$8 billion fund to pay tribute to pioneers
Budget gives major boost to older Singaporeans, 1% rise in CPF rate for all
By Lee Su Shyan, The Straits Times, 22 Feb 2014
Budget gives major boost to older Singaporeans, 1% rise in CPF rate for all
By Lee Su Shyan, The Straits Times, 22 Feb 2014
IT WAS a Budget that delivered on the promise of thanking and honouring the pioneers of Singapore, whose grit and determination helped build today's flourishing nation.
Details of the much-awaited Pioneer Generation Package were unveiled by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday.
The unprecedented $8 billion pioneer fund is the cornerstone of the Budget and consists of health-care benefits for some 450,000 pioneers for the rest of their lives.
These pioneers - at least 16 years of age in 1965, the year Singapore became independent, and who were citizens before 1987 - will enjoy benefits involving outpatient care, Medisave top-ups and MediShield Life subsidies as signalled by Prime Minister Lee Hsien Loong in a speech earlier this month.
Aside from the landmark pioneer package, the Budget had a range of measures to help older workers and elderly Singaporeans as well as address the healthcare-cost concerns of tomorrow's seniors. There were also moves to help today's youngsters, with assistance for pre-school and tertiary education for lower and middle-income families.
Aside from the landmark pioneer package, the Budget had a range of measures to help older workers and elderly Singaporeans as well as address the healthcare-cost concerns of tomorrow's seniors. There were also moves to help today's youngsters, with assistance for pre-school and tertiary education for lower and middle-income families.
The Budget continued the themes outlined in 2010 by Mr Tharman when Singapore started on an ambitious restructuring journey to transform the economy and raise average wages.
Yesterday, he talked about focusing on quality growth and building a fair and equitable society as well as continuing on Singapore's productivity journey. He even made a rallying call for social norms to be changed, "in order to raise productivity and pay".
But the Budget speech's centrepiece was Singapore's pioneers, with Mr Tharman declaring the purpose of the package for them is "to honour the contributions of this whole generation".
At a projected cost of $9 billion in nominal terms, this will be the largest single measure seen in a single year, but the Government has taken the prudent step of setting up an $8 billion fund. The fund, with accumulated interest over time, is expected to be enough to pay for the package.
Not only does that mean the pioneer generation can be assured the Government will honour its commitment to them, but "the Budget in subsequent years can focus on the needs and challenges of the future, for all Singaporeans", Mr Tharman said. The cost of the package, together with the other measures announced yesterday, can be fully covered in this year's Budget without drawing on past reserves. A deficit of only about $1.2 billion will be incurred, which is close to a balanced Budget, Mr Tharman added.
This was also a Budget where older Singaporeans - but not from the pioneer generation - were not forgotten. Singaporeans aged 55 and above this year will enjoy a Medisave top-up of between $100 and $200 annually over the next five years. Older workers also benefit from an increased Central Provident Fund (CPF) contribution rate from next January.
While it was a Budget where the Pioneer Generation Package took the spotlight, the fact that rising health-care costs is a concern among many was not overlooked.
While it was a Budget where the Pioneer Generation Package took the spotlight, the fact that rising health-care costs is a concern among many was not overlooked.
Yesterday's Budget saw the move to give all workers more in their Medisave Account. Mr Tharman announced the CPF employer contribution rate will go up by one percentage point for all workers, with the increase channelled to the Medisave Account.
Lower and middle-income individuals who are not part of the pioneer generation also received additional help on the health-care front. For example, they will get higher subsidies when they visit specialist outpatient clinics.
Mr Tharman said that achieving quality growth and an inclusive society go hand in hand as we "ensure a caring hand is always there to help those who run into life's inevitable difficulties".
Singapore is also going for "quality growth". Mr Tharman said that "raising productivity is at the centre of the economic agenda. It is the only way we can raise our living standards".
Businesses will be cheered by an extension of the Productivity and Innovation Credit scheme - which gives tax breaks for firms who improve their processes - among other measures.
Tax partner Gan Kwee Lian from Big Four firm KPMG said that "this is very much a people's Budget. Almost every Singaporean stands to gain something from this Budget".
One-point hike in CPF rate
Additional contribution from employers to go to Medisave
By Yasmine Yahya, The Straits Times, 22 Feb 2014
Additional contribution from employers to go to Medisave
By Yasmine Yahya, The Straits Times, 22 Feb 2014
The employers' Central Provident Fund (CPF) contribution rate to all employees will increase by 1 percentage point from Jan 1 next year with the entire increase going into their Medisave accounts.
The overall CPF contribution rate will then be 37 per cent, with employers contributing 17 per cent and employees, 20 per cent.
Half the employers' cost increase for one year will be met by a Temporary Employment Credit.
For the additional 1 percentage point in CPF contributions that employers have to fork out, they will receive 0.5 percentage point back, up to the CPF salary ceiling of $5,000. In total, this will cost the Government $330 million.
Finance Minister Tharman Shanmugaratnam said the move was considered carefully and took into account future needs.
"Compared to a decade ago, life expectancy has increased and will very likely move up further in Singapore. The demand for healthcare services has also increased as advancements in medical care become available," he noted.
Medisave account contribution rates will also be raised by 1 percentage point for the self-employed who have annual net trade income of $18,000 and above.
Mr Tharman added that the Government does not expect to make further changes soon to total CPF contribution rates beyond this 1 percentage point increase.
Both young and middle-aged workers will benefit significantly from the move, he said.
"For example, a 40-year-old earning a wage of $4,000 will increase his Medisave savings by $20,800 by the time he retires at age 65," said Mr Tharman.
UniSIM economist Randolph Tan said he was surprised by the move, given the tough business environment. The Temporary Employment Credit might not be enough help, he added. "I am still a bit concerned about doing it in the current environment when the labour market is still in a critical adjustment phase. Much of our experience should have shown that the adjustments that need to be made... cannot be rushed."
KPMG Singapore's director of economics and regulation Paul Kent said that while the rate hike was an important move, he was uncertain how it would affect companies. "On the one hand, businesses will be faced to some extent with higher costs in an already high-cost environment. However, this needs to balanced against the potential future costs of providing equitable health care if no action is taken now."
Workers welcomed the news.
Secretary Selina Goh, 50, said 1 percentage point might not sound like very much but it will still help as she builds up her retirement nest egg.
Sales manager Jeffrey Chia, 48, agreed. "One percentage point is not a big increase so I think it will be OK on employers, and can still help to beef up our savings."
Executive assistant Amela Tiong may not have to worry much about health-care costs just yet, given her age of 37, but she said it was a good move.
"I think it's necessary especially nowadays, because people spend more than they earn and don't think about their retirement needs until they are older."
Employers who spoke to The Straits Times were also generally supportive. Ademco Security chief executive Toby Koh said: "It will make an impact on our costs but all companies are operating within the same parameters so it's fair, we just have to get on with it. No point in moaning."
