Parliament: Budget 2023 Speech

MP Pritam Singh

Mr Pritam Singh (Aljunied): Sir, my speech is in two parts. In the first part, I will speak about the overarching thrust of the Budget. In the second part, I will address three specific areas covered by the Deputy Prime Minister: one, Jobs and the new Jobs-Skills Integrators; two, the raising of the CPF income ceiling; and three, the increased grants for buyers of HDB resale flats.

Let me start with my views on the principal thrusts of the Budget.

At last year’s Budget, which was titled “Charting our way forward together”, the Deputy Prime Minister outlined the Government’s approach towards strengthening Singapore’s social compact. Deputy Prime Minister Wong reiterated a commitment to further improving social policies, saying that this would be a multi-year agenda to prepare Singapore for the future. The Workers’ Party sees this year’s Budget as another plank of that multi-year agenda. This Budget also coincides with the Forward Singapore exercise launched last June. The Forward Singapore exercise is intended to build on the expression “social compact” that was employed at last year’s Budget.

My view is that Singapore’s social compact must be one where we move forward together as one Singapore to tackle an unpredictable and potentially disruptive future. We must guard against a split in society, where the rich and the well-off high-earners are pitted against the rest of Singapore.

To achieve that end, significant work needs to be done. I say this because one theme that was carried by some outlets, both mainstream and online, was that this year’s Budget was, I quote, a “Robin Hood” Budget. Referring to it as such pits one group, high-earners and the rich, against the lower- and middle-classes.

For those of us on the ground, our social trends are clear – a rapidly ageing population, a belief that social mobility for younger Singaporeans contrasts markedly with that in our parents’ generation and a view that meritocracy has developed a perverse edge, allowing the well-off to move ahead much faster than the broad middle-class.

Aljunied GRC Member of Parliament Leon Perera will speak more on this theme in his Budget speech. These are forces that have to be properly managed and it is critical for any Government to make the fight against inequality a central policy agenda and to decisively intervene to lift those at the bottom.

It would be remiss of me to say that the Government has not made moves in this regard. In his Budget speech for example, Deputy Prime Minister Wong spent time highlighting how disadvantaged children need an early leg-up.

If Singapore does not do more, a threat that has loomed large on the horizon in the last few years, of the potential emergence of “two Singapores”, may become reality.

One Singapore is connected to the world as a hub economy. It is where high salaries and opportunities abound and where locals and crucially, many foreigners too, power diverse nodes of the economy. This Singapore gives meaning to the promise and lure of Singapore and how we remain relevant to world. It is a Singapore that always strives to be at the cutting edge of global developments.

The other Singapore is one where the majority of Singaporeans live. It is one where there are perceptions of slowing social mobility, connected to the reality of high housing prices. Today, the prospect of upgrading to a condominium or a landed property, unlike in decades past, is not as realistic for HDB home owners. Buying a car is an out-of-reach luxury for most people, unlike in many other countries.

I have also heard it summarised this way. In the past, you may not have done well in school, but if you were prepared to slog and save, you could become rich and successful. Today, the view is that once you have not succeeded academically, even if you slog for years, success, let alone wealth, may not follow. These “two Singapores” could easily become a reality that causes frictions in society.

Singapore is a tiny red dot and both these Singapores would unavoidably rub up against each other. There is no countryside to retreat to, where the pace is slower and prices of things are lower than in the city. Human nature and the instincts of envy and chauvinism and a narrative of haves and have-nots can quickly poison society and accentuate cleavages. With people living cheek-by-jowl, such views can easily take root and manifest themselves in cruel ways.

As much as the Government endeavours to keep society open and bring new businesses and opportunities to Singapore and Singaporeans for the greater good, it is that second Singapore, where a very broad middle of Singapore lives and works and plays, which should never find itself unmoored and cynical about the future of Singapore.

There are some Singaporeans within the bureaucracy and they include members of the Executive and other senior civil servants, who are fixated about keeping Singapore relevant to the world, thinking of how to enlarge the pie even as they keep the other eye on making sure the pie does not get smaller. Their efforts cannot and should not be underestimated or ignored. It is not lost on many Singaporeans including the Workers’ Party that it is because of these efforts and those of their forebears that we have the capacity to propose other redistributive policies for our fellow Singaporeans today.

