$1.5 billion Support Package builds on the support measures announced in Budget 2022, April 2022 and June 2022
By Hariz Baharudin and Goh Yan Han, The Straits Times, 14 Oct 2022
A new $1.5 billion support package will give Singaporean households additional help to deal with rising prices, with more aid going to lower to middle-income groups, Deputy Prime Minister Lawrence Wong announced on Friday.
Some 2.5 million eligible adult Singaporeans will receive a special cost-of-living payment of up to $500 in December, as part of the package.
They will get the payment together with the Goods and Services Tax (GST) Assurance Package cash payout that was announced at Budget 2022 to offset the impact of the upcoming one percentage point hike in GST from 7 to 8 per cent on Jan 1, 2023.
Every Singaporean household will also get additional Community Development Council (CDC) vouchers worth $100 next January. This means that together with the $200 CDC vouchers announced during the Budget this year, a total of $300 of such vouchers will be given out then.
The Ministry of Education will also increase the income eligibility thresholds for financial assistance schemes to defray school expenses for more students from January 2023. It will also enhance the bursary quantum for full-time Institute of Technical Education (ITE) students.
Mr Wong, who is also Finance Minister, said the latest measures have been designed with two groups of Singaporeans in mind who have been affected by higher inflation - lower-income Singaporeans and elderly retirees with no income from work.
Those earning less would be more disproportionately impacted because their wages may not rise sufficiently to cope with higher prices, said Mr Wong, adding that the older retirees would also be negatively impacted because they do not have incomes and have to deal with higher prices.
“That is why we have been monitoring the situation with respect to these different segments of Singaporeans, and the additional spending that they will have to incur,” he added.
The latest support package, together with earlier measures announced at the Budget as well as in April and June 2022, will fully cover the increase in cost of living for lower-income households on average, said the Ministry of Finance (MOF).
The package will also fully cover more than half of the increase in cost of living for middle-income households on average this year, the ministry added.
Full year inflation for 2022 is expected to come in at 6 per cent, Mr Wong said.
The Monetary Authority of Singapore had, earlier on Friday, said there was considerable uncertainty around the outlook for both inflation and growth, with core inflation set to remain high in the first half of 2023.
MOF said more support will also be given to help people deal with rising transport costs.
On Wednesday, it was announced that the Government will provide an additional subsidy of about $200 million to cover the 10.6 per cent fare increase that will be carried over to future fare review exercises.
"This additional subsidy helps to mitigate the impact of the fare increase on commuters and pay for higher costs of providing public transport services due to the increase in energy prices, manpower costs and inflation," said MOF.
Additionally, 600,000 public transport vouchers worth $30 each will be given to eligible Singaporean households, which can be used to top up fare cards or buy public transport concession passes.
MOF said there will be no draw on past reserves for the new support package. It will be funded by the better-than-expected fiscal out-turn in the first half of this financial year, which began in April.
The ministry added that the Omicron variant of Covid-19 was milder than expected, enabling more sectors of the economy to open up in tandem, boosting the nation's economic recovery.
The support package comes amid rising inflation, it noted. While supply chain frictions have eased slightly, the ongoing conflict in Ukraine and geopolitical tensions continue to put pressure on the prices of goods and services.
"As a small, open economy, Singapore is particularly susceptible to imported price pressures, through channels such as food and energy. Domestically, a tight labour market continues to support strong wage growth," said MOF.
"As such, we must be prepared for inflation to stay elevated for some time."
On Friday, Mr Wong also said that there will be an update to the GST Assurance Package, in order to take into account higher than expected inflation.
Details on these changes will come in Budget 2023, and Mr Wong stressed that the Government is fully committed to cushioning the impact of the GST increase for all Singaporeans.
The GST rate will increase by one percentage point from 7 to 8 per cent on Jan 1, 2023, and by another percentage point to 9 per cent on Jan 1, 2024.
Cash payouts, CDC vouchers: Key measures in $1.5 billion support package for Singaporeans
By Goh Yan Han, Political Correspondent, The Straits Times, 14 Oct 2022
Cash payouts, more Community Development Council (CDC) vouchers and public transport subsidies are among the relief measures announced on Friday in a new $1.5 billion support package to combat the rising cost of living due to inflation.
Here are five things to note from the latest package:
1. Up to $500 Cost-of-Living Special Payment
Cash of up to $500 will be given out to 2.5 million eligible adult Singaporeans in December 2022. This is on top of the up to $200 cash that adult Singaporeans will get in December from the GST Assurance Package. No application is required.
Those eligible would be Singaporeans aged 21 or above in 2023, with assessable income for the year of assessment 2022 of not more than $100,000. They should also not own more than one property.
Those with assessable income of up to $22,000 will receive $500. This is generally the point from which one has to start paying personal income taxes.
Those with assessable income of between $22,000 and $34,000 - about the 40th percentile of income earners - will get $400.
Those with assessable income of between $34,000 and $100,000 - about the 80th percentile of income earners - will get $300.
