Friday, 1 March 2019

Budget 2019 debate in Parliament

House passes Budget targeted at building strong, united Singapore
By Adrian Lim, Political Correspondent, The Straits Times, 1 Mar 2019

Parliament yesterday passed an $80 billion Budget that Finance Minister Heng Swee Keat said aims to help Singaporeans thrive and to build a strong, united Singapore.

In a 90-minute speech responding to concerns 55 MPs raised over three days, he outlined key principles underpinning the Government's spending and revenue plans.

While many MPs welcomed the $6.1 billion set aside for the Merdeka Generation Package to fund healthcare subsidies for those born in the 1950s, some called for more help for seniors and the less well-off. Others asked if the planned goods and services tax hike from 7 per cent to 9 per cent, to take effect some time between 2021 and 2025, could be deferred.

Mr Heng noted the Merdeka package is on top of existing schemes. This year alone, he said, the Health Ministry expects to spend $6.1 billion on patient subsidies under existing permanent schemes. And while the Government has yet to decide on the exact timing of the GST hike, it is necessary to support structural increases in healthcare spending, among others, he said.

Addressing calls for more help for the young, workers, the less well-off and seniors, and for a fairer tax system, he outlined three Budget principles he termed the "Singapore way": The Government puts people at the centre of its strategies; plans for the long term and adapts to changing needs; and works in partnership with people, firms and others.

Doing so has allowed Singapore to do more with less, he said. And the Government believes the best way to take care of Singaporeans is to empower them and build capacity. "There is always room to do even better", he said. "But overall, it is a good system, which gives Singaporeans a good foundation in life."

He also listed three goals on the fiscal front: Remain pro-growth, ensure the overall system of taxes and transfers is equitable and keep the tax burden on the middle-income low.

While all MPs backed the Budget, Workers' Party chief Pritam Singh (Aljunied GRC) rose to state for the record that his party's position on the planned GST increase, which it opposed last year, has not changed.

Budget 2019 debate, Day 3

Merdeka package tailor-made to better meet needs of seniors: Heng Swee Keat
A calibrated cohort-based approach is fair to different generations, he says, while noting the subsidies for all
By Seow Bei Yi, Business Correspondent, The Straits Times, 1 Mar 2019

The Merdeka Generation Package, like that for the Pioneer Generation, is custom-made to better meet the needs of Singaporeans in their silver years, said Finance Minister Heng Swee Keat.

And while younger cohorts will have needs, theirs are not of the same nature as those of these seniors, Mr Heng said in replying to MPs who spoke on Budget 2019.

"It is a plan that has been carefully studied over a significant period of time," he said of the Merdeka package, noting that not many countries have gone through similar rapid growth leading to relatively wide divergences between the older and younger generations.

"Building on our substantial base of permanent healthcare schemes, a calibrated cohort-based approach is fair to different generations."

The $6.1 billion set aside for the Merdeka Generation Package - for those born in the 1950s - was discussed by many of the 55 MPs who spoke this week, some of whom asked if there would be similar packages for future cohorts.

Some noted those born in the 1960s have been called the Majulah Generation. Others worried about the cost burden.

Mr Heng noted the Merdeka package was on top of existing schemes, and pointed out that the Ministry of Health expects to spend $6.1 billion this year alone - to subsidise patient bills through existing permanent schemes that all citizens enjoy. This does not include spending to enhance healthcare facilities, and to research more effective treatments.

He also noted that during Singapore's journey from Third World to First, the Merdeka Generation, and pioneers, did not benefit from the social safety nets in place today. They had fewer or no educational opportunities and earned less, and their Central Provident Fund contributions were very much lower.

"So, a cohort-based approach to support them in their silver years is appropriate," he said. Today, he noted, more than nine in 10 Singaporean youth go on to post-secondary education, compared with one in 10 among pioneers and fewer than two in 10 among the youngest in the Merdeka Generation.

Schemes over the years - Medisave, MediShield Life and CareShield Life - ensure that younger generations will be in a much better position to look after their healthcare needs when they retire, he added.

"Of course, some among us will still need more help. The Government will look at the needs of each group, and tailor our policies and programmes in the future," he said.

Many seniors he has met want to stay active, healthy and connected, he added, saying: "We look to you to redefine ageing and forge a new path on what it means to be the independence generation."

Mr Heng also reiterated that the Merdeka package is not linked to the election cycle or to the unexpected surpluses in this term of government.

Rather, a responsible and long-term approach to planning means younger Singaporeans need not fear they will end up bearing a disproportionate share of the cost.

"But if we lose this discipline and make rash promises, like universal healthcare benefits regardless of circumstances, I would worry for our future generations," he added.

Workers' Party chief Pritam Singh (Aljunied GRC) had on Tuesday said some see the Merdeka package as timed ahead of the election, drawing a rebuttal from Senior Minister of State Chee Hong Tat.

Yesterday, Mr Singh asked Mr Heng if it was possible to still consider moving away from cohort-based packages to something more permanent and universal.

In reply, Mr Heng reiterated that there are already many permanent subsidies in the healthcare system.

"The Merdeka Generation and Pioneer Generation packages build on top of what we already have," he said.

All have benefited from low rates of income tax: Heng Swee Keat
Budget 2019 is part of multi-year plan that continues to benefit middle-income
By Seow Bei Yi, Business Correspondent, The Straits Times, 1 Mar 2019

Middle-and upper-income families may feel that the personal income tax rebate of 50 per cent - capped at $200 - in this year's Budget is insignificant, but Finance Minister Heng Swee Keat urged them not to forget how they have benefited from the low rates of income tax overall.

Income tax is progressive, meaning those who earn a bigger income pay a higher rate, and the top rate is 22 per cent, allowing workers to keep a large part of what they earn. This, Mr Heng said yesterday, is among the key factors helping to keep expenses manageable.

In his round-up speech on the Budget debate, Mr Heng noted comments from some quarters that there did not seem to be anything for them in this year's Budget.

Citing the speech by Ms Cheryl Chan (Fengshan) the previous day, he reiterated that the Budget should not be seen as a "bag of benefits that serves some people in one year or the other".

Instead, it is a multi-year plan that tackles Singapore's priorities as systematically as possible, he said.

"Because we take a long-term approach, we cannot see each year's Budget in isolation. One Budget builds on the foundation of earlier Budgets," he said.

"Even if there is nothing new for you this year, you and your family have certainly benefited from every one of our Budgets," he added.

Young people, for example, have benefited from stronger support in education, public housing and parenthood over the years, on top of opportunities a vibrant economy brings. They get up to $80,000 in grants for new Build-To-Order flats, and $120,000 for resale flats, he said.

Parents can receive a maximum of between $18,000 and $32,000 as well in marriage and parenthood benefits for each eligible child, and get paid maternity and paternity leave, tax benefits as well as pre-school subsidies.

Middle-income families who may feel "sandwiched" in supporting both retiree parents and school-going children benefit from other schemes too, as well as "significant education subsidies". Without these subsidies, families would have to pay more than 60 times the current fees for their children in school.

Schemes such as the Pioneer Generation and Merdeka Generation packages help ease healthcare costs for parents of the "sandwich class" too, and many will get top-ups this year, like to their children's Edusave account.

He stressed that all will gain from a strong and united Singapore, and the bicentennial commemoration this year is an "opportune time" to reflect on how far the country has come.

The bicentennial is also a time to reflect on what being an independent, sovereign nation means, he added, and this includes doing one's best to build on what past generations have done.

Hefty subsidies in education to help all level up
By Adrian Lim, Political Correspondent, The Straits Times, 1 Mar 2019

On average, every child entering Primary 1 in 2018 would have received over $130,000 in education subsidies by the time he completes secondary school.

Those who go on to post-secondary education receive another $15,000 to $22,000 for every year they remain in school, Finance Minister Heng Swee Keat told the House yesterday, as he underlined how the Government invests heavily in ensuring high-quality education is affordable and available to all.

And there will be no let-up in efforts to do more for Singapore's young, he added.

"We have been investing more in pre-school - to make pre-school education better, more accessible, and affordable especially for the lower income. This will help our children build a solid foundation from an even younger age," Mr Heng said in his wrap-up of three days of debate on the Budget.

Helping Singaporeans from all walks of life by empowering them and building their capacity is one of the key principles of the Budget which the minister termed the "Singapore way". There are specific forms of help targeted to assist workers, the less well-off and seniors.

As for the young, education is kept affordable. Mr Heng said: "Parents pay $13 each month, per child, in primary school fees. This is possible due to the significant subsidies provided to every child."

A quality education is also provided for all, and not just for top achievers or those who are better-off, he added. Last year, the Government provided at least 60 per cent more in resources for primary school pupils with a weaker foundation in literacy and numeracy, through learning support programmes in schools.

To maximise students' pathways, there are specialised schools catering to the needs of Normal (Technical) students, or those with interests in science and technology, or the arts or sports, he added.

Mr Heng said he agreed with Nominated MP Lim Sun Sun, who spoke on Tuesday on the need to help students develop "cross-cultural, digital and ethical" competencies. Singapore's schools provide this holistic education by making available co-curricular activities and other programmes, all of which are heavily funded by the Education Ministry. There are also awards to recognise students who demonstrate excellence in areas beyond their academic performance.

As for learning about other cultures, the Global Ready Talent Programme, for example, helps students at institutes of higher learning to intern with Singapore firms overseas.

