Singapore Alternatives: February 2019

We have successfully conducted our Singapore Budget 2019 Forum today.

We thank all who have attended and also great appreciation to those who have helped to make this possible.

The following is our official statement on PAP government's Budget this year:

Budget 2019: Political Gimmicks without Bold Vision

Expansionary Budget with Money locked up in CPF and Medisave?

1. Finance Minister Heng Swee Kiat has declared that his Budget 2019 for Singapore government is an “Expansionary” budget and he cited the projected budget deficit of $3.5 Billion after taking into account of the net effect NIRC and Special Transfers of $3.6 Billion as supporting fact. However when we put the details of the Budget at closer examination, we have come to the conclusion that this Budget is NOT the usual “Expansionary” budget but just full of political gimmicks without bold vision.

2. A government Budget is an important tool of fiscal policy that is used to manage the economy. An Expansionary Budget would result in fiscal stimulations of the Nation’s economy in anticipation or direct mitigation of any potential economic slowdown or recession. But in Minister Heng’s Budget 2019, there is no mention of any job creation initiative nor bold vision for Singapore’s Future Economic development direction.
3. Most of the “additional spending” announced for the populistic Merdeka package ($6.1B), Long Term Care ($5.1B) and other the various injections of money into healthcare, workfare, schemes for SMEs ($4.6B) and education (Total of $15.3B of Special Transfers) are either just money transfers credited into CPF or Medisave accounts or deferred expenditure across a few years which do not have an immediate direct impact on overall spending in the economy.

4. It basically means that these money are effectively an “expected surplus” (over the announced $3.5B deficit) ultimately stashed away into the reserves via such Special Transfers arrangement.

5. Thus we do not really see this year’s Budget as “Expansionary” but rather a pack of Budgeting Acrobatic Gimmicks which channeled money back into the reserves masqueraded as “Goodies” for Singaporeans without real positive impact on the Economy.

Cost of Living

6. In a normal free market economy, inflation is normally caused by an excess demand on goods and services. This will drive up the cost of living for everyone.

7. However, in Singapore, inflation is mostly caused by the PAP government and its Government Linked Companies. The rise in water tax, electricity tariffs, public transport fares, healthcare cost, the rapid increase in rentals by GLC REITS, petrol and diesel prices etc. are the direct results of PAP governance.

8. How could the derisory $300 GST voucher cover the inflation caused by all these increases?

9. The BEST gift to ALL Singaporeans is NO GST instead of GST vouchers!

Cost of Healthcare

10. Any increase in healthcare subsidies for Merdeka generation could easily be offset by another round of increase fees in polyclinics and public hospitals.

11. We have witnessed how fees at public polyclinics and hospitals increased right after the last Pioneer Generation Package was announced in 2015.

12. At many instances, the fees at these public “restructured” healthcare entities are even higher than private clinics or hospitals before subsidies were taken into account.

13. There is a need to rethink whether the current model of “Restructured Hospitals” really serve Singaporeans’ interests at all.

Adverse Impact on SME

14. There are a couple of new but insignificant programs initiated in this year’s budget to help SME and workers to cope with changing dynamics of the economics.

15. However, out of the $4.6B slated to help both SMEs and workers over next three years, only $100million was put into funds for helping SMEs to upscale.

16. Although we agree to the overall strategy of reducing dependency of Foreign Workers in the long run, but we do not think it is a good move at all to apply such one-size-fit-all policy of reducing the Dependency Ratio Ceiling to cut across the board for the whole Service Sector.

17. Local SMEs are always grossly disadvantaged by the foreign workers policy whereby larger foreign companies enjoy concessions through government special incentives or technical advantage in sourcing their foreign labor via internal transfers from foreign bases.

Where are the Good Jobs?

18. Within the Service Sector, there are many sub-sectors which have very different labor situations. Singaporeans generally shy from certain industry or service sectors like hospitality, Food and Beverage sectors while there is a great underemployment for Singapore PMETs who cannot find jobs in other service sectors like banking, finance or IT etc.

19. A more calibrated approach should be implemented to focus more on reclaiming PMET jobs for Singaporeans in service sector instead.

Tax Cut for Taxi Companies while Higher Tax on Taxi Drivers?

20. The increase of diesel tax will affect SMEs greatly with an increase in business cost despite of the cut in road tax for diesel vehicles.