Cleaning Express chief executive Abdul Aziz Yusof added that "the credit will definitely help, even if it's just for one year", saying it would delay having to ask customers to pay higher prices.
By Janice Heng, The Straits Times, 22 Feb 2014
TO BOOST retirement savings of older Singaporeans, the Central Provident Fund (CPF) contributions of workers aged above 50 and up to 65 will be raised.
With this move, the Government continues to close the gap between rates for older and younger workers, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday.
Most of the increase falls on employers, who will have help to adjust. For workers older than 50 and up to age 55, employer contribution rates will rise by 1 percentage point, with the increase going to the worker's Special Account.
Employees' contributions will rise by half a point, and that will go into the Ordinary Account.
This is because some older workers may still be tapping their Ordinary Account to pay for their mortgage, said Mr Tharman.
For those aged above 55 and up to 65, employers' contributions will go up half a point, with the increase going into the Special Account. But these workers' own contributions will not go up.
"As a result of these changes, a 50-year-old worker earning a wage of $3,000 will have $6,500 more in his retirement savings at age 65," said Mr Tharman.
These changes kick in on Jan1 next year. He noted that in 2012, the Government made a commitment to give workers aged above 50 and up to 55 the same rates as younger ones. The first step was taken that year. The new changes are thus "a second step towards raising the contribution rates for them". Workers older than 50 and up to age 55 will have a new total contribution rate of 35 per cent, compared to 37 per cent for younger workers.
These changes kick in on Jan1 next year. He noted that in 2012, the Government made a commitment to give workers aged above 50 and up to 55 the same rates as younger ones. The first step was taken that year. The new changes are thus "a second step towards raising the contribution rates for them". Workers older than 50 and up to age 55 will have a new total contribution rate of 35 per cent, compared to 37 per cent for younger workers.
Currently, the respective rates are 32.5 per cent and 36 per cent.
This move follows consultation among the tripartite partners, said Mr Tharman. The labour movement had earlier called for older workers' rates to go up by one to two percentage points.
The Singapore National Employers Federation (SNEF) supported a rise, but cautioned that it should be done gradually.
Yesterday, National Trades Union Congress president Diana Chia said the labour movement was "heartened" that the Government had heeded its call. "In particular, we are happy the workers' contribution will go into the Ordinary Account," she added.
As for SNEF, it was satisfied with the pacing. "The one year advance notice... will give adequate time for employers to make any necessary adjustments," it said.
Bosses will also get help to make the transition, with a one-year increase in the Special Employment Credit (SEC). It subsidises the pay of Singaporeans older than 50 and earning below $4,000 a month. Employers who hire such workers next year will get SEC of up to 8.5 per cent of the worker's monthly pay, compared to a maximum of 8 per cent now. This will offset the increase in older worker contribution rates, said Mr Tharman. It will cost the Government $30 million.
'Sharper' incentives for continued restructuring
More help for companies to expand overseas, innovate, boost capabilities
By Jonathan Kwok, The Straits Times, 22 Feb 2014
More help for companies to expand overseas, innovate, boost capabilities
By Jonathan Kwok, The Straits Times, 22 Feb 2014
COMPANIES here are being offered even more ways to expand, innovate and improve their skills.
The Government called the latest incentives "sharper" as efforts intensify to restructure businesses to be more productive and depend less on foreign workers.
It also called for a change in "social norms" which is important for the economic restructuring to work out.
Most changes unveiled yesterday involved extending and enhancing existing programmes, as the national restructuring drive moves into its fifth year.
The Government's productivity schemes will return to businesses more support than the additional foreign worker levies collected from policy tightening in recent years.
"We must adapt to the permanent reality of a tight labour market, and transform every sector of the economy to achieve higher productivity and skills," said Finance Minister Tharman Shanmugaratnam in his Budget speech.
"This is the only way we can sustain higher incomes for Singaporeans." He noted that economic restructuring "is a major, multi-year undertaking".
"We cannot transform our economy and achieve major, innovative breakthroughs in every sector in only a few years," he said.
The economic restructuring started in 2010 as the Government unveiled schemes to help firms raise productivity and tightened foreign worker supply.
Mr Tharman yesterday announced more help for firms looking to expand overseas or invest in information technology, research or intellectual property. For instance, the Government will spend $500 million over the next three years to help firms adopt infocomm technology systems.
The Productivity and Innovation Credit (PIC) scheme, which gives firms tax deductions or cash grants when they invest to boost their capabilities, will be extended till 2018, costing the Government $3.6 billion.
It will also be broadened for small and medium-sized enterprises making substantial investments, in what Mr Tharman termed "PIC Plus".
He gave special mention to the construction sector, where "more intensive efforts" are needed to upgrade productivity. "While we are not making further moves to tighten foreign worker inflows for the economy at large in this year's Budget, we will make further efforts to encourage the construction sector to retain skilled workers and to implement manpower-saving technologies," said Mr Tharman.
He gave an upbeat scorecard on restructuring. "Change is happening on the ground. Even within our 'old economy' sectors, individual players are doing things quite differently."
He cited the example of three firms, including food and beverage chain Genki Sushi. It has invested in a system that has reduced the number of staff serving tables by about 85 per cent, and cut waiting times for orders by half, said Mr Tharman. Orders are placed on iPads while there is also an automatic system to serve food straight to its diners' tables.
Social norms also need to be changed. Workers' views and contributions should be valued, and society has to take pride in every vocation. Consumers also need to change their expectations. "Quality service comes in many forms, and need not mean having service staff constantly waiting on us," said Mr Tharman. "We must also feel at ease with self-service technologies, such as at check-out counters in supermarkets."
Mr Adrian Ball, managing partner for tax in Asean at Ernst & Young, said the Government is trying to accelerate the pace of economic transformation.
"(It) thinks that more of the current prescription around productivity will do the job."
Property cooling measures to stay for now
By Melissa Tan, The Straits Times, 22 Feb 2014
By Melissa Tan, The Straits Times, 22 Feb 2014
PROPERTY market cooling measures are staying put for now despite calls by industry players for some relief amid softening prices and sales volumes.
"Given the run-up in prices in the last four years, it is too early to start relaxing our measures," Deputy Prime Minister Tharman Shanmugaratnam said.
He added that the measures were imposed "to prevent property prices from getting too far out of line with incomes".
"We are not engineering a hard landing," he said.
"But neither are we able to eliminate cycles in the property market, with upswings in prices in some years followed by corrections."
Developers and analysts said they were disappointed.
However, they noted that buyers who were sitting on the fence awaiting a possible Budget announcement might now jump back into the market.
Mr Tharman said the property curbs were working, with both Housing Board resale and private home prices "stabilising".
The Government will continue to monitor the market and adjust measures "when necessary".
The housing market slowed on all fronts late last year.
HDB resale prices slid last year from 2012, posting their first annual decline since 2005.
Private home prices also fell in the final quarter last year compared with the previous three months - the first such decline in nearly two years. Even so, they are still relatively elevated, at 61 per cent above the trough in the second quarter of 2009.