Singapore must explore what works, discard what doesn't: Heng Swee Keat
By Seow Bei Yi, Business Correspondent, The Straits Times, 1 Mar 2019

Singapore must consistently review its policies in line with new trends, feedback and evidence as it plans for the long term, Finance Minister Heng Swee Keat said.

"We plan for the long term because we plan for Singapore to be here in the long term," he said yesterday.

Ministries should have an entrepreneurial mindset as well, Mr Heng added, in rounding up three days of debate on the Budget. He stressed the need for the Government to be prepared to experiment and take calculated risks.

"We must be focused on exploring what works, discard what does not, and execute effectively, so as to achieve better outcomes for Singapore and Singaporeans."

Mr Heng added that an ability to draw from a broad slate of policies is critical in the light of a rapidly changing world.

Adaptations have already taken place in some areas, with the Business Grants Portal and Startup SG Network launched following feedback from smaller firms that it was hard to navigate government schemes and get help to transform businesses.

Some policies have seen changes as well, said Mr Heng, citing the introduction of CPF Life and the Lease Buyback Scheme to help citizens prepare for retirement as they live longer, and the expansion of Community Health Assist Scheme subsidies to give universal coverage for chronic illnesses.

On long-term planning, Mr Heng also said that leaders should not be deterred from making investments because of external risks and uncertainties. Rather, these can be impetus for "bold but deliberate planning".

He cited ageing and climate change as areas the nation is building up infrastructure for. "We do not shy away from making difficult decisions," he said. "That is why we have been pushing hard on economic restructuring, and have taken further steps this year to drive deeper restructuring."

The Republic is well placed to ride on global shifts and must push ahead to strengthen its position, he said.

"We will continue investing in research, innovation and enterprise development, and support our entrepreneurs and businesses to boldly venture into new markets," he said. "However, the window to achieve deeper economic restructuring, to help more of our firms capitalise on this opportunity, is narrow."

Singapore, he added, has to double down on improving productivity and innovation at the industry and firm level. This was why it made the hard move to cut the Dependency Ratio Ceiling level for the service sector. This refers to the maximum permitted ratio of foreign workers to the total workforce a company is allowed to hire.

Citing NTUC deputy secretary-general Heng Chee How's speech on Tuesday, the Finance Minister said: "Our resident labour force growth will continue to slow. If we do not move decisively on improving productivity and building up a skilled Singaporean core... firms will find it harder to adjust in the future."

Exact timing of GST increase to 9% yet to be decided, says Heng Swee Keat
Govt will monitor economic conditions carefully before deciding, says Heng
By Ng Jun Sen, Business Correspondent, The Straits Times, 1 Mar 2019

The Government has yet to decide on the exact timing of the planned goods and services tax (GST) hike by two percentage points to 9 per cent, and it will exercise care in doing so, Finance Minister Heng Swee Keat said yesterday.

"We will continue to monitor the prevailing economic conditions, spending trends and the buoyancy of our revenues carefully," he said in a speech rounding up debate on Budget 2019.

Addressing points raised by 55 MPs over three days, Mr Heng noted the reservations some had over the GST hike announced in last year's Budget that is slated to kick in between 2021 and 2025.

Ms Foo Mee Har (West Coast GRC) had urged the Government to delay the planned hike for as long as possible, suggesting that funds set aside in this term of government as well as the decision to use government debt to finance infrastructure could provide some leeway to postpone the increase.

But Mr Heng said the increase is necessary, and a decision that was not made lightly.

This year alone, he said, the Health Ministry is expected to spend $6.1 billion to subsidise patient bills through existing permanent schemes enjoyed by all Singaporeans. This excludes further spending to boost healthcare facilities and medical research.

"Such healthcare spending is of a completely different scale and nature from the cohort-based package set aside for the Merdeka Generation or the Pioneer Generation," he said.

"As our population ages, spending on permanent healthcare schemes and other parts of the healthcare system will continue to increase structurally. Funding this requires a structural increase in our operating revenues," he added.

A GST hike is therefore necessary to support this structural increase in healthcare spending, among other critical needs like pre-school education and security, the minister said.

Mr Heng also said the GST increase is similar to measures taken by other governments with ageing societies. "To address the growing fiscal burden... without further ballooning of public debt, there is a need for these governments to raise primary revenues," he added.

Mr Heng cited a recent Organisation for Economic Cooperation and Development (OECD) paper which highlighted that public health spending in the median OECD country is projected to increase by almost 5 percentage points of gross domestic product (GDP) between 2018 and 2060.

The median OECD government is also estimated to require additional revenues of 6.5 percentage points of GDP by 2060, said Mr Heng. "To put it in perspective, we expect to raise about 0.7 percentage point of GDP with the planned 2 percentage point GST increase," he added.

Workers' Party MP Low Thia Khiang (Aljunied GRC) sought clarification on how long this structural increase will last, saying that the biggest ageing demographic now is the Merdeka Generation, which will diminish in size over time.

Mr Heng replied that the Merdeka Generation will continue to stay active and live longer. Singapore has been studying the experience of others, and many variables go into the cost of long-term care and support.

Drawing laughter from the House, he said he has spent a lot of time with Health Minister Gan Kim Yong, and each time, Mr Gan comes up with a higher set of figures on healthcare costs. Mr Heng said: "So, if you ask me how long will this last, I will not want to mislead this House. We are continuing to study this very carefully. All I can say is that, it is going to last for quite a number of years."

There are many variables that are not certain, he said. "For instance, how will our lifespan change and what is the extent to which our seniors will continue to be healthy?"

"We are looking at all these long-term needs very carefully and we will share these when ready," he added.

Mr Heng noted there are many doctors in the House, but they will not be able to give a definitive answer, given this uncertainty.

Responding to Mr Liang Eng Hwa (Holland-Bukit Timah GRC) on the role of surpluses accumulated in this term of government, Mr Heng said the monies will be re-invested into the reserves. Half of the long-term returns can be spent in future Budgets under the Net Investment Returns framework.

These are part of the Government's obligation to prepare for uncertainties such as economic downturns, he said. Many commentators have in recent days said the cumulative surpluses since 2015 allow the Government to run deficits of up to an estimated $18.8 billion in the remaining term of government.

Mr Heng said: "We should not have the mentality of trying to spend everything that we have before the end of each term of government. As part of our approach, we continue to review our plans for the long term and will deploy financial resources where necessary."

WP chief Pritam Singh (Aljunied GRC) added that his party was against the GST hike. Last year, the WP said it supported the Budget, but voted against it because of the announcement on the GST. "This year, we support the Budget, but our position on the GST has not changed. And I just want to put that down for the record," he said.

Tiered GST less efficient and difficult to implement, says Heng Swee Keat
By Ng Jun Sen, Business Correspondent, The Straits Times, 1 Mar 2019

A tiered goods and services tax (GST) that imposes higher rates on luxury items than on daily necessities would be a less efficient way to help the lower income, compared with Singapore's current approach, Finance Minister Heng Swee Keat told Parliament yesterday.

Such a multi-rate tax would be difficult to implement, and the costs of enforcing such a tax regime would ultimately be passed on to consumers, he added, rejecting calls made by MPs in recent years and in this year's Budget debate to implement a tiered regime based on what poorer Singaporeans spend on.

Instead, the Government prefers a flat GST rate while providing structural offsets through GST vouchers, with more offsets going to help lower-income households and seniors. This is on top of other schemes and programmes to help those less well-off, he said.

Some MPs, such as Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), felt the multi-rate GST could help make the tax system more progressive.

Fine-dining services, said Mr Saktiandi, could be given a 10 per cent GST, while necessities like rice could be taxed at a lower 3 per cent.

But Mr Heng, in his speech responding to 55 MPs over three days of debates, noted that it is difficult to define what qualifies as a necessity. "Take bread, for example. There are the white and wholemeal loaves that you can find at supermarkets, but there are also loaves sold at artisan bakeries. On top of that, there are so many other types of bread - floss buns, baguettes, kaya toast at your coffee shop.

"Where do we draw the line?"

Better-off households also tend to spend more in absolute terms and would therefore reap more benefits from reduced GST rates, he said. "The experience of many countries and relevant studies also show that a multi-rate GST system raises businesses' compliance and administrative costs significantly, which are then passed on to consumers."

Mr Yee Chia Hsing (Chua Chu Kang GRC), Ms Jessica Tan (East Coast GRC) and Mr Lim Biow Chuan (Mountbatten) had also asked for the criteria for these schemes to be reviewed in order to benefit poorer Singaporeans.

Mr Heng said the Government regularly reviews eligibility criteria to ensure intended groups benefit. "No criterion is perfect, but if we put all our different schemes together, we have a system that is progressive and, as Mr Yee said, fair."

Property tax better form of wealth tax for Singapore: Heng Swee Keat
By Ng Jun Sen, Business Correspondent, The Straits Times, 1 Mar 2019

Wealth taxes should ideally target fixed assets like property instead of levying inheritances or other holdings as most household wealth here is held in the form of property, said Finance Minister Heng Swee Keat.

Mr Heng, who was addressing calls from MPs for alternative taxes to levy on the well-off, told Parliament yesterday: "What works best depends on the country's overall tax system, and broader economic and social circumstances."