I note the moves through the Budget to better equalise opportunities through fiscal intervention, such as raising taxes and duties for high-end property and luxury vehicles. And I note also the policies that came through last year, such as hikes in personal income taxes. In contrast, when some commentators characterise the Budget as a “Robin Hood” budget, they reinforce the perception of “two Singapores” being created.

To combat both the perception as well as the reality in some quarters of “two Singapores” inexorably emerging, redistribution must be at the core of Government policies. To that extent, the Workers’ Party supports the idea of a progressive society, where those who earn more pay proportionally more in taxes. Equally, we honour the centrality of a strong work ethic even as we are not only empathetic but also sensitive towards the disadvantaged and those who need extra support. 

The interventions of the Workers’ Party for this debate would be in the spirit of this review of our social compact, envisioning how best society can position itself for an unpredictable and potentially far more disruptive future. 

I will now go on to the second part of my speech that will address three specific announcements in the Budget. In as much as the Budget is titled “Moving forward in a new era”, a look back at the past is a useful guidepost for the new policies that are being introduced.

Onto the first point of jobs and specifically equipping and empowering workers through the Jobs-Skills Integrators, the Budget seeks to ensure that training translates into good employment outcomes. Labour market intermediaries are being developed for two purposes: first, to ensure that training leads to real jobs; and second, to ensure job placement for those who have been properly trained.

At first glance, the initiative holds much promise as many jobseekers may not have information on what opportunities there are out there, what they should train for or what organisations will need their new skills.

The Deputy Prime Minister announced that the Jobs-Skills Integrators are being piloted for the precision engineering, resale and wholesale trade sectors. To get a sense of how this initiative might fair, we should look at past efforts in these sectors.

In a 2016 press release on the Industry Transformation Map, or ITM, for the precision engineering sector with respect to digital manufacturing, the then-Minister of Trade and Industry reported that the move towards digital manufacturing would see the creation of 3,000 PMET jobs by 2020. Specifically, the press release noted that the workforce could expect strong support from the Government and that a new skills framework for precision engineering would be launched under SkillsFuture Singapore. In addition, employers and workers would be equipped with insights on career pathways for 13 occupations, job roles, and specifically training programmes. Professional conversion programmes were also promised to support the reskilling of mid-careerists who were keen to embark on new careers. Sir, what has become of these training and placement efforts and how are they qualitatively different from what the Deputy Prime Minister has proposed in the Budget?

A sum of $4.5 billion was committed to the first Industry Transformation roadmap. When the Government was transiting to ITM 2.0, I asked in this House when the Government’s report card on the first ITM would be ready. The Government replied that it was still early days and those details were not available. We have yet to hear in this House a proper accounting of the success or otherwise of the first ITM. I hope the Government can provide some details in this regard.

Separately, on job placements. The then-Minister for Manpower Minister Lim Swee Say announced at Budget 2017 that the Ministry of Manpower (MOM), specifically Workforce Singapore (WSG), had roped in two foreign job matching firms, namely Ingeus and Maximus, to help unemployed professionals with their job hunt. It was reported that Ingeus and Maximus would work on an outcome-based payment model. In 2019, WSG reported that the two appointed firms had demonstrated an ability to deliver satisfactory placement outcomes, which were comparable to that of NTUC’s Employment and Employability Institute (e2i) with more than six in 10 PMET jobseekers finding jobs within two months after tapping on Workforce Singapore and e2i’s career matching services. Crucially, this move came after WSG stated that it had worked with four local employment agencies, but with I quote “lacklustre results” where the placement rate was less than 50%. 

I note that the new Jobs-Skills Integrators have not been named. Can the Minister tell us who they are and what KPIs will be used to determine the effectiveness of this latest pilot and which agencies will anchor this initiative? Can the Government also flesh out the fiscal outlay set aside for the Jobs-Skills Integrators?

Sir, related to the issue of jobs, Sengkang GRC Member of Parliament He Ting Ru will speak about the announcements that pertain to the Baby Bonus and more specifically work and family life in Singapore. Separately, Sengkang GRC Member of Parliament Louis Chua and Hougang SMC Member of Parliament Dennis Tan will speak on the changes to the Working Mother Child Relief.