Mr Lim Yew Soon, managing director of boutique developer EL Development, said yesterday that although most developers had hoped for an easing of the additional buyer's stamp duty, it was "also good that he (Mr Tharman) gave a clear signal".
"There were rumours that there would be tweaks. Now that he has taken a firm position, it can put buyers' minds at rest and, if they want to buy now, they don't have to wait."
Chesterton Singapore managing director Donald Han said it would probably take several consecutive quarters of price drops for the Government to consider loosening curbs.
"It is probably too early because we're now at the beginning of a correction," he said. "While the industry had been hoping for some measures to be relaxed, it is also realistic."
Several property industry players have been suggesting that the time was ripe for some curbs to be eased.
City Developments executive chairman Kwek Leng Beng said earlier this month that the Government could consider reviewing some measures in the light of concern over the global economy.
There are also worries about oversupply. From this year to 2016, the private home segment will add another 77,000 units.
Alcohol suffers stiffest hike among 'sin taxes'
By Jermyn Chow, The Straits Times, 22 Feb 2014
By Jermyn Chow, The Straits Times, 22 Feb 2014
BARFLIES absorbed the sobering news yesterday that they will have to dig deeper to pay for drinks, with an increase on alcohol tax by 25 per cent.
In the first such hike in a decade, the tax on wine and spirits goes up to $88 per litre of alcohol content, and for beer, to $60 per litre of alcohol content, with immediate effect.
It is the heftiest of the hikes on the so-called sin taxes, with cigarette levies also up by 10 per cent and betting duty rates up to 30 per cent from 25 per cent.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday that the move is "in line with our social objective of avoiding excessive consumption or indulgence in these areas".
The tax hikes on alcohol come amid plans by the Government to to curb public nuisance caused by drinking. It is considering a ban on the consumption of alcohol in common areas such as void decks and parks, and reducing the number of hours shops can sell liquor.
Studies have also shown that a sizeable proportion of young people binge drink. The 2010 National Health Survey found that 1 per cent of Singaporeans aged between 18 and 29 drink regularly, but 16 per cent of them binge drink.
Studies have also shown that a sizeable proportion of young people binge drink. The 2010 National Health Survey found that 1 per cent of Singaporeans aged between 18 and 29 drink regularly, but 16 per cent of them binge drink.
Industry players expect the higher cost of drinking will curb excessive drinking to an extent.
Assuming the extra booze levy is passed on to consumers in full, people can expect to pay 20 cents more if they drink a can of beer at the coffee shop, and $1.80 more for a bottle of Chardonnay at a supermarket.
Mr Ernest Goh, owner of cocktail bar Bitters and Love, said his patrons will not feel the pinch from the tax hike overnight. "The crucial thing is to see if suppliers will pass the added cost to us before I relook my costings to ensure the business is sustainable."
Alcohol distributor Moet Hennessy Diageo Singapore said it "respects the role of government in setting alcohol policy and we are currently assessing the impact of the tax increase".
But lawyer Ranjan Indiran, 32, who spends $300 on drinks on weekends, argues that a person with an alcohol problem will not stop drinking just because alcohol is more expensive.
"He will channel more money towards his drinking habit and he and his family will just be worse off," he said.
The hikes on alcohol will net the Government $120 million more a year. Cigarette and tobacco levies will add $70 million and betting, $255 million.
Lifelong health-care subsidies for pioneers
Move honours generation who built nation, with more help for older ones
By Robin Chan, The Straits Times, 22 Feb 2014
Move honours generation who built nation, with more help for older ones
By Robin Chan, The Straits Times, 22 Feb 2014
That is because the goal is to honour the whole generation, Deputy Prime Minister Tharman Shanmugaratnam said yesterday as he announced a $9 billion package to lower their health-care costs.
"As the Prime Minister has stated, we are honouring this unique generation of Singaporeans who built up the country, although no package can fully reflect the contributions that our pioneers have made," Mr Tharman, who is also Finance Minister, said in his Budget speech.
Older pioneers will get more help than younger ones. That is because more of the very old are likely to be burdened by medical costs, as the Medisave scheme to help workers save for health-care needs came about only in 1984.
The Pioneer Generation is defined as Singaporeans aged 65 and above this year, and who became citizens before 1987 if they were not born here.
Acknowledging that the definition was "very precise", Mr Tharman said an appeals panel will be set up to assess the eligibility of those who marginally miss out.
Acknowledging that the definition was "very precise", Mr Tharman said an appeals panel will be set up to assess the eligibility of those who marginally miss out.
Prime Minister Lee Hsien Loong first mentioned in his National Day Rally speech last year the Government's plan to come up with a package to honour members of this generation for helping to lay the foundations of modern Singapore.
Yesterday, Mr Tharman gave details of the three key components of the package: subsidies for outpatient care, Medisave top-ups, and MediShield Life subsidies. The benefits will start as early as August this year.
For outpatient care, pioneers will enjoy subsidies of 75 per cent to 85 per cent at specialist outpatient clinics (SOCs).
That will be of help to those with chronic conditions like diabetes or high blood pressure.
All pioneers will also be put on the Community Health Assist Scheme (CHAS), which gives them subsidies for treatment at general practitioners. Those already on CHAS, meaning they are low- or middle-income, will get additional subsidies, similar to those for SOCs and polyclinics.
The new enhanced outpatient treatment subsidies for pioneers will be built on top of current subsidies, which are tiered according to income.
There is also a new disability assistance scheme for pioneers, or their nominated caregivers.
It is for those with moderate to severe disabilities and they will receive $1,200 in cash each year for life. To qualify, pioneers must need help with at least three out of six activities of daily living, such as washing, dressing or feeding themselves.
As for Medisave top-ups, pioneers will get annual top-ups of between $200 and $800 depending on their age.
They and other seniors will also be able to use their Medisave funds more flexibly.
The final big piece of the package are MediShield Life subsidies, which will help pioneers pay for the new national medical insurance to be implemented next year.
Many of the Pioneer Generation currently do not have MediShield, especially the older ones, noted Mr Tharman.
With this package, pioneers will have 40 per cent to 60 per cent of their MediShield Life premiums subsidised, depending again on their age.
That means someone who is 65 today and lives to age 85, will only need to pay half of the total premiums over a lifetime.
While the new level of premiums will likely go up and is still under review, Mr Tharman said the Government's intention is clear.
"For Pioneer Generation members aged 80 and above in 2014, we intend to fully cover their premiums through a combination of premium subsidies and Medisave top-ups," he said.
And a pioneer who is 70 this year will only need to pay about half of the current premiums for the rest of his life, if he is already on MediShield, he added.
As for those not on MediShield, they will still pay less in premiums under the new insurance scheme after the top-ups and subsidies.
Experts said the package of benefits was more generous than they had expected, and were glad that income levels will not matter.
