A more sizable budget should have been allocated to households to cope with the COVID-19 crises and economic slowdown

Progress Singapore Party’s Budget 2020 Response

The Singapore Budget 2020 was announced by the Deputy Prime Minister and Finance Minister in Parliament on Tuesday, 18 February 2020. In our pre-Budget statement, dated 12th of February 2020, Progress Singapore Party (PSP) called for an expansionary budget and therefore, we are aligned in principle.  We would like to thank the government for taking into consideration feedback from voices like ours.

The Government has announced $800million for the healthcare system to battle the COVID-19.  We hope that our frontline healthcare workers will benefit substantially from this.

More support for households affected by COVID-19

We are of the view that a more sizable budget should also be allocated to households to cope with the COVID-19 crises as opposed to the current 1.6B allocated to the people and household. We propose additional relief should also be provided to cover loss of income for Singaporeans who are affected by COVID-19.

“We propose another one to two billion to be allocated to households to cope with COVID-19 crises and economic slowdown.” Mr Leong Mun Wai, Assistant Secretary-General

Budget is not a goodie bag

The expansionary measures were also handed out in “goodies” in many different forms making it hard for people to understand how much they are getting and hence depriving the economy of an immediate confidence boost.   We are of the view that long term measures are always better than short-term goodies because the former facilitate better planning by the people and enterprises.

The COVID-19 outbreak and the negative impact on Singapore’s businesses and economy has highlighted that our over-reliance on foreign workers is a key risk to our economy. This is partly a result of our steadily declining total fertility rate (TFR) which has reached a historical low of 1.14 in 2018. We should hence consider a thorough rethink on strong policies to increase our own Singaporean workforce through increasing our TFR.

No to GST hike for at least the next five years

We also acknowledge that the Government has listened to reasonable voices to put off the Goods & Services Tax (GST) increase, even if it is for just one year. We advise against a further rise in the Goods & Services Tax (GST) or any other fees, at least in the next five years. Given that the Government cannot give a definite timeline as to when the GST increases will take place (only that it will still be needed by 2025), PSP questions the rationale for the $6 billion Assurance Package which will be set aside in the GST Voucher Fund in this year’s Budget.

Also, before the current economic difficulties caused by COVID-19, government announced that it would be necessary to raise the GST from 7% to 9%.  However, it is now able to postpone the increase in GST despite the economic difficulties and in addition, disburse $6.4bn in support packages, without resorting to draw down from reserves. This showed that the increase in GST was actually not necessary.

Stronger push to be more manpower-lean to benefit Singaporean PMETs

Budget 2020 announced that the foreign worker quota for S Pass workers in the construction, marine shipyard and process sectors will be cut. S Pass workers, which are a subset of the foreign workforce, refer to mid-skilled foreigners who compete with Singaporeans for Professional, Managers, Executives and Technicians (PMET) jobs. Although this move is welcomed, PSP is however of the view that the effect of foreign workers on our job market and society should be given more attention than just reducing the S Pass sub-Dependency Ratio Ceiling (DRC) for a few industries.

Many of the 359,000 permanent residents in our labour force, along with the 184,000 E-Pass holders and the 201,600 S-Pass workers (total 744,600 workers) compete directly with Singaporean PMETs for good jobs in Singapore. As such, to address the PMET job issue, the number of E-Pass holders and the PRs will have a bigger bearing.

Foreign Workforce Numbers

https://www.mom.gov.sg/documents-and-publications/foreign-workforce-numbers