2. Additional $100 CDC vouchers
An additional $100 in CDC vouchers will be distributed to every Singaporean household in January 2023.
This will be on top of the $200 in vouchers announced in Budget 2022, to be also distributed in January, as part of the enhanced Assurance Package to offset the goods and services tax increase.
A second round of $200 in vouchers, also announced in Budget 2022, will be distributed in 2024.
No application is needed.
3. Public transport subsidies
There will be an additional subsidy of about $200 million in 2023 to cover the 10.6 percentage point fare increase that will be carried over to future fare review exercises.
This subsidy is meant to mitigate the impact of the fare increase on commuters and pay for higher costs of providing public transport services due to the increase in energy prices, manpower costs and inflation.
The Public Transport Council said on Wednesday following its annual fare review exercise that it was able to limit the fare increase this year to 2.9 per cent - or about four to five cents for each bus or train ride - because the Government is forking out additional public transport subsidies in 2023 on top of the more than $2 billion in subsidies it already foots annually.
4. Public transport vouchers
A total of 600,000 public transport vouchers will be made available to resident households with a monthly household income per person of not more than $1,600.
Each voucher is worth $30 and can be used to top up fare cards or buy monthly travel or concession passes.
This is meant to provide additional support to lower- and lower-middle-income households.
Households that received a voucher during the 2021 public transport voucher exercise and continue to meet the income eligibility criteria will automatically receive a notification letter via post and need not apply. These letters will be sent by end-December.
Households that meet the eligibility criteria but did not receive a voucher in the previous scenario can apply for the vouchers online or in person at community centres from early 2023. More details will be given later.
5. Enhanced education financial assistance schemes and bursaries
The income eligibility threshold for the Ministry of Education's (MOE) financial assistance schemes will be raised to defray school expenses for more students.
This will take effect from Jan 1, 2023, for primary, secondary and pre-university students and from the 2023 academic year for those on government bursaries for post-secondary education institutions.
For the MOE financial assistance scheme for government, government-aided and specialised schools, as well as for MOE-funded special education schools, the gross household income cap will be increased from $2,750 to $3,000. The per capita income cap will be increased from $690 to $750.
The higher income eligibility criteria mean an additional 10,500 students can benefit from such assistance.
The bursary quantum for full-time Institute of Technical Education students will also be enhanced from the 2023 academic year, with those from lower-income households benefiting from the highest increase.
The ministry is also reviewing government bursaries for diploma and undergraduate students, and will provide more details when ready.
GST Assurance Package to be updated amid higher inflation, details in Budget 2023: DPM Wong
By Goh Yan Han, Political Correspondent, The Straits Times, 14 Oct 2022
The $6.6 billion support package to offset the upcoming goods and services tax (GST) hike will be updated to take into account higher-than-expected inflation, said Deputy Prime Minister Lawrence Wong on Friday.
Details will be provided in Budget 2023, he added at a press conference where he announced additional measures to help Singaporeans cope with rising prices.
Mr Wong said the Government is fully committed to cushioning the impact of the GST increase, which will take effect in two stages from Jan 1, 2023, and that proceeding with the hike to secure revenue needed for growing expenditure is the "more responsible approach".
Noting that the Assurance Package is meant to offset the impact of the GST increase for the majority of Singaporean households for at least five years, and for lower-income households for about 10 years, he said the Government will "review the sizing and components" of the package to keep to that commitment.
The GST will increase by one percentage point from 7 per cent to 8 per cent on Jan 1, 2023, and another percentage point to 9 per cent on Jan 1, 2024.
The package currently includes cash payouts for all adult Singaporeans, GST voucher cash payouts for lower-income seniors, as well as additional GST voucher U-Save rebates for about 950,000 Singaporean households.
Mr Wong, who is also Finance Minister, said he understood the concerns people have about raising the GST rate at a time when inflation is high, and that they may want to defer the increase till a time when inflation eases.
But while inflation is expected to ease somewhat by the second half of next year, it will not return to the very low rates that people were used to over the past decade, he added.
"Going forward, the new normal will be a much higher rate of inflation than we were used to in the past," he said.
The inflation outlook also remains very uncertain, he noted.
"So even if it eases to a new level of inflation next year as we have projected, there may well be uncertainties down the road."
The Russia-Ukraine war may be more protracted or there may be new disruptions to food and energy supplies, which could lead to higher inflation persisting for a much longer duration of time, he said.
"While we have this uncertain inflation outlook, our spending needs are very certain. They are just going up year by year. It is going to be very hard for us to time our revenue raising measures with the uncertain inflation outlook," said Mr Wong.
Hence, the Government will proceed with the GST increase, but ensure that it offsets or cushions the impact on Singaporeans, in particular for the lower- and middle-income households, he added.
In doing so, higher-income Singaporeans as well as foreigners and tourists here will be paying the additional GST increase and providing the revenue the government needs to fund the health and social expenditure, he said.