Dr Lam Pin Min, MP and chairman of the Government Parliamentary Committee for Health, said: "We need to be cognisant that this package serves to honour our pioneer generation and is not a financial assistance scheme."
Dr Kang Soon-Hock, head of the Social Science Core at SIM University, said: "It shows the Government's appreciation and recognition of the contributions and sacrifices made by the pioneer generation at a crucial stage of Singapore's development."
Fund set up to pay for package
By Robin Chan, The Straits Times, 22 Feb 2014
By Robin Chan, The Straits Times, 22 Feb 2014
THE Pioneer Generation Package will cost slightly over $9 billion and be paid for entirely from a new fund set up in this Budget.
The move - the largest one-off special transfer for a single measure ever booked in a Budget here - ensures that later governments will not have to worry about funding the package.
"With this fund, we assure the pioneer generation that Singapore will honour our commitment to them, regardless of future economic circumstances," said Finance Minister Tharman Shanmugaratnam. "The fund also ensures that Budgets in subsequent years can focus on the needs and challenges of the future, for all Singaporeans."
With spending needs expected to grow significantly over the next 10 to 15 years, Mr Tharman, who is also Deputy Prime Minister, said that "it is right and prudent" to set aside the money now when Singapore has enough resources to do so.
These increased spending needs include investment in infrastructure like renewing Housing Board estates, expanding MRT lines and developing Changi Airport Terminal 5. Health-care spending will also grow, as will outlays on education, including continuing education for workers.
The Pioneer Generation fund means the Budget will be in deficit to the tune of $1.2 billion but Mr Tharman said it is close to a balanced Budget and will not require a draw on past reserves as there are sufficient surpluses from recent years.
Of the $9 billion, $8 billion will be injected into the fund. The extra $1 billion or so will come from accumulated interest generated over time. This will be enough to pay for the entire package of benefits, even with a buffer for inflation, said Mr Tharman.
This also does not include $260 million that the Government is spending in this fiscal year for benefits in the package available this year, he added.
Medisave top-ups will be credited in August.
The additional subsidies for specialist outpatient care and po-lyclinics, and disability cash assistance for the pioneer generation members will be available from September.
The other benefits will kick in next year.
Due to the age profile of the pioneer generation members and older members getting more in benefits, half of the $8 billion fund is expected to be drawn down in the first 10 years, said Mr Tharman. About 65 per cent of the pioneer generation group are aged 70 and above, according to the Ministry of Finance.
Health economist Phua Kai Hong of the Lee Kuan Yew School of Public Policy said the total size of the package was more generous than he expected, and noted that by "ring-fencing" the funds, the Government made it clear the package would not have to compete with the rest of the Budget for funds.
MP Lam Pin Min, who is also chairman of the Government Parliamentary Committee for Health, added: "It gives the assurance that this programme will continue regardless of the economic climate in Singapore."
Subsidy for MediShield Life premiums
Govt will offset premium increase for everyone for the next few years
By Salma Khalik, The Straits Times, 22 Feb 2014
Govt will offset premium increase for everyone for the next few years
By Salma Khalik, The Straits Times, 22 Feb 2014
NO ONE needs to worry about having to pay higher premiums when MediShield Life is introduced next year.
The Government has promised to provide a subsidy to offset the premium increase for everyone for the next few years, including high-income earners.
With the change, MediShield insurance will cover everyone for life, even those with pre-existing diseases.
It will also provide better coverage, with patients expected to pay less cash for big hospital bills.
As a result, premiums are expected to go up significantly, leading to high anxiety about affordability, especially among older citizens.
Premiums now range from $50 to $1,190 a year.
For lower- and middle-income groups, help will go beyond the initial few years.
They will be given "significant permanent subsidies" so they will be able to pay the entire premiums out of their regular Medisave contributions.
The CPF contribution rate by employers will go up by one percentage point for all workers from next year, with the addition coming from employers.
Anyone facing financial difficulties will get additional help to pay his annual premium.
Details of these subsidies will come later, as the MediShield Life Review Committee will submit its recommendations only in May.
When contacted yesterday, Mr Bobby Chin, who heads the review committee, told The Straits Times he was "heartened" that the Government has heeded the call to provide premium support for the elderly and lower-income group.
He said: "Premium affordability has been a significant concern raised during the committee's public consultation process, and it is reassuring that the Government has committed to providing subsidies for the lower- and middle-income."
He promised that he and his committee will "develop a set of good and sustainable recommendations that will give every Singaporean peace of mind from large hospitalisation bills".
Dr Lam Pin Min, chairman of the Government Parliamentary Committee for Health, said that the generous help for seniors will "allay the concerns of the pioneer generation about the affordability of the MediShield Life premiums".
Seniors with healthy Medisave accounts who have difficulty paying for their outpatient treatments can take heart from another new measure.
As contributions to Medisave will go up by one percentage point, the Ministry of Health will further relax the use of Medisave for outpatient treatments.
It started with $300 a year for treatment of chronic problems. This was expanded in January 2012 to $400 a year for treatment of several mental conditions.
Last month, more uses were added, including osteoarthritis and Parkinson's disease.
Madam Lucy Bek, 66, said she hopes the new additions will include eye and dental treatments, as they are important for the elderly but are not cheap.
Meanwhile, both she and her husband Lewis Lew, also 66, plan to stay healthy as long as possible by eating well and exercising regularly, she said.
Help for people with disabilities
By Charissa Yong, The Straits Times, 22 Feb 2014
By Charissa Yong, The Straits Times, 22 Feb 2014
- More subsidies means Aleena's early intervention programme may cost as low as $3
- Subsidies of up to 80 per cent for dedicated transport or 50 per cent for taxi travel
- More Handicapped Child Relief of $7,500, up from $5,500THREE times a week, six-year-old Aleena Yeo goes to the Building Bridges centre in Jurong East to learn how to do simple actions she needs for daily life.
Besides learning how to follow instructions, she is now learning how to hold pencils properly and to write.
This programme for Aleena, whose autism was diagnosed two years ago, costs her family about $80 a month after subsidies.
Her mother, Mrs Selena Yeo, 43, spends another $50 a month ferrying her to and from her childcare centre via public transport and taxi.
She has two other children, aged seven and nine. Her husband, an assistant manager in an IT and office furnishings firm, is the family's sole breadwinner and earns about $3,600 a month.
The Yeos will soon benefit from new education and transport subsidies to help the disabled from a young age.
Early therapy and educational support helps children with special needs like Aleena be more independent. But this help requires a lot of resources and therefore costs more, said Finance Minister Tharman Shanmugaratnam yesterday. This places strain on the finances of families with such children.
"Their difficulties are the greatest, and often their courage too. They deserve greater support," he said.
Subsidies for all Singaporean children enrolled in early intervention programmes will go up to a minimum of $500 a month from the current $300.
Subsidies will also be extended to cover four in five households, compared to one in two now.
