Singapore Budget 2024: Building Our Shared Future Together

A Budget for all as Singapore tackles immediate cost-of-living challenges, invests in longer-term goals

By Goh Yan Han, Political Correspondent, The Straits Times, 17 Feb 2024

Everyone will have a slice of the Budget 2024 pie, which aims to address immediate challenges like cost-of-living pressures while investing in longer-term goals of strong economic growth, better jobs and a culture of lifelong learning.

Key policy moves include enhancements to the Assurance Package like giving out more Community Development Council (CDC) vouchers.

A significant top-up of SkillsFuture credits will benefit mid-career workers, while a corporate income tax rebate aims to help companies manage rising costs.

The Government will also be rolling out strategies to improve retirement adequacy, lower healthcare costs and provide more for lower-wage workers.

Many of these moves were signposted earlier in the Forward Singapore report released in October 2023.

Budget 2024 rolls out the first instalment of the Forward Singapore programmes, Deputy Prime Minister Lawrence Wong said in Parliament on Feb 16 as he delivered his third annual Budget speech.

He laid out a $131.4 billion proposal – about 18.3 per cent of Singapore’s gross domestic product.

These moves are part of an “ambitious agenda” to achieve the shared goals of building a nation that is vibrant and inclusive, fair and thriving, as well as resilient and united, he said.

They come amid a mixed outlook for 2024, he said. Growth in major economies is expected to be resilient, but geopolitical risks continue to loom large.

At the same time, global inflationary pressures are tipped to further recede, said DPM Wong, who is also Finance Minister.

He was “cautiously optimistic” that 2024 will be better than 2023, as he projected a $0.8 billion surplus for the upcoming financial year – “essentially a balanced fiscal position”.

Tackling cost-of-living pressures

DPM Wong acknowledged the pressure of higher living costs faced by many households.

While the economic situation is expected to improve in 2024, there are still uncertainties, which is why he has further enhanced the Assurance Package, said DPM Wong.

The package, meant to offset the impact of the goods and services tax hike, will be boosted by another $1.9 billion.

This includes an additional $600 in CDC vouchers for all Singaporean households, with the first tranche of $300 to be disbursed in end-June, and the remainder in January 2025.

All adult Singaporeans with an assessable income of up to $100,000 and who do not own more than one property will also receive a Cost-of-Living Special Payment of between $200 and $400 in cash.

Other measures to help individuals with costs include a MediSave top-up of up to $300 for about 1.4 million adult Singaporeans aged 21 to 50.

Those aged 51 and above will receive up to $1,500 in their Medisave Accounts under the earlier announced Majulah Package.

To help parents, fee caps – the maximum amount that school operators can charge – will be reduced for government-supported pre-schools. There will also be fee reductions for special education schools.

In addition, there will be a personal income tax rebate of 50 per cent, capped at $200, for the 2024 year of assessment.

Businesses will also receive help to manage rising costs, such as a 50 per cent corporate income tax rebate, capped at $40,000.

Supporting workers and businesses

A key component of the Budget is a suite of measures targeted at mid-career workers.

All Singaporeans aged 40 and above will receive a $4,000 top-up in SkillsFuture Credit as part of a new SkillsFuture Level-Up programme.

This will benefit about 1.95 million Singaporeans currently, though those younger will receive the top-up as well when they turn 40.

While the existing basic tier of $500 SkillsFuture Credit covers a wide range of courses, the new credit will only be allowed for use for selected training programmes with better employability outcomes. More details will be announced later.

Under the new programme, there will be subsidies for all Singaporeans aged 40 and above to pursue another full-time diploma at polytechnics, institutes of technical education and arts institutions from the 2025 academic year onwards. Currently, only those studying for their first diploma benefit from government subsidy.

DPM Wong also unveiled a monthly training allowance for Singaporeans aged 40 and above who enrol in selected full-time courses.

These moves are meant to help Singaporeans develop to their fullest potential, and to have productive and meaningful careers, he said.

A key priority of the Government is to ensure a strong, innovative and vibrant economy – and it will do so by focusing on productivity and innovation, he added.

DPM Wong announced a new Refundable Investment Credit, a tax credit meant to help Singapore stay competitive and attract investments from global companies.

There will also be investments to upgrade the Nationwide Broadband Network to enable mass market access to broadband speeds of up to 10 gigabits per second in the second half of this decade. This would be 10 times faster than the broadband speed in most homes today.

DPM Wong also brought up the temporary financial support scheme for the involuntarily employed, which had been mentioned in the Forward SG report.

He said that the Government is working out the parameters for the scheme, and will provide more details later in the year.

“Ours must always be an economy that provides opportunities for all; an economy that benefits the many rather than the few,” he said.

In this vein, DPM Wong announced enhancements to schemes that uplift lower-wage workers, such as the Workfare Income Supplement scheme and Workfare payouts.

The Government will also provide more support for employers who raise the wages of lower-wage workers by increasing its co-funding levels of the Progressive Wage Credit Scheme – from a maximum of 30 per cent to 50 per cent.

To encourage and support more young ITE graduates in upskilling efforts, a new ITE Progression Award will be rolled out for those aged 30 and below.

This will include a $5,000 top-up to their Post-Secondary Education Accounts when they enrol in a diploma programme, as well as a further $10,000 top-up to their Central Provident Fund (CPF) Ordinary Account when they attain their diplomas.

Help for seniors

Another area that the Budget provides for is support for the retirement needs of senior citizens.

DPM Wong said there will be adjustments to the CPF system, such as an increase in CPF contribution rates for those aged 55 to 65 by 1.5 percentage points in 2025.

Employers will be able to benefit from the CPF Transit Offset for another year, to cover half of the increase in their contributions for 2025. This will help cushion the impact on business costs.

The Enhanced Retirement Sum – the maximum amount one can put in the CPF retirement account to receive CPF payouts – will also be raised from 2025, to become four times the Basic Retirement Sum (BRS). It is currently three times the BRS.

The CPF system will also be tweaked, as the Special Account will be closed for those aged 55 and above, starting in 2025. The savings in the Special Account will be transferred to the Retirement Account, up to the Full Retirement Sum. The rest will be transferred to the Ordinary Account.

In addition, there will be enhancements to retirement support schemes for seniors who need more help. These include the Silver Support Scheme and Matched Retirement Savings Scheme.

