learning requires more than setting up a fund or a committee or to disburse training grants.

32. NSP agrees with the Minister’s view when he said in presenting the budget [15]: “We must become a meritocracy of skills, not a hierarchy of grades earned early in life.”

33. There is a need to carry out a total review of our education system, in particular, the dominating role played by the PSLE which has turned our primary school education into a rat race. An overly stressful education system in early years will not produce a population that will embrace knowledge for the love of knowledge, let alone life–long learning.

34. NSP is concerned that the current mindset of most of our students is to study for the sake of doing well in examinations and to clinch their desired job or career. Once they have achieved their objective, they begin to lose interest in acquiring knowledge and begin their pursuit of materialism and high living.