A More Compassionate Budget?

By Abdul Shariff Aboo Kassim

The Budget 2017 statement delivered by Minister for Finance, Mr Heng Swee Keat, on 20 February 2017, came shortly after the Committee on the Future Economy (CFE) made its recommendations on the policies that the government could pursue to sustain a modest annual growth of between two and three percent, going forward.

For most, their perception of the future is a mix of hope and concern. The recommendations of the CFE and the announcements of Budget 2017 painted a picture of a volatile economic landscape punctuated  by disruptive technological innovations which pose uncertainty to both businesses and individuals. In an environment such as this, they are expected to be future-ready – businesses building digital capabilities, supported by the government’s SMEs Go Digital Programme; and individuals deepening their skills to remain relevant in their jobs, tapping on approved courses through SkillsFuture.

It is inevitable that the future scenario, as portrayed by the CFE and Budget 2017, requires commitment on the part of businesses and individuals to be abreast of developments or risk descending into a vicious cycle of debilitating outcomes amid a highly competitive and uncertain economic terrain.

A pertinent point to note is that as Singapore embarks into a future which rewards sophistication (a better word may be needed) – going digital, scaling up, deepening skills, lifelong learning, and other buzzwords associated with the immediate and long-term future – the starting points for the various groups in the emerging social and economic milieus are not the same. For example, how many businesses are well-positioned to take advantage of the incentives to go digital?

Skills upgrading is a prerequisite in the new economy but while some have the advantage of being in adjacent industries, thus merely needing to update their skills, others facing structural unemployment have to acquire a new set of skills altogether, meaning starting from scratch. For those further down the skills hierarchy, working in jobs that face the prospects of automation or displacement by low-wage foreign labour, adapting to the new climate of higher value jobs can be a steep climb, bordering on the insurmountable.

As Good as It Sounds?

For a start, Budget 2017 is couched in a language that tends to drive a wedge between people who have the requisite grasp of fiscal policies and the laity. For instance, under the Household Support Measures section of Budget 2017, a statement such as a “one-off (GST Voucher – Cash) Special Payment will cost about $280 million and benefit more than 1.3 million Singaporeans” looks like a massive expense on the part of the government to help households cope. In fact, in ensuing parliamentary debates, some Members of Parliament expressed concerns about total expenditure – which in addition to social spending includes investments in businesses, workers and infrastructure developments – outstripping growth in operating revenue consecutively over the last five years. It is deemed that such a rate of government expenditure is unsustainable, thus posing a threat to future generations.

In per capita terms, however, as announced in Budget 2017, this translates into payment of up to $200 for each eligible GST Voucher – Cash recipient, in addition to the regular GST Voucher – Cash. Thus, in total, eligible Singaporeans can receive up to $500 in cash for 2017. For the common man, all that $500 for an entire year comes up to is the equivalent of a monthly handout of about $41.70. Moreover, this amount depends on the annual value of one’s home as at 31 December 2016 and whose income during the Year of Assessment (YA) is $28,000 and below, meaning some may receive less than that.

It also seems that the additional costs incurred by most households from the hike in water prices are unlikely to be fully offset by the GST Voucher-U-Save Rebate, which was initiated with the aim of helping lower- to middle-income Singaporeans with immediate cash needs, medical needs and utilities bills. Although the annual rebate has been increased by between $40 and $120, depending on one’s HDB flat type,  75 percent of households are staring at the prospect of paying up to $12 more for their monthly water bill. Dwellers of one- and two-room flats would not need to spend more on water as the increase in the annual rebate completely offsets the hike but those seeking further help with coping with the rising costs of living looks set to have their hopes dashed.

Nominated Member of Parliament, Ms Kuik Shiao Yin, in a passionate speech in Parliament on 1 March 2017, highlighted that the level of trust that the mass population has in Singapore’s system was almost as high as the informed public but, in 2017, for the first time, a small proportion of the former slid from being “trusters” to being “neutrals”. Alluding to the case of the United States and Great Britain where distrust of the mass population in their systems led to outcomes like Brexit, Ms Kuik opined that this small group of respondents is worth paying attention to.

Social Need, Fiscal Bid

While acknowledging that schemes such as the GST Voucher – U-Save Rebate, Service &Conservancy Charges (S&CC) Rebate and enhancement of education bursaries will help those in need, in her view, they are like “drops in a constantly leaking bucket” for the working poor. The annual Budget Statements, which calls on Singaporeans to “upscale”, “internationalise” and “innovate” are valid but she attempted to dispel the notion that the poor do not care or are “lazy”. On the contrary, they are trying “not to drown under wave after wave of new demands, new causes and new changes to their world” as they try to break free of the poverty cycle. To those in dire circumstances, announcements such as increase in the price of water, while justifiable, merely adds to their predicament.

During a roundtable discussion to discuss Budget 2017 organised by the Centre for Research on Islamic and Malay Affairs (RIMA), Madam Nooraini Razak, Centre Manager at PPIS As-Salaam Family Support Centre felt that, while help in terms of “dollars and cents” are essential in addressing the unmet needs of lower-income households, the way they are viewed and how schemes targeting them are framed could perpetuate certain perceptions about them. She proposed that they are instead seen as “masters of their future”, a lot with the potential to be key contributors to the nation’s economic development.

Driven by such an empowering faith in the poor, the Budget should allocate funds as investments in developing their latent abilities.  She cited The Straits Times Pocket Money Fund’s initiative of sending two of their beneficiaries to participate in Building the Future programme by Technische Universität München campus in Germany – a project for children from underprivileged families.  Such initiatives, Madam Nooraini argued, help build confidence and ignites aspiration and ambition of these young underprivileged Singaporeans.

In any discourse on a compassionate society, social policies come under scrutiny. As pointed out in Budget 2017, the government has increased social spending and strengthened social safety nets, particularly over the last decade, as social needs became increasing complex and aggravated by factors such as a rapidly ageing population. This has however not allayed concerns about whether enough is being done to alleviate the plight of low-income families or whether social spending can be increased further. Former GIC Chief Economist Yeoh Lam Keong argued that the government has ample resources to achieve better welfare, but the question was whether it was willing to use the resources rationally to achieve the targets he had outlined during the Singapore Perspectives 2016 conference for healthcare, education and public transport.

However, the following year, according to research from data provider CEIC, Budget 2017 and Maybank Kim Eng, social development spending is rising sharply, especially since the financial year 2012, thus the mounting pressure to increase revenue as part of the fiscal plan to cope with climbing social expenditure. But revenues from taxes, such as GST and corporate ones, have not kept pace with social expenditure. Nevertheless, the concerns of those worried about the impact of social spending on the sustainability of fiscal balances and those attempting to highlight or address the daily challenges of the poor are both valid.

Considering the apparent divide between technocratic explanations of the policies of Budget 2017 and perspectives from the ground, there is a need for annual Budget Statements to be communicated in a manner such that the different segments of the population, including those from lower socioeconomic backgrounds, could relate to so as to obtain diverse feedback from the larger society – from the more policy-savvy ones to the ‘laypersons’ who constitute the bulk of those impacted by budget decisions. Thus, inclusiveness will not just appear to be a word bandied about in policy statements but is reflected in the way they reach out to a wider audience.