- The Straits Times
SINGAPORE – Finance Minister Heng Swee Keat on Monday (Feb 18) delivered a generous Budget that will help Singaporeans with healthcare costs and other expenses, and provide support for businesses and workers to thrive in a changing global environment.
He unveiled a $6.1 billion fund that will subsidise healthcare for Singaporeans born in the 1950s, via subsidies for outpatient care and Medisheld Life premiums, as well as Medisave top-ups for five years.
This Merdeka Generation Package will benefit nearly 500,000 Singaporeans in all, and cost more than $8 billion over their lifetimes.
Speaking against the backdrop of Singapore’s bicentennial, Mr Heng also announced a special $1.1 billion “Bicentennial Bonus” to commemorate what he called a key turning point in Singapore’s development.
It includes GST vouchers of up to $300 in cash that will benefit 1.4 million Singaporeans, and a personal income tax rebate of 50 per cent capped at $200.
These two measures are part of Singapore’s long-term plan to build a caring and inclusive society, said Mr Heng, who presented his first Budget since he was named as the designated successor to Prime Minister Lee Hsien Loong.
Highlighting four major global shifts, including a decline in support for globalisation, Mr Heng also flagged longer-term domestic challenges such as ageing, social mobility and economic transformation.
Singapore should chart its way forward by building on its distinct strengths and DNA, he said, pointing to the country’s multi-cultural society and openness to diversity.
While previous Budgets focused primarily on economic and social policies, Mr Heng set aside part of his two-hour speech this year to emphasise the need to keep Singapore safe and secure.
“We cannot take our peace, prosperity and stability for granted,” he said, noting that security threats are becoming more complex.
That is why the Government will continue to invest a significant share of its resources – about 30 per cent of total expenditure this year – to support defence, security and diplomacy efforts, he added.
Mr Heng said efforts to transform Singapore’s economy are bearing fruit, with the economy growing by 3.2 per cent last year.
All 23 Industry Transformation Maps, which cover about 80 per cent of the economy, have been launched, he said, noting that productivity has grown by 3.6 per cent per year for the past three years.
But with global growth expected to moderate in 2019, he outlined measures to help companies and workers build deep capabilities, to stay relevant and useful to the world.
The Government will spend $4.6 billion on this front over the next three years, he said.
Among the initiatives are a $100 million fund to bring in more funding for small and medium-sized enterprises (SMEs), and new programmes to help workers pick up skills in areas such as blockchain and prefabrication.
But Mr Heng also flagged uneven productivity growth across sectors, highlighting how the number of S Pass and Work Permit holders in the services sector has risen by about 3 per cent per year, or 34,000 in the last three years.
Calling this trend potentially unsustainable, he said decisive action must be taken to encourage companies in the service sector to revamp their processes and redesign jobs.
To that end, work permit and S Pass quotas for the services sector will be tightened in two phases from next year.
More help will also be given to Singaporeans who are less well off.
The monthly income ceiling for the Workfare Income Supplement will be raised from $2,000 to $2,300 by January 2020. The maximum amount paid out each year will also be increased by up to $400.
These improvements will cost an additional $206 million a year. In all, nearly 440,000 Singaporeans will benefit, said Mr Heng.
A tripartite workgroup has also been formed to study the concerns of older workers, and review policies such as retirement age and CPF contribution rates.
Noting that healthcare needs will grow as the population greys, Mr Heng said a scheme that subsidises primary care and basic dental care for lower- to middle-income families will be extended to cover all Singaporeans for chronic conditions.
A $5.1 billion fund has also been set up to fund long-term care support measures such as ElderFund and CareShield Life subsidies, Mr Heng said.
The minister also laid out the different approaches for funding major infrastructure investments compared to recurrent social and security expenditures.
Paying for major infrastructure such as MRT lines through some borrowing will help instil financial discipline and distribute the share of funding more equitably across current and future generations, he said.
However, recurrent spending in areas such as healthcare and pre-school education must be met with recurrent revenues, he added.
“Many countries have taken the easier route by funding these recurrent expenditures through borrowing. We must not do this, as such borrowing shifts the burden of paying for today’s needs onto future generations. That is not the Singapore way,” he said.
That is why the tax system must be continually reviewed to ensure its resilience, he said, announcing that travellers will get less GST relief and duty-free concession for alcohol.
Overall, the Budget remains expansionary, with ministries expected to spend $80.3 billion – 1.6 per cent higher than the previous year.
An overall deficit of $3.5 billion is projected, which Mr Heng said will be funded by previous surpluses.