(Delivered in Parliament on 28 February 2020)
Budget 2020 Speech
Mr Speaker, we are at the tail end of this Government’s term. From 2016, all the titles of each Budget emphasized unity – partnering for the future, moving forward together, together – a better future, building a strong and united Singapore and finally this year, advancing as one Singapore.
But unity in the context of a democracy – along with the 4G leadership seeking to engender a Singapore Together movement – must also encounter varied, diverse, edgy and even contradictory views in the effort to find common cause. This is to be encouraged. It is that process of embracing diversity, and accommodating political differences that give meaning to a democracy of deeds for the 21st century and not a one for a one-party Parliament of decades past.
Mr Speaker, Parliament is an august forum which is one manifestation of Singapore Together. My colleagues in the Workers’ Party and I thank all Singaporeans for sharing their views and coming to us to bring up issues to Parliament over this term of Government, particularly those that government MPs cannot be expected to raise – not out of any inability of their own, but because of the nature of politics and political contestation. WP MPs agree with Government when we have to, disagree where we must, in the knowledge that we endeavor for the best outcomes for Singapore and for a unity of purpose when politics must take a back seat like during this current COVID-19 outbreak.
My speech will be divided in 3 parts. I will first speak of the geopolitical environment and the response of some businesses to the budget announcements. Next I will talk about our fiscal position, with some points on our revenue and expenditures before finally concluding with my views on the enhanced SkillsFuture credits and climate change related announcements.
Budget 2020 and the External Environment
Sir, the Finance Minister’s budget speeches on the external environment and the developments that affect Singapore’s geopolitical developments over this term of Government have been prescient, illuminating upon not just the challenges, but imperatives ahead for Singapore.
In his 2018 Budget speech, the Finance Minister outlined three major shifts in the coming decade – the shift in global economic weight to Asia, the emergence of new technologies that will change the way we live, work and play and finally aging – themes which were repeated in the Minister’s 2019 budget speech.
Sir the last few years have witnessed tectonic geopolitical shifts. US Attorney-General William Barr’s speech at the Department of Justice earlier this month captured the mood of the times ahead, at least from Washington’s perspective. In reminiscing about the days of the Cold War, Barr remarked, “Russia wants to conquer the world. We can deal with that. China wants to own the world. That is going to be more challenging to deal with.”
American policy towards China is on a very different course and with a bifurcation of the world looking like an almost forgone conclusion – not just a technological decoupling but with differences in values and norms at the heart of things. More so than before, shaky US-China relations are threatening to force invidious choices upon Singapore – choices which the political leadership not just within the PAP, but all political parties and citizens in Singapore would have to negotiate with greater judiciousness and sensibility without compromising an absolute commitment and loyalty to Singapore.
However, this circumspection does not just extend to the superpowers. We must also resist the urge to engage in gloating when our closest economic partners like Malaysia and competitors like Hong Kong negotiate their own unique political circumstances – circumstances which are historically apart, completely different and in many cases, take place in more complex and significantly larger country, many times our population size.
My brief discussions after the Budget was announced with a few members of the various local chambers of commerce inform me there has been general acknowledgment of the relief provided by stabilization and support package in this Budget. Separately, I understand chamber members are also continuing the work on longer term efforts at internationalization and bringing businesses up to speed with new initiatives, particularly training and growth opportunities.
Sir, one specific group of Singaporean businesses and individuals reached out to me in the aftermath of the budget. They are our private-hire bus companies and drivers who are bearing the brunt of cancelled trips and tours arising from the COVID-19 outbreak. These are the bus drivers who bring our residents to Malaysia for durian trips and even National Servicemen around Singapore for local tours or training. I understand an Industry Briefing was held on 21 Feb 2020 by the Singapore Tourism Board on a Relief Package for Travel Agents and Tour Operators. While the briefing was appreciated, private bus companies feel the Budget’s support package is not targeted enough in view of the nature of their businesses.
I thank Minister Josephine Teo for her speech during the course of the Budget debate, explaining the policy reasons why foreign worker levies were not reduced or waived.
