Budget Debate 2017 – Speech by Daniel Goh

(Delivered in Parliament on 28 February 2017)


A Disappointing “Wait and See” Budget?

Madam Speaker, my initial reaction to the Minister of Finance’s Budget Statement last Monday was deep dissatisfaction and disappointment. I thought a lot about it in the next few days.

Was I disappointed because this Budget contained relatively few goodies for SMEs, workers and consumers? This was the first question that crossed my mind. Many businesses and Singaporeans expressed the same sentiment, as reported in the papers and as can be read online on social media.

It is understandable. This time round, the support given by the Government is targeted rather than broad-based. We have gotten too used to spectacular Budgets with goodies for everyone and the fireworks of snazzy phrases, pictures and presentations. Yet, there is nothing positively spectacular in this Budget. Instead, the negatives stand out in ominous light, especially the big 30% hike in water prices.

I stared at the Budget in Brief for a very long time, putting aside my sentiments, trying to make rational sense of the Budget, to see the pattern and trend that have to be there. So I stared and stared. Then it came to me, this is a “Wait and See” Budget.

It clicked. This is why Minister Heng opened the Budget Statement signalling a time of VUCA – the volatility of populist politics, the uncertainty of economic protectionism, the complexity of technological disruptions, the ambiguities of the changing global order.

In such a context, it is prudent to wait and see before committing national resources to a set path with a clear destination. When everything is up in the air, we need to wait and see, to keenly observe the trajectories of the things being thrown up to decide which gems to catch and how to catch them.


Wait and See Does Not Mean Do Nothing

Wait and see does not mean to do nothing. I read an article in the Harvard Business Review that helped me see the pattern and logic of the Budget in Brief I was staring at. This was an article written by two United States Marine Corps officers who switched careers to become business consultants. They wrote, and I quote,

“As Marine officers, we always ate last, ensuring others had food on their plates before ours were filled. During down time, we kept our teams busy with training opportunities so they could broaden their skills, which also curtailed complacency. When it was dark and cold in the field, we made a point of being present on the lines (not hiding out in a warm tent) to show our teams we were right there with them. Through our actions, we demonstrated that we were willing to go without food, free time, and comfort to ensure our people knew they were supported. The result? Our teams felt cared for and valued, and they demonstrated their loyalty through their initiative and engagement.”

Waiting means to keep ourselves busy with training and development. Thus many of the Budget initiatives are focused on the long-term development of business capabilities and enhancing the affordability and accessibility of training for our workers.

Seeing means to be vigilant and being prepared to respond quickly to opportunities and exigencies. Thus many of the Budget initiatives have to do with road-mapping and transformation mapping, and prototyping, testing and experimenting.

As the Marine officers related, waiting and seeing also means cultivating strong bonds of trust through shared engagements. Thus many of the Budget initiatives emphasize partnership, alliances and integrated spaces.

If I were to summarize this Wait and See Budget into three main thrusts, they are, one, training and development, two, mapping and testing, and three, partnership and team building. Despite my initial disappointment and dissatisfaction, I believe this Budget is making the right moves of waiting and seeing in these three thrusts.


Psychological Security

But I do not think we should dismiss the negative sentiments of disappointments and dissatisfaction with this Budget. They are also signals to possible deficiencies and gaps in the Budget.

I believe they point to one defect that the Government can do a lot better to address. This is the psychological effect of insecurity induced by the VUCA environment. It is getting very dark and cold in the field and ordinary Singaporeans are feeling unsettled by the uncertainty. We need to understand and alleviate this psychological insecurity.

There are three ways to improve the psychological security and mental well being of ordinary Singaporeans even as they are exhorted to train and develop themselves as they wait and see.

First, we should maximize the availability and accessibility of the training programmes as far as possible.

Second, we need to strengthen the safety nets for middle-income households who are financially squeezed on several fronts and threatened by employment insecurity.

Third, we should transform the current management culture of top-down leadership to one of service-based leadership, which is more conducive to fostering real partnerships of trust.

  1. Maximise Availability and Accessibility of Training and Development

The first way to improve psychological security is to maximise the availability and accessibility of training and development for workers. We should not underestimate the sense of security that comes with knowing that there are many options available to us for deepening our skills or changing tracks to pursue new dreams. I have three substantive points to make in this respect.

The Adapt and Grow programmes are excellent for promoting functional skills and the practical placement of jobseekers. But we should not forget the psychological impact of the various conditions and restrictions that the programmes place on workers. For example, young PMEs have to wait for six months of unemployment before they become eligible for the Career Support Programme.

The new “Attach and Train” initiative is interesting. Notwithstanding the details to be elaborated later by the Manpower Minister, I ask that the Government pay close attention to the psychological aspects of attached participants, as there is a risk that the attachments could backfire if participants find themselves treated as mere interns and not as valuable would-be employees.

Regarding the Global Innovation Alliance, going forward, it would be good to open up the Innovators Academy to mid-career workers who would like to explore opportunities and build up experiences in innovation. Many entrepreneurs are not born straight from the universities, but become enterprising innovators after accumulating years of experience in the marketplace.

