This is the speech I made in Parliament on 29 February 2012, during the debate on the Budget 2012 Statement.
The initiatives in Budget 2012 demonstrate a shift in the Government’s mindset in providing much needed support for our low-income workers, senior citizens and people with disabilities. I commend the Government on this shift in the right direction.
While it is important to grow our economy, it is equally important to ensure a fairer distribution of our nation’s prosperity.
Building resilient local companies
Sir, it has been said that “SMEs are the lubricant of Singapore’s economy, without which, Singapore’s economy may not survive”. There are about 150,000 SMEs in Singapore, making up 99% of all enterprises. They contribute to about half of Singapore’s GDP and employ about 60% of the workforce.
Clearly the SME sector is critical in our drive towards higher productivity and real wage growth. We must do all we can to uplift the SMEs as we restructure our economy. This Budget provides some support for SMEs, and I believe more can be done.
One area often cited as a major challenge facing SMEs is that of manpower, especially skilled manpower. The growth of successful SMEs is often constrained by their ability to attract more capable and talented Singaporeans to work for them. Many successful SMEs pay competitive salaries and offer exciting career prospects, yet they often get overlooked as graduates make a beeline to jobs in MNCs and the civil service.
Our government scholarship system has been successful in bringing in and retaining many bright, young Singaporeans in the public sector. I would like to propose the introduction of an SME scholarship programme to help bring more talent into SMEs. The Government could work in collaboration with business federations and SME associations to create and administer this programme, which should be done on a cost-sharing basis.
Promising SMEs could then be given funding to award scholarships to top JC and polytechnic students, who upon graduation will return to work for them for a minimum number of years, and hopefully stay longer to grow the business further.
I am glad that this Budget has made it easier for companies to claim Productivity and Innovation Credit (PIC) benefits on their in-house training costs, by removing the requirement to have these training programmes certified by WDA or ITE. I would urge the Government to take a step further and provide more funding for On-the-Job Training, or OJT.
OJT is recognised as one of the most effective forms of training, especially for those in vocational work. There should be greater government funding for companies to provide structured OJT programmes for their workers and new hires. This could include payroll subsidies and more funding for OJT supervisor training. Boosting OJT subsidies could help companies overcome their resistance to hiring Singaporean workers who may lack the necessary skills and experience. In addition, workers do not need to miss work in order to attend training.
Levelling up society
Sir, I would like to now share some thoughts on the social development initiatives in the Budget.
The Government has always warned that we must avoid the path of excessive social spending, which could result in crippling public debts. While I share the Government’s concern about uncontrolled spending or unsustainable social entitlements, this should not be a convenient excuse to hold back much needed social investments.
Income inequality in Singapore is already among the highest in the developed world. There is much research that has pointed to the detrimental effects that income inequality could have on a society, including reduced social mobility, higher crime rates and increased social tension.
There is a pressing need to reform our social compact to not just contain, but reduce income inequality. We also have a moral obligation to provide more help to our elderly citizens, who built this nation to what we enjoy now.
I affirm the Budget’s focus towards countering the adverse implications of our growing income gap.
The Silver Housing Bonus is a good attempt to help increase the retirement incomes of the elderly. However, I believe the Bonus would be more attractive if the elderly received a greater portion of the proceeds from the sale of their previous flat in cash, rather than having most of it returned to their CPF accounts.
In the example that the Finance Minister gave in his speech, the elderly couple receives only $23,000 in cash, or about 9% of their net proceeds from the sale of their flat, even after the Silver Housing Bonus.
This is because to benefit from the Silver Housing Bonus, flat owners must use the cash proceeds from the sale of their previous flat to top up their CPF Retirement Accounts to the Minimum Sum. I propose that they be allowed to pledge the value of their new studio apartment towards meeting up to half of the Minimum Sum. This will allow them to get more cash after the sale of their previous flat.
Since they will still be meeting their Minimum Sum, there is no need to apportion $5,000 from the Silver Housing Bonus to their CPF Retirement Accounts. The full $20,000 Silver Housing Bonus could be given to them in cash.
While a larger Retirement Account may get them more per month in CPF LIFE annuity pay outs, many senior citizens may have more immediate needs for cash, for example, to pay their medical bills. Why not give them this option to have more cash on hand? If they want higher annuity pay outs, they can always voluntarily top up their CPF Retirement Accounts.
In any case, most elderly folks prefer to remain in their current homes, rather than get displaced to unfamiliar surroundings in their old age.
To give the elderly more choice, the Lease Buyback Scheme should be extended to owners of 4-room or larger flats, just like the Silver Housing Bonus. Currently only owners of 3-room or smaller flats are eligible. This could be a reason for the low take up rate.
An enhanced Lease Buyback Scheme will enable more of our elderly to age in place, and to live their golden years in familiar surroundings, without having to worry too much about finances.
Sir, moving on to elder care, I think many families will welcome the additional grant for hiring foreign maids to help them care for infirm elderly parents. This grant adds to the existing concession for households with elderly persons. But instead of all these grants and concessions, I suggest completely doing away with the Foreign Domestic Worker Levy for these families, so as to provide further relief for them and simplify administration.
Extending the maximum MediShield coverage age from 85 to 90 years old is a move in the right direction. However, would the Government consider removing the age limit completely? There are only about 9,000 Singaporeans aged above 90. Many of them would have outlived their own spouses, siblings or children, and may have no immediate relatives to care for them.
We should be doing all we can to help this small group of seniors who have worked tirelessly to build up Singapore to what it is today, instead of pulling the rug from under their feet when they need it the most.
There are several other MediShield enhancements that I believe should be made, while still keeping the insurance scheme solvent. I will share these during the Committee of Supply (COS) debate.
I agree with the Finance Minister that the GST is a regressive tax. The GST Voucher Scheme moderates this impact, although the policy falls short of supporting many more in need. The Voucher offsets the GST payments of only half of retiree households. Younger, low-income families also do not get their full GST payments back. To achieve its aim, GST Vouchers should cover all HDB households whose incomes are within the bottom 20%. The GST Voucher values must also rise over time to keep pace with inflation.
The Budget announced the increase in CPF contribution rates for older workers. I support this move. But increasing the employee contribution rates in fact reduces workers’ take home pay. Since the Government is providing an 8% Special Employment Credit (SEC) to companies for employing older workers, the increase in CPF contributions should come entirely from employers, not employees.
Supporting middle income Singaporeans
Mr Speaker, this Budget has provided more childcare support to lower income families, which is something I welcome. However, many young, middle income families still struggle to pay well over $1,000 each month for childcare, even after subsidies. Those of us with young children would agree that childcare costs are one of the most significant expenses for families.
I urge the Government to provide more childcare subsidies for middle income earners, as this would not only lighten their burden, but may make them consider having more children.
Finally, Mr Speaker, I would like to share some thoughts on the poignant video that the DPM and Finance Minister screened at the end of his Budget speech.
Tears welled up in my eyes when the little girl from a low income family shared her dream of buying a house for her parents when she grew up.
While I admire her love for her parents, it pains me to think that given our widening income gap, increasing high inflation, and slowing social mobility, many little children like her will find it hard to afford an HDB flat of their own, much less a house for their parents.
We have a responsibility, as members of this House, to do all we can to speak up for these young ones, to enable them to fulfil their dreams and build a better life for themselves, their children and their parents.
This is what the Budget of the Future should be all about.
We can do more. We must do more.
Mr Speaker, I support the motion.