I wish to add some comments on the extension of paternity leave. I understand some employers, particularly smaller SMEs, may find greater difficulty in accommodating two further weeks of paternity leave for their staff members because of manpower and operational challenges. It is a legitimate concern but I hope employers can empathise with the importance of strong families and the lived reality of raising children in Singapore. The time dedicated to raising children is in addition to other filial responsibilities such as spending time with our seniors and parents. This is a fact of our Asian culture. Many parents endeavour to strive hard and chase the pot at the end of that rainbow at the workplace for a better future for our children.

More paternity leave is certainly welcomed and I hope SMEs make the adjustments necessary to accommodate male employees, just the same way as they do for their female employees with respect to maternity leave.

To better negotiate this transition, employers should review the important mindset shift that the Government has sought to cultivate for some years and that is the hiring of mature workers. SMEs should adjust and constantly reconsider their HR policies and job scopes to hire seniors permanently, with a view to make up the temporary absences of younger staff not just due to either paternity or maternity leave, but also due to those unplanned days and events where young children fall ill and parents scramble to make alternative plans.

For this reason, I support the extension of the Senior Employment Credit (SEC) up to 2025. The SEC pays up to 8% of wages, up to a salary of $4,000 a month. However, for workers between the ages of 55 to 64, this contribution from the Government pays only up to 3% of wages. For example, a company that hires a worker who earns $3,000 and is between the ages of 60 and 64, the company would get about $90 for that senior hire.

I believe employers can be given more support to encourage them to hire senior workers. Studies should be carried out to see how the SEC can be increased to better motivate employers to hire seniors. In view of our rapidly ageing population, has the Government undertaken any studies to consider the fiscal impact of raising the SEC?

There must be an upside for employers as we undertake this cultural shift towards making the workplace more family-friendly. Notwithstanding the efforts thus far, greater support towards senior employability will open new vistas for our SMEs. 

Sengkang GRC Member of Parliament Jamus Lim will cover other Budget initiatives for businesses such as the Enterprise Innovation Scheme and advance other important Workers’ Party alternatives, whose time we believe have come, such as the Redundancy Insurance.

One additional point on paternity leave I wish to address is that some have commented that men be excused from their NS duties for the year they are child is born. Speaking as an NSman, I would be very cautious about moving in this direction. I would suggest leaving it to unit commanders to determine how best to accommodate the specific requests of their servicemen as they have been doing so for many years already. If a unit is having a major exercise of conducting a critical operation, the needs of the Singapore Armed Forces (SAF) or the Home Team agencies cannot and should never be compromised. 

Sir, the second Budget announcement I wish to address is the move to help middle-income Singaporeans save more for their retirement by the raising of the CPF monthly salary ceiling. CPF rates and income ceilings have been used as a macroeconomic counter-cyclical tool in decades past to combat recession, help employers save jobs and the prospect of slower economic growth.

The Finance Minister stated that the salary ceiling was last raised in 2016. While this is correct, it should be noted that the salary ceiling of $6,000 was first put in place in 1985. In response to economic uncertainty, it was reduced to $5,500 in 2004 and further reduced to $4,500 in 2006 before re-establishing itself at the 1985 of $6,000 only some 30 years later in 2016. 

There is much catching up to do with respect to retirement adequacy, particularly since so much of our CPF funds are dedicated to housing. Because of the importance of retirement adequacy in the longer term, the Workers’ Party supports the rise of the income ceiling to $8,000. However, I have a few questions for the Deputy Prime Minister.

First, in view of the policy reason for this new salary ceiling which is to allow Singaporeans to save more for retirement, I am of the view that it would have been appropriate to simultaneously reconsider the percentage of CPF funds credited into the three CPF accounts with a higher proportion allocated to the Special Account.

For example, currently out of 37% of total wages for a member aged 35 and below, 23% of the CPF contributions is allocated to the Ordinary Account. The contribution to a member’s Ordinary Account drops to 21% when the member turns 36 years of age and is gradually reduced in five-year intervals to reach only 12% when a member returns 56.