Ms Cheryl Chan (Fengshan) called for net-wealth taxes and taxes on inheritances in remarks made in Parliament on Wednesday, and asked if ultra-high-net-worth individuals were willing to share their wealth to uplift the vulnerable and less privileged.

Last year, several MPs had also argued for such levies to be imposed as an alternative to the planned goods and services tax hike.

Singapore taxes personal wealth mainly through three channels - property, personal income and consumption, with the top earners contributing more to the state's coffers.

Taxing the estates of local residents when they die stopped in 2008 as the wealthy tend to manage their financial assets on a global basis.

Mr Heng said that compared with other types of assets, property is fixed and less mobile: "Indeed, a large portion of Singapore household wealth is held in the form of housing assets."

The Government has been adjusting property taxes over the years to make them more progressive, he added. This has included levying stamp duties.

"Owner-occupied properties enjoy a concessionary property tax rate, with the rate being higher for higher-end homes," Mr Heng said. The rate is also higher for property not occupied by owners, such as those left vacant or which are rented out.

Singaporeans pay an additional 12 per cent for their second property and a further 15 per cent for third and subsequent properties, following changes to the additional buyer's stamp duty last year. Foreigners have to fork out an additional 20 per cent on all purchases.

Mr Heng also said a new tier for the buyer's stamp duty for property valued above a million dollars was imposed in last year's Budget.

Diesel tax hike to nudge users towards cleaner choices
By Adrian Lim, Political Correspondent, The Straits Times, 1 Mar 2019

While the recent diesel tax increase makes the environment cleaner, it may be at the expense of potentially higher business costs, Non-Constituency MP Dennis Tan said on Tuesday during the debate on the Budget statement.

Responding yesterday, Finance Minister Heng Swee Keat said the framing of the issue needs to go beyond that of a simple trade-off to a broader understanding of the longer-term approach Singapore is taking to address the increasingly urgent issue of vehicular emissions.

"Diesel exhaust contains substantial amounts of particulate matter and nitrogen oxides, which are associated with an increased risk of lung cancer and respiratory infection," Mr Heng said in his wrap-up speech on the Budget debate.

"The long-term impact of excessive diesel use on the health of our family and children is significant," he added.

Several MPs had earlier flagged the impact of the diesel tax hike on businesses and taxi drivers. The tax has been increased from 10 cents a litre to 20 cents, from Feb 18.

Mr Heng said it is necessary to use a price signal to nudge diesel users towards cleaner and more sustainable alternatives.

The diesel excise duty is only one part of a larger road map to discourage diesel consumption, he noted.

Other measures include the Early Turnover Scheme introduced in 2013. It helps owners of commercial goods vehicles to switch to cleaner and more fuel-efficient diesel models.

Last year, the Vehicular Emissions Scheme was also introduced.

Mr Gan Thiam Poh (Ang Mo Kio GRC) suggested exempting vehicles and machinery with no non-diesel alternatives from the tax hike, but Mr Heng said this works against what the Government is trying to do.

Mr Heng said the tax hike will help nudge businesses that are heavy diesel users towards greater efficiency - for example, by adopting consolidated logistics.

He noted that the Government has given an offset package to cushion the cost impact until 2022, adding that it recognises the impact of the new tax on cost for cabbies.

Reiterating what Senior Parliamentary Secretary for Transport Baey Yam Keng said a day earlier, Mr Heng told the House yesterday that taxi operators have pledged to pass on the entire savings, from an $850 reduction in annual special tax for taxis, to their drivers.

Reserves are a strategic defence to deter parties wishing to hurt Singapore, says Heng Swee Keat
They help Singapore to weather crises, give Govt confidence to plan for the long term
By Adrian Lim, Political Correspondent, The Straits Times, 1 Mar 2019

Singapore's reserves are a strategic asset, allowing the country to tide over a crisis without being reliant on others, Finance Minister Heng Swee Keat said yesterday.

They also serve as a "strategic defence, to deter parties who wish to undermine the interests of Singapore and Singaporeans", he added.

"Such moves go beyond currency speculation attacks to other types of threats," Mr Heng told Parliament in a speech rounding up debate on this year's Budget.

The minister said: "Our reserves, like our investments in defence and security, give us the confidence to plan long term, knowing that we will have the ability to take care of our people and defend our sovereignty."

He outlined the need to be disciplined in managing the reserves. Under the current Net Investment Returns (NIR) framework, the Government taps up to 50 per cent of the expected long-term real returns for spending and ploughs back at least 50 per cent to grow the pot and generate more returns.

This ensures that both current and future generations benefit from the reserves, Mr Heng said.

The NIR contribution is today the single largest contributor of revenues, larger than any category of taxes collected. "If we did not have the NIR framework, we would have had to double our personal income tax collection or our GST collection to raise the same amount of revenues," he added.

Addressing Workers' Party chief Pritam Singh (Aljunied GRC), who sought more data on the reserves so people can better understand Budget policy trade-offs, Mr Heng said Mr Singh is "misinformed".

Mr Heng explained that Singapore's reserves comprise assets invested by the Monetary Authority of Singapore (MAS), GIC and Temasek. The size of MAS' and Temasek's assets is public information, but the GIC portion is not disclosed. This is because doing so would reveal the complete picture of Singapore's financial reserves, Mr Heng said.

As of March 31 last year, the official foreign reserves managed by MAS stood at $377 billion and the size of Temasek's portfolio was $308 billion, according to the Finance Ministry's website.

While the size of the Government's funds managed by GIC is not published, it has been revealed that GIC "manages well over US$100 billion (S$135 billion)", the ministry noted.

Mr Heng said: "We should not underestimate the need for a rainy day fund. Singapore faces particular vulnerabilities, given our lack of natural resources. With an economy worth nearly $500 billion a year, we should set aside enough to protect it and our people's livelihoods and future."

Citing how the reserves played a key role in Singapore weathering the 2008 global financial crisis, he said: "Let us not squander this strategic advantage that we have."

Unexpected Budget surpluses due mostly to volatilities: Heng Swee Keat
By Adrian Lim, Political Correspondent, The Straits Times, 1 Mar 2019

The unexpected surpluses which the Government has accumulated in the past few years are due mostly to "volatilities and uncertainties in revenues and expenditures", Finance Minister Heng Swee Keat said yesterday.

They are not due to the introduction of Temasek into the Net Investment Returns Contribution (NIRC) framework, Mr Heng said in response to Workers' Party chief Pritam Singh (Aljunied GRC) suggesting earlier this was the case.

Mr Singh, in exploring ways to fund a permanent and universal senior citizen healthcare package on Tuesday, cited the addition of Temasek into the NIRC since 2016, saying this explained the "healthy accumulated surplus" accrued in the current term of government.

Mr Heng, in his wrap-up of the 2019 Budget debate, said this was not the case. Rather, it was the volatilities and uncertainties in revenues and expenditures that accounted for most of the surplus.

He pointed out that forecasting is an inherently difficult exercise, and some revenue items are volatile, especially those dependent on sentiment-driven markets such as stamp duty or vehicle quota premiums.

For instance, in the 2018 financial year ending March 31 this year, the Government had estimated stamp duty collections would be lower because of property market cooling measures. But the property market defied expectations, he added.

On the expenditure side, there can also be surprises, Mr Heng said, referring to the two-year suspension of the Kuala Lumpur-Singapore High-Speed Rail project.

These factors contributed to an overall Budget surplus of $2.1 billion projected for FY2018, a $2.7 billion increase from the $600 million deficit that was forecast a year ago.

Mr Heng said: "While the Government's approach is to look ahead, plan ahead and prepare for the unexpected, it seems that Mr Singh would prefer to look backwards to find unexpected revenue surprises and count on them to keep happening.

"I am afraid such an approach of hoping for the best is not how we secure Singapore's future."

Mr Heng said that while there is room for improvement, the accuracy of the Government's revenue and expenditure projections has been reasonable, and respectable by international standards.

Actual revenue and expenditure figures have generally been within plus or minus 4 per cent of original estimates, he noted.

He also replied to Mr Singh's question two days ago about how borrowing will impact revenues available for future recurrent spending.

Clarifying that it does not, Mr Heng said: "Borrowing does not create new revenues for recurrent spending. It merely converts a concentrated lump of spending in a few years into a smoother stream of loan repayment with interest. And we must have every intention to pay back what we borrow."

He added: "In fact, it is irresponsible for a government to borrow to spend on recurrent needs such as healthcare and security. Such borrowing shifts the burden of paying for today's needs onto future generations."

Why Singapore needs to build on its partnerships within and outside
Strong partnerships at home will allow Singapore to strengthen its ties abroad
By Seow Bei Yi, Business Correspondent, The Straits Times, 1 Mar 2019

Singapore has been strengthening its partnerships both regionally and globally, but the most foundational ones are within the country, said Finance Minister Heng Swee Keat.

"A strong and united Singapore assures our partners around the world that we can be taken at our word, and will not cycle back on our commitments due to domestic divisions," he said yesterday. "(It) also sends a clear signal of our will and resolve to defend our sovereignty and safeguard our vital interests."

Partnerships are a key principle of the Singapore way, Mr Heng said, noting it was a key element of recent Budgets and entails working with others internationally, in the business arena, and with the community.

Globally, Singapore has free trade agreements allowing businessmen access to other markets, defence agreements allowing militaries to build mutual understanding, and collaborations between officials and businesses that build goodwill.