DPM Wong also provided more details on the Majulah Package, announced by Prime Minister Lee Hsien Loong at the National Day Rally in 2023. The scheme will benefit about 1.6 million Singaporeans.

The package includes an Earn and Save Bonus for seniors earning up to $6,000 a month to accumulate more retirement savings and a one-time Retirement Savings Bonus of between $1,000 and $1,500 for seniors with retirement savings below the BRS.

Rounding up his speech, DPM Wong said the Forward Singapore policy moves will cost around $5 billion in the 2024 financial year, and will in total reach close to $40 billion by the end of the decade.

Projections by the Finance Ministry in 2023 assessed that government spending would increase to around 20 per cent of GDP by 2030.

DPM Wong said that for now, that remains the Government’s assessment.

Assuming the Government stays within this range of spending increase, it should have sufficient revenues to maintain a balanced budget over the coming years, he added.

But the medium-term fiscal position is tight, as there are many pressures to spend more.

“We will have to manage these expenditures carefully, or we will end up with a significant funding gap,” he said.

This is already happening in many other advanced economies, where public finances are on an unsustainable path and fiscal systems are at risk of breaking, he added.

“We must never allow this to happen in Singapore. Instead, let us uphold the ethos of fiscal discipline and responsibility that has served us well, and ensure that our fiscal position always remains balanced, sound and sustainable.”

He reiterated that Singapore has been able to weather past storms and emerge stronger.

“I believe we can do so again in our road ahead, so long as we stay united, work together and continue to keep faith in each other.”

Parliament will debate the Budget and the spending plans of various ministries from Feb 26 to March 7.

Something for everyone: Budget 2024 at a glance

By Jean Iau, Correspondent, The Straits Times, 17 Feb 2024

From workers to seniors, individuals to households, Budget 2024 has something for everyone to cope with cost-of-living pressures.

Deputy Prime Minister and Minister for Finance Lawrence Wong on Feb 16 unveiled a suite of support measures for all Singaporeans, including cash payouts, Community Development Council (CDC) vouchers for households, and mid-career training allowances for Singaporeans aged 40 and older.

Here’s what you can expect:

Individuals

• Singaporeans aged 21 and older who own not more than one property will receive between $200 and $2,150 in cash payouts between April 2024 and March 2025, depending on their eligibility.

• A personal income tax rebate of 50 per cent, capped at $200, will be given for the year of assessment 2024.

• $200 National Service LifeSG credits will be given for all past and current national servicemen.

• All Singaporeans will get $100 to $1,650 in top-ups to their Central Provident Fund (CPF) MediSave Account, depending on their eligibility.

• Singaporeans born in 1973 or earlier will receive bonuses of $400 to $2,500 in their CPF Retirement Account or Special Account, depending on their eligibility.

Households

• All Singaporean households will get $600 in CDC vouchers, half of which will be given out in June 2024 and the other $300 in January 2025.

• Eligible HDB households will receive $550 to $950 in U-Save rebates, depending on the size of their flat.

• Eligible Singaporean households in HDB flats will also get service and conservancy charges rebates to offset two to four months’ charges.

Families

• Eligible families who have booked their Build-To-Order flats but need a place to stay while waiting for their flats to be completed can apply for a one-year Parenthood Provisional Housing Scheme (Open Market) voucher to offset their rents of HDB flats in the open market. HDB currently offers subsidised rental housing under the Parenthood Provisional Housing Scheme.

• Monthly full-day childcare fee caps will be reduced in government-supported pre-schools in 2025 to $640 for anchor operators and $680 for partner operators. This is before the childcare subsidies that all families benefit from.

• Existing pre-school subsidies will be enhanced for lower-income families. Currently, more subsidies are given to children with working mothers. This will be extended to all children from lower-income families, including those with non-working mothers.

• ComLink+ Progress Packages will be launched to support lower-income families that enrol their children in pre-schools, and take action to remain employed, stay financially stable and save up for home ownership. For example, if these families ensure a child is enrolled in pre-school in the year the child turns three, they will get a one-off $500 top-up to the child’s Child Development Account.

• The annual income threshold will be raised for dependant-related personal income tax reliefs to $8,000 from the year of assessment 2025.

• For families with children with special needs, maximum monthly fees at special education schools and fee caps at all special student care centres will be lowered.

• More support will also be given to people with disabilities in employment and for integration into the community. Spaces will be expanded in sheltered workshops and day activity centres.

Workers

Mid-career reskilling for Singaporeans aged 40 and above

• A $4,000 SkillsFuture Credit (Mid-Career) top-up will be given in May 2024. This can be used for selected industry-oriented training courses with better employability outcomes.

• Subsidies will be available for another publicly funded full-time diploma.

• Up to $3,000 in monthly training allowance will be given for up to 24 months, for selected full-time courses.

Lower-wage workers

• Workfare Income Supplement scheme payouts will be increased to a maximum of $4,900 per year, up from $4,200, and the qualifying income cap will be raised from $2,500 to $3,000 from January 2025.

• The Local Qualifying Salary will be raised from $1,400 to $1,600 from July 2024. This means that companies that employ foreign workers must pay all full-time local workers at least $1,600. The minimum hourly rate will be increased from $9 to $10.50.

• The Progressive Wage Credit Scheme (PWCS), where the Government co-funds the pay increases of lower-wage workers, will be increased in 2024 to a maximum of 50 per cent from 30 per cent. The PWCS wage ceiling will be raised to $3,000 in 2025, from the current $2,500.

Institute of Technical Education (ITE) graduates

• To encourage and support more ITE graduates aged 30 and below to upskill, their Post-Secondary Education Account will be topped up by $5,000 when they enrol in a diploma course at a polytechnic, the ITE, Nanyang Academy of Fine Arts or Lasalle College of the Arts. They will also get a $10,000 top-up to their CPF Ordinary Account after they complete the course.

• There will be a temporary financial support scheme for involuntarily unemployed workers while they undergo training or look for jobs. More details will be announced later in 2024.

Seniors

• Eligible seniors earning up to $6,000 a month will receive a yearly bonus of up to $1,000 to their CPF Retirement Account or Special Account for as long as they work. Those who have retirement savings below the Basic Retirement Sum will also get a one-time retirement savings bonus of between $1,000 and $1,500.

