Response to the Government’s Emerging Stronger Budget 2021

24 February 2021

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Introduction


Mr Speaker, as in recent years, Budget 2021 reflects not just the Government’s priorities for this financial year, but the Government’s medium-term direction as well. In my view, many schemes in the Budget are a continuation of a strategic agenda laid out in previous years, or are jigsaw pieces of a longer-term plan fleshed out elsewhere. The Government’s agenda continues to be guided by the Committee for the Future Economy report released four years ago and by the more recently released Research, Innovation and Enterprise 2025 Plan, amongst others. 


COVID-19 however has accelerated some plans, and thrown a spanner in the works of others. For example, digitalisation has found new impetus while the Changi Air Hub plans have been put on hold. Following Minister Lawrence Wong’s comments at the recent Singapore Perspectives Conference, I was looking forward to indications in the Budget of a reset of the Government’s agenda in the areas Minister Wong highlighted. Of particular interest to me was Minster Wong’s mention of a reset of our social compact to tackle inequality and keep society fluid and mobile. His discussion of a permanent shift towards stronger social safety nets, a commitment towards a Greener Singapore, and a reset to strengthen solidarity in our people also made for a refreshing vision. 


However, the Budget did not sound like a reboot of ideas and the direction of yesteryear. To some extent, this is understandable as the country remains in the throes of a pandemic along with talk of K-shaped recovery. With many uncertainties on the horizon, an instinct to stay the course and to adopt a nimble posture is not unexpected.


I will speak on three main areas that address specific aspects of DPM Heng’s Budget speech.


Emerging Stronger with Skilled Workers and Innovative Businesses


First, on Emerging Stronger with Skilled Workers and Innovative Businesses. Sir, in my opening speech this Parliamentary term, I cautioned about the lived reality of the Singaporean worker in light of foreign competition in his or her own country. DPM Heng said in his speech that a balance has to be struck, with a focus on the complementarity of local and foreign manpower and the stepping up of industry transformation. 
As such, I was surprised by the relatively small number of Singaporeans who have benefitted from the Capability Transfer Programme or CTP. Fewer than 970 Singaporeans have benefitted thus far. The CTP funds the salary and training for both foreign and local trainers and local trainees by between 30 and 90 percent. 


When the scheme was launched in 2017, the Ministry of Manpower positioned it as a scheme that would strengthen the Singaporean core of workers and enhance how local and foreign workers would complement rather than compete with each another. Considering that there are a quite few sectors in which there is a real need for talent transfer to Singaporeans, such as IT where a common complaint from employers is the lack of Singaporean talent, I would have expected to see many more Singaporean workers improving their prospects through the CTP. Similarly, with the establishment of industry clusters through the Industry Transformation Roadmaps (ITMs) identifying improved jobs and skills prospects across 23 sectors as a key ITM deliverable, one would have imagined more CTP applications, with more than a fair share qualifying for the highest tiers of the grant. The example Minister cited in his budget speech of a Technical Officer at SP Services learning new skills in network support for the rollout of advanced electricity meters suggests there is significant downstream reach of the CTP, regardless of industry. 


In extending the CTP until 2024, can the Minister share what has been achieved by the CTP for the Singaporean worker thus far and how much money has been spent? What skill sets have been transferred to Singaporean workers by sector and which industry clusters is the Government earmarking for greater talent transfer through the CTP?  I also seek greater clarity on the Minister’s commitment of $24b to enable firms and workers to emerge stronger. Can Minister detail what this multi-year allocation entails? More importantly, in view of the headline numbers, how does the Government plan to release information and account for the tangible and intangible outcomes of the monies spent on these multi-year initiatives?


In similar vein Mr Speaker, Minister shared that an additional $5.4b would be allocated to a second SGUnited Jobs and Skills Package, on top of the $3b allocated last year. Sir, from 11 Aug last year, the Ministry of Manpower has been releasing weekly Job Situation Reports providing updates on the SG United Jobs and Skills Package. After the seventh weekly report, the Reports stopped becoming weekly. Instead, periodic reports were released, focussing on the available opportunities in each sector on a monthly basis. The public sector opportunities are significantly funded by the Government. As such, the Job Situation Reports need to be buttressed with significantly more detail. For example, while the reports state the number of successful placements and charts the salary range for major job roles in specific sectors, there is little detail on the salary levels and age ranges of those who have been successfully placed, particularly those in long-term jobs. 


Sir, outcomes for our mature workers are an important bell-weather for the Government’s initiatives. Shortly before COVID struck, the tripartite partners acknowledged the importance of strengthening support for older workers through a range of measures, including progressively raising the CPF contribution of older workers in the years to come. The public should be given greater insight into the effectiveness of multi-billion-dollar initiatives that aim to improve job opportunities and outcomes for all our workers, but especially our mature workers. This is in light of the fact that a significant number of workers who will also enter their 50s by 2030. The effectiveness of the Government’s measures should be readily determinable. Without such scrutiny, a perception may crystallise of large sums of money being deployed to address an issue for which effectiveness is hard to establish.