He cited the Kendal Industrial Park in Indonesia, the Chongqing Connectivity Initiative in China, Iskandar Malaysia, and the new capital of Andhra Pradesh state in India.

Locally, Singapore needs to build on its partnerships between the Government, companies and unions, said Mr Heng, who highlighted the role of trade associations and chambers in helping companies as well.

Firms must build deeper capabilities with their workers, who benefit from better jobs and pay, he added.

In turn, a skilled and committed workforce gives firms a competitive edge and the Government will continue supporting them, such as with changes to the Enterprise Development Grant, giving eligible firms up to 70 per cent of government funding to transform themselves.

A strong tripartite partnership can also bring positive outcomes, such as in ST Engineering's aerospace sector, where a union-management training council has worked with the National Trades Union Congress to customise the SkillsFuture Digital Workplace course for workers, he said. Last year, more than 200 employees attended the course, which familiarises workers with digital technologies. Another 600 workers are expected to do so this year.

Mr Heng added that the authorities will continue to help, with steady investments in research and development, as well as by strengthening economic links to the region.

The Government will take an "enterprise-centric approach" tailored to firms' stages of growth, such as by having the Scale-up SG programme - introduced in Budget 2019 - for those ready to compete globally.

Other key partnerships include building a caring and inclusive society, as well as keeping Singapore safe and secure together, he added.

"We will find the best way forward together. But no one - not you, not me, not the Government - has all the answers," he said.

"There is always room for improvement," he added, noting the robust feedback from Mr Ang Wei Neng (Jurong GRC), who flagged on Wednesday businesses' difficulties with regulations and called for better feedback channels to the Government.

Mr Heng said: "Let us not just stop at making criticism, but reach out to one another, recognise that we may have different views, but we can work together and find that middle ground."

Budget 2019 debate: When spending needs to be sustainable, not rash
By Royston Sim, Deputy Political Editor, The Straits Times, 1 Mar 2019

When Finance Minister Heng Swee Keat announced plans last year to raise the goods and services tax (GST) some time between 2021 and 2025, he said it would help pay for increased spending in areas such as healthcare and security.

Fast forward a year, and concerns over whether increased expenditure can be funded in a sustainable manner - and the best ways to do so - continued to feature prominently during the course of the debate on the Budget statement which began on Tuesday.

Among the 55 MPs who spoke was Mr Gan Thiam Poh (Ang Mo Kio GRC), who suggested taxing the winning proceeds from gambling so that raising GST would be a "last resort". Similarly, Ms Foo Mee Har (West Coast GRC) urged the Government to postpone a GST hike for as long as possible, in the light of the estimated $15 billion surplus accumulated in its current term.

Mr Heng thus devoted more than a third of his 90-minute round-up speech yesterday to set out how Singapore intends to balance its Budget in the medium term, and made clear why the future GST increase is needed to support structural increases in spending in important areas like healthcare.

Such healthcare spending is of a "completely different scale and nature" from cohort-based packages such as that for those born in the 1950s, dubbed the"Merdeka Generation, he noted.

The Health Ministry, he pointed out, expects to spend $6.1 billion this year alone on subsidies for existing permanent schemes for all Singaporeans. The sum excludes spending to improve healthcare facilities and research on better treatment. And this base of permanent healthcare spending will continue to grow.

In comparison, the scale of spending for the Merdeka Generation Package is far less: The $6.1 billion set aside for the package is expected to cover the projected costs over the entire cohort's lifetime.

To reinforce his point about the need for additional revenue, he cited a recent Organisation for Economic Cooperation and Development (OECD) paper which highlighted that public health spending in the median OECD country is projected to increase by almost 5 percentage points of gross domestic product (GDP) between 2018 and 2060.

The median OECD government is also estimated to require additional revenues of 6.5 percentage points of GDP by 2060, said Mr Heng.

"To put it in perspective, we expect to raise about 0.7 percentage point of GDP with the planned 2 percentage point GST increase," he added.

But younger Singaporeans need not fear that they will end up with a disproportionate share of the cost, he said, so long as the Government continues to take a responsible and long-term approach to planning.

He also cautioned against making "rash promises, like universal healthcare benefits regardless of circumstances". It was a veiled reference to a call by Workers' Party chief Pritam Singh (Aljunied GRC) on Tuesday for a universal and permanent healthcare package for seniors aged 60 and above.

The minister had barely returned to his seat after concluding his speech when former WP chief Low Thia Khiang (Aljunied GRC) raised his hand for a clarification.

How long does the Government expect the increase in structural spending on healthcare to last and at what speed will it increase, he asked, adding that the Merdeka Generation - which he is a part of - is the biggest ageing generation.

Structural spending is going to last for quite a number of years, Mr Heng replied. He added that there were too many uncertain variables to provide a definitive answer - from the extent to which seniors will continue to be healthy, to how advances in medical treatments will affect costs.

He also warned that aside from a greying population, Singapore has to plan for ageing infrastructure - another area where the costs are set to rise.

Mr Singh again asked if the Government would consider moving away from cohort-based packages to a more permanent and universal package - to which Mr Heng said no.

The WP chief also stated for the record that his party supported the Budget, but that its position on the planned GST hike has not changed from last year. The WP, which opposes a GST hike, voted against the Budget statement last year after the Government called for a vote to be recorded in the House.

But with Mr Heng opting not to pick up on that point this year, the three-day debate, lasting about 14 hours, on the Budget statement ended without drama.

Earlier, Mr Heng highlighted partnerships and working together with various parties as one key principle of what he called the "Singapore Way".

This was also a theme Manpower Minister Josephine Teo used when she cited the influence that families, employers and the wider society have in shaping attitudes towards marriage and parenthood.

Speaking during the debate on the budget of the Prime Minister's Office, she revealed that the total fertility rate (TFR) for last year dipped to a new low of 1.14 - down from the previous low of 1.15 in 2010. But she expressed optimism that the TFR would rise when children of the "baby boomer" generation start having babies themselves.

She also announced that the National Population and Talent Division will consult the public in the coming months about their needs and concerns with regard to forming families, as well as how the Government and community can better support their aspirations.

Given how the low TFR is an existential issue for Singapore, one hopes concrete policies to arrest the slide will emerge from that process.

Budget 2019 debate, Day 2

Healthcare operations will not be hit by cut in foreign worker quotas, says Minister of State for Manpower Zaqy Mohamad
Healthcare providers to get manpower flexibility
By Ng Jun Sen, Business Correspondent, The Straits Times, 28 Feb 2019

The operations of essential services, like healthcare, will not be affected by cuts in the foreign worker quotas in the service sector, Minister of State for Manpower Zaqy Mohamad said in Parliament yesterday.

The Manpower and Health ministries will work together to ensure healthcare providers are given "manpower flexibilities" so that there is no disruption in their day-to-day operations, Mr Zaqy added, without elaborating.

The lower quota, which sets the proportion of foreigners on work permits or the S Pass that a company can employ, will take effect in 2020 and 2021.

But the move, announced last week during the unveiling of the 2019 Budget, has generated controversy, with at least two MPs questioning the decision yesterday.

Ms Joan Pereira (Tanjong Pagar GRC) said she felt uncertain about the cuts as they would impact the labour-intensive caregiving sector.

"These manpower reductions will have a major impact on our elderly - the very group of Pioneer Generation and the Merdeka Generation seniors whom we want to help age with dignity," said Ms Pereira, who called for a review of the foreign worker quota policy.

Ms Lee Bee Wah (Nee Soon GRC) suggested having the policy kick in for new workers only, and letting businesses retain existing foreign workers who would have gained experience and skills by working in their companies.

"They have invested a lot in training their current workers, and it would be a waste to send them back," said Ms Lee.

The previous day, Nominated MP Douglas Foo also urged the Government to be more flexible in implementing the cuts by taking into account the needs of individual businesses in the service industry, as the move will raise labour costs.

Mr Zaqy, responding to Mr Foo, said that depending on the companies' restructuring plans, the Government could calibrate the extent of transitional manpower support to help them cope with the changes.

"We will work closely with the industry, to support businesses in developing more efficient techniques and service models, so that they can grow and transform in a tight labour market," he added.

Since 2012, the Health Ministry has rolled out more than 250 productivity projects for about 70 public healthcare and community care organisations.

Mr Zaqy, explaining the rationale for the quota cuts, said the Government decided against raising worker levies, which would directly raise costs for companies sticking to their existing business models.

But a lower Dependency Ratio Ceiling would give companies a choice: To hire more Singaporeans or transform their business into a leaner organisation.

Whichever option they pick, there are various government schemes to support them, he said, adding that the outcome must be a win-win for workers and employers.

Mr Zaqy also acknowledged that access to foreigners is crucial for businesses to stay competitive, especially if these workers have experience in emerging growth areas or have skills that are in short supply in Singapore.

But he cautioned against becoming over-reliant on foreign manpower, which was the reason the Government had earlier adjusted the Employment Pass (EP) requirements and will continue to do so as Singaporean wages rise, he added.

In 2017, the EP qualifying monthly salary was raised from $3,300 to $3,600 to keep pace with local wages. The change led to a 3 per cent drop in the number of EP holders, with lower-quality professionals leaving Singapore.

Mr Zaqy stressed that job redesign was key in helping all industries - including the service sector - cope with manpower shortages, and uplifting the Singaporean workforce.