• $3.5 billion will be set aside to support seniors in their homes and communities, such as by expanding the network of Active Ageing Centres, and introducing more senior-friendly home fittings and commuter infrastructure.

• The per capita household income thresholds will also be increased for healthcare and associated social support subsidy schemes.

• The Matched Retirement Savings Scheme will be expanded. The scheme helps Singaporeans aged 55 to 70 with less CPF savings by providing dollar-for-dollar matching for cash top-ups to their CPF accounts. The expanded scheme will cover Singaporeans aged 55 and above, and increase the annual matching cap to $2,000, with a lifetime matching cap of $20,000.

• The CPF Enhanced Retirement Sum (ERS) will be increased from three to four times the Basic Retirement Sum. The ERS is the maximum amount that people can put into their CPF Retirement Account to receive CPF payouts. This means the ERS in 2025 will be $426,000.

• The interest-free Giro instalment plan for residential property tax bills will be extended to 24 months for eligible retirees aged 65 and above.

Budget 2024: Singaporean households to get $600 in CDC vouchers as part of enhanced Assurance Package

By Chin Soo Fang, Senior Correspondent, The Straits Times, 17 Feb 2024

Singaporeans will get a mix of cash, vouchers and rebates under a $1.9 billion boost to the Assurance Package to help them cope with cost-of-living concerns and an uncertain economic outlook.

The aim is for lower-income families and larger households – especially those with seniors and children – to get more support, Deputy Prime Minister and Finance Minister Lawrence Wong said in his Budget speech in Parliament on Feb 16.

Among the enhancements are an additional $600 in Community Development Council (CDC) vouchers for about 1.4 million Singaporean households.

The first $300 will be disbursed in end-June in 2024, and the remaining $300 will be disbursed in January 2025. Each tranche of the vouchers will be split equally for spending at participating merchants and hawkers, and supermarkets.

A Cost-of-Living Special Payment of between $200 and $400 in cash will be given to eligible Singaporeans in September 2024. To qualify, people must be aged 21 and above in 2024, reside in Singapore, own not more than one property and have an assessable income of up to $100,000. This will benefit about 2.5 million adult Singaporeans.

In January 2025, a one-off service and conservancy charges (S&CC) rebate will be given to more than 950,000 Singaporean households to offset half a month of the charges.

Together with the regular S&CC rebates, eligible households in Housing Board flats will receive up to four months of such rebates in this financial year.

An additional one-off U-Save rebate will help more than 950,000 Singaporean HDB households with increases in their utility bills.

Eligible households can receive 2½ times the amount of regular U-Save rebates, or up to $950, in this financial year. This will cover about four months of utility bills for those living in three- and four-room flats, and will be disbursed in April, July and October in 2024, and in January 2025.

In his speech, titled Building Our Shared Future Together, DPM Wong noted that while inflation had started to moderate in 2023, economic growth also slowed and real incomes declined.

The Government had picked up early indicators of this negative trend, he said. As a result, it introduced the Cost-of-Living Support Package in September 2023, and enhanced the Assurance Package to more than $10 billion.

He cited an example of how a lower-income household of four, with two young children, will benefit under the enhancements to the Assurance Package.

Such a household will receive about $5,500 in benefits in this financial year, comprising cash, MediSave top-ups, U-Save and S&CC rebates, and CDC vouchers.

A middle-income household of four, with two young children, will receive about $3,000 in benefits.

And a middle-income household of six, including two seniors and two young children, will receive about $8,000 in benefits.

“Let me assure everyone: We will always have your backs,” DPM Wong said.

Beyond the Assurance Package, the GST Voucher Fund will also be topped up by $6 billion.

“This delivers on our commitment to permanently defray GST (goods and services tax) expenses for lower- and middle-income households, through the GST Voucher Scheme,” DPM Wong said.

An Enterprise Support Package worth $1.3 billion will also be introduced to help businesses manage rising costs in wage bills, rental, utilities and other costs.

This includes a corporate income tax rebate and cash payouts for companies that employed at least one local employee in 2023.

The Enterprise Financing Scheme will also be enhanced to help Singapore enterprises with financing needs and the SkillsFuture Enterprise Credit will be extended by a year.

“The enhanced Assurance Package and the Enterprise Support Package will provide some near-term relief to Singaporean households and firms. These are needed during this difficult period when inflation, while moderating, remains on the high side,” said DPM Wong.

However, he acknowledged that these are not permanent solutions.

“In the longer term, the best way to deal with inflation is to ensure that our firms and workers are more productive, and that real incomes continue to rise sustainably.”

Budget 2024: $4,000 SkillsFuture Credit top-up for mid-career workers, subsidies for another diploma

By Syarafana Shafeeq, The Straits Times, 17 Feb 2024

All Singaporeans aged 40 and above will be given a $4,000 top-up of SkillsFuture credits in May to encourage mid-career workers to refresh their skills and progress in their careers.

They will also be given subsidies to pursue another full-time diploma at polytechnics, the Institute of Technical Education and arts institutions from the academic year 2025.

Deputy Prime Minister Lawrence Wong announced in his Budget speech on Feb 16 that this move will give Singaporeans another bite of the education subsidy, even if they have graduated from an institution of higher learning as a young adult.

He added that the $4,000 credit top-up, under a new SkillsFuture Level-Up Programme, will be “more targeted in scope”. Its usage will be confined to selected training programmes with better employability outcomes. These include part-time and full-time diplomas, as well as post-diploma and undergraduate programmes.

DPM Wong, who is also Finance Minister, said: “We want participants taking up these programmes to be assured of better employability outcomes after they have completed their training.”

Younger Singaporeans will receive the same top-up once they reach 40. The $4,000 credit will have no expiry date.

Those above the age of 40 will also be given a monthly training allowance when they enrol in selected full-time courses from 2025, to partially offset income loss from taking time off work.

The courses that are eligible include full-time SkillsFuture Career Transition Programme courses, and full-time publicly funded courses at institutes of higher learning and arts institutions up to the undergraduate degree level.

The allowance will be equivalent to 50 per cent of one’s average income over the latest available 12-month period, up to $3,000 per month.

Each person can receive up to 24 months of training allowance throughout his or her lifetime. If an individual has been unemployed for more than a year, the training allowance will not be applicable.

Mr Calvin Li is one of the many Singaporeans who will be able to reap the benefits of the newly announced initiatives.

