Budget 2011: Feeling you can get there by working hard

Last updated on October 20th, 2015 at 10:50 pm

By: Ravi Philemon

There were many highlights in Budget 2011.  For one, I think it was funny that the MPs almost fell over backwards cheering the abolishment of radio and TV license.  It was long overdue in my opinion – at least a decade overdue.  Why were the MPs not calling for this in parliament earlier? The other highlight was the $600 - $800 the government was giving in cash to all Singaporeans by 1 May 2011, which made me make an educated guess that the General Election will be called 2 – 3 weeks from this disbursement.

Budget 2011 is definitely a populist budget, perhaps prepped for the General Election to give a feel good effect to the voters as they go to the polls. But it is a populist budget which has fallen short; at least in my opinion.

For one, the Budget did not address the suffering retail sector which has not fully recovered from the last recession.  The Department of Statistics Singapore indicated that compared to December 2009, retail sales increased by 8.6% (excluding motor vehicles).  But this is a poor comparison as 2009 was a recession year and people will naturally tighten their belts in a recession year.

There is intense competition among the retailers in Singapore partly because the ratio of retail space to population size is much higher than in neighbouring countries such as Hong Kong. The cost of doing business is high (mainly due to spiraling rents), but productivity is low.  Even though the consumers have become increasingly sophisticated and demanding the service quality of retail industry is low. There is also intense competition from overseas retailers.

Against this backdrop, the Budget could have done a little bit more for the retail sector in Singapore.  I would propose that the government consider a rebate system where the retailers could give 5 per cent of the GST back to the consumer as a rebate in the form of shopping vouchers.  Such a scheme will entice the consumer to keep the retail scene in Singapore more vibrant.

By reducing the marginal tax rates for the first $120,000 of chargeable income, the government has significantly reduced taxes for upper-middle income families. I am worried that such reductions will leave the government unable to play its essential role of promoting the common good of essential community services/support.

Although such tax cuts may help in attracting in more foreign talents into Singapore, it would also mean that the tax cuts may provide an excuse for the government to raise the Goods and Services Tax (GST) further for public assistance, when GST for providing public assistance should actually be pared down.

Singapore continues to spend less than 4 per cent of its GDP on healthcare, which is unrealistic.  Even the Health Minister agrees that it is unrealistic to expect national spending on healthcare not to increase to below 10 per cent of GDP. Against this setting, it is disheartening to note that the Budget had allocated a much smaller percentage to healthcare when compared to other developing countries (it is ok that the comparison is not with developed countries as the FM had indicated that his target is to be a first rate developed country is only in 10 years time).

As studies have shown that two-thirds of seniors over the age of 65, who receive long-term care rely exclusively on family, friends and other informal caregivers for helps including everything from shopping, to cleaning to taking medication, to getting to doctors’ appointments and even financial helps, the Budget should have considered the following for those who are in the for the middle-income tier:

  1. Remove the Domestic Foreign Worker levy for qualified foreign workers who are brought in to care for the elderly, so that the elderly could be provided appropriate care at home (where possible) without the need step-down care at nursing home.
  2. Provide Elder Care Tax Credit for qualified elder care expenses. As caregivers make heavy financial sacrifices in spending a large amount of money each year on expenses for aging relatives, including cost of providing food and transportation and paying for medical expenses, such a tax credit would be an added incentive and encouragement for caregivers to provide appropriate care for the elderly in their own homes.
  3. Create a Programme and Registry of Certified Geriatric Caregivers. There is a need to create a programme to train Certified Geriatric Caregivers, who are not full-fledged nurses, as there is no need for all the caregivers for the elderly to be registered nurses. Creating such a programme and a registry for properly certified and licensed caregivers, will ensure the availability of qualified caregivers for the elderly and it will also reduce the high manpower costs involved with hiring registered nurses.
  4. Create Retirement Communities which is a community-based model for aging in place which experts say is an alternative to nursing homes and assisted living centers run by large service providers. Such a community of subscribed members, allows the elderly to stay in their own community as they age, by organizing and delivering programs and services that allow them to lead safe, healthy productive lives in their own homes.

Budget allocation for such initiatives would make significant difference in a greying society like Singapore and Budget 2011 should have considered these.

I like how the FM concluded his speech by saying:

“But whichever way the Government intervenes, we will only succeed if we preserve and strengthen the things that Singaporeans value most – family; everyone aspiring for a better life and feeling they can get there by working hard; and a sense of community.”

The key words there being “feeling they can get there by working hard”; because to ‘get there’ by sheer hard work is going to be an illusion for many.

A survey in 1953-54 found 19 per cent of all households in Singapore to be in absolute poverty.  A similar survey in 1982-83, found 0.3 per cent to be in absolute poverty.  Much of the alleviation of poverty and income inequality in Singapore happened in the 1970s and the 1980s. Towards the end of 1980s, surveys show that most Singaporeans described themselves as middle-class.

That was possible because upward social mobility through hard work was possible for the majority in the 70s and the 80s.  Since the mid 1990s though, there has been less intergenerational income-based social mobility. And it will be even more difficult from the 2010s onwards.  This is because education, training and the availability of appropriate opportunities in this decade gives the upper-middle and the upper income families an advantage in manoeuvring through the system, while modernisation of the economy, depression of wages brought on by foreign workers and increasing government regulation has made it more difficult for the poor to get a head-start.

Budget 2011 is not comprehensively designed to give the less advantaged this head-start.  It cannot be comprehensive because the policies are designed with fear; fear that policies will be abused, fear that work ethics will erode, etc.

Against this background, it is more important for ordinary Singaporeans to only ‘feel that they can get there by working hard’.  So, even though comprehensiveness has been compromised to placing a few hundred dollars of hard cash in your hands (probably just in time before the General Election); and even though in all probability Grow and Share concept may mean that the million-dollars salaried Ministers get a bigger share of the GDP pie than the average Singaporean; I will take it as I probably will not be able to change anything else.

This entry was posted in Current Affairs, Uncategorized.
This entry was posted in Current Affairs, Uncategorized.