Regarding Continuing Education and Training degree programmes, this would be a good time to accelerate the placement of adult learners in part-time programmes in our universities to 10% of each cohort from 2015 onwards as recommended by the 2012 Committee on University Education Pathways. I understand our six universities have been launching various types of work-study programmes with SkillsFuture support and in partnership with industry. But many of these programmes are understandably starting out slow and small and targeted at young adults heading to university and not adult learners. I hope this would accelerate to cater to adult learners who defer their university education to later and even to mid-career switchers, especially since the size of cohorts heading to university would start to shrink due to plunging birth rates two decades ago.

  1. Strengthen Safety Nets for Middle-income Households

The second way to improve psychological security is to strengthen the safety nets for middle-income households. The 30% hike in water price and the carbon tax when implemented will have knock-on effects on the costs of living, as all areas of everyday life are affected by the use of water and electricity.

Middle-income households do not have the benefit of the enhanced financial transfers to low-income households to soften the impact of the water price increase. Compared to low-income and high-income households, middle income Singaporeans will feel the head-on impact of the increase in costs of living most strongly.

In this respect, the Personal Income Tax Rebate of 20% capped at $500 does not benefit the middle-income worker as much as the high-income earners. For example, a worker earning the median gross monthly income with a taxable income of around $40,000 will only receive $110 tax rebate. On the flip side, high-income earners will be receiving the full $500 tax rebate. This effectively means that the Government will be subsidising the expenses of high-income earners many times more than middle-income workers. Middle-income workers need the rebates a lot more in order to soften the impact of water price increases and the knock-on increases in costs of living.

Middle-income workers are also facing higher risks of retrenchment and under-employment. While the Adapt and Grow programmes help to mitigate the fallout from retrenchment and encourage retrenched workers to reskill and return to employment, the Budget could do better to provide for short-term relief to allow workers to find their feet and not be mired in temporary cash-flow problems that could distract them from training and job-seeking. The Government could consider introducing redundancy insurance to even out the risks of retrenchment and provide short-term support. Short-term tax deferments would also help retrenched workers to manage their cash flows.

  1. Encourage Service-based Leadership

The third way to improve psychological security is to promote service-based leadership. Management thinker Robert Greenleaf introduced the concept in 1970 in his famous essay, “The Servant as Leader”. In contrast to traditional leadership involving the top-down exercise of power and the taking of individual credit from the team’s work, the service-based leader focuses on the growth of the people they are leading and the well being of communities they serve in.

The SkillsFuture Leadership Development Initiative announced by the Minister Heng is an excellent initiative. It is a belated recognition that we need to consciously cultivate Singaporean leaders in all our industries. We have focused on talents who could follow through the logic of development and faithfully execute the plans. What we need now are thought leaders and visionaries who could inspire teams of talents and workers to collectively chart and create new pathways of growth.

However, to maximize the return of investment in leadership to ordinary Singaporeans, we should focus on cultivating service-based leaders. Traditional leaders who are focused on their own power and achievement may well achieve the same level of growth as service-based leaders, but the benefits will not be equitably distributed to workers and the community. On the other hand, because service-based leaders are committed to the personal and professional growth of their workers, growth will benefit everyone.

In turn, this will foster committed and engaged workers who will use their initiative and give their best and all to the team’s efforts. The two Marine officers I quoted at the beginning of my speech consciously applied this concept of service-based leadership to build up a cohesive team of well-trained and deeply committed warriors. Instead of producing an elitist group of leaders commanding regular troops, they forged an elite fighting unit.

Conversely, traditional leaders will treat workers as expendable units to be constantly evaluated for their performance and stigmatized and culled if they no longer meet certain standards. I think it is very clear how this can be detrimental to the psychological security of our workers, with ripple effects beyond the affected companies and industries, as can be seen in the Surbana terminations.

I believe this is the missing ingredient in our drive to improve productivity and inspire engaged workers. Thus, I urge the Government to emphasize service-based leadership in its industry transformation mapping exercises, in the SkillsFuture Leadership Development Initiative and in the Future Economy programmes to deepen partnerships to share expertise and solutions.


Present in the Lines with Everyone of Us

Madam Speaker, I have come to accept this “Wait and See” Budget for what it is. It is down time and the Government is encouraging Singaporeans to get busy with training and development, mapping and testing, partnering and team building. We are preparing for the fight to come.

But it is also getting dark and cold in the field. It is unnerving to many Singaporeans. The price hikes and looming tax increases do not help. A sense of insecurity is setting in. Other than the three ways to improve psychological security even as we train and prepare I have highlighted above, there are two things that the Government, the political leaders, can do.

First, we are still not getting a sense of the big picture of the changes in the global order and how Singapore features in this big picture. What are the different scenarios of the future we are facing? We seem to be still focused on internationalisation, but do we have a plan if nationalistic protectionism takes root and spread? What are the worst-case scenarios and the known unknowns, and how should we prepare for these? We need to have a shared understanding of what we are fighting and what we are fighting for.

Second, as the example of the two Marine officers show, when it gets dark and cold in the field, being present on the lines with the troops and not hiding out in a warm tent is a tremendous demonstration to our people that they are being fully supported and truly valued. It is not my place to lecture the Government leaders on what they should be doing to be present on the lines with the workers and small businesses. But it is my duty to register that there is a need for it.