The 40-year-old project director at Khoon Engineering Contractor believes that training and upskilling can broaden his career opportunities and contributions to the workforce. He previously made a career switch from finance to the electrical engineering industry, and has attended different courses run by tertiary institutions and Workforce Singapore.

“What you study in school isn’t what you become or where you end up,” he said. “It is about your mindset – what is more important is that you are willing to try. Learning is a never-ending process.”

DPM Wong said the Government invests heavily in human capital, but learning cannot stop when formal schooling ends.

Singapore’s workforce ranks highly in terms of skills and technical proficiency, but expertise is in constant flux with rapid technological advances, he said.

That is why more investment has to be made to help workers update their skills, and learn how to harness new technologies more effectively, he added.

Since SkillsFuture was started nearly 10 years ago, the Government’s spending on continuing education and training has nearly doubled to $900 million in 2023, he noted.

But much more can still be done even as good progress has been made in this area, he said, adding: “Continuous skills upgrading throughout life is now more important than ever.”

The support measures for mid-career workers aim to help those who need a skills reboot and have to take time off work to attend training over an extended period while juggling financial and caregiving obligations, DPM Wong said.

Support for the involuntarily unemployed

Under SkillsFuture, more help will also be given to workers who are involuntarily unemployed, said DPM Wong.

The scheme will be designed carefully, taking into consideration the quantum of assistance and other conditions that come with the support, he added.

“This is to avoid the pitfalls that other countries have experienced when they introduced unemployment benefits,” he said, adding that more details will be provided later this year.

Prime Minister Lee Hsien Loong had previously announced plans to offer temporary financial support to retrenched workers during his 2023 National Day Rally speech. He said the scheme will enable those who are laid off to attend skills courses rather than seizing whatever jobs are offered out of desperation.

In his speech on Feb 16, DPM Wong said the Government’s move to provide temporary support for this group of workers comes amid technological changes that will bring about more churn in the economy.

Thus, even when the economy as a whole is doing well, some businesses, or even industries, may be suffering, he said.

“In some sectors, firms will have to let go of people, while in other sectors, new and better jobs will be created,” he said. “We have to accept this reality, but it doesn’t mean we should be indifferent to the suffering caused when firms lay off workers.”

Those who become involuntarily unemployed naturally feel the pressure to rush into the first available job they find, even if it is not a good fit, to make ends meet. Ideally, however, they should upgrade their skills and find a job that fits their aptitude and talent, he said.

“Therefore, we will do more to support this group of workers.”

Budget 2024: CPF retirement sum ceiling to increase; Special Account to be closed for those aged 55 and up from 2025

By Tay Hong Yi, The Straits Times, 17 Feb 2024

Central Provident Fund (CPF) members who wish to save more for retirement will be able to do so with a higher retirement sum ceiling from 2025.

The Enhanced Retirement Sum (ERS), which is the maximum amount members can put in their CPF Retirement Account to accrue interest and receive payouts, will be pegged to four times the Basic Retirement Sum (BRS) from Jan 1, 2025.

This is up from three times now, Deputy Prime Minister Lawrence Wong said in his Budget 2024 speech in Parliament on Feb 16.

The ERS will hence be $426,000 in 2025, instead of $319,500, which DPM Wong said will allow more members aged 55 and above to commit their accumulated CPF savings to receive higher monthly payouts.

The BRS provides CPF members with monthly payouts to cover their basic living expenses during retirement.

The higher ERS is part of wide-ranging changes to the CPF system that DPM Wong, who is also Finance Minister, announced on Feb 16.

Also kicking in on Jan 1, 2025, is more retirement support for seniors under the Matched Retirement Savings Scheme (MRSS) and the Silver Support Scheme.

Under the MRSS, the Government now matches the amount of voluntary CPF top-up for Singaporeans aged 55 to 70 if they do not meet their BRS.

“I will extend the MRSS to those above the age of 70. This will enable more Singaporeans to meet their retirement needs, with help from their families, employers and the community,” DPM Wong said.

The cap on the amount matched will be increased to $2,000 annually, from $600 now, but the amount granted to an eligible member will be capped at $20,000 throughout his lifetime.

Moreover, cash top-ups that attract the matching grant will not qualify for tax relief with the changes, as the matching grant “is already a significant benefit extended by the Government”, added DPM Wong.

Currently, Singaporeans aged 55 and above receive tax relief on cash top-ups of up to $8,000 they make to their Retirement Account (RA).

The number of CPF members eligible for the MRSS is expected to more than double, from 395,000 in 2024 to about 800,000 in 2025.

Meanwhile, the per capita household income threshold to qualify for the Silver Support Scheme will be raised from $1,800 to $2,300.

The threshold to qualify for increased support under the tiered scheme, which targets seniors who earn low incomes during their working years and have less family support, will also be raised from $1,300 to $1,500.

Quarterly payments made under the scheme will be increased by 20 per cent across all tiers as well to keep pace with inflation, DPM Wong said.

The enhanced Silver Support Scheme will benefit around 290,000 Singaporeans aged 65 and above, the Ministry of Finance (MOF) said in a statement on Feb 16.

To streamline the CPF system, the Special Account (SA) of members aged 55 and above will be closed starting from early 2025, DPM Wong announced.

This means that all CPF members will have three CPF accounts at any one time, with the RA or SA as the sole account holding savings intended for retirement payouts, depending on the member’s age. The other two accounts are the Ordinary Account (OA) and MediSave Account (MA).

SA savings will be transferred to the RA up to the Full Retirement Sum, and continue to attract the same long-term interest rate.

DPM Wong said the remaining SA savings will be transferred to the OA, but members can voluntarily transfer their OA savings to the RA at any time to earn higher interest and receive higher retirement payouts.

Otherwise, members may choose to keep those savings in the OA, where they remain withdrawable and will earn the short-term interest rate.

The long-term interest rate, which applies to the SA, RA and MA, is currently set at a minimum of 4 per cent, while the short-term interest rate applying to the OA is currently held at a 2.5 per cent minimum.

“As a principle, only savings that cannot be withdrawn on demand should earn the long-term interest rate, and savings that can be withdrawn on demand should earn the short-term interest rate,” MOF said in its statement.

Senior workers aged above 55, and up to 65, will also see CPF contribution rates for their own contributions and those from their employers increase by a total of 1.5 percentage points from Jan 1, 2025.