Middle-income households will get a further subsidy of between 20 and 50 per cent. For example, a family with a per capita income of $1,875 will pay less than $300 a month, compared to $600 previously.
Lower-income households such as Aleena's will pay a nominal monthly fee, which could fall to as low as $3.
"Every dollar counts," said Mrs Yeo, who welcomed the news.
"I've stopped working for two years now and it's been a bit of a strain. In the near future, it's going to be harder as we dip more into our savings," said the former car export company employee, who lives in a five-room Housing Board flat in Jurong West.
People with disabilities will also get help with transport costs. New subsidies will cover up to 80 per cent of the cost of dedicated transport to school and care services for the lower two-thirds of households.
For those unable to travel by dedicated transport or public transport, up to 50 per cent of the cost of taxi travel will be subsidised under a new scheme. This applies to the lower half of households.
Working individuals with disabled family members will also get greater tax relief.
Those with a disabled spouse, sibling or child will have their tax deductions increased by $2,000, with effect from April next year. They currently get tax relief of between $3,500 and $5,500.
Together, these schemes will cost an additional $30 million a year. The Ministry of Social and Family Development will provide more details during the debate on its budget.
Handicaps Welfare Association president Edmund Wan said people with disabilities "will now have to cough up much less than they are currently paying out of pocket".
Society for the Physically Disabled executive director Abhimanyau Pal said expenses for people with disabilities and their families are generally higher. "Any additional support for them will go a long way in helping them."
$147 million more in bursaries for higher education
Income requirement also raised to cover two-thirds of households here
By Pearl Lee And Amelia Teng, The Straits Times, 22 Feb 2014
Income requirement also raised to cover two-thirds of households here
By Pearl Lee And Amelia Teng, The Straits Times, 22 Feb 2014
UNDERGRADUATE Lin Xun Zheng can look forward to more help with his tuition fees.
Deputy Prime Minister Tharman Shanmugaratnam said yesterday that up to $147 million more will be spent per year to boost bursaries for students at institutes of higher learning.
The bursaries will be extended to families with a per capita monthly household income of $1,900, up from $1,700. This will cover two-thirds of Singaporean households, said Mr Tharman.
Xun Zheng, 21, an engineering student at the National University of Singapore, plans to apply for a bursary. "Getting more help to pay for my school fees and other programmes like overseas exchange trips would of course be good," he said.
His parents together earn about $5,000 a month from their carpentry business; his younger brother Xun Jian, 18, a second-year Singapore Polytechnic aeronautical engineering student, is already on a Ministry of Education bursary.
With the changes, not only will more students at institutes of higher learning qualify for financial aid, but those who do also stand to get more money.
For instance, university students who belong to the lowest-earning third of households will see bursaries increase to $3,600 a year. Those from middle-income families will have their bursaries go up by $450 to $2,600 a year.
This is on top of existing education loan schemes that allow students to pay for their university education interest-free while they are still studying.
Singaporean students from middle-income families in polytechnics and the Institute of Technical Education (ITE) will get more support too, said Mr Tharman, without giving details.
Lower-income students at the ITE can also expect to receive more help. Mr Tharman said ITE bursaries for lower-income students will be "significantly higher than their fees", to help them with their living costs.
More details will be provided in the upcoming Committee of Supply debate next month.
Extras for older workers welcomed
NTUC cheers; bosses take higher costs in their stride
By Janice Heng, The Straits Times, 22 Feb 2014
NTUC cheers; bosses take higher costs in their stride
By Janice Heng, The Straits Times, 22 Feb 2014
THE labour movement has welcomed higher Central Provident Fund (CPF) contributions for older workers, while bosses say they are not too worried by extra cost.
NTUC president Diana Chia said in a statement: "We are heartened that the Government has heeded our call." The NTUC had wanted a 1 to 2 percentage point hike for workers aged above 50 to age 55 and got its wish yesterday.
That age group will get a 1.5 percentage point increase in CPF contributions while workers above 55 to age 65 will get a 0.5 percentage point rise. This is on top of a 1 percentage point increase in CPF contribution rate for all workers.
NTUC deputy secretary-general Heng Chee How was "delighted". "I am also heartened that employers will contribute more than... workers."
Employers will contribute 1 percentage point of the rise for workers aged above 50 to 55 and all of the 0.5 percentage point increase for older workers. But they are taking the higher rates in their stride.
For one thing, the cost pales in comparison to the CPF Medisave rate hike for workers of all ages.
"For most employers, the 1 percentage point across the board increase in Medisave contributions will likely be more significant," said Mr Mark Whatley, director of benefits for South-east Asia at human resources firm Towers Watson.
Ms Sharon Kwok, vice-president of human resources at building services firm CPG Corp, had expected its costs to rise by $20,000 a month if rates went up only for older workers.
But the across-the-board Medisave rate hike means the increased cost is closer to $80,000. But the firm will just have to manage it, she said. "We really value our older workers for their knowledge."
Older workers remain key, not least in the tight labour market, so the higher costs are unlikely to deter firms from hiring, said Kelly Services vice-president and country general manager Mark Hall.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said: "Bosses already need to raise wages to attract workers. In this environment, I think another 1 or 2 per cent is not going to create that much of an additional impact."
Firms are also getting help to offset the rate hike. The Special Employment Credit (SEC), which subsidises pay for Singaporeans over 50 and earning up to $4,000 a month, will be increased for a year. Employers who hire such workers next year will get an SEC of up to 8.5 per cent of pay compared with up to 8 per cent now. "That helps to cushion it," said Mr Woon Chiap Chan, country managing director of cleaning firm ISS Facility Services.
For workers, higher CPF contributions from bosses are cause for cheer. Security operations manager Lim Chong Teng, 65, said: "I won't benefit from this for very long, but it's still a good thing."
But some worry about their own contribution rate going up as workers above 50 to age 55 have to chip in an extra 0.5 percentage point themselves.
"My take-home pay will go down, which is very worrying," said social worker Tan Ah Mai, 51, who earns about $1,000 a month working part-time.
"Every dollar counts," she said.
What CPF hikes mean for workers
By Toh Yong Chuan, The Straits Times, 22 Feb 2014
By Toh Yong Chuan, The Straits Times, 22 Feb 2014
SECURITY supervisor Jeffrey Chew turned 51 yesterday and his boss surprised him with a birthday cake.
But he got a bigger birthday present from the Government, together with over two million workers - Singaporeans and permanent residents - who contribute to the Central Provident Fund (CPF).
From next year, firms have to cough up at least 1 percentage point more to their workers' CPF accounts. They will have to pay older workers above 50 to 55 2 percentage points more.
But there is a catch. The hikes will not mean more cash in hand for workers. Rather, they go into savings in the CPF for retirement and medical needs.
The CPF rate hike is significant for workers on two fronts.
First, it raises CPF rates to levels not seen since 1999, when CPF rates were cut across the board to boost Singapore's economic competitiveness in a recession.
For workers aged above 60 to 65, their total contributions of 16 per cent will be at the highest level since 1990.