In contrast, contributions to the Special Account increased from 6% to 7% when a member turns 36 years of age and peaks at 11.5% between the ages of 50 and 55. To achieve the Finance Minister’s policy intent of better retirement adequacy, a reduction in the range of 1% to 2% in the allocation to the Ordinary Account from one’s early years in favour of the higher interest-bearing Special Account in step with the salary ceiling hike would serve the retirement needs of Singaporeans better. The CPF system after all is designed primarily for our retirement needs. May I ask the Minister if such a redistribution was considered; and if not, why not? 

On this point, Mr Speaker, numerous studies have been conducted on the income replacement rate, or IRRs of pension funds worldwide. The IRR is the ratio of retirement income to pre-retirement income. The World Bank recommends that countries should aim for an IRR of 53% of net final year wages or 78% of net average lifetime wages. For many, their CPF LIFE payouts are unlikely to meet this threshold since much of our CPF funds are locked up in housing.

The Deputy Prime Minister stated that the Government was considering what more can be done to enhance retirement adequacy in its Forward Singapore deliberations. The decline in retirement adequacy in the past was mitigated by the appreciation of home values. However, the Government has also stated that housing is unlikely to see steep rises in value as in the past. 

The Government should begin a deep conversation to re-centre the CPF system towards its original purpose, especially as the cycles of job disruption, job redesign and job obsolescence become more pronounced and frequent in the face of rapid technological advancement.

There have been suggestions made most recently by former Nominated Member of Parliament Walter Theseira to reduce the usage of CPF funds for home purchases. This call was met by consternation from the public because of the already high prices and the reduced affordability of housing. However, achieving better retirement adequacy would require a hard look at how much the CPF system dedicates towards home ownership. More affordable public housing will inevitably improve retirement adequacy.

This leads me to the next part of my speech – the announcement that CPF grants will be increased, which is for the ostensible purpose of making resale flats more affordable for first-timers. Sir, over 6 and 7 February this year, this House debated the Motions on affordable and accessible housing. Some 10 days later, the Leader of the House was quoted in The Straits Times saying, “but I think in the longer term, we are looking to see how we can make housing more accessible and affordable”.

From this it would appear that at the highest levels, the Government intends to intensify its efforts in this regard. Also, in a Facebook post of 12 February, the Minister for National Development alluded to going beyond building an additional 2,000 to 3,000 short-wait flats by 2025. The Minister said that the HDB will recalibrate its building programme from 2025, so that short-wait time flats form a larger proportion of our new flat supply than before.

While the details for the moment are restricted to broad thinking, these public pronouncements were followed shortly by the Deputy Prime Minister’s Budget Day announcement of higher CPF grants for resale flat buyers.

Almost immediately, there were concerns about the impact of such measures on house prices by property watchers, especially for larger flats and those in popular areas. Would they feed into higher prices and only make a future correction even sharper when the reality of lease decay for resale fats set in? I hope the Minister can share the Government’s thinking behind this move and the assessment of its intended effects, particularly in view of 11 quarters of growth in HDB resale prices. 

While these additional grants may appear on the surface to be a panacea, there is a real prospect of home prices rising to match the new grants for eligible first-timers. This could happen as a response to the increase in grants. But more likely, price rises could happen because buyers will be tempted to bid more for a flat they want because they know they have the additional grant to enhance the price they can pay. Aljunied Group Representation Constituency (GRC) Member of Parliament, Gerald Giam will further elaborate on the affordability of resale flats in his speech.

More fundamentally in line with the renewal of the social compact through Forward Singapore, would the Deputy Prime Minister share more details on the differences between the valuation of land for public and private use? I asked some questions about this recently in this House and asked if the establishment of a committee akin to the Land Working Group of the Economic Review Committee of 2002, but one that would include Ministry of National Development (MND) and Housing Development Board (HDB) to review the principles of how land is sold for public housing would be something the Government would consider.

Specifically, I also call for an understanding of the principles and rationale behind the market discount of up to 15% of land allocated for Government land sales and industrial Government land sales and the sale of some private land even below this market price threshold.

In addition, I enquired how such sales of private land below market valuation intersected with the Government’s call that HDB land not sold at market valuation would amount to a raiding of the reserves. The Government should reply to these questions which are asked with a view to considering alternative approaches the valuing of land for 99-year leasehold public housing. These are questions that members of the public are interested in, particularly since the details and principles of this subject have not been significantly ventilated in public.