Noting that most locals are employed in the service sector, including food and retail, he said: "We should avoid reinforcing the view that these are jobs that only foreigners want to take up."

Sylvia Lim seeks better ways to measure underemployment
By Seow Bei Yi, Business Correspondent, The Straits Times, 28 Feb 2019

Official data indicates that the less educated in Singapore tend to be more prone to underemployment, a finding that led Workers' Party chairman Sylvia Lim to call on the Government to study the economic phenomenon more thoroughly, and monitor its effects on society.

Referring to Ministry of Manpower (MOM) figures, she noted that underemployment for university graduates is 2.3 per cent, which is lower than the overall rate of 3.3 per cent. But for those with just secondary education, it rises to nearly 4 per cent.

It grows further to 5 per cent for those without secondary education, she said in Parliament yesterday, the second day of the Budget debate.

"The rate was derived by a time-based definition of underemployment... persons working part-time and would like to work full-time," said Ms Lim (Aljunied GRC), referring to the underemployed group - people working below capacity.

"Even by MOM's measure, the 3.3 per cent translates into nearly 73,000 workers," she added. Ci-ting the breakdown for those of different education levels, she said: "This may suggest that there may be a class dimension... with the less educated more prone to underemployment."

She asked the Government to continue improving the way underemployment is measured and monitor its effects on different segments of society. She also noted that the underemployed face challenges, such as being underpaid, feeling insecure about their income and lacking finances for daily expenses.

Citing a 2017 study by the Ong Teng Cheong Labour Leadership Institute, she noted that it yielded an underemployment rate of 4.3 per cent, which is higher than MOM's 3.3 per cent as at June last year.

The institute's survey adopted a multi-factor definition of underemployment and looked at those with university degrees and higher qualifications earning below $2,000 a month in a full-time job.

This state of vulnerability requires monitoring amid growing upheavals from job disruption.

Noting efforts to respond to such job disruption, with initiatives like Professional Conversion Programmes that help workers move into new roles, Ms Lim said the message that workers need to adapt is clear. She added: "The question is how well such initiatives are serving to give economic security to workers."

For instance, of the more than 76,000 job seekers who found employment through the Adapt and Grow Initiative from 2016 to last year, it would be useful to know if those who switched industries had comparable remuneration or took pay cuts.

Ms Lim also called for more support for vulnerable workers, like those in the gig economy.

With some needing flexibility of time to attend to family issues, and others finding it hard to take time off work to attend to personal matters, she suggested that they be allowed instalment payments for composition fines - so their cases do not go to court when they have trouble making payments.

"The direction of the Government in economic transformation and workforce reskilling... is necessary," she said. But, she added: "The other pillar that is equally necessary is to have compensatory policies in the form of social safety nets, to cushion citizens who face disruption."

Yesterday, Ms Lee Bee Wah (Nee Soon GRC) also called for a re-look at policies surrounding another group of workers - seniors facing re-employment.

She cited feedback that some were "forced to leave their company upon reaching retirement age" despite still being productive.

In another case, a worker was told to take a 40 per cent pay cut on re-employment, on top of added responsibilities.

"He was referred to the Tripartite Guidelines on the Re-employment of Older Employees, which stated that wages can be adjusted to the mid-point of the salary range," she said.

"I understand that re-employment might not be at the same salary, but to suffer a 40 per cent pay cut for an additional job scope, that is too much."

Bicentennial CPF top-up a tribute to women, says Manpower Minister Josephine Teo
By Linette Lai, Political Correspondent, The Straits Times, 28 Feb 2019

The Bicentennial Bonus CPF top-up is a "tribute" to women who stayed home to care for their families while others went out to work, Manpower Minister Josephine Teo said yesterday.

"It recognises that they had fewer years to build up their retirement savings," she pointed out in a speech that honoured women who contributed to Singapore's development.

"We don't usually apply the gender lens when debating our Budget, but when we do, it is clear that every Budget benefits women in significant ways. And they all add up to a lot of support," she added.

Last week, Finance Minister Heng Swee Keat announced that Singaporeans aged 50 to 64 this year with less than $60,000 of retirement savings in their Central Provident Fund (CPF) accounts will receive a top-up of up to $1,000.

About 300,000 Singaporeans will gain from the top-up, six in 10 of whom are women in their 50s and 60s. Mrs Teo said the money will go some way in supporting these women in their old age.

"Even today, when women have more choices, many dedicate their lives to their families by staying home to personally take care of their needs," said Mrs Teo. "We don't say it often enough, but their sacrifices did not just make a difference to their families - they also made a difference to our nation-building."

Ms Rahayu Mahzam (Jurong GRC) and Ms Lee Bee Wah (Nee Soon GRC) also highlighted the contributions of women to Singapore.

Ms Rahayu said there are many women activists and volunteers who have "defied traditional expectations and made great strides to change society's pre-conceived notions and habits".

But she noted that there is still much to do in Singapore when it comes to issues such as closing the wage gap between men and women, or supporting women who return to the workforce after having children.

"While women here have access to education and jobs, and we have representation of women in many key positions in leadership, there is still much that we can do," said Ms Rahayu.

Ms Lee reiterated Mrs Teo's point on how the CPF top-ups will help this group achieve retirement adequacy, and urged families to top up their mothers' and wives' accounts.

"You will get a tax relief of up to $7,000 for doing this. But more importantly, it is to show her how much you appreciate her sacrifices," Ms Lee said.

Mrs Teo noted that many government schemes targeted at the elderly benefit women more since their life expectancies are longer.

These include the Pioneer Generation Package and the Silver Support Scheme for needy seniors. More than 65 per cent of those who receive Silver Support payouts are women, she said.

In her speech, Mrs Teo also held up women who contributed to Singapore throughout its long history.

They include Hajjah Fatimah, who arrived in Singapore in the 1800s and built houses and a mosque, as well as fungi expert Gloria Lim, who was the first woman to be appointed dean of the science faculty of the then University of Singapore, the predecessor of the National University of Singapore.

"Our women pioneers set solid foundations for the generations after them so that we can all advance and progress in society," she said.

Baey Yam Keng: Diesel tax hike for better living environment
Lower special tax for cabs, new rebate scheme for diesel buses among ways to cushion impact
By Adrian Lim, Political Correspondent, The Straits Times, 28 Feb 2019

While the tax hike on diesel has affected businesses and cabbies, the move will help discourage usage of the fuel and create a better and healthier living environment, said Senior Parliamentary Secretary for Transport Baey Yam Keng.

He noted that the land transport sector is the second-largest source of emissions in Singapore, and this has to be addressed as the land transport system expands.

To do so, the Government is also promoting commuting modes such as car-sharing, trains and personal mobility devices, managing vehicle growth and usage, and encouraging the adoption of cleaner and more carbon-efficient vehicles, he said.

MPs Lee Bee Wah (Nee Soon GRC) and Gan Thiam Poh (Ang Mo Kio GRC) yesterday raised concerns about the hike, as they called for more support to mitigate the impact on cabbies and businesses.

Finance Minister Heng Swee Keat had announced a doubling in excise duty on diesel fuel from 10 cents a litre to 20 cents last week. This took effect from Feb 18.

Yesterday, Ms Lee pointed out that no lead time or grace period was given, and many service providers which use diesel vehicles have lost money overnight. She called for ComfortDelGro, the largest taxi operator here, to at least absorb part of the diesel tax hike.

Meanwhile, Mr Gan said certain heavy machinery and special purpose vehicles have no diesel alternatives in the market, and appealed for firms and operators using them to be exempted from the hike.

In his speech, Mr Baey listed several ways in which the Government is helping to cushion the impact of the diesel tax increase.

The annual special tax for taxis has been reduced by $850, and Mr Baey said he was glad that all taxi operators have pledged to pass on the entire savings to cabbies in the form of rental reductions and, for some, Medisave top-ups.

ComfortDelGro cabbies driving a diesel taxi that is five years or older can get a $100 voucher if they convert to a hybrid taxi by the end of next month, he added, urging other taxi operators to offer similar incentives and more non-diesel options.

On concerns from parents about school bus fares, Mr Baey said the Government is helping operators through a new road tax rebate scheme for all diesel buses, for a three-year period from August.

All diesel school buses, diesel private-hire buses and excursion buses ferrying schoolchildren will also get an additional cash rebate for three years from August.

Mr Ang Hin Kee (Ang Mo Kio GRC) said after the sitting that he hoped more taxi firms would take up Mr Baey's call to support cabbies.

But the National Taxi Association's executive adviser added that rebates like the $100 voucher from ComfortDelGro offer only slight reprieve to taxi drivers, as the daily rental rate for a hybrid taxi is $120, compared with $100 for a diesel taxi.

"Taxi firms should look into lowering the rental rates. If not, cabbies may not switch to hybrid taxis, and instead clock longer hours and distances on their diesel cabs to cover the higher diesel rates.

"This runs contrary to the intention of the tax hike," Mr Ang said.

Planned GST hike not enough to meet future needs: Sitoh Yih Pin
By Ng Jun Sen, Business Correspondent, The Straits Times, 28 Feb 2019

The planned GST increase is but one measure to meet rising spending needs, and will not be able to meet them in full, Mr Sitoh Yih Pin (Potong Pasir) said yesterday.