For workers 50 and younger, the total CPF contribution rate of 37 per cent even exceeds the 36 per cent cap previously set by the Government in 2003.
This shows that the Government is not completely averse to raising CPF rates to boost workers' retirement savings, as long as it does not hurt their employability and Singapore's overall attractiveness to foreign investors.
But Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday also sent a second, but more subtle, message to workers.
Those expecting further CPF hikes will be disappointed. Mr Tharman said no further increases are to be expected "soon", and longer-term changes will have to be negotiated with unions and employers.
With rates likely to plateau at these levels, those not satisfied had better start looking elsewhere - be it savings or investments - for their retirement nest eggs.
While the CPF hikes may bring cheer, there are two groups that may perceive themselves to be worse off in some aspects.
Those aged above 50 to 55 will see a slight reduction in take-home pay because they will soon have to pay 0.5 percentage point more of their monthly salary into their CPF Ordinary Accounts, which they can use to service their home mortgages.
A worker who earns $1,900 a month - the current ceiling for the Workfare Income Supplement (WIS) scheme - will see nearly a $10 cut in take-home pay. While the amount may be small, it still deserves some attention.
Last year, Workfare changes saw these workers getting more cash, so hopefully the cut in their take-home pay this year is already offset by last year's higher cash payout.
Besides those aged above 50 to 55, those turning 55 may also be in for a rude shock, if they do not plan their finances, especially mortgage payments, well.
At present, those turning 55 see a 9 percentage point dive in their total CPF contributions, from 32.5 to 23.5 per cent. From next year, the plunge will be even sharper at 10 percentage points, from 35 to 25 per cent.
The allocations to the CPF Ordinary Accounts for those above 55 remains unchanged - 12 per cent for those above 55 to 60, and 3.5 per cent for those above 60 to 65, and 1 per cent for those above 65.
That means that those above 55 will continue to see a gradual decrease in their abilities to use their CPF Ordinary Accounts for housing mortgages.
By channelling the bulk of CPF increases in this round of changes to retirement and medical needs, the Government is making it clear that these are priorities for now.
That is perhaps the most important message to workers, more powerful than property cooling measures that Mr Tharman said the Government will not ease. The message: Do not overcommit using CPF for property purchases, pay off that mortgage by age 60, otherwise Singaporeans will continue to end up asset-rich but cash-poor in their twilight years.
800,000 HDB households to get utilities, conservancy rebates
By Tham Yuen-c, The Straits Times, 22 Feb 2014
By Tham Yuen-c, The Straits Times, 22 Feb 2014
Both rebates will be one-off payments.
The utilities rebates will come in the form of the GST Voucher - U-Save special payment this year.
Those eligible will receive a rebate ranging from $90 for those in executive flats to $260 for those in one- and two-room flats.
Last year's Budget had also included a similar one-off payment.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said when announcing these schemes yesterday that the additional rebates will help these households free up cash for other expenses.
Besides the GST Vouchers, these households will also get SCC rebates.
Those in executive flats will get one month's worth of these SCC rebates, while those in five-room flats will get 1.5 months.
Those in three- and four-room flats get two months, and those in one- and two-room flats will get the most at three months' worth.
More tax relief for those supporting older folk
By Rachael Boon, The Straits Times, 22 Feb 2014
By Rachael Boon, The Straits Times, 22 Feb 2014
Those living with their elderly dependants will get higher relief and it can also be shared among family members.
Ms Nurul Huda, 28, who lives with her 62-year-old mother, is pleased with the increase. She is likely to be eligible for parent relief of $9,000, up from $7,000.
The trade specialist at a bank spends about $300 a month on household expenses and gives $300 to her mother each month. Her father is dead.
Ms Nurul, the youngest of four children, said yesterday: "When I started working at the age of 21, I asked (Mum) to retire. She's comfortable living with me. The rest of my siblings are already married and have their own families."
The new measures will benefit about 170,000 individuals, supporting 208,000 dependants and will cost about $27 million a year.
Finance Minister Tharman Shanmugaratnam said the moves are "to give greater encouragement and recognition to individuals supporting their parents and grandparents".
Sharing parent relief will also be allowed. Under current rules, only one family member can claim tax relief on a parent.
Parent relief for those not living with their parents or grandparents will be raised to $5,500 from $4,500.
Handicapped parent tax relief will be $14,000 for those living with their dependants and $10,000 for those who are not.
Ms Kerrie Chang, director of human capital at Ernst & Young Solutions, said: "The current tax reliefs for supporting parents and handicapped family members have not changed for a few years.
"The reliefs show the Government's commitment to provide special focus on our elderly and the handicapped."
Middle-income families to get kindergarten subsidy
By Janice Tai, The Straits Times, 22 Feb 2014
By Janice Tai, The Straits Times, 22 Feb 2014
EITAN Leong's nursery teachers noticed the five-year-old's flair for drawing and painting and told his parents to nurture his talent.
But they have yet to send him to art classes because such enrichment lessons can be expensive.
His mother, housewife Wong Li Wah, 37, said: "These costs do add up in the long run."
So the announcement during the Budget speech that middle-income households are now covered under the Kindergarten Financial Assistance Scheme is good news for the family.
Previously, only lower-income families with a household income of $3,500 or less were eligible for kindergarten subsidies.
The move is made to improve opportunities for children from lower- and middle-income families, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said yesterday.
For instance, a lower-middle income household that earns $4,800 a month will now pay $85 a month, down from about $130.
Ms Wong and her chef husband, who live with her parents and two siblings and have a household income of about $5,000, pay $150 a month to send their son to a Ministry of Education (MOE) kindergarten. She plans to use the savings from kindergarten fees to enrol him for art classes.
She is doubly lucky as MOE kindergartens did not come under the scheme previously. Now, families with children in kindergartens run by MOE and anchor operators such as PAP Community Foundation (PCF) will be eligible.
Those with a household income of up to $3,000 will need to pay only $3 a month for their children to attend kindergarten. These families used to pay as much as $75.
Freelance administrator Rokiya Camaloudine, 39, and her environmental health officer husband, 38, spend a fifth of their household income of $1,500 on school fees, books and school activities for their six children. Their six-year- old daughter's kindergarten charges $75 a month.
Madam Rokiya also plans to use the savings for her child's enrichment. She said: "Money is tight at home and I feel sad when my kids have to forgo art, speech and drama classes. These are learning opportunities and I don't want my kids to be held back simply because we can't afford it."
Of the subsidy enhancement, a PCF spokesman said: "It will help more parents, especially those with incomes at the margin, to pay for their children's kindergarten fees and correct the current situation where the childcare subsidy seems more generous. For PCF, we hope to be able to reduce the fee arrears situation we have been facing."