This is the latest instalment of increases in contribution rates in steps through to about 2030, as recommended by the Tripartite Workgroup on Older Workers in 2019.

DPM Wong also said the CPF Transition Offset for employers will be provided for another year, to cover half of the increase in employer contributions for 2025.

“This will help to cushion the impact on business costs,” he added.

Budget 2024: $8.2 billion Majulah Package to benefit 1.6 million Singaporeans

By Cheow Sue-Ann, Business Correspondent, The Straits Times, 17 Feb 2024

Some 1.6 million Singaporeans in their 50s and older will get more help to boost their retirement adequacy under the Majulah Package.

The package was announced at the National Day Rally in 2023 and is expected to have a total lifetime cost of about $8.2 billion.

It covers younger seniors in their 50s and early 60s, as well as those of the Merdeka generation, who were born between 1950 and 1959, and those of the Pioneer generation, who were born in 1949 or earlier.

To honour this commitment without burdening future generations, Deputy Prime Minister and Finance Minister Lawrence Wong said he will set aside $7.5 billion in a new fund, the Majulah Package Fund.

He said this will be enough to cover the lifetime cost of the package, after accounting for the investment income of the fund.

DPM Wong added that all Singaporeans born in 1973 or earlier will benefit from at least one component of the Majulah Package.

Details of the eligibility criteria for the three-part package were released on Feb 16.

The first component of the package is the Earn and Save Bonus (ESB), which provides lower- and middle-income workers with a Central Provident Fund (CPF) bonus of between $400 and $1,000 yearly. This bonus will be credited to the recipient’s CPF account, on top of the usual employer and employee contributions.

To qualify, recipients must remain in the workforce, whether full-time or part-time. They must have an average monthly income of between $500 and $6,000.

Eligibility for the ESB will be assessed annually, based on information from the preceding year. It will be tiered by the recipient’s average monthly income.

The first annual ESB will be credited to eligible recipients’ CPF Retirement Account (RA) or Special Account (SA) in March 2025.

To further prepare older Singaporeans for retirement, the package will also include a Retirement Savings Bonus (RSB) for those whose CPF balances as at Dec 31, 2022, have not reached the 2023 CPF Basic Retirement Sum of $99,400.

Seniors whose CPF retirement savings fall below the sum will receive the one-time bonus.

They can expect to receive between $1,000 and $1,500, credited to their CPF RA or SA in December 2024.

Both bonuses are applicable only to seniors who live in a residence with an annual value of $25,000 or below. They also cannot own more than one property.

Unlike the ESB and RSB, which benefit those who meet income and other eligibility criteria, the third component, a one-time MediSave Bonus, will be provided to all seniors who meet the age requirement.

DPM Wong said: “Young seniors with less means will be given the higher tier of $1,500, and all other seniors will receive $750.”

This bonus is tiered based on the recipient’s year of birth, the annual value of his residence and whether he owns more than one property.

The bonus will be credited into the CPF MediSave Account in December 2024.

Budget 2024: $3.5 billion to help seniors age actively, stay socially connected

By Judith Tan, Correspondent, The Straits Times, 17 Feb 2024

A total of $3.5 billion is being set aside for Age Well SG initiatives over the next decade to help seniors keep active, access better care options and live more independently in the community.

Under the new national Age Well SG programme, the network of Active Ageing Centres will be expanded so there will be more programmes available, from physical exercises to volunteering opportunities.

More assisted living options such as Community Care Apartments and better homecare arrangements will be in place, so that people can age at home and in the community.

In addition, “silver upgrades” to residential estates will cover amenities such as therapeutic gardens, barrier-free ramps and senior-friendly home fittings such as wider toilet entrances and shower seats.

Commuter infrastructure will also be improved, including building more sheltered linkways and senior-friendly bus stops and roads.

Announcing this in his Budget speech on Feb 16, Deputy Prime Minister and Finance Minister Lawrence Wong said Singapore had invested heavily to ensure that healthcare remains affordable and accessible.

About one in four Singapore citizens will be 65 and older in 2030, up from about one in five now.

Already, the Health Ministry’s annual budget has tripled within a decade, DPM Wong noted.

“With a rapidly ageing population, the fiscal pressures of healthcare will only grow. As a responsible government, we have to plan ahead and set aside sufficient resources to keep healthcare affordable for all,” he said.

DPM Wong told the House that the increase in the goods and services tax (GST) was meant for this purpose.

“Essentially, we are pre-funding the rising healthcare expenditure by increasing GST now, instead of waiting to do so in the future; because if we wait, we will end up imposing a heavier burden on our future selves and our children,” he said.

Citing the example of Madam Rubiah Rahim, who turns 69 this year, DPM Wong said individuals too must play their part.

“She is monitoring her blood pressure daily, cutting down on ice cream and keropok (deep-fried crackers) in her diet, and staying active through exercise classes and nature walks,” he said.

Yet, even with healthier lifestyles, people will still need some form of medical care as they get older.

“We must expect healthcare costs, including medical insurance premiums, to rise, even after generous government subsidies,” said DPM Wong.

He announced a one-time MediSave Bonus for all adult Singaporeans, part of the Government’s efforts to help Singaporeans offset healthcare costs and build their medical savings for old age.

Singaporeans aged between 21 and 50 years will be getting up to $300 in their MediSave Account to help cover smaller medical bills and insurance premiums. Under the Majulah Package, those aged 51 and older with less means will be given $1,500, while the rest will get $750 in their MediSave Account.

To provide more support for healthcare costs, both the Ministry of Health and Ministry of Social and Family Development will be revising the income criteria for various schemes and services that are means-tested using the monthly per capita household income.

Such schemes include MediShield Life premium subsidies and Community Health Assist Scheme (Chas) subsidies for both inpatient and outpatient treatments at public hospitals.

The changes to the per capita household income thresholds will mean additional government spending of around $300 million a year, with more than a million Singaporeans to benefit from the higher subsidies, said DPM Wong.

*  FY2024 Budget Debate Round-Up Speech by Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong on 28 Feb 2024

Singapore pursues growth to improve citizens’ lives as ‘no one will come to our rescue’: DPM Wong

By Goh Yan Han and Jean Iau, The Straits Times, 28 Feb 2024

Singapore needs to keep its economy growing so that it can make a living and take care of its people, at a time when the world is becoming more dangerous and unpredictable, Deputy Prime Minister Lawrence Wong said on Feb 28.

