Just two things you need to know from the Budget

If you take a very bird’s eye view of the budget, you’ll realise there are really just two overarching directions:

a.) Why we need to spend more and 

b.) How we will be able to spend more

It is not about GST. GST was but a means to an end. And this end, is all about financing our social expenditures.

Healthcare spending is going to rise by $3.6b more dollars a year. Why? More old people, more chronic diseases. More care, drugs an manpower are going to be needed to be paid.

Security spending is going to rise. The scale of terror attacks have been heightened and their means of attacking are becoming more creative.

Many countries are not prepared for rising expenditures in these two areas. Japan and Germany for example, spend 10-12% of their GDP on healthcare. Britain is struggling to cope with its very expensive healthcare system.

Although our healthcare is sound, we do not want to be caught unprepared when new demands on our expenses arise.

As people age, their expenses rise. Same as with a country, when it progresses and grows, expenses will rise.

“But didn’t we have a surplus? Couldn’t this surplus fund rising costs?” This was the same question MPs asked, notably Tin Pei Ling.

The surplus in 2017 was a one off.

Anyone who has done a bit of investment would know that it would be folly to rely on exceptional performance to plan your expenses. The main increases came from the MAS due to unexpected investment gains from a global rally in equity and bond markets. If you’re following the stock markets in the United States, you should know what this is about. Markets at at peak highs, never seen since the dot com bubble of 2001.

So although some of the surplus was distributed to Singaporeans, the bulk of it was reserved for future needs such as MRT development plans and ElderShield subsidies.

Ok, we need to spend more. But how will we get the money?

There are essentially 3 ways:

a.) Raise taxes

b.) Borrow or

c.) Draw on our reserves

It isn’t hard to decide which is the best course of action. Borrowing is not sustainable and savings are savings, you don’t use them unnecessarily.

The question now turns to “which tax to raise”?

The largest components of our income is:

a.) Contributions by GIC and Temasek

b.) Corporate taxes

c.) Income taxes

d.) GST

It is logical to decide which button to push.

a.) is not sustainable. Losses comes as easily as winnings when it comes to investments

b.) is tricky, countries all over the world are lowering taxes to attract businesses, and businesses are the only source of income for a country like us

c.) is closely pegged to businesses. If the environment is good, people don’t mind paying taxes to stay here. But if taxes keep on rising, it is very easy to move their source of income out of the reach of the tax man.

So what does that leave us with?

It is famously said that GST is a “regressive tax”. Now while that may be true, we are forgetting that low to middle income Singaporeans get a portion of their GST back in the form of cash. This writes off the amount of GST they pay, which is a better administration model than not charging GST at all.

The net effect is this: the rich pay for GST, but the low to middle income do not.

But even for the high income earners, they may be comforted knowing that our GST is still low by international standards.

Transforming the economy

The issue of GST should then be of least concern to a thinking Singaporean. Not withstanding the GST rebates, if your expenses go up then something must be done about your income.

As an administrator, the pressing issue then is growing jobs and opportunities. Ang Wei Neng, MP for Jurong GRC pointed out that this task is “growing more urgent by the day, as structural changes in the global economy and technological advances disrupt the status quo”.

In short, it means the Ubers, the Air BnBs, the autonomous machines… these are all technologies that destroy jobs and they’re doing it on a faster and wider scale than before.

Collectively, the MPs from the Labour Movement want the Government to focus on the importance of each worker and the value they bring to the country. These include:

Value mature workers’ wisdom and experience (Heng Chee How)

Companies can only continue to do well if they tap on mature workers who bring valuable wisdom and experience to the table. How can we tap, train and help the workers grow?

Value every worker by keeping them relevant (Patrick Tay)

Patrick questioned if the Employment Act is keeping up with the changing demographics of our workforce and whether or not training and upskilling is at the top of both employers’ and our workers’ minds.

Uncover the value that youths bring to the nation (Desmond Choo)

Desmond is concerned if youths understand the significance of creative destruction and how it will impact their jobs in the future.

Value the family behind every worker (K Thanaletchimi)

How many of us look beyond workers and see the families behind them? This Nominated Member of Parliament questions if there are more policies we can build to create family friendly workplaces.

Don’t underestimate the value that the freelancers and  self-employed bring to the economy (Ang Hin Kee)

As the gig economy rises and grows, freelancing is fast becoming the new employment norm. But are the freelancers accorded the same level of protection that traditional workers enjoy?

Low-wage workers’ contributions must be valued (Zainal Sapari)

The stark realities faced by these vulnerable workers don’t have to persist year after year. CPF, medical needs and compulsory Annual Wage Supplements are things that the Ministry of Manpower must consider.

Value the life of every worker (Melvin Yong)

Economic transformation is not possible without a strong and healthy workforce. As our workforce shrinks and population ages, the life of every worker — Singapore’s only resource — becomes even more valuable. Yong wants Parliament and businesses to create safer and healthier workplaces for our workers.

In short, businesses are fighting to grow their financial prowess in order to help Singapore and Singaporeans better. Workers also have to shoulder some responsibility in creating value and help their employers achieve better returns. It is only in such a relationship that the country can grow in spirit and stature.

The coming future will not be about mere economical expansion alone. The world is evolving into one where every person is cared for, every person has their rights defended and everyone person has a private space to grow. In order to create such personalisation and to care for all the marginalised people in Singapore, we need to be able to fund it.

The ecosystem that we’ve created, where businesses, government and working people contribute peacefully and co-operatively will move Singapore into a stronger position in the next decade and for further decades to come.

 

 

About the author

Tay Leong Tan

Tay Leong Tan is a collective of 3 writers. Tay, Leong and Tan. (Who were you expecting?!) We are enthusiastic about labour issues, economics and current affairs in particular.

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