Nonetheless, I hope the Government reconsiders this and extends some support by way of a one month reduction or partial waiver of levies for companies that have no choice but to hire foreign manpower on the condition that these are companies consciously seek to increase the local headcount by way of job redesign going forward. Some conditional support and consideration for them in these difficult times may provide greater impetus on all our companies reliant on foreign manpower today to make a greater effort to hire locals including senior citizens and those on a part-time basis, tomorrow.
Fiscal Prudence and Sustainability
Mr Speaker, I move on to the second part of my speech on fiscal prudence and sustainability, a subject which is a feature of practically every one of DPM Heng’s Budget speeches. One hard truth that we do not hear in this House, notwithstanding greater demands on the expenditure, is that the current Government has had the privilege of far more budgetary elbow room, both political and fiscal, than any other previous Government in Singapore’s history.
Just think about it, after the inclusion of Temasek in the NIRC component of the Budget from 2016, monies for a GST offset package can be set aside for the introduction of higher taxes for the next term of Government. Compared to 2015 the NIRC component of the Government’s revenue, has doubled. Separately, the package to support the economy in light of COVID-19 was not funded from a draw on the reserves, unlike the support package during the Global Financial Crisis about a decade ago.
Sir, when the Workers’ Party made enquiries on the reserves over the course of a few Budgets in this term of government, it was to explore and consider different approaches and prospects to improve the lives our people, particularly the low and middle income.
At the last Budget, Minister provided a lengthy reply on why the dollar value of the reserves could not be disclosed. But the answer remains an unsatisfactory one, particularly when the same argument could apply to the overwhelming majority of other democratic societies, but who nonetheless err on the side of fiscal scrutiny and accountability.
At last year’s budget, I brought along a Business Times article that saw Singaporeans calling for a greater discussion on the reserves. These calls for greater transparency are not out of place and they will continue in the years to come. They run in parallel with the Singapore Together spirit – with Singaporeans taking ownership, exploring fiscal solutions, seeking to co-create not just today’s Singapore but a sustainable and equitable tomorrow that future generations of Singaporeans will inherit.
More specifically, in Minister’s 2018 speech, the prospect of borrowing by Statutory Boards and Government-owned companies to build infrastructure was first raised to help spread the cost of larger investments over more years. The prospect of borrowing was raised again by Minister in his 2019 Budget speech where the Minister confirmed that the Government is further studying the option of using government debt as part of the financing mix for long-term infrastructure projects.
Mr Speaker, it has been two years since these plans on debt financing were raised. Can the Government share more details on these plans as this year’s budget does not communicate the results of the Government’s studies on the borrowing or debt financing framework and their fiscal consequences on future budgets?
This year’s Budget also saw the Finance Minister once again make reference to the Base Erosion and Profit Shifting project or BEPS – an initiative that seeks to ensure companies are taxed where substantive economic activities are performed. The Minister had first raised BEPS in his 2017 Budget speech. Then, the House was informed that the Government was in consultation with businesses on scheme refinement and implementation of the relevant standards. What has been the results of these consultations from three years ago?
BEPS was raised again in the Minister’s speech this year and Minister shared there are discussions to revise international tax rules and that Singapore was actively participating in them. However, reference to BEPS this year was in the context of a sub-point of another sentence which warned there were uncertainties and downside risks to the Government’s revenue position, which should be of interest to all Singaporeans.
I have a query with respect to BEPS. Before that, it is useful to recap the Government’s argument on proposals by Singaporeans to raise taxes on higher income earners who do enjoy the security and safety offered by Singapore. The concern was that high nett worth individuals would be able to structure and move their assets to avoid higher tax obligations. What is the impact of BEPS on this prospect and the Government’s assessment of the impact of BEPS developments on our tax policies? Is there an upside nonetheless by way of other taxes on the ultra-rich to maintain our progressive tax system? What are the best and worst-case scenarios to the developments in BEPS on our revenue position?
Mr Speaker, the Finance Minister’s budget speech confirmed that the GST will not be going up next year. Notwithstanding the offsets announced, the GST is a regressive tax that will hit the low and middle income, retirees and seniors particularly hard as they would have to manage their expenditures more frugally, because offsets do not last forever particularly for the middle class. At this year’s Budget, Finance Minister shared that the Government put off the rise in GST after considering the state of the economy, but more critically, and I quote, “after reviewing our revenue and expenditure projections.” Unquote.
