The Singapore Budget 2012 released on Friday was touted as a “budget for the poor and disadvantaged" that will reduce Singapore’s dependence on foreign workers and do more for the disadvantaged in Singapore. I have sent the weekend looking over the budget and…well, I don’t see it.
The title I would give to this budget is “The Redundant Budget”. As many of you would probably had guessed, I find several things in the new budget to be redundant. These are the biggest 3 “offenders” in my view;
The media has been focusing the government’s move to tighten the foreign worker quota. They are doing this by reducing the Dependency Ratio Ceilings (DRC). The DRC specified the maximum proportion of foreign workers that companies in various industries can hire. The manufacturing industry’s DRC will be cut from 65% to 60% while the services sector’s DRCs will be cut from 50% to 45%.
This means that foreigners will only be allowed to make up 60% of the workforce in a manufacturing company while the remaining 40% of the workforce must be Singaporeans. Ditto for a company in the service sector; 45% foreign workers to 55% Singaporeans.
What is 5%? Let me give you an example; Even if you are a big manufacturing company employing 100 people, the difference under the new rules will be just 5. 5 more Singaporeans will get a job in the company that employs 100 people! If you are a small manufacturing company, the difference will be less than that. How is a 5% difference going to curb the rise in the population of foreign workers when 1 in 3 people in Singapore is already a foreign worker? A difference of 5% is so little it is redundant.
I do not understand the scrapping of the Additional Transfer Fee by the government. The transfer fee is a fee you pay to the government when you transfer a vehicle, usually a second-hand vehicle. Now abolishing the fee will no doubt be welcome by Singaporeans but I don’t quite understand the need for it. If you buy over a car, you will have to pay $50,000 and above for it. The transfer fee of a vehicle comes up to $100-$400. Getting rid of the transfer fee will hurt the coffers of the government with only minimal benefit for Singaporeans. I mean if a Singaporean can pay $50,000+ for a car, what’s another few hundreds?
Starting in September, the CPF contribution rates for older workers aged between 50-65 will be increased by up to 2.5%. At the same time, older Singaporeans will get a “Silver Housing Bonus” of $20,000 if they downgrade to a smaller home (3 bedroom flats and below).
More CPF contribution for the elderly is always good but the budget sort of missed the point. The problem the elderly has isn’t how much money they have in their CPF, but how much money they take home. Many elderly workers have money in their CPF accounts, but are living hand-to-mouth because they are unable to touch their CPF accounts. Putting more money in the CPF, which they can’t use, isn’t going to help them with their day to day living expenses at all.
It’s the same with the “Silver Housing Bonus” of $20,000. Housing prices in Singapore are very high and despite all the so-called “cooling measures” of the Singapore government, the prices are not coming down (in some cases, it’s still rising only more slowly). A normal 3 room HDB flat in Singapore cost at least $300,000 so a bonus of $20,000 isn’t going to convince anyone to downgrade.
Instead of redundant, to be more exact I will say I find this budget announced by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam to be very strange. It is as if the Singapore government knows what is needed by Singaporeans but is unsure how much to push to give the benefits needed by the disadvantaged. So the budget is filled with half-hearted measures that don’t do enough.
More than anything, I find that disappointing.