Measures rolled out in 2022 fully covers inflation impact for households in bottom 40%: Ministry of Finance report
By Goh Yan Han, Political Correspondent, The Straits Times, 14 Oct 2022
The various cost of living support measures rolled out in 2022, including a new $1.5 billion package announced on Friday, will fully cover the effect of rising prices for the bottom 40 per cent of households and retiree households.
For households in the middle 20 per cent, more than half of their average expenditure increase will also be covered by the measures, according to estimates released in a Ministry of Finance (MOF) report on Friday.
These offsets will reduce the effect of inflation, which is around 6 per cent, by more than half, said the ministry.
In particular, those in the bottom 20 per cent will have more than 1½ times of their average projected expenditure increase covered by the cost-of-living support measures announced in 2022, according to the report.
The consumer price index (CPI) inflation for all items is expected to be around 6 per cent for 2022 while the Monetary Authority of Singapore core inflation is projected to average around 4 per cent.
Both are much higher than the average of 1.5 per cent for both rates experienced over the past 20 years, said MOF, adding that heightened inflation erodes the purchasing power of households and raises the cost of living.
In response, the Government has implemented four rounds of measures in 2022 to lower cost-of-living pressures and provide support for households.
These are: two $1.5 billion support packages each announced in June and in October, the Household Support Package in Budget 2022, and a public transport voucher disbursement announced in April.
The MOF report released on Friday examined the extent to which government support measures provide support to Singaporean households and defray increases in their living expenses.
Government support comes in two forms - price subsidies, which directly lower prices, as well as cash and near-cash support.
The ministry noted that many of the social schemes are designed to supplement the income of Singaporeans households and offset part of their expenditure.
Cash or near-cash transfers are intended to improve affordability and give households the choice on how to use the additional resources, rather than lower prices generally for all.
This targeted approach more effectively buffers cost-of-living pressures for lower- and middle-income households, said MOF.
To examine how government support measures are reflected in the CPI, the ministry simulated the price impact of three schemes: the GSTV - U-Save rebates and Household Utilities Credit, public transport vouchers and MediSave top-ups.
These measures are among those not directly reflected in the CPI because they can be used for more than one specific purpose or are utilised over a longer duration than a specific month, or both.
The simulation registered an average inflation of 5.4 per cent for the period.
This shows that the effective inflation faced by households between the simulation period of January 2022 to August 2022 was 0.3 percentage points lower than the actual inflation rate of 5.7 per cent, with the help of these three measures, said MOF.
More Than 10,000 Students to Benefit from Revised Income Criteria for MOE Financial Assistance Schemes and Increased ITE Bursary Quanta
By Amelia Teng, Education Correspondent, The Straits Times, 14 Oct 2022
About 10,500 more students will be eligible for financial help to defray school expenses, as the Ministry of Education (MOE) raises the income eligibility cap for financial assistance schemes.
The income eligibility criteria was last revised in 2018.
The changes will take effect from January 2023 for primary, secondary and pre-university students. The revisions will also apply to students in special education schools and independent schools.
For students in post-secondary education institutions such as polytechnics, the change in household income criteria will start from the academic year (AY) 2023.
This is expected to bring the total number of students receiving financial assistance to about 135,500, said the MOE in a statement on Friday.
Deputy Prime Minister and Finance Minister Lawrence Wong announced these changes on Friday at a press conference as part of a new $1.5 billion support package targeted at helping Singaporeans cope with rising prices.
From AY2023, Institute of Technical Education (ITE) students will also receive more support through government bursaries, with those from lower-income households getting the highest increase.
Full-time ITE Nitec and higher Nitec students from families with a gross household monthly income of $3,000 and below will have their tuition fees fully covered, and receive an annual bursary amount of $1,600, up from $1,500 currently.
With the revised income criteria, around 19,500 ITE students will be eligible for financial assistance, up from about 18,000 now.
The MOE said it is reviewing bursaries for diploma and undergraduate students and will share more details later.
These latest enhancements follow MOE's announcement in August on increasing transport and meal subsidies for needy primary and secondary students and bursaries for pre-university students, which also take effect from Jan 1.
In a Facebook post on the latest changes on Friday, Education Minister Chan Chun Sing said: "Education must remain accessible to all students, regardless of their backgrounds."
The MOE also said that it will revise the qualifying income cap for the Edusave Merit Bursary, from $6,900 to $7,500. This will apply from 2023.
This award is given to primary to polytechnic students who are within the top 25 per cent of their school's level and course in terms of academic performance and have shown good conduct.
From AY2023, MOE will also increase the cash award for the merit-based ITE Community Scholarship to $1,800, up from $1,600.
It will continue to provide 100 per cent fee subsidy for those receiving this scholarship, which is given to the top 10 per cent of N or O-level students in each intake.
Related
600,000 Public Transport Vouchers Available to Provide Support for Lower- to Lower-Middle Income Households -12 Oct 2022
Additional $200M Support from Government to Mitigate the Impact of Fare Increase on Commuters -12 Oct 2022
$1.5 billion Support Package to Provide Targeted Relief for Lower-Income Households and Vulnerable Groups -21 Jun 2022
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