Sir, when the WP objected to rise in GST in 2018 amongst other things, it was on account of a lack of information of alternate revenue streams. Finance Minister’s position was that one did not need to have information on everything to make a decision on anything. But from the Minister’s speech this year and the announcement not to raise GST next year, it is obvious the Government relies on revenue and expenditure projections to make decisions. Would the Government make public these projections so that Singaporeans can critically evaluate the necessity of the GST hike?
I believe this openness would contribute to a more substantive conversation and understanding on our fiscal trade-offs. This can only advance and mature the conversations that take place in Singapore. Until this clarity is provided, the WP position has not changed. We cannot support a GST hike, especially since this is to be raised in advance, and before the Government’s projections have been put to this House.
SkillsFuture & Climate Change
The third segment of my speech is a short one Mr Speaker. I refer to the Government’s call for special SkillsFuture credits top-up for Singaporeans between the ages of 40 to 60. The Workers’ Party supports this move, but urges the Government to track the use of these credits for this age group to job and employability related outcomes closely.
More generally, while SkillsFuture subsided courses can range from – in the words of the Finance Minister – from “cooking to coding”, it does not bode well if taxpayer’s monies are expended on courses that are underweighted with regard to real improvements of skills, job prospects and employability of our workers, in view of the workplace disruptions to come. We know from previous parliamentary replies that there is an upper limit to certain entrepreneurial prospects in Singapore, such as the opening of cafes. An audit of the courses our people are taking up – particularly younger and mid-aged Singaporeans – must be reviewed every so often in consultation with the inputs from ITM stakeholders so as to evince the best outcomes possible for our workers in the medium term.
Lastly Mr Speaker, I expected some strong incentives or subsidies in this year’s Budget on climate change outcomes, particularly in the aftermath of the Ministry of Environment and Water Resources’ efforts towards greater climate change awareness over the last few years including designating one year, a year of climate action.
To this end, I would urge the Government to move more decisively to incentivize changing behavioral norms to reduce the over-use of plastic bags. For example, a transitional subsidy amounting to $20 for households to subsidise the purchase of plastic bags at supermarkets could be considered as a bridge for Singaporeans before a charge is levied for every bag by all retailers.
Mr Speaker, incentivizing the reduced usage of plastic bags is not just about our over-consumption of plastic bags per se. It is also about the amount of waste we generate and dispose, which usually ends up in a plastic bag that is thrown down our bin chutes. A plastic bag charge is far from representing mere climate change symbolism. It is a clarion call to us all and to alter social norms to equally, if not more importantly, reduce the amount of waste we generate. This is a pressing issue as there are infrastructural constraints on the amount of space we have to dispose our incinerated waste on Palau Semakau which is expected to be full by 2035 or thereabouts. That is only a mere 15 years from now. Correct as of Monday, there were 342,304 pledges on the MEWR website to take fight climate change. There is a window move more decisively and we should move fast.
To conclude Mr Speaker, Finance Minister is correct to say that many Singaporeans are coming up with and acting on ideas to make Singapore a better place on their own initiative. For the first time in his Budget speech in this term of Government, Minister has spoken about the democracy of deeds. But whatever deeds our people underwrite, they take place within the context of our democracy. A democracy where alternative views, criticisms and disagreements shape the outcomes that give meaning to the phrase – one united people, united in a vision for a better and more confident Singapore tomorrow no matter what our political beliefs.
It is a little like that anthem that was referred in this House during the course of this budget debate, “You’ll never walk alone”. But how many of us know that it is not just the anthem of one club, but others too like Glasgow Celtic, Borrusia Dortmund and many others. Sir, Singapore’s diversity is our strength. As long as our people, youth, businesses, individuals engage the issues of the day civilly in our democracy, and treat their fellow Singaporeans and foreigners within our midst with dignity and empathy, and endeavor for a more caring society, the best years for Singapore – a Singapore for all – are ahead of us.