Wednesday 25 February 2015

Budget 2015: Ask the Finance Minister

Being Robin Hood not Singapore Government's strategy: DPM Tharman
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam - speaking at MediaCorp's Budget forum, Ask the Finance Minister, on Tuesday evening (Feb 24) - says Singaporeans have to take collective responsibility to build their society.
By Wong Siew Ying, Channel NewsAsia, 25 Feb 2015

A day after unveiling Budget 2015 in Parliament, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam urged Singaporeans to get involved and take a collective responsibility in building a strong society.

Mr Tharman was speaking at MediaCorp's Budget forum, Ask the Finance Minister, on Tuesday evening (Feb 24), and he addressed wide-ranging questions about this year's Budget measures.

This year's Budget is aimed at providing support for all Singaporeans at different phases of life - cash supplements for needy elderly in the form of the Silver Support Scheme; the SkillsFuture initiative to help Singaporeans, young and old, to continue to learn and deepen their skills; and a range of measures to help businesses innovate and expand beyond Singapore.


Some questions raised during the hour-long forum focused on the training of employees: Whether there can be more flexibility on the range of approved courses, as well as if there are enough service providers to offer training for various industries and revamp training programmes to better suit older workers.

Mr Tharman said that companies could consider working with trade associations to craft relevant training programmes, which could even be held within the company's premises. Larger firms can also conduct training collectively for the industries, he said.

But he also pointed out that SMEs have to break out of a "vicious circle" in the area of staff training.

"I think we have to tackle ageism in Singapore. There is sort of a quiet, unstated discrimination among the mid-careers and those who are in their 50s. Mid-40s and 50s, it's usually not so easy for them to get back in," said the Deputy Prime Minister.

"They are good people, hardworking, who have accumulated a lot of experience. Sometimes a particular industry has folded, but they have got skills which are relevant to other industries, and I think collectively, employers working with the Government have to make it easy for them to come back in, give them the training required and let them prove their full worth. That's a resource for Singapore and also the right and fair thing to do for those individuals.

"I think many of our SMEs are today in a vicious circle: No time to train people, no time to invest in the person because you are not sure if the person will be with you two years, or maybe even a year from now. As a result, people leave and turnover is higher because they are not even sure they have a future with the firm.

"We have got to break out of that vicious circle by investing in people, giving them a sense of ownership in the firm. It is hard for SMEs individually to do it, but SMEs collectively can do it - SMEs working with industry associations, setting up their own training facilities, sharing trainers, joining forces so that each of the SME benefits from being part of that coalition."


Another question raised was about the increase in petrol duty rates at a time when global oil prices have been falling, and whether this would have a trickle-down effect.

Said Mr Tharman: "It is of course better to raise the petrol levy when oil prices have fallen compared to when prices are going up. But the basic point is this: Petrol is used mainly by cars - it's not used by commercial vehicles, it is used mainly by all of us driving around. We have got to make sure that over time in Singapore we move towards a society that is less about driving cars - particularly driving cars during the most congested period - and more about taking public transport, and also sharing cars and basically moving towards a greener environment.

"From time to time, some of these taxes will change, it cannot stay unchanged permanently. From time to time, we have to make an adjustment and the last adjustment was 12 years ago. The fact that oil prices have come down and pump prices have come down made it opportune to raise the duty. I will be quite frank about that - it is much better than doing it when prices are going up.

"I am not too worried about this filtering through to the cost of living because commercial vehicles largely use diesel, and this is a cost that basically can be borne in the Budget, when we were in fact lowering costs on many other fronts. Many families who drive a car also hire a maid and they will be saving more on the maid than the additional cost of petrol."


Budget 2015 also includes measures to help Singaporeans build up their savings, among them the increase in CPF salary ceiling from S$5,000 to S$6,000. Questions were raised if this would put a squeeze on the middle-income, who will have to set aside a little more of their take-home pay for CPF contributions.

Mr Tharman said the middle-income group will be a significant beneficiary of the move, noting that CPF is completely tax-free.

With the salary ceiling raised, "the employers are contributing more, the individual is putting a little more into their Ordinary Account, which is usually taken out to pay for housing mortgage during the working years".

"So, the net effect of this raise in the salary ceiling isn't very much difference for the individual, because he is putting money into his Ordinary Account and taking it out to pay his mortgage. The net effect is the employers pay more and we've got to do that in the right measure - we can't overdo it. But this increase in employer contribution is affordable in the context of a tight labour market where wages are going up anyway; all we are doing is making sure this is saved for long-term retirement."


To fund the range of measures aimed at strengthening Singapore's social security system and building skills for the future, the Government will tap on increases in revenue from higher personal income tax rates for top earners.

Mr Tharman said: "We have got to be careful that we don't think we are Robin Hood, where you can simply take money from the rich and give it to someone else. It's in everyone's interest - especially the poor and the middle-class - that we have an economy where jobs are always available and wages can go up. That can happen if we are competitive, and we have entrepreneurs, we have professionals, we have everyone here in world-class teams - that's in everyone's interest.

"Robin Hood makes a good newspaper commentary, but that's not our strategy. We need to spend more over the next five years in the common interest.

"We need to have the Silver Support Scheme, we need to strengthen some of our social provisions, that's part of it and I think it is fair that those that are better off pay for it, but most of what we do is in the common interest, not of one particular group alone. If you talk about our transport infrastructure, if you talk about our hospitals, if you talk about some of our new economic infrastructure like T5 at Changi, everyone will benefit from it either because of jobs or because of cohesion.

"To have a cohesive society you need public good that everyone shares in, and someone has to pay for it. We all pay for it: Most people pay for it by GST, those who are better off also pay for it through the property taxes which are higher than others and also income tax. So everyone pays for this common good that we are all benefiting from, but the rich pay more, and the poor get some benefits out of the system, and that's fair."


Mr Tharman's message to Singaporeans: To take collective responsibility to build their society for the future.

Said the Deputy Prime Minister: "It is important for all of us, whenever we talk about taxes, whenever we talk about our obligations, to take a collective approach. This is our society. It is our society. We need to take collective responsibility.

"If someone needs help, the Government should do its job, I would contribute to the Government so it can do its job, but I should also find other ways in which volunteers, community organisations, everyone gets involved. That keeps us a strong society and it keeps everyone involved in society. It's our society."

Singapore Budget 2015
Budget 2015: Building Our Future, Strengthening Social Security
SkillsFuture scheme: How it can help you
Reactions to Budget 2015

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