Debate on Annual Budget 2013
Madam, this morning, I was elated to hear of my young special-needs staff, Wong, who happily showed his colleagues the $915 Workfare notification he had just received. Wong who hardly speaks was previously folding envelopes at a job centre with a monthly pay of about $220. My team and I offered him a job and pay that match his ability and potential. He is now an administrative assistant earning $1,020 a month. Wong is not the only one happy with his Workfare cheque. His employer also receives a Special Employment Incentive of 16% of his payroll, about $160 per month. Madam, this is the kind of good news that arises from good and thoughtful Budgets.
As a committee member of Our Singapore (OSG) Conversation, I thank Deputy Prime Minister Tharman, Minister of State Josephine and their team for yet another Budget with a Heart. In particular, I wish to touch on three of the 12 aspirations that were raised by thousands of Singaporeans in the OSG National Conversation. The three are: A Society that takes care of the disadvantaged; A Society where everyone can age with dignity; and A Singapore with a strong and vibrant economy.
Society that Takes Care of the Disadvantaged. Madam, this year's Budget continues the provision of a stronger safety net for the disadvantaged. It testifies of the coming of age of a Government that used to be wary of measures that smack of welfarism. This Budget is now more aggressive in its efforts to provide help directly to the more vulnerable in our country.
I am grateful that Public Assistance recipients now not only receive an increased quantum, but also additional tiers of assistance in the cost of consumables such as milk feed, adult diapers, and so forth.
I am happy that low income workers now receive a higher salary top-up through a more generous Workfare scheme. More people now benefit from the scheme with the qualifying monthly income raised from $1,700 to $1,900. Payout of workfare is also increased up by 50%, with a larger portion paid out in cash.
I am happy that low and middle income families remain in the radar with additional GST vouchers and personal income tax rebates of up to 50%.
Madam, I believe that this Government has crossed the chasm of the fear of welfarism. But taking care of the disadvantaged cannot be done through Government alone. The perspective emerging from the OSG Conversations is, "A society that takes care of the disadvantaged" not just "a government that takes care of the disadvantaged". Singapore cannot be considered successful and much less significant if only a few people do very well, whilst the lowest segment struggles or the average-income cannot catch up. Singaporeans at the top of the socio-economic pyramid, either by way of inheritance or meritocracy, must be persuaded that no one reaches the pinnacle without help.
That is why I want to talk about a do-good tax. I am heartened that the Government has carefully introduced more progressive tax systems on wealth. This is done carefully this year through what the Deputy Prime Minister calls the wealth tax – higher taxes on luxury cars and non-owner–occupied properties. Madam, we can see taxes of this nature as penalising the wealthy or worse, discouraging hard work. But I urge those who are affected to see it in a different light. The value that those of us who do well must also do good – is worth anchoring and applying throughout Singapore.
In this respect, I urge the Government to re-consider the recommendation I made in last year's Budget speech to render the personal income tax structure of Singapore even more progressive. I am happy that the Member, Sylvia Lim, for example, supports this, and I am mindful of David Ong's and Amy Khor's views to implement this with caution.
The highest income tax rate for a person earning a taxable income of over $320,000 today is still 20%. This is way below that paid by the highest-income earners in many countries such as the Nordic countries, Australia, New Zealand, China and the United States.
I propose the introduction of a "Do-Good Tax" that will compel the most wealthy and successful to contribute more to the tax chest. Specifically, I propose a 1% increase in income tax payable for every half a million dollars of taxable income above S$500,000. Persons earning above $500,000 to $1 million taxable income to contribute 1%, and an additional 1% for every $500,000 additional income bracket up to a maximum of 25%. This is still lower than that in many other countries. I propose also that the Government study how the principle of "do-well and do-good" be applied to the public sector, starting with those which are Government-linked.
Next, a society where everyone can age with dignity. Madam, Singaporeans who joined the OSG Conversations also said that they want a society in which everyone can age with dignity. Indeed, this Budget has provided a slew of measures that honours the seniors in our midst. These measures include: a $200 Medisave top-up for some 1.5 million Singaporeans aged 45 years and above; higher personal income tax rebate of 50% for those aged 60 years and above, subject to $1,500; a further discount in the foreign domestic worker levy (down to $120 per month) for families with elderly members; a restoration of CPF contribution rates for older workers; and extension of the Senior's Mobility Fund to allow claims for a much wider range of assistive devices like hearing aids, shower chairs and motorised wheelchairs.
Madam, one of the top anxieties voiced by our elderly at many platforms – the OSG onversations and house visits – is the rising cost of living. The fear of these seniors who are either not receiving incomes anymore or on the verge of retiring, or receiving not sufficient CPF income, for example, is the out-of-pocket cash expenses such as outpatient clinic visits, medication for chronic illnesses and transportation costs. I hence urge the Government to consider two more visible measures to honour the seniors: (1) The healthcare Vouchers for Seniors. Instead of topping up their Medisave Account which is not visible and likely not appreciated, issue holder-specific healthcare vouchers, similar to utility vouchers, that will allow seniors to purchase medical supplies, visit the clinics and procure outpatient medical or dental services; and (2) Provide free public transport for seniors. For all Singaporeans above 65, grant them free public transport during off-peak hours, instead of the more complex discounted fares that many seniors may not easily understand or appreciate.