21. We are particular concerned on the impact on taxi drivers. While the PAP government gave a generous reduction in Special Tax on Diesel Taxi by $850, but this may only benefit taxi companies while taxi drivers suffer higher diesel price due to the double of diesel tax.

The Real Vision and Plan to Cut Pollution

22. A great percentage of commercial vehicles used in Singapore runs on diesel engines. The increase of Diesel Tax will not have significant effect on lowering the consumption of diesel for these commercial vehicles because the demand is totally inelastic.

23. Raising Diesel Tax now without providing a viable alternative to businesses will only result in a drastic rise in business cost. This may affect our leading position as logistic hub in Southeast Asia.

24. PAP government lacks the bold vision to explore clean alternatives for commercial vehicles running on diesel.

25. The key problem with diesel engines lies with the toxic cancer-causing nitrogen oxide emission. Thus we should phase out diesel vehicles from our roads totally instead of just raising diesel tax.

26. In fact, our long term plan should aim to reduce air pollution on the roads by phasing out both petrol and diesel vehicles totally by replacing them with electric vehicles.

27. Instead of harming our SMEs and economy by raising diesel tax now, we should be putting more investment and focus efforts to implement a comprehensive plan to promote electric vehicles by building relevant infrastructures and battery waste management system.

28. Singapore is lagging behind countries like China and Norway when it comes to implementation of a systematic plan of replacing diesel and petrol vehicles by electric vehicles to cut down harmful air pollution. This is due to the lack of bold vision and political will of PAP leadership.

CPF Inadequacy

29. About 75% of retirees are getting less than $500 from CPF payout. This is totally inadequate which resulted in many retirees living in absolute poverty.

30. It is an irony that Singaporeans had paid 37% of their monthly salary into CPF but yet they could not retire comfortably with a good payout from CPF.

31. It basically means that the CPF system along with the HDB and Medisave policies had failed to secure a decent retirement for most Singaporeans.

32. This will have to be looked into and only with Bold Vision could a government come up with bold plans to revamp the whole structure.

Long Term Care for Ageing Population

33. We will be facing the Silver Tsunami very soon when the baby boomers from 1950s to 1970s start to reach retirement age.

34. Putting billions into funds as future subsidies is a passive act which lack forward looking planning vision.

35. We would rather spend these billions now to build up both infrastructure and human resource capacity for long term care to prepare for the inevitable Silver Tsunami in the coming decade.

Pre-School Childcare and Education vs Fertility

36. The cost of Pre-school education is extremely high even after subsidies.

37. This is one important factor among the many issues that cause low fertility rate in Singapore.

38. Instead of putting more money in Edusave, it is time to focus to solve this pertaining issue of Pre-school education.

39. A cheap or even free Pre-school education system for all will also level up for children from poor families which will improve future potential social mobility.

Our Concerns:

HDB

40. There is no mention on any plan for PAP to resolve the huge problems which they have created in the past via Asset Enhancement Scheme.

41. No funds is allocated for any initiative on solving the time bomb of a huge stock of ageing HDB flats in the coming decades.

42. On the contrary, the Ministry of National Development has the biggest cut in its budget by 19.3%!

Financing Huge Infrastructure Spending via Borrowing

43. It is mentioned that part of the huge infrastructure spending like Changi Terminal 5 will be partially financed by borrowings.

44. It is also mentioned that Government will provide guarantee to these loans.

45. Is there a necessity for Government to finance such infrastructure spending when we have a huge National Reserve well above $500B?

46. Financing such infrastructure through borrowing would mean such spending on extremely expensive mega projects will escape rigorous scrutiny by parliament while the government has taken up huge potential liability as a guarantor.

47. The lack of accountability to parliament when the government takes up such huge liability will result in unchecked ex-Budget spending which could go wrong.

Conclusion: A Budget that Lacks Bold Vision

48. We are utterly disappointed by this year’s Budget which basically mimics the 2015 Election Budget without Bold Visions and lacks New Ideas.

49. This Budget contains a pack of gimmicks that attempt to make Singaporeans feel good and make believe that they had gained something substantial from it. However, most of these goodies are deferred goodies.

50. Unfortunately, these political gimmicks are done at the expense of the need of REAL immediate expenditures on various areas which we have listed out here.

51. Singaporeans deserve a better deal than what the current Budget could offer.
52. The reduction of GST relief and duty free alcohol concession for travelers is the best key feature to sum up this Budget 2019 – Small Mindedness without Bold Vision.

Goh Meng Seng
Secretary General
For CEC People’s Power Party Singapore