Productivity scheme to be extended by 3 years
Move will cost Govt $3.6b; SMEs to benefit from higher expenditure cap
By Chia Yan Min, The Straits Times, 22 Feb 2014
Move will cost Govt $3.6b; SMEs to benefit from higher expenditure cap
By Chia Yan Min, The Straits Times, 22 Feb 2014
THE Government has responded to calls to extend and enhance one of its most popular schemes aimed at helping companies restructure.
The Productivity and Innovation Credit (PIC), originally due to expire after Year of Assessment 2015, will be extended till Year of Assessment 2018.
This extension will cost the Government $3.6 billion.
In addition, small and medium-sized enterprises (SMEs) will get an extra perk, called the "PIC Plus". For them, the expenditure cap for each of the six qualifying activities under the scheme will be raised from $400,000 to $600,000, with effect from the Year of Assessment 2015.
Only firms with annual turnover of not more than $100 million, or employing fewer than 200 workers, will qualify for the higher cap.
Under the existing scheme, which applies to all companies, businesses can deduct from taxable income 400 per cent of the first $400,000 spent on the six qualifying activities to improve productivity. The expenditure cap for each qualifying activity is combined across three years.
The qualifying activities are acquisition and leasing of automation equipment; training; acquisition of intellectual property rights; registration of patents and trademarks; research and development; and design projects.
Transforming the economy is not just about technology, and productivity is not ultimately about dollars and cents, said Deputy Prime Minister Tharman Shanmugaratnam. "It also means changing our social norms."
Developing a workplace culture where the views and contributions of employees are valued will help SMEs boost productivity, he said.
Society as a whole should also nurture a culture of job mastery - "we have to take pride in developing expertise and flair in every vocation, seeking not just competence but excellence". "Doing the job well is what counts, not long hours on the job," said Mr Tharman.
Consumers should also change their habits to feel more at ease with self-service technologies, said the minister - quality service need not mean being constantly waited on.
The Budget aims to provide "sharper incentives to support significant efforts in business transformation and upgrading", to allow companies to sustain and step up restructuring.
Two out of three SMEs with turnover of more than $1 million have claimed benefits under the PIC scheme, added Mr Tharman.
Analysts said the changes will be welcomed by businesses, but more could have been done for smaller companies.
Ms Tan Bin Eng, business incentives advisory partner at Ernst & Young, said there have been calls for enhancements to the PIC cash bonus, which did not materialise in the Budget.
The PIC scheme allows eligible companies to convert up to $100,000 of qualifying PIC expenditure into a maximum cash payout of $60,000.
Increasing the amount eligible for conversion into a cash payout would have helped smaller companies with their cash flow, said Ms Tan. "Smaller companies might have found the lack of any enhancements disappointing."
DBS economist Irvin Seah said there is scope for further improvement, particularly with PIC qualifying criteria. For instance, the scheme applies only to firms with at least three workers. "Smaller companies need more help and have not been benefiting as much as bigger ones from the scheme. This carrot should be made accessible to all," he said.
Mr Kurt Wee, president of the Association of Small and Medium Enterprises, said the extension of the scheme was "something a lot of businesses and associations have been calling for, and shows that the Government is listening to the ground".
Levy hike for lower-skilled construction workers
Govt puts the squeeze on companies that rely on cheap foreign labour
By Cheryl Ong, The Straits Times, 22 Feb 2014
Govt puts the squeeze on companies that rely on cheap foreign labour
By Cheryl Ong, The Straits Times, 22 Feb 2014
The monthly levy - now $450 for a basic skilled worker and already due to hit $600 from July 1, 2015 - will be further raised to $700 on July 1, 2016.
But levies for skilled workers remained unchanged as the Government wants to encourage building firms to use such staff and to train more of them.
A new initiative - the Market-based Skills Recognition Framework - will be introduced on Aug 1 to give an alternative route to upgrade the status of lower-skilled workers.
Such workers who now want to be upgraded must have worked in construction for at least four years and sit a certification test.
But this changes on Aug 1. They can be upgraded if they receive a monthly salary of at least $1,600 and have worked in the industry for at least six years.
Firms already have plenty of incentive to improve the capabilities of their staff.
The levy for a basic-skilled foreign worker is now $450 a month, with big rises to come, yet a skilled worker costs a firm just $300 a month in levies.
An estimated 17,000 basic-skilled foreign workers are expected to benefit from the new initiative - or 5 per cent of the number of foreign workers in Singapore, said Dr Ho Nyok Yong, president of the Singapore Contractors Association (SCAL).
"At least the Government realises that those who are skilful but can't perform during exams can still be productive people," said Dr Ho.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam pointed out that firms have raised concerns about needing to retain skilled and experienced workers so that their maximum employment period will be extended from 18 to 22 years.
This extension will apply to the marine and process sectors as well, allowing 8,700 skilled workers to remain in Singapore for a longer time.
The measure will take effect from May 1 and will apply to foreign workers from China and "non-traditional sources" such as Bangladesh, India and Thailand.
But the number of work permit holders will not increase as a result because firms must still adhere to an allocated ratio of foreign workers, said the Ministry of Manpower.
Mr Freddie Quek, 63, general manager of sub-contracting firm Deluge Fire Protection (SEA), said the higher levies will increase his costs by 10 per cent in 2016.
But he welcomed the longer maximum period of employment most, as workers with 18 years of experience are valuable to the firm.
"These are the people we want to keep."
However, he noted that it is not easy for workers to reach a monthly pay of $1,600, even if they have worked for six years.
"They would have to be very skilled, like a supervisor, to get that salary, and not many are there," said Mr Quek.
$500 million plan to help SMEs catch up on high-tech
3 schemes to get 10,000 firms up to speed with infocomm technology
By Grace Chng, The Straits Times, 22 Feb 2014
3 schemes to get 10,000 firms up to speed with infocomm technology
By Grace Chng, The Straits Times, 22 Feb 2014
THE Government is mounting a major three-pronged push to ensure smaller businesses get up to speed with information and communications technology (ICT).
Larger companies and the public sector here are already making the most of technology that is transforming almost every industry across the globe, Finance Minister Tharman Shanmugaratnam said in his Budget speech.
But small and medium-sized firms (SMEs) need to catch up.
He unveiled three schemes, to be known collectively as the ICT for Productivity and Growth (IPG) programme, that will cost the Government $500 million over the next three years.
The first scheme aims to scale up ICT use in 10,000 SMEs over the next three years, up from the 500 that have benefited from a similar scheme. They will be given a 70 per cent subsidy of the project cost.
The approach is to get common ICT solutions which can be used by SMEs operating in the same sectors such as health care, construction and waste management.
Mr Tharman said: "Over the past three years, IDA (Infocomm Development Authority) has worked with trade associations and the ICT industry to develop and deploy sector-specific solutions under the iSprint scheme.
"In the food and beverage industry, for example, more than 50 F&B operators have adopted a wireless integrated restaurant system that has relieved their service staff from manual and repeated tasks."
To make it easier for the SMEs, there is no application process since the Government will reimburse the vendors directly.