The Goods and Services Tax, currently at 7 per cent, is estimated to bring in $11.69 billion in the coming financial year. The rise in the tax rate by 2 percentage points to 9 per cent, sometime between 2021 and 2025, is expected to bring in an estimated $3.3 billion more in revenue, at best, he said.

Mr Sitoh, an accountant, turned to numbers to make his case on the need for prudence. Spending on an ageing population and expanding and renewing infrastructure is rising, he said in the final speech on day two of the Budget debate.

The Health Ministry's expenditure rose three-fold in 10 years, from $3.8 billion in Financial Year 2009 to an estimated $11.7 billion for FY 2019, he noted. Overall Government spending has risen from $57 billion in FY 2009 to a projected $80.25 billion in FY 2019. This figure does not include special transfers like the Central Provident Fund and Medisave top-ups, GST vouchers and household rebates, amounting to $15.3 billion for FY 2019.

"The projected GST increase is therefore simply only one measure to mitigate the trend of rising expenditure, but clearly is unable to meet it in full," he said.

One way to meet these needs was through borrowing, as it had for the MRT lines in the 1980s, for long-term infrastructure projects like Changi Airport Terminal 5. "Singapore is in a better position now to dictate favourable borrowing terms than in the past as our Government's credit rating is now among the world's best," he said.

But although this strategy of government spending is fairer and more equitable, it is also not without risk, he said. "We have seen enough examples around the world, of countries mired in debt arising from careless borrowings and reckless funding of projects."

He also urged the Government to ensure oversight of major infrastructure projects funded by borrowings, such as by creating an independent panel or body.

Speaking earlier in the day, Mr Gan Thiam Poh (Ang Mo Kio GRC) suggested raising taxes on gambling activities, such as winnings, to support recurrent spending. "(This) could provide a sustainable and long-term revenue to support the rising Singaporeans' social expenditure needs, leaving a rise in GST as a last resort," he said.

Mr Sitoh also addressed calls for more Net Investment Returns (NIR), proceeds from investing Singapore's reserves, to be tapped. Under the current framework, half the expected long-term real returns from GIC, Monetary Authority of Singapore and Temasek can be spent, while the remaining half is re-invested into the reserves.

Mr Sitoh noted the NIR contributes about 20 per cent of the Budget, which without this, would be substantially in deficit every year.

"There are those who advocate for more returns to be used for the present, but I think the current arrangement is fair," said Mr Sitoh. "As they say in Hokkien, 'jit lang jit pua' - half for this generation and half saved for future generations."

Wealth, inheritance taxes could be avenue to level playing field, says MP Cheryl Chan
By Adrian Lim, Political Correspondent, The Straits Times, 28 Feb 2019

Consider wealth and inheritance taxes on ultra high net worth individuals as a possible source of revenue in future, MP Cheryl Chan (Fengshan) said yesterday.

These would be an additional source of funds to sustain the many social welfare programmes that may have "a long tail in the years ahead", and help the country maintain fiscal prudence, she said on the second day of debate on the Budget statement.

In a speech delving into inequality and ways to achieve a more equitable distribution of resources, Ms Chan said Singapore has done well, with a system built on meritocracy, a fair and progressive tax system, and a redistribution of wealth focusing on social outcomes.

But in the last 10 years, evidence shows the rise in wealth inequality has been greater than in income inequality, she noted. "Those with wealth are not only on a better footing to accumulate more, they have even better access to resources that help preserve their wealth."

To reduce the wealth inequality gap, Singapore has taxes on personal income, property and consumption, so the top earners and those with more assets contribute to the national coffers, she noted.

But while Singapore has a low personal income tax rate compared with other countries, it is impractical to consider further taxes on income, owing to the shrinking and ageing workforce.

"After all, the ability of an average income worker to build wealth is dependent on sheer labour. Also, the consumption tax in one way or other does impact the lower-income group to meet their basic living expenses," Ms Chan said.

She proposed looking into wealth and inheritance taxes for ultra high net worth individuals or the top 1 to 2 per cent of society.

"In the spirit of giving and sharing, will the ultra high net worth individuals be willing to share more of their wealth to uplift the vulnerable and less privileged communities?" Ms Chan asked rhetorically.

There have been similar calls for such a tax in other countries.

Ms Chan also called for a "decent living wage" for lower-income workers, especially those with young families, so they need not live hand to mouth. Central to the issue is how much consumers and employers are willing to pay to meet this living wage, she said.

"This comes back to the need for sharing. The top and middle tiers of the economy... have more opportunities and pathway to elevate. They can certainly do more for the lower-income group, starting with a willingness to pay more for their services," she added.

Ms Chan said talk about inequality in Singapore will be "chatter", unless people acknowledge that "we must all play a part and take actions in our daily lives to make Singapore an inclusive country".

"Without building our social capital now, defining the values and roles of this country with active civic participation, each Budget will only fall on the ears of citizens like a lecture in class and endless debate of whose rightful duty it is to care for the ageing population and the future generations."

Need to acknowledge both good and bad of colonial past: Yaacob Ibrahim
Look at 1819 as 'one milestone among many', acknowledge colonial history's dark side
By Linette Lai, Political Correspondent, The Straits Times, 28 Feb 2019

As Singapore commemorates its bicentennial and reflects on its history, the country must also accept that the colonial experience has had a different impact on its various communities, said former minister Yaacob Ibrahim in Parliament yesterday.

"We need to acknowledge that different communities have different historical experiences and memories," said Dr Yaacob (Jalan Besar GRC). "We need to recognise both the good and the bad."

Although 1819 marked a turning point in Singapore's history, it has also given rise to myths and misperceptions that damage communities here, he added.

One of these is the myth that Singapore was a fishing village "waiting to be discovered by enlightened British imperialists", rather than the vibrant economic hub that historical evidence suggests.

Another is the toxic myth of the lazy native, which has been studied and debunked but yet still lingers in the minds of some people, said Dr Yaacob, the former minister for communications and information as well as former minister-in-charge of Muslim affairs.

"When I was growing up in modern Singapore, my own teachers dismissed my community as being lazy and unable to study hard. This is the burden of history that my community carries. It is unjust and unfair," he added.

"If we are to commemorate the bicentennial, we must also recognise the less savoury aspects of it - practices and ideas designed to meet the needs and maximise the profits of the empire at the expense of the indigenous population."

Referring to Finance Minister Heng Swee Keat's Budget statement, which touched on building an inclusive society, Dr Yaacob said: "If we are to build an inclusive society... we need to ensure that inclusivity applies not just to how we view the here and now, but also how we view our history as a people."

Dr Yaacob said it is right to acknowledge every event for what it is worth, and that the colonialists' arrival changed the region forever. But overly-ascribing Singapore's present-day success to the arrival of the British ignores "larger forces" at work before they set foot on Singapore's shores, he said. Rather than focus on the past 200 years, Singapore should look at 1819 as "one milestone among many".

He urged Singaporeans in this bicentennial year to see how the country's history is intertwined with that of the region. "The diversity that we see in Singapore reflects the diversity of the region and beyond."

In doing so, more Singaporeans - especially the young - will understand how Singapore is a part of the larger region, and how its good location and the talents of its diverse peoples can create a peaceful hub for trade and commerce, he said.

Dr Yaacob suggested changes to school curriculum, including relooking at how history is taught to ensure students are well-versed in pre-colonial history and have a deeper understanding of the region. National education can be expanded for local students to understand the colonial experiences of other Asean countries, he added, noting: "Being part of this region, I strongly believe that we should have a good understanding and appreciation of the region's history."

Budget 2019 debate, Day 1

Merdeka package not timed for election: Chee Hong Tat
Such schemes cannot be rolled out at start of Govt's term as surpluses need to be earned
By Adrian Lim, Political Correspondent, The Straits Times, 27 Feb 2019

The Merdeka Generation Package (MGP) and its timing were a focus on day one of the Budget debate yesterday.

Senior Minister of State Chee Hong Tat rebutted Workers' Party chief Pritam Singh's remark that some see the $6.1 billion set aside for those born in the 1950s as being timed to coincide with the election.

Mr Chee said it was misleading to link the MGP - or the Pioneer Generation Package (PGP) unveiled in 2014 - to election cycles.

The reason, he said, was that such schemes cannot be rolled out at the start of the Government's five-year term as surpluses need to be earned, accumulated and put aside to fund healthcare and other benefits.

At the start of its term, the Government will not know how much surpluses it will accrue or how much it can set aside, he added.

This is also part of "what a responsible government needs to do to ensure that our policies and programmes are financially sustainable for the current and future generations", he said.

Some 500,000 Singaporeans will benefit from the Merdeka package, which includes subsidies for outpatient care, MediShield Life premiums and Medisave top-ups. Details of when these will be rolled out will be announced next week.

Earlier in the debate, Mr Singh (Aljunied GRC) said people on the ground feel that the package helps seniors with their medical bills.

"There are also quarters who conclude it is pungently timed with the election cycle, giving off the odour of an unfair advantage aimed at the electoral prospects of the PAP," he said. These words prompted Mr Chee to say pointedly: "I wonder why Workers' Party (WP) chose to use such an unpleasant description and to focus on politicising this tribute to our Merdeka Generation."

He added: "The opposition calls for the Government to give more, and yet, when the Government gives more to help Singaporeans, the WP criticises the move as an election tactic. We can't have it both ways, please make up your mind and decide where you stand."