As he laid out the Government’s plans to achieve between 2 per cent and 3 per cent growth annually over the next decade, DPM Wong said: “The reality is that Singapore will always be a little red dot – we have no hinterland, we have no natural resources, unlike resource-rich countries like Qatar or the UAE (United Arab Emirates).

“If we falter, no one will come to our rescue.”

DPM Wong noted that the Government has quadrupled social spending over the last 20 years.

Sustaining growth is therefore the way to help Singaporeans secure a better future, he said, as he detailed how Budget 2024 builds on deliberate moves in recent decades to strengthen social support.

He was speaking at the end of three days of debate in Parliament on his $131.4 billion government spending plan that saw 61 MPs from across the aisle airing their views.

In his hour-long, round-up speech, DPM Wong said increasing value-add is how Singapore can command better prices in world markets, which in turn benefits workers here with higher wages.

He cited the example of German multinational enterprise Siemens, which came to Singapore in 1908 and grew over time from a small sales office to providing technologies across sectors such as transport, water treatment and medical diagnostics.

As businesses have options on where they want to invest or site their operations, Singapore has to maintain its competitiveness to justify the premium firms pay to be here, he said.

Key to this is productivity improvement, which the Government targets to account for 1 per cent to 2 per cent of economic growth in the coming decade.

This is an ambitious goal, given Singapore’s stage of development, and will require a continual transformation of the economy, with workers embracing new skills and technologies, said DPM Wong.

Staying attractive to high-quality investments will be essential, as such investments typically involve innovative activities that push the productivity frontier.

The remaining 1 per cent of growth has to come through increases in the workforce, he said.

With resident workforce growth slowing and insufficient to meet the demands of the economy, DPM Wong said Singapore has to stay open to foreign talent.

This includes work-permit holders, who comprise about two-thirds of the total foreign workforce, mostly doing jobs that Singaporeans do not want to do.

At the upper end, this means workers able to take on jobs in new growth areas such as the digital economy, where there is a global shortage of skilled talent.

DPM Wong said Singapore has a comprehensive system of controls to regulate the quality and number of work-pass holders across every level of the workforce.

To keep pace with wage growth here, the minimum qualifying salary for employment pass applicants will be increased, he said.

“Why are we doing all this? It is not to chase after a target. It is not to grow for the sake of growth. It is to secure better outcomes for Singapore and Singaporeans,” he added.

This is why the Government is also making several other moves in tandem, such as enacting workplace fairness laws, enhancements to SkillsFuture, and new support for segments that face more challenges, such as Institute of Technical Education graduates, he said.

Following DPM Wong’s speech, Leader of the Opposition Pritam Singh said that while growth is important, what is more key is that such growth is sustainable. He cited how the Government said about a decade ago that the country needed to slow growth down as the situation had changed dramatically.

In response, DPM Wong agreed that growth has to be sustainable. The issue then was about infrastructure, and the Government had since updated its planning processes. For instance, it has ramped up the building of public housing and worker dormitories.

Strengthening social safety nets

Over the course of the three-day Budget debate, questions were raised on whether the social support system is sufficient to assure Singaporeans through every life stage. Those who spoke on the topic included Ms Ng Ling Ling (Ang Mo Kio GRC) and Dr Wan Rizal (Jalan Besar GRC), as well as Workers’ Party MP Dennis Tan (Hougang).

In response, DPM Wong said social spending has quadrupled over the last 20 years, and the Government is also spending more on social support as a share of the whole Budget.

In Budget 2024, half the total expenditure across all government ministries is committed to social spending, with a substantial portion of this being structural schemes rather than temporary measures, he said.

He noted that some MPs urged the Government to do more, while others stressed the need to proceed carefully to avoid breeding a sense of entitlement and dependency among Singaporeans or undermining individual responsibility.

DPM Wong said the Government is careful about getting this balance right. “We have not changed our ethos of social support – it is not just about giving handouts, but it is about giving people a leg up.”

In response to Progress Singapore Party Non-Constituency MP Leong Mun Wai, who urged the Government to employ more permanent schemes rather than temporary handouts, DPM Wong said the Government does not see this as one or the other, and employs both. This was particularly the case in the past two years, as inflation was higher and temporary relief measures were necessary.

He pointed out that poorly designed permanent schemes will breed dependencies permanently.

On structural schemes which are not temporary, DPM Wong said: “We continue to fine-tune them to make sure that they are designed well so that we are providing all the support and assurance we need while also upholding our key ethos of individual responsibility and self-reliance, and avoiding dependency and entitlement.”

In his round-up speech, DPM Wong noted that the new ComLink+ scheme and SkillsFuture Level-Up Programme have been designed to not erode personal and family responsibilities. Likewise, the upcoming temporary support scheme for workers who are involuntarily unemployed will also abide by these principles.

“We catch Singaporeans when they fall, and we make sure they do not fall behind. We invest in them, and we provide them the support to bounce back from life’s setbacks, and do even better for themselves,” he said.

DPM Wong added that these schemes are ultimately about ensuring that families and individuals enjoy better incomes and living standards.

He noted that over the past decade, lower-income groups in Singapore have progressed faster than other groups. The real incomes of the bottom 20 per cent have increased slightly faster than the middle income and twice as fast as the top 20 per cent.

“This is based on incomes alone. It has not taken into consideration our progressive system of taxes and benefits, which favours the lower-income,” said DPM Wong, noting the overall picture is better for the lower-income and that the Government will continue to improve its policies.

Support amid inflation

DPM Wong pointed out that the reasons for high inflation in Singapore over the last two years are not unique to the country.

For more than a decade before the Covid-19 pandemic, global inflation was generally stable at about 4 per cent per annum.

During this time, Singapore enjoyed relatively stable inflation and in most years, this was lower than global inflation, he noted.

But in 2021 and early 2022, strong demand and constrained supply due to pandemic-related restrictions and the Russia-Ukraine war resulted in a surge in prices, driving inflation everywhere.

Tightened monetary policy in Singapore helped ensure that inflation did not reach the peaks seen in several parts of the world, said DPM Wong.

Some MPs, including Ms Ng and Mr Faisal Manap (Aljunied GRC), highlighted other specific cost items such as housing and transport, to which DPM Wong said affordability has improved in relation to real income.