This follows on from my call in September for more, not less, information from the Government. I encourage Singaporeans to look out for the reports of the Estimates Committee, a standing Parliamentary Select Committee, one of whose roles is to examine the Government’s budget. If the Government would consider a more aggressive reset in this regard, the establishment of an independent Parliamentary Budget Office may well be another complementary addition towards the judicious use and accountability of taxpayer dollars. In fact, it would be in step with Minister’s call for fiscal prudence and add an important element of public accountability and transparency in light of the massive drawdown of reserves to fight COVID-19.


Sir, in response to the Minister’s Resilience and Solidarity budgets of last April, I spoke of the lessons of COVID-19 raising the prospect of sectors that could be manned by more Singaporean workers for better resilience and national outcomes. I also spoke of what a living wage ought to be for those who man our critical infrastructure and keep the country’s heart beating. Like many Singaporeans, a high point for me in this budget was the announcement of a hike in the salaries of our nurses and healthcare professionals. A crisis usually leaves lasting lessons about those you can count on and who are always there in one’s most challenging times. Healthcare workers deserve their raise. I would urge the Government to look at reviewing the wages of other front-liners and particularly essential workers like our waste disposal workers, transport workers and many others who proved indispensable in this COVID-19 fight. 


Strengthening our Social Compact


The second section of my speech covers Minister’s comments on strengthening the nation’s social compact. My key query in this section pertains to the announcement of the disbursement of $100 worth of Community Development Councils (CDC) Vouchers to all households, to be used at participating heartland shops and hawker centres. 

 
Sir, the Singaporeans who have borne the brunt of COVID-19 are the low-income. Government schemes ranging from SIRS to various COVID-19 grants have certainly helped stave off hardship, but there are nonetheless serious concerns about the state of these families and households today. Beyond Social Services is a community organisation which reaches out to 64 rental blocks where more than 10,000 individuals live. This  represents a fairly large and determinative sample of Singapore’s rental housing population. 


Beyond Social Services launched its COVID-19 Family Assistance Fund in March 2020 and in 6 months had committed over $3m to more than 1900 families. The organization released a report earlier this month and some findings read starkly. Post COVID-19, the median household income from work fell from $1600 to $500, a 69% drop. The median per capita income fell 74% from $425 to $113 and 35% of FAF applicants saw their income drop to $0. I have to clarify that these numbers do not take into account the not insignificant COVID-19 financial assistance pumped over the course of the last year. 


That said, according to Minister in his comments to ChannelNewsAsia over the weekend, the inequality situation measured by the Gini coefficient has actually improved over the past year. It therefore appears that there is divergence in what the absolute data on inequality reveals and what the lived experience on the ground in our rental flats suggests. I hope the Government will look into this more deeply, to assess how COVID-19 has affected our low-income households and their employment prospects. 


Moving forward, the disbursement of additional assistance through other vouchers and schemes from the Contingencies Fund targeted at households in public rental units should be seriously considered through the course of the year. This would also be consistent with the findings of the Government’s Emerging Stronger Conversations thus far which after 88 conversations involving 4400 participants finds social support - covering issues like dignity of the less privileged, protection of vulnerable segments and support for giving and volunteerism - ranked as the most discussed topic.


Sir, one major purpose of the CDC Vouchers as expressed by Minister is to benefit heartland shops and hawkers. This cannot be objectionable, and indeed, given the revenue and scale of operations of some of these heartland shops, incentives to purchase the goods and services they offer would indeed be helpful for shop-owners. This use of CDC Vouchers follows the intervention of the former WP MP for Hougang Mr Png Eng Huat who in his Unity Budget speech last year queried whether Grocery Vouchers announced in the Unity budget ought to have also been allowed for use in neighbourhood mom-and-pop shops as well, rather than the bigger supermarket chains only. As a follow-up, may I ask the Minister to clarify the current scheme? Minister’s statement does not say whether the CDC vouchers can also be used at Giant, Sheng Siong, Fair Price and Prime for example. I would suggest that the current scheme be focused only on heartland shops – of which there is a broad range - such as local provision shops, Chinese sin-sehs or TCM providers, fruit sellers, barbers, hairdressers and so forth. There is a risk that if this is not done, the bulk of the vouchers would be spent at supermarkets like NTUC, and bypass the heartland shops. If the supermarket chains are involved, the scheme would effectively mirror a cash top-up.