The second scheme is to encourage SMEs to pilot emerging and innovative solutions using innovations in areas such as sensors, data analytics and robotics.
SMEs will get funding of up to 80 per cent of costs up to a maximum of $1 million per firm.
An innovative solution, for example, is an automated restaurant like Haohai Robot Restaurant in Harbin, China, which uses robots to cook and serve meals.
The final scheme aims to help SMEs to use fibre broadband so that they are better poised to adopt newer technologies such as data analytics that require greater computing power.
The final scheme aims to help SMEs to use fibre broadband so that they are better poised to adopt newer technologies such as data analytics that require greater computing power.
SMEs that tap on qualifying ICT productivity solutions can get 50 per cent subsidy for a fibre broadband connection that is at least 100Mbps (megabits per second) for up to two years, capped at $120 per month.
There is also support for SMEs to provide high quality Wi-Fi networking at their offices using Wireless@SG services provided by telcos here. There is a one-time subsidy of up to $2,400 to set up the network.
Non-residential building owners will be given an incentive to deploy fibre broadband in their buildings. They will get a subsidy of up to 80 per cent of the costs up to a maximum of $200,000 per building.
Mr Vincent Ting, managing director of Integrate Engineers, said that the ICT projects he had undertaken for the cable-laying company had helped to improve productivity.
He had implemented an automated clock-in/clock-out system on smartphones two years ago. Last year, he completed a project management system that lets him track the progress and profitability of each project.
"ICT has improved productivity but it also disrupted my operations. A lot of resources are needed. For example, workers have to be trained and there are many tests, which take time."
For Mr Kunalan Doraisingham, managing director of public relations firm Priority Consultants, government grants have led to productivity gains for the company.
"But with emerging technologies like data analytics, I and other SMEs need to know more on how they can use these emerging technologies to their benefit. This is lacking at the moment."
Surplus hits $3.9 billion, higher than forecast
Lower govt spending, COE premium and stamp duty takings boost coffers
By Alvin Foo, The Straits Times, 22 Feb 2014
Lower govt spending, COE premium and stamp duty takings boost coffers
By Alvin Foo, The Straits Times, 22 Feb 2014
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Better-than-anticipated takings for stamp duty on property and Certificates of Entitlement (COE) receipts for vehicles enabled the Government to nearly double its fiscal surplus from original projections.
The number came in at $3.92 billion, far above the $2.42 billion estimated during last year's Budget speech. Then, revenue was tipped to fall in the 2013 fiscal year due to smaller collections from stamp duty and COE premiums.
However, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam noted yesterday that the stronger surplus in the 2013 fiscal year was mainly due to cyclical factors.
"They will not last, and we should see a tighter budget position in the coming years," he warned.
However, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam noted yesterday that the stronger surplus in the 2013 fiscal year was mainly due to cyclical factors.
The Government's overall revenue was $57.15 billion, 3.9 per cent higher than the initial estimate of $55.03 billion.
This was largely due to collections from vehicle quota premiums which came in at $2.76 billion, 7.2 per cent higher than the 2012 fiscal year and 13.2 per cent more than what was initially estimated.
Also, stamp duty takings did not fall as much as originally expected despite the property cooling measures, falling just 6 per cent from the 2012 fiscal year to $4.05 billion, a whopping 31.5 per cent more than what was originally expected.
The bigger surplus was also due to temporary delays in public infrastructure projects, Mr Tharman said, giving the example of unexpected delays in the building of the Downtown Line due to the insolvency of one of the contractors.
Thus, government spending was lower, with total expenditure at $52.34 billion, 2 per cent less than the $53.41 billion originally budgeted.
The Government also took more investment returns from the reserves, with $7.94 billion in net investment returns contributions (NIRC), an increase of 3 per cent from what was initially estimated.
This was a new record, eclipsing the previous high of $7.92 billion in the 2011 fiscal year.
The NIRC is made up of up to 50 per cent of the net investment returns on the net assets managed by the GIC and the Monetary Authority of Singapore, and also up to 50 per cent of the investment income of Temasek Holdings.
Looking forward, the Government expects revenue in the 2014 fiscal year to rise by 4.1 per cent to $59.51 billion because of higher takings from personal income taxes and goods and services taxes.
The NIRC is projected to reach a new record of $8.1 billion.
This will give an overall budget deficit of $1.16 billion, or about 0.3 per cent of gross domestic product, said Mr Tharman.
He added that this is "close to a balanced Budget", and will not lead to a draw on past reserves as the Government has "sufficient surpluses" from the last few years.
First fiscal deficit since 2009 expected
Possible shortfall of $1.16b due to $8b for pioneer generation fund
Possible shortfall of $1.16b due to $8b for pioneer generation fund
By Alvin Foo, The Straits Times, 22 Feb 2014
SETTING aside $8 billion for the pioneer generation fund means the Government is expecting an overall fiscal deficit of $1.16 billion for the 2014 Budget, its first such shortfall since the global financial crisis in 2009.
This comes even as overall social spending rises from $24.4 billion in the 2013 fiscal year to $27 billion in 2014.
However, economists said the $1.16 billion represents a relatively small budget deficit, and that the Government can still end up in the black.
"If the economy does better than expected, we could even see a surplus," said CIMB economist Song Seng Wun.
He pointed out that in the 2012 fiscal year, the Government originally budgeted for a $1.27 billion surplus which eventually became an actual $5.82 billion surplus. Last year, a $2.42 billion surplus was initially expected, and this figure became a revised $3.92 billion surplus yesterday.
In 2009, the overall budget deficit was about $819 million.
Total budgeted expenditure for the Government will increase by 8.3 per cent from last year's revised Budget of $52.34 billion to $56.66 billion, mainly due to increases in health-care spending, housing-related costs and culture and community-linked expenses.
Health Ministry spending will rise 22.5 per cent to $7.1 billion, amid higher manpower costs from pay rises and more staff for new facilities. Funds are also needed to develop key health-care facilities such as Ng Teng Fong General Hospital.
The National Development Ministry will also see its budget rise 28.4 per cent to around $2 billion, mostly due to higher housing grants and increased spending on upgrading.
The National Development Ministry will also see its budget rise 28.4 per cent to around $2 billion, mostly due to higher housing grants and increased spending on upgrading.
The expenditure of the Ministry of Communications and Information will rise 45.3 per cent to $1.1 billion due to development spending for the national broadband network, and replacing and upgrading library facilities.
The budget of the Ministry of Culture, Community and Youth climbs 44.5 per cent to $2 billion. This was due to factors including Sports Hub operations fees and replacing and upgrading facilities under the People's Association, Singapore Sports Council and National Heritage Board.
Only two ministries will have a reduced budget this year. The Education Ministry's budget shrinks 1 per cent to $11.5 billion due to a one-off grant to the Singapore Institute of Technology in the last fiscal year.
And the Trade and Industry Ministry sees a 0.6 per cent dip in expenditure to $2.6 billion due to lower operating grants to statutory boards.
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