Next, a Singapore with a strong and vibrant economy. Madam, one of the key aspirations that OSG Conversation participants want is a Singapore with a strong and vibrant economy. In this regard, I would like to focus on our small and medium enterprises (SMEs) – which form the backbone supporting our dream of an economically strong Singapore to foot the bills of the society we want.
Madam, like recent Budgets, the Government has provided a slew of measures for the business sector – most visibly this year, the three-year Transition Support Package comprising the Wage Credit Scheme, PIC bonus, corporate income tax, road tax rebates, and others.
I am glad that the Government has considered my suggestion to nurture high-potential SMEs such as Mr Bean and others. I have heard from many SMEs who are appreciative of this year's measures. But many also continue to be concerned over the restriction of foreign labour inflow, and restructuring for productivity gains remains a dream for some. The cost of doing business remains a key challenge.
I have three suggestions for the Government's consideration in this regard: First, higher to lower levels of WCS Support. Since the Wage Credit Scheme is not directly linked to productivity gains, I can only deduce that it is a measure to plainly help SMEs contain business cost. One of the key worries facing SMEs is the million-dollar question of "what happens after 3 years?" It would therefore make sense to reduce the level of WCS support to enable their weaning from such a subsidy. I propose a higher to lower scale of support, example 50% in Year 1, 40% in Year 2, and 30% in Year 3.
My second suggestion: install cooling measures to reduce business rental. It is not a surprise that Singapore real estate investment trusts (REITs), including retail REITs, remain a darling amongst the financial analysts. 2012 was a bumper year for them. OCBC, in fact, recently reported that looking into 2013, the sector offers the highest yield spreads compared to other major markets with very positive outlook and financial position. But it is a known fact that many SMEs and even private food court stallholders have been suffering from the seemingly uncontrolled spiral increase in rental. Rental hikes that run way ahead of GDP have been the bane of businesses. If allowed to continue, rental increases will put out not only current small businesses but also extinguish the flames of small businesses of the future. Even good online business models need warehousing real estate. MAS should install cooling measures and place a cap on the REITs' rental income rates. The increase should be a function of not only supply and demand, but also GDP and inflation indices.
My third suggestion: commission an independent study of the effectiveness of current productivity measures. Madam, many had lamented the slow progress of the productivity movement – which is the lynchpin of a continually strong and vibrant Singapore economy. Unless the numerous productivity incentives, grants, and support packages yield tangible results, many SMEs including those with potential will exit, leaving a major negative impact on jobs and workers. Madam, I do not believe we have solved these issues at the root cause level. I believe we have not yet found the key to the productivity problem. I propose that before we do more and more, we commission a qualified independent task force with actual corporate turnaround experiences to study this important issue.
In conclusion, Madam, a Budget is only the means to an end – a resource allocation. The end of resource allocation must be to create a Singapore that we all aspire. Madam, at this point, I seek your permission to distribute a handout from the OSG Conversation. [Copies of handout distributed to hon. Members.]
This OSG Conversation's handout presents the latest summary table of the perspectives that emerged from more than 16,000 Singaporeans, more than 130 volunteers and more, who have participated in Phase One of OSG. There are 12 emerging common aspirations arising from the largest national conversation ever held in our country. What Singaporeans would like to see is:
A society with diverse definitions of success;
A Singapore with a more fulfilling pace of life;
A Singapore with a strong and vibrant economy;
A society with strong families;
A Singapore that is affordable to live in;
A society where everyone can age with dignity;
A society that takes care of the disadvantaged;
A society with a greater sense of togetherness;
A Singapore for Singaporeans;
A society where Government and people have a more collaborative relationship;
A society anchored on values; and
A Singapore with a trustworthy government.
These are the voices of the people. They represent the hope of many of us. But these aspirations will not just self-execute. My fellow MPs and I can advocate for many free things for Singaporeans. But the truth of the matter is there are finite resources and infinite needs and wants – sometimes conflicting ones. The hard truths remain – our ageing population, our declining birth rates, our shrinking local workforce, and income inequality in a global economy that values different skill sets and pace for them. Solutions to these complex issues cannot be thought of and mandated by the Government alone. They need to be crafted with the inputs of Singaporeans, with as many of us understanding the nature of the hard truths that we face, and opt for the best possible, and sometimes painful, solution such as economic restructuring.
But as one of our national songs goes: We are Singapore, we will stand together and stand up for Singapore. We are after all Singapore; we made it when people said we could not.
Madam, I encourage fellow Singaporeans to join phase two of our ongoing Singapore Conversations – to seek first to understand the issues, and then to be understood, so that their aspirations and ideas will continue to be considered and reflected in future budgets. Madam, I support the Budget.