Acknowledging that there tends to be a gap between economic data and perceptions of consumers, he said the Government takes feedback on the ground seriously, but also examines data closely to better shape policy responses.

This is why support packages have been extended over the last two years to cushion the impact of inflation, particularly for low- and middle-income Singaporeans, added DPM Wong.

While inflation is moderating in 2024, the Government recognises that prices are still high, and that there are continued pressures for families and individuals. This is why the Assurance Package has been enhanced.

He said: “We have designed and sized the support of the enhancements carefully. There is something for everyone, regardless of age, property type or income. But we also don’t want to inadvertently stimulate demand too much and push up prices... So, the support is targeted and tilted towards those with less.”

DPM Wong also reiterated how support measures in Budget 2024 will fully cover the increase in spending due to inflation for lower-income households in 2024, and will substantially cover the increase for middle-income households.

For businesses, he said the Government has pledged to help them with rising costs through the Enterprise Support Package, which he called the most generous corporate income tax rebate extended to date.

All eligible firms, including those that are not profitable, will be provided with a cash grant which can be used to defray cost increases in wages, rentals, utilities or transport.

“I understand that some groups will feel that the help extended is still not enough. But I hope everyone can appreciate the bigger picture. We are going through a rough patch of higher prices due to forces well beyond our control,” DPM Wong said, noting the Government will do all it can to help households and businesses through this rough patch.

WP MP Jamus Lim (Sengkang GRC) asked if DPM Wong still believed that the timing of the increase in goods and services tax (GST) was justified, given that it would likely have contributed to domestic inflation.

DPM Wong said the impact of the GST increase is “once-off” and not permanent. It is not the key driver behind Singapore’s inflation spike, he said.

He added that there are schemes in place to defer the impact of the tax increase, especially for low-income groups.

The GST increase was also necessary to fund rising expenditure, he said. “Our approach is let’s do it correctly, let’s do it in good time... Make sure that our fiscal system remains sound and always ensure that we have sufficient revenues to cover our spending.”

Singapore’s fiscal system is fair; those with greater needs get more than they pay in taxes: DPM Wong

By Timothy Goh, The Straits Times, 28 Feb 2024

Singapore’s fair and progressive fiscal system ensures that those with greater needs, particularly lower-income families, receive more assistance than what they pay in taxes, Deputy Prime Minister Lawrence Wong said on Feb 28.

The Government’s long-term and prudent approach has enabled it to keep expenditure at less than 20 per cent of gross domestic product (GDP) and hence keep the tax burden low, DPM Wong added as he addressed MPs’ comments on the Budget statement he had delivered on Feb 16.

DPM Wong, who is also Finance Minister, noted that Singapore does better than advanced economies such as the United Kingdom and Finland in terms of the benefit-to-tax ratio, especially for lower- and middle-income households.

For example, the lowest 20 per cent of households in Singapore receive about $4 in benefits for every dollar of tax paid, which is higher than the benefit-to-tax ratio of about 3.5 in the UK and Finland.

The middle 20 per cent of Singapore’s households receive about $2 for every dollar of taxes paid, more than the UK’s benefit-to-tax ratio of 1.2.

Meanwhile, the top 20 per cent of households here receive about 30 cents for every dollar paid in taxes, similar to Finland’s benefit-to-tax ratio of about 0.3.

DPM Wong added that the benefits cited in these figures do not include other intangible benefits such as access to quality education, healthcare and housing.

During the Budget debate on Feb 28, several MPs, including Mr Liang Eng Hwa (Bukit Panjang), Mr Louis Chua (Sengkang GRC) and Leader of the Opposition Pritam Singh (Aljunied GRC), sought clarifications on the potential impact of the BEPS 2.0 global framework.

BEPS, or Base Erosion and Profit Shifting, are tax planning strategies used by multinational enterprises that artificially shift profits to locations with no or low tax rates, and where the company has no or little economic activity.

Singapore is implementing a minimum effective tax rate of 15 per cent for large multinational enterprise (MNE) groups from January 2025, in line with Pillar Two of the BEPS 2.0 framework.

However, this means the Republic will no longer be able to offer traditional tax incentives to attract such companies.

In response, DPM Wong said that based on the Organisation for Economic Cooperation and Development’s (OECD) estimates, investment hubs could see a corporate income tax revenue gain ranging from about 17 per cent to 38 per cent, which translates to a revenue gain of about $5 billion to $11 billion per year for Singapore.

He also noted that economies like Hong Kong and Switzerland, which are also investment hubs like Singapore, have estimated their revenue gains at $1.7 billion and $2.4 billion, respectively, which are much lower than the OECD’s estimates.

“These data points are suggestive of what the range for Singapore could be – anywhere from $2 billion to $11 billion. But we are really not sure where we will end up because there are so many unknowns,” he said.

DPM Wong also emphasised that these figures have not taken into account how MNEs may respond and the possibility of their activities moving out of Singapore, which would reduce the country’s tax base.

He added: “What we are doing is to engage the MNEs better to understand how they are likely to respond, especially taking into account some of the moves we have made in this Budget, and we will provide our own revenue estimates in due course.”

Any revenue impact from the Pillar Two moves will only materialise in the Financial Year 2027, he noted.

DPM Wong also agreed with MPs like Mr Chua and Associate Professor Jamus Lim (Sengkang GRC) that the point of BEPS 2.0 is to shift the balance to favour governments and get MNEs to pay more taxes.

However, the reality is that MNEs have bargaining power, and “governments around the world are all finding ways to favour them and getting them to invest”, he said, citing the United States’ $2 billion grant to semiconductor chipmaker GlobalFoundries as well as Japan’s latest subsidy of $6.5 billion for fellow chip manufacturer Taiwan Semiconductor Manufacturing Co.

“We are not in the same league, but we have to play a smart game so as not to lose ground and to anchor important investments here,” he said.

This is why the Refundable Investment Credit (RIC) scheme was introduced in Budget 2024 to update the Republic’s investment promotion toolkit, and the Government also committed to spending more to support new investments, research and innovation activities, he said.

The RIC scheme is a new tax credit scheme that aims to support high-value and substantive economic activities. It includes a refundable cash feature.

Activities in support of the green transition and those to do with new innovation and research and development are some of the investments eligible for the scheme, as is the setting up or expansion of manufacturing facilities.