The next general election must be held by April 2021, but many expect it to be called some time next year.

People's Action Party backbencher Murali Pillai (Bukit Batok) also took on Mr Singh's remarks about the package's timing.

Mr Murali said it is a "fortunate situation" that the Government is able to fund the package using the current reserves.

"Members sometimes forget that whatever we budget for in this House does not define what will happen for the financial year," he said, noting that market circumstances would dictate whether there are sufficient resources.

"To ascribe a political motive, to say that the MGP is timed for elections, really elevates the Government to a position of being a fortune teller."

Mr Singh and fellow WP members Faisal Manap (Aljunied GRC) and Non-Constituency MP Daniel Goh also called for the Government to move beyond one-off benefit schemes like the MGP, towards a universal and permanent healthcare package for Singaporeans from the age of 60.

In reply, Mr Chee said the MGP and PGP are on top of structural subsidies already provided for Singaporeans. Lower and middle-income citizens also get help with their MediShield Life premiums.

A total of 27 MPs spoke on a broad range of economic and social issues. Labour MPs, in particular, focused on how to improve the lives of Singaporean workers amid technological disruption.

MPs also raised concerns over cuts to the foreign worker quotas for companies in the service sector.

Mr Chee, speaking in his Trade and Industry portfolio, noted that the move would cause some pain, but said it was better to act now to secure jobs for citizens.

The debate resumes today, and Finance Minister Heng Swee Keat will respond to MPs' comments tomorrow.

WP chief Pritam Singh calls for universal senior citizen healthcare package
By Adrian Lim, Political Correspondent, The Straits Times, 27 Feb 2019

A permanent senior citizen healthcare package for all Singaporeans from age 60 has been proposed by Workers' Party (WP) chief Pritam Singh, who said it will "represent a critical symbol of integration" among the people.

This basic level of medical benefits will also ease citizens' out-of-pocket expenses for primary healthcare and help them cope with the cost of living, he said yesterday, the first day of debate in Parliament on the 2019 Budget statement that was unveiled last week.

Mr Singh (Aljunied GRC) said such a healthcare package will also help the Government address feedback from the ground that schemes, such as the Pioneer Generation Package and Merdeka Generation Package, are timed with the election cycle or are unfair because some are left out.

There is an "inherent inequity" in the Government's packages for the earlier generations as some senior citizens, by virtue of their year of birth, miss out on a few years of medical benefits because of the interval between the one-time packages, he added.

Mr Singh, one of four WP MPs who spoke yesterday, also suggested how the WP's proposed healthcare scheme can be funded from the annual Budget.

First, the introduction of Temasek Holdings into the Net Investment Returns Contribution (NIRC) framework since 2016 brings an additional $5 billion a year into the mix instantly and about $25 billion across a five-year term of government, he said.

Despite greater spending needs going forward, the roughly 35 per cent increase in the NIRC from 2016 "goes some way to explain the healthy accumulated surpluses accrued to this term of government from the opening of Parliament in 2016", he noted.

Second, he cited Finance Minister Heng Swee Keat's Budget statement that huge infrastructure projects will be partly funded through borrowing. Mr Singh asked whether this can free up revenue to fund recurrent spending.

"If it does, it would appear that funding such a universal and permanent healthcare initiative for our seniors cannot be dismissed as dishonest, unreasonable or imprudent," he said, citing adjectives that People's Action Party MPs had used in previous years when they shot down the WP's suggestions on public spending.

Last May, in the debate on the President's Address, the WP called for a relook of the 50 per cent cap on spending from the returns of the reserves. National Development Minister Lawrence Wong said it showed an "ill-disciplined, imprudent and unwise" mindset to relax the rules every time money was needed.

In last year's Budget debate, Mr Heng rapped the WP as "dishonest and irresponsible" for its stand on the proposed goods and services tax hike from 7 per cent to 9 per cent, expected to take effect some time from 2021 to 2025.

Mr Singh's call for the senior healthcare package was echoed by MP Faisal Manap (Aljunied GRC) and Non-Constituency MP Daniel Goh.

Responding to the proposal, Mr Chee Hong Tat, Senior Minister of State for Trade and Industry as well as Education, said there are quite a number of existing healthcare subsidies that are structural.

These include extra subsidies at polyclinics for seniors, and government subsidies and support to help low-and middle-income Singaporeans pay for MediShield Life premiums, he added.

"It is not quite accurate for Associate Professor Goh to describe it as, Singaporeans pay for each other, (and the) Government save money. Actually, the Government pays quite a bit of the premiums through premium subsidies and additional premium support. This is part of the sharing," Mr Chee said.

The same principle applies to the upcoming disability insurance scheme CareShield Life, he said, adding that the Community Health Assist Scheme will be expanded to benefit more Singaporeans.

In his speech, Mr Singh also urged the Government to be more open and transparent in sharing information, pointing to the freedom of information law elsewhere.

"Increasingly, as we move into the future, the Government will not have all the answers," he said.

Foreign worker quotas cut to protect Singaporeans' jobs, says Chee Hong Tat
It'll be painful for some firms but decision was made in bid to avoid sociopolitical problems, he says
By Ng Jun Sen, Business Correspondent, The Straits Times, 27 Feb 2019

Jobs for Singaporeans will be lost and sociopolitical problems could flare up if the country does not control the number of foreign workers, said Senior Minister of State for Trade and Industry Chee Hong Tat.

Mr Chee told Parliament yesterday that such problems have occurred in other countries, and this is why the Government reduced the foreign worker quotas for the service sector despite knowing there would be an impact on some companies.

His response came after several MPs questioned the decision to lower the Dependency Ratio Ceiling in 2020 and 2021 for the service industry.

MPs argued that the move would raise business and labour costs for the service sector.

Nominated MP Douglas Foo said the quota cuts are the main concern of the business sector, given its labour constraints.

"No matter how technology may alleviate operational demands, a lack of readily available human resource, which will invariably in turn drive up already increasing labour costs, will work in tandem to drive businesses out of Singapore or out of business altogether," he added.

Ms Denise Phua (Jalan Besar GRC) said the hospitality, food and beverage, arts, entertainment and other lifestyle sectors will likely be hit hardest.

She cited the predicament of Cube Boutique Hotel, whose owner Benedict Choa has adopted an innovative hotel model, automated its check-in system and worked with government agencies to transform some of its processes.

"Ben is all ready to employ any local staff willing to work, if he can only find them," she added.

How can the Government help such companies that are aligned with the national direction and yet still face manpower challenges, asked Ms Phua.

Mr Chee said at the end of yesterday's debate: "We knew it would be painful for the affected companies, and we agonised over this difficult decision during our many rounds of inter-ministry discussions."

Ultimately, the Government decided that it was better to make a move now to control the overall number of foreign workers before the problem got out of hand.

He said the Government was aware of labour constraints in the service sector and how some firms have begun investing in productivity improvements, working closely with government agencies and industry associations.

"The hard work is starting to bear fruit and we need to keep it up," added Mr Chee, noting how productivity has been rising steadily across sectors.

It rose 4.4 per cent for the accommodation segment in each year from 2013 to last year, 3.2 per cent for retail trade and 1.4 per cent for food services. Total manpower in the accommodation sector fell by 1 per cent in that period, while total room stock went up 4 per cent.

While technology cannot fully replace human roles, companies need to understand how it can improve products, reduce costs and raise the quality of services, said Mr Chee.

The Government will increase its support to help businesses transform, and has worked with industry associations for this purpose.

For example, the Productivity Solutions Grant will be enhanced to subsidise up to 70 per cent of out-of-pocket training expenses of eligible firms, up to $10,000.

They can also access up to 70 per cent of government funding for transformation projects through an extended Enterprise Development Grant.

The Ministry of Trade and Industry's Pro-Enterprise Panel has been working with industry associations and companies to review regulations and look for ways to reduce licensing costs, Mr Chee noted.

Change can be a daunting challenge for businesses, but there is support if firms are willing, he said, adding: "Government agencies and industry associations will walk this journey together with you.

"If you want to transform and you are willing to put in effort to do so, we will help you."

NTUC in industry project to nurture 'Worker 4.0'
It is partnering firms to set up committees to identify training and skills workers will need
By Seow Bei Yi, Business Correspondent, The Straits Times, 27 Feb 2019

The National Trades Union Congress (NTUC) has taken steps to set up "training committees" that identify the types of training and skills workers will need to keep up with the transformation of the industries they are in.

Its secretary-general Ng Chee Meng said NTUC has worked with about 10 companies in a pilot project to set up these committees, which comprise management staff and union leaders, to help nurture what he termed as "Worker 4.0".

"For Industry 4.0 to be actualised, we need our workers to transform in parallel with their companies and industries because there can be no Industry 4.0 without the worker," Mr Ng said yesterday, the first day of the debate on the Budget statement.

NTUC is working with companies in sectors ranging from port engineering to aviation, including SIA Engineering as well as in-flight catering service provider Sats.

Together with NTUC, companies are working out future versions or archetypes of their employees, and hence the skills gap and training required for their present workforce.

"Our intention is to help our workers visualise the potential of Industry 4.0 for their companies, and for... their careers," he added.

The partnerships cover about 64,000 workers and the plan is to expand the collaboration to all of NTUC's unionised companies.