 
My final query is with regard to the implementing agency of this scheme. The CDCs have come into the spotlight after GE2020 because many Singaporeans are of the view that the salaries of Mayors are outrageous, principally because they are not perceived to be commensurate with a Mayor’s roles and functions. Other Singaporeans are of the view that the CDC’s functions can be carried out by other existing entities or by Ministries and statutory boards including other organisations under the PA, particularly since the social footprint of each CDC is uneven and can differ greatly compared to another. Yet others simply don’t know what the CDCs do. Effectively, the need for mayors continues to be widely questioned and it would appear that there is scope for a serious review of the necessity of having full-time mayors. On the CDC vouchers specifically, it is widely known that representatives of Market and Shop Association merchants are commonly represented on the Citizens’ Consultative Committees (CCC) for example, and there is one for each ward or constituency. It would follow that local bodies like CCCs are even more closely connected to the ground than the 5 CDCs, rendering the CDCs’ role in the Voucher scheme potentially superfluous. 


Sir, it would appear to me as if the Government is trying to find some way to make the CDCs relevant in view of their relative absence in the public mindshare. The Government allocated $20m to the CDCs in the Unity budget last year, and this increased to $75m a month later in the Resilience budget. This injection is equal to all the reserves of the CDCs put together, according to the CDC’s FY2018 annual report. On the CDC Vouchers, out of the $150m being allocated to resource the latest initiative, how much is allocated for the scheme per se and separately, how much constitutes the amount allocated for the administration of the program? 

 
Building a Sustainable Home for all


In the third and final area of my speech, I refer to where Minister spoke of Building a Sustainable Home for All. The Science and Environment correspondent of The Straits Times, in her article of 11 February 2021, observed that upon closer inspection, the Government’s Singapore Green Plan 2030 was, and I quote, “more or less a compilation of existing sustainability initiatives”, unquote, even as she acknowledged there were some new targets worth watching. As such, the decision to raise petrol duties came like an ill-timed bolt from the blue.  

 
The government’s move towards a future where Electric Vehicles (EVs) replace internal combustion vehicles is arguably one central plank of the Green Plan, nudging Singaporeans to select more environmentally-friendly vehicles. However, there is much frustration and unhappiness on the ground with respect to the timing of the hike in petrol prices to support this goal. 


The main reason for this is that the infrastructure and registration regime for a greater adoption of EVs has not even been rolled out, but yet, the petrol duty hike was implemented immediately on budget day. Even the road tax rebate is slated to kick in only six months later! So many Singaporeans are asking, why do petrol duties go up immediately, all at one go? Did DPM consider a phased and gradual increase of the petrol duties in step with the availability of EVs as a realistic consumer choice and a rise in their numbers on the roads in the years to come? 


Furthermore, given the economic environment and uncertainty, there is a real prospect of a simultaneous cost of living pain point with the Government committed to raise the GST, well before the next general elections, and in my estimation over a window that traverses 2022 to 2023, after the petrol duty subsidies end. For middle-class Singaporeans or the sandwiched class who do not qualify for the full extent of GST subsidies in particular and for whom EVs may not be a compelling option in the short-term, the next few years may well precipitate added cost of living pressures.


Sir, I acknowledge the rebates Minister has announced alongside the petrol duty hike. These are expected to offset the petrol duty hike of up to a one year for taxis and motorcycles, and around seven to eight months for cars. Even so, I urge the Government to review this budget announcement and implement a more thoughtfully phased-in increase of the petrol duty, in proportion to the actual growth of EV usage on the roads. The rebates proposed can be given out in a similarly phased manner. Such a move will be fairer for road users as compared to the Minister’s current plan which is also implicitly contingent on a large number of EV charging points becoming available in 12 months’ time when the subsidies end. In comparison, the Government’s roadmap for 60,000 EV points has 2030 as its end-date.


With regard to the rise in petrol duty, I have two additional questions for the Minister. First, can the Minister confirm if any assessment has been carried out as to inflationary effect of a rise in petrol duties and its impact on cost of living for Singaporeans particularly in this economic climate? Second, is the Government prepared to look pro-actively into the prospects of profiteering by unscrupulous businesses that seek to ride on this increase in petrol duties? 


Conclusion

 
To conclude Mr Speaker, there remain many uncertainties about the pace and evenness of an economic recovery across sectors. As a hub economy, until the aviation sector re-opens in a significant way and the movement of people across our borders returns to some semblance of normalcy, a sense that the Singapore growth engine is not able to fire on all cylinders is likely to persist given our reliance on the global economy. 


But the opportunity for a reset in some aspects is clear. With a tighter fiscal environment in the years ahead as stressed by Minister over many speeches, closer scrutiny of expenditure should not be seen one-dimensionally as political one-upmanship, but as an administrative necessity. The scrutiny raises everyone’s sense of ownership in Singapore. It should logically extend to the outcomes of budget initiatives for Singaporean workers and their success in transitioning to higher value-added jobs. This should be consistently reviewed especially since significant fiscal resources are being deployed across a number of years. The relevance of institutions whose roles and functions substantively overlap with other state agencies should also be reconsidered, with finite fiscal resources redeployed to support the low-income and needy. 


Mr Speaker, notwithstanding my interventions above, I support the Budget.