To illustrate the public interest in this matter, on 11 February, released a set of infographics on Telegram. The lead slide was titled “Does disregarding land cost mean BTO flats will be cheaper?” The second last slide put across the Government’s narrative as follows: “Selling land below fair market value = eroding reserves. This diminishes resources available for you and your children.” As of 21 February, 176 individuals gave the post the thumbs up while a far larger 553 individuals chose the emoji which I would describe as showing they were not being convinced.

In the spirit of refreshing our social compact, I renew my call for the Government to also release the price of land for specific public housing, projects and their associated subsidies on a BTO project basis, so that Singaporeans can more meaningfully engage the Government in the course of the Forward Singapore exercise.

Before I round up, I mentioned in the first part of my speech that the Budget titled “Moving Forward in a New Era”, would find the past to be an important reference point. The release of an occasional paper by the Ministry of Finance earlier this month on medium-term fiscal projections has been helpful to the extent that it responds to the calls by the Workers’ Party at the last Budget for additional details on medium-term projections. Singaporeans would recall that this was a call that had been made even earlier when the Goods and Services Tax hike was first mooted. Like the Finance Minister’s Budget, the occasional paper was unable to shed significant light on the impact of the Base Erosion and Profit Shifting 2.0 (BEPS) on our fiscal position. However, it did hypothesise the prospects of greater corporate tax revenue collection under Pillar Two, which it said is expected not to deliver any fiscal upsides as any additional revenue would be ploughed back to encourage investments into Singapore by way of grants.

With the Minister’s announcement in this Budget to top up the National Productivity Fund by $4 billion for, I quote, “investment promotion”, the impact of BEPS is likely to be a significant question mark with regard to the Ministry’s medium-term fiscal outlook. Sengkang GRC Member of Parliament Louis Chua will speak more about BEPS and share his analysis of the Budget in his speech.

Be that as it may, the Workers’ Party looks forward to more of such papers and recalls its proposal two budget cycles ago for the establishment of a Parliamentary Budget Office for a closer scrutiny of the Government’s budget. In view of tighter fiscal environment in the years to come as predicted by the occasional paper, such an office would hold much promise for greater Parliamentary and public scrutiny on Government expenditure and whether programs are worth the taxpayer monies that have been allocated to them.

In conclusion, Sir, in an Institute of Policy Studies’ Study of Social Capital in 2017, the report stated, the sharpest social divisions in Singapore may be based on class, instead of race or religion. The perception of two Singapores that we must guard against which I raised earlier in my speech reinforces the point that fiscal redistribution, better social protections and greater support for our most vulnerable Singaporeans must remain a mainstay of our future budgets. It is imperative that policies should be continually refreshed and reviewed, including the applicability of the principles they were originally based on. Singapore, a young country, where Singaporeans feel, live and experience the emotions of nationalism and citizenship must continue to thrive in a fair, broad and balanced way, so that we leave a better future for today’s generation and those that come after. Mr Speaker, the Workers’ Party supports the Budget.

22 February 2023

7.02 pm

Mr Pritam Singh: No, Mr Deputy Speaker. Just a small technical clarification in my speech which I would like to clarify.

Mr Deputy Speaker: Your speech earlier today?

Mr Pritam Singh: That is right, Mr Deputy Speaker, Sir.

In my speech, I mentioned at the part on retirement adequacy, that the contribution of a member’s Ordinary Account drops to 21% when a member returns 36 years of age and is gradually reduced in five-year intervals to reach only 12% when a member returns 56.

I got these figures from the latest CPF Annual Report which was tabled to Parliament on 27 June last year. It has been brought to my attention that in 2022 and 2023, the CPF allocation ratios actually have changed slightly. So, I think it is important that I put that on the record, and that the figures that I quoted were in reference to the Annual Report of the CPF of 2021.

But it still does not change my fundamental point which was to re-allocate early on in a member’s working life.

Mr Deputy Speaker: So, it is a clarification in relation to your own speech.

Mr Pritam Singh: That is correct.

Mr Deputy Speaker: That you want to put on record.

Mr Pritam Singh: That is correct, Mr Deputy Speaker.

22 February 2023

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