He gave the example of PSA senior mechanical engineer Ng Hwee Sheng, who took on a larger role managing automated and intelligent systems at the port operator after completing a year-long systems engineering course at the Singapore Institute of Technology (SIT).

Mr Ng said that with examples of workers who have moved towards Worker 4.0, the hope is that more will do so and take personal responsibility in upgrading their skills.

He suggested that the training committees can chart skills and competency requirements, put in place training programmes such as PSA's one-year systems engineering course at SIT, and schedule worker training to minimise downtime on ongoing operations.

He also pledged that NTUC will do its best to support workers who feel displaced by rapid changes.

Mr Ng was among several MPs who gave suggestions and updates on how workers can be supported.

Senior Minister of State for Trade and Industry Koh Poh Koon, who is NTUC's deputy secretary-general, said firms need to have better training for older workers to improve their skills in using technology. He said NTUC will work with unions, industry partners, government agencies and institutes of higher learning to simplify the training space.

NTUC assistant secretary-general Patrick Tay (West Coast GRC) wants professionals, managers, executives and technicians (PMETs) who earn between $2,500 and $3,500 a month to also benefit from the Progressive Wage Model (PWM), which helps to raise wages by upgrading skills and improving productivity.

"It is timely to scale these efforts on a national level and extend the PWM to lower-wage PMETs to provide for their progression and upward labour mobility," he said.

Mr Melvin Yong (Tanjong Pagar GRC), who is also an NTUC assistant secretary-general, suggested ways to boost workplace safety and health, like compulsory yearly health check-ups for employees.

There could also be differentiated insurance premiums for companies, with those who face many claims for similar incidents paying higher premiums, he added.

Firms urged to improve plight of low-wage service workers
By Linette Lai, Political Correspondent, The Straits Times, 27 Feb 2019

Those who procure services can do more to improve the plight of low-wage workers, said labour MP Zainal Sapari yesterday.

These include focusing on quality rather than price as well as making sure contracts have fair clauses and no unreasonable liquidated damages, said Mr Zainal (Pasir Ris-Punggol GRC).

On top of that, the companies that procure such services should consider longer contract periods, which will give service providers an incentive to invest in technology.

When contracts are renewed, service buyers should also take into consideration that the incumbent workers are more experienced and familiar with the job requirements, and ensure they are not worse off.

"Adopting progressive procurement practices will achieve more favourable outcomes for all, including better welfare for our outsourced, low-wage workers," he added.

Mr Zainal said those who procure services have a "moral responsibility" to look after the welfare of such outsourced workers.

"This includes training - allowing service providers to send their workers for training without requesting headcount replacements - and workplace welfare."

He also called for building owners and those who procure such services to set aside dedicated rest areas for these workers, and urged government agencies to set the example.

Mr Zainal also stressed that service providers must not bid for contracts at the expense of workers' welfare.

"Service providers should not gamble on their workers' wages and welfare and hope that the contract they won through price undercutting will bring them profit."

Suggestions to raise, remove retirement age
Parliament: Many older workers not ready to retire, says unionist
By Linette Lai, Political Correspondent, The Straits Times, 27 Feb 2019

Veteran unionist Arasu Duraisamy has suggested raising both the retirement age and re-employment age to help older workers stay employed.

Speaking in Parliament yesterday, the Nominated MP said the retirement age could go up from 62 to 65, and the re-employment age from 67 to 70.

Mr Arasu, a member of the National Trades Union Congress (NTUC) central committee, said: "Many of the older workers have told us they are not ready to retire for good."

Some of them, he added, need to support their families, others hope to build up funds for healthcare or retirement, and many say they are still healthy, physically able and want to be gainfully employed.

Said Mr Arasu: "The extension of the retirement age and re-employment age provides certainty to workers who want to continue working, and allows a longer runway for employers to plan for training and upskilling, as well as adapt to digital transformation holistically."

Mr Arasu was one of three MPs who urged the Government to make changes to the age of retirement and re-employment to provide greater certainty for older workers.

He lauded recent measures to increase support for older workers, such as increased annual payouts from the Workfare Income Supplement scheme for those with low wages, and the topping up of the Special Employment Credit to coax employers to hire seniors.

But Mr Arasu added: "While these are helpful to older workers, the best support is ensuring they have a good job."

More than 20 firms, including Gardens by the Bay, have raised the retirement age to 65, and some firms have no contractual retirement age.

Mr Arasu said: "From time to time, the labour movement also receives appeals from workers seeking assistance to extend their re-employment contracts.

"I urge the civil service and other government-linked companies to quickly take the lead."

He also spoke about the importance of training workers and educating those in their 50s.

Mr Arasu said: "We need to change their mindset and help educate them that training and skills upgrading are necessary for them to remain relevant. In view of digital transformation and an ageing workforce, ensuring that both SMEs and their workers are pro-training is especially important."

Do away with retirement age, Workers' Party Daniel Goh urges
By Linette Lai, Political Correspondent, The Straits Times, 27 Feb 2019

Non-Constituency MP Daniel Goh wants the retirement age to be removed and the re-employment age to be raised to 70, to help workers age with dignity and independence.

Forcing them to retire prematurely is a waste of human capital, said Dr Goh, who also urged the Government to restore the Central Provident Fund (CPF) contributions of these workers.

"Our older workers should be respected for their experience gathered in a lifetime, and not forcibly retired when they still have so much to contribute in meaningful ways," he said in Parliament yesterday during the debate on the Budget statement.

Dr Goh, who is from the Workers' Party, was one of three MPs to call for changes to the retirement and re-employment ages.

The others were Workers' Party MP Faisal Manap (Aljunied GRC) and Nominated MP Arasu Duraisamy, who is a member of the National Trades Union Congress' central committee.

Dr Goh, however, also stressed that removing the retirement age does not mean getting Singaporeans to "work until they die".

"It is to reform the system so that Singaporeans do not have to worry about their finances and can retire in their 60s if they want to, but they can also continue to work if they want to," he said.

He said those who want to retire in their 60s should be empowered to do so, adding: "The ideal would be that from today, no Merdeka-Generation Singaporean would be compelled to retire or forced to work by necessity."

Dr Goh, speaking in support of his party's call for a permanent universal healthcare scheme for seniors, also urged the Government to allow partial CPF withdrawals if a person is so physically or mentally incapacitated that he cannot work for a significant period of time.

Other proposals he made involved changes to help Singaporeans age with independence.

These included allowing CPF payouts at the age of 60, increasing Medisave top-ups for older women to close the gender gap in CPF, and promoting the Lease Buyback Scheme among those in the Merdeka Generation, who were born in the 1950s.

Many women in the Merdeka Generation may have suffered the opportunity cost of giving up full-time work to care for others, he said.

Call to help caregivers return to work
Heng Chee How seeks more part-time, flexi-work options to tap latent manpower pool
By Linette Lai, Political Correspondent, The Straits Times, 27 Feb 2019

Labour MP Heng Chee How has called for greater efforts to tap Singapore's "latent working population" by matching people with caregiving responsibilities to part-time jobs.

He believes that getting caregivers to work will help solve the current "structural mismatch" between the demand and supply for manpower, indicating that a change is overdue in the labour market which "has long been based on the full-time staffing model".

Mr Heng, who is Senior Minister of State for Defence, is deputy secretary-general of the National Trades Union Congress.

He was the first of 10 labour MPs who spoke in Parliament yesterday, during the debate on this year's Budget statement.

In his speech, he pointed out that companies across many sectors have been "crying out for manpower to meet their needs".

Surveys have also shown that a significant proportion of women who quit their jobs to be caregivers would like to return to work if they can find part-time jobs that allow them to balance work and family, he added.

"This also means that if more companies have such options, many of those who had to quit to care for family would have been able to stay in work, earn and provide better for their immediate and longer-term needs," he said.

Mr Heng noted that there are only four sources any country can tap to get manpower.

The first is school-leavers entering the workforce, but these numbers "were set two decades ago".

Second, it can rely on industry transformation to improve productivity, so that the same number of people can create more economic value through their work.

The third is foreign manpower. But in Singapore's case, the size, mix and growth of this labour source have to be managed judiciously, said Mr Heng.

The fourth is making the best use of the working-age population, including those in the "latent pool".

Mr Heng added that Singapore's full-time mature worker employment rate is 67.1 per cent, which compares favourably with many of the developed nations in the Organisation for Economic Co-operation and Development.

But the equivalent rate for part-time workers here is only 8.3 per cent.

As a result, it ranks 10th on the list of full-time employment rate for mature workers, but only 23rd when it comes to the part-time rate.

"This tells us that most Singapore companies have not yet learnt how to ably utilise and integrate part-time and other flexible work options into their mainstream manpower model or are, perhaps, also unwilling to do so," Mr Heng said.

"This is despite years of promoting flexible work arrangements by the tripartite partners at national and company levels."

Calling for a thorough review of how such work arrangements can fit into mainstream staffing models, he said: "We have to investigate mindsets, close knowledge gaps and consider incentives to open the way and grow the capacity."

Singapore Budget 2019 - Speech

Budget 2019 Debate Round-Up Speech

Merdeka Generation Package

Merdeka Generation Package unveiled at Singapore Budget 2019

Budget 2019 - Overview of Tax Changes

Singapore Budget 2019: CPF-related Highlights

MOM announcements in 2019 Budget Statement

Budget 2019 Foreign worker quota cuts: Will they finally nudge services?

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