“These moves are absolutely necessary so that we remain in the race for quality investments and create good jobs for Singaporeans,” DPM Wong said.

“This is not an academic exercise. This is about the lives and livelihoods of Singaporeans, and we will do whatever is necessary to safeguard this, especially in a world where competition will only get tougher.”

No need for further GST increases up to 2030: DPM Lawrence Wong

By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 28 Feb 2024

There will be no need for further increases in goods and services tax (GST) up to 2030, Deputy Prime Minister and Finance Minister Lawrence Wong said on Feb 28.

Wrapping up the debate on his Budget statement in Parliament, he said: “As of now up to 2030, we are in a sound position.”

He was responding to a question by Progress Singapore Party Non-Constituency MP Hazel Poa, who asked if there would be a need to raise GST from now until 2030.

To this, DPM Wong said the 2 percentage point GST hike – from 7 per cent to 8 per cent on Jan 1, 2023, and to 9 per cent on Jan 1, 2024 – is meant to close the gap between revenue and expenditure until 2030.

“We have closed the funding gap up to 2030. The GST increase that we announced was intended for this, so we are okay up to 2030. We do not need further GST increases up to 2030,” he said.

The Government has said the revenue from the increase in GST will go towards meeting Singapore’s medium-term needs, such as in healthcare and social spending.

In an occasional paper on medium-term fiscal projections published in February 2023, the Ministry of Finance (MOF) projected that government spending would rise to about 19 per cent to 20 per cent of gross domestic product in the 2026 to 2030 financial years, and may exceed 20 per cent of GDP by FY2030.

To close this funding gap, moves were made at both Budget 2022 and Budget 2023 to strengthen the Government’s revenue position so that rising expenditure can be balanced by total revenue in the coming years, DPM Wong said previously.

In Parliament on Feb 28, he said MOF will continue to update its projections of Singapore’s medium-term fiscal needs on a rolling basis.

He added: “So, post-2030, we will have to see what the picture is.

“And beyond that, we will have to see if indeed there is a funding gap, if there are increased expenditures, and whether or not additional revenues or tax changes are needed to close those funding gaps.”

Impact of GST hike on inflation

Workers’ Party (WP) MP Jamus Lim (Sengkang GRC) said the GST hike had likely contributed to domestic inflation, adding that increases in value-added taxes in other jurisdictions have typically caused a spike in inflation. He asked if DPM Wong “still believes that the timing of raising GST was justified”, or if it would have been wiser for the move to be postponed.

To this, DPM Wong said that while hiking GST does cause prices to go up, this impact is “once off” and is “not permanent”.

He added that it was clear from inflation trends that the GST increase was not the key driver behind the spike in prices here, and “neither will it cause us to have inflation remaining high”.

The rise in inflation was a global trend, and Singapore had been hit as well, but the inflation rate here has since come down and continues to moderate, he said.

Through the Assurance Package to help Singaporeans cope with cost-of-living pressures, the Government has deferred the impact of the GST increase on the vast majority of Singaporeans, especially the lower-income groups, by more than five years, he added.

As for the timing of the hikes, he said: “If we had not done it at the time we did, when will be a good time to do it?

“And, well, if we were to do it this year, or next year, will the opposition therefore support it? I seriously doubt so.

“So, I think our approach is let’s do it correctly. Let’s do it in good time, make sure that our fiscal system remains sound and always ensure that we have sufficient revenues to cover our spending.”

Avoid ‘fiscal fantasies’

Opposition MPs have often called on the Government to use more of the past reserves to fund current spending, DPM Wong said, noting that this will be detrimental to both current and future generations of Singaporeans.

If this is done, the Net Investment Returns Contribution (NIRC) – which comes from the long-term returns of investing the past reserves – will shrink as a percentage of GDP, and the funding gap will increase.

This means future generations will have to pay more taxes, he warned.

Unlike many other advanced economies, where debts and deficits are rising and the fiscal systems are close to breaking point, Singapore is enjoying the benefits of savings from the past, he said.

Around the world, many political parties are not prepared to speak the hard truths, he added, and policy debates are dominated by “fiscal fantasies”, including overly optimistic forecasting assumptions, unrealistic suggestions to raise funds from only the rich or kicking the can down the road indefinitely.

Calling on the House to commit to maintaining fiscal sustainability, DPM Wong said: “Let’s not indulge in fantasy thinking. Not in this House, not in Singapore.

“Having the resources to pursue a strong economy and a strong society, and achieve good outcomes, is not a fairy tale. This is very much our Singapore reality, but it requires us to focus on prudence, fairness and sustainability.”

He said the ruling People’s Action Party’s (PAP) position on the issue was quite clear.

“Where it comes to certain fundamental principles, and values, like fiscal responsibility, a basic orientation not just to look at today but for the future, this must never be compromised, this must never change,” he added.

“These principles were put in place by our founding leaders. They have continued under successive leaders of the PAP, and they will certainly continue under my watch.”

There was a time when there was an alignment between the PAP and the WP, under former chief Low Thia Khiang, on this ethos, but this has changed under current WP chief and Leader of the Opposition Pritam Singh, he added.

To this, Mr Singh suggested that the PAP, too, had changed its position.

He pointed to how the “PAP government (of) yesterday” would return money drawn down from the reserves as a “matter of principle”, but may not do so today.

Contrasting the drawdowns from the reserves made during the global financial crisis in 2008 with those during the Covid-19 pandemic, Mr Singh said the Government had returned the money to the reserves after the global financial crisis but has said it is unlikely to return the amount drawn down during the Covid-19 pandemic.

“Global financial crisis, Government draws down, returns the money, and I think there were some statements made about why it was doing that. This time round, reserves are used for another emergency, and they are not returned,” said Mr Singh.

“Just (a) simple statement of fact. Positions change.”

In his wrap-up speech, DPM Wong said if the opposition parties have different views on Singapore’s fundamental fiscal philosophy, they should take the issue to the ballot box for people to decide.

“Make drawing more from the reserves an election issue. Go to the people, ask them for a mandate to change the Constitution, compel the President to let you spend 60 per cent, 75 per cent or even 100 per cent of the NIR (Net Investment Returns),” he said.

“The PAP will join issue with you – we will present our case to Singaporeans, and ultimately Singaporeans can decide what is the best fiscal approach to take Singapore forward.”