ESS Post-budget