Budget 2015 is just around the corner. We’ve made a few predictions as well as the probable changes that will be announced when our Finance Minister heads to the podium. Let us know what you want to see in Budget 2015!
Silver Support Scheme
Here's our mistakes. Don't do the same.
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
If you could characterise the 2014 Budget in one word, it would be pioneers. Last year, the ruling government implemented a boatload of initiatives aimed at improving the lives of the senior citizens of Singapore, those who carried the country on their wizened backs during her backwater days and propelled Singapore to where she is today. Named the Pioneer Generation Package, the different measures were created to salute these pioneers and recognise their past efforts.
Budget 2015, which will be announced this coming Monday, looks set to continue rewarding the senior citizens of Singapore. Over the past few months, a few details have emerged, sketching a rather comprehensive support scheme for those aged 65 and above. It’s alliteratively named the Silver Support Scheme and will most likely be geared towards the less fortunate and those who did not benefit from Singapore’s growth even though they worked as hard as their peers. Unlike the PGP, which was available to every senior citizen, the SSS will most likely employ means testing. PM Lee mentioned earlier that he believes the government and the community should do more for a select group of senior citizens, most likely those who solely rely on money from their children and whose monthly CPF pay-outs are less than S$450 a month.
When the SSS kicks off, the initiatives will not only help these old folks but also their children who might be facing financial stress from supporting their parents. What will the SSS consist of? We reckon it will be subsidies on essential items such as public transport, CPF top-ups, and a small monthly payout.
In recent years, the CPF scheme has been a hot button topic among many Singaporeans, many of whom have the mentality that the money in their CPF accounts is money that, in Singlish parlance, “can see but cannot touch”. A large number of folks have complained, with good reason in our opinion, that the CPF scheme is too restrictive, lacks transparency, and never takes into account the feedback from the men and women on the street.
We’re glad that the CPF Advisory Panel, formed last year in September 2014, elicited feedback, thoughts, and comments from a wide spectrum of Singaporeans before recommending their proposed changes to the government. Many, if not all, of the issues raised such as having the ability to withdraw a lump sum of money at a specified age have been addressed.
We’re uncertain whether the government will implement all of the proposed CPF changes in Budget 2015, but we’re certain that most of them will see the light of day.
Show Me the Money!
Civil servants have already been given their schedules for election briefings. Electoral rolls are being updated. To top it all off, 2015 is Singapore’s 50th birthday, with a huge number of events organised around the SG50 theme.
All of these signs point to one thing – an election sweetener, usually composed of cold, hard cash or money transfers from the government’s coffers to your bank accounts. The past Budgets are wonderful predictors for this behaviour.
Budget 2011: Growth dividends, a one-time cash pay-out on 1 May 2011 (General Elections held on 7 May)
Budget 2006: In May, growth dividends between S$200 and S$800 given out in cash and signalled the first time these sweeteners were given in cash instead of through a shares scheme (General Elections held on 6 May)
Budget 2001: The election sweetener wasn’t actually in the Budget announcement but in the National Day Rally speech on 19 August. Called New Singapore Shares, these shares were worth S$1 and were non-tradable and non-transferable, but gave dividends every year (General Elections held on 3 November)
Enhanced Benefits to Drive Productivity
The government introduced a variety of schemes over the past few Budgets that aimed at increasing productivity and making the Singaporean worker a more attractive hiring proposition. These included the Wage Credit Scheme, an initiative that co-funded up to 40 percent of wage increases given to Singaporean employees, and the Productivity and Innovation Credit scheme, a move that helped to fund the productivity steps taken by different companies.
In our opinion, many of these moves artificially drove productivity by cutting business costs instead of actually adding value to the economy. We predict that Budget 2015 will contain a slew of initiatives that are focused less on cost-cutting measures but more on creating demand and value for the global economy. This could be funding to help companies expand regionally or even globally, and more support for entrepreneurs who want to start new businesses. We hope it’s the latter.
An Enhanced Progressive Wage Model
Last year, Finance Minister Tharman Shanmugaratnam announced an entry-level minimum wage for Singaporean cleaners, setting it at S$1,000. It was a much-applauded move and a boost to these low-wage workers who, if you really think about it, do so much to make sure Singapore keeps ticking on a day-to-day basis.
In Budget 2015, we hope that this progressive wage model can be extended to other menial jobs that don’t benefit much from productivity drives and benefits. After all, there’s only so much that you can do in terms of increasing real productivity when it comes to jobs such as cleaners, security guards, and the like. Yet, these people form the backbone of Singapore’s everyday essential functioning.
By recognising their contributions, we can mature as a society.