Budget 2015 - Keep Budget inclusive but financially sound

Wednesday, 4 March 2015

THE STRAITS TIMES
THE BIG STORY

Keep Budget inclusive but financially sound.

Need to safeguard reserves, look after low-wage workers and homemakers.

Published on Mar 4, 2015 12:33 PM



Many government agencies and statutory boards enter into unequal "master-servant" service contracts with cleaning, security and landscaping companies, which often do not provide better welfare and employment benefits to their low-wage workers, says Mr Zainal Sapari (Pasir Ris-Punggol GRC). -- ST PHOTO: KUA CHEE SIONG

By Chua Mui Hoong, Opinion Editor

It's easy to praise a Budget as generous and forward-looking as this year's.

So it wasn't surprising that the 25 MPs who spoke on Budget 2015 in Parliament yesterday had many good things to say about it.

Its business measures help pave the way for future growth.

SkillsFuture will kick-start lifelong learning; the Silver Support Scheme adds a vital plank of old age support to care for the most vulnerable elderly.

It's inclusive, with many measures for the low- to middle-income earners.

It's progressive, with higher taxes for the top 5 per cent. It taps additional revenue sources, adding Temasek Holdings' returns to the cocktail allowed for use in each year's Budget under the Net Investment Returns Contribution framework.

But pick through MPs' six hours of speeches yesterday, and a few concerns emerge.

First, fiscal sustainability.

Mr Arthur Fong (West Coast GRC) noted that since 2009, the Government has run deficit Bud-gets in four out of the last seven years.

"Should this be of concern? Several academics and professionals in finance seem to think so. Many of them argued that without the provisions from contributions from our Net Investment Returns, our Budget would be out of whack and is in reality in deficit," he said.

"For example, FY2014 sans the transfer from NIR contributions, the deficit should be $8.4 billion, and even with the transfer, we still have a deficit of about $0.13 billion. This is a sobering thought."

Social spending is expected to go up as the population ages and fewer working adults support more retirees.

Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) said: "Every additional dollar spent today simply means more than a dollar less for the future. More importantly, we are running out of levers to pull."

One lever that Workers' Party MP Sylvia Lim (Aljunied GRC) suggested: The top income tax rate can go up, beyond the current 22 per cent.

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) suggested that a fiscal sustainability review be added as a term of reference for Parliament's Estimates Committee, especially for spending programmes expected to last 10 years or more.

Indeed, this is not a local concern. Australia, New Zealand and Britain have all introduced fiscal sustainability review as part of a fiscal responsibility regime. There's momentum worldwide to set fiscal rules to bind govern-ments' hands from over-dipping into public funds or borrowing too much for spending.

The fiscal conservative in me listened to the calls for prudence with relief. If every deficit draws a chorus of jeremiads, the reserves are safe - for now.

Second, MPs are concerned about the plight of people who remain marginalised and in a poor position to benefit from the growth and income distribution measures in Budget 2015.

One group singled out by Mr Zainal Sapari (Pasir Ris-Punggol GRC) is low-wage workers working for cleaning, security and landscaping companies.

Many government agencies and statutory boards enter into unequal "master-servant" service contracts with these companies, he said.

He added: "'Master-servant' contracts are often one-sided, demanding services at ridiculously low prices, punitive, and often it is the outsourced low-wage workers that bear the brunt because their companies could not provide better welfare and employment benefits to save costs."

Mr Zainal urged service buyers to give weightage to companies that treat workers fairly, such as those that offer decent increments and benefits. He also wanted the Government to pressure employers of low-wage workers to offer medical benefits and an-nual wage supplements and follow National Wage Council pay rise recommendations.

If moral suasion fails, use the law, he urged.

Another group left out of what is arguably Singapore's most inclusive Budget to date is homemakers.

People who stay home to care for children or sick family members do not benefit from Central
Provident Fund top-ups or CPF interest rate hikes or tax rebates.

Ms Jessica Tan (East Coast GRC) suggested that husbands and working children be allowed to transfer SkillsFuture credits to their homemaker wives/mothers.

Dr Fatimah Lateef (Marine Parade GRC) went further: "There can be a formal programme for spouses to transfer (CPF) funds into their non-working wives' account.

"This will be beneficial for the women, as they can have an independent account and be subjected to all the benefits that come with having a proper CPF account, like others who are working.

"If these women do have working, grown-up children, they too can be the ones making the transfer to their stay-home mum's accounts. This will give the stay-home mums some level of recognition and empowerment."

Alas for Dr Fatimah, the Government is unlikely to heed her sound advice. Over the last decade,

Singapore has strengthened social safety nets for the low-wage, the very old, the unhealthy, and the elderly poor. It can now move on to other marginalised groups. Low-wage workers will remain high on the agenda.

The disabled will likely get their day in the sun.

Homemakers and their retirement adequacy, however, are likely to remain on the backburner and their old-age peace of mind at the mercy of their husbands and children for years to come.

Dr Fatimah suggested, tongue-in-cheek, that a couple have a prenuptial agreement or incorporate something into the wedding vow, on CPF funds.

Now that sounds like sensible advice from a friend to another.

But alas, it's likely not something the Finance Minister can concern himself with.

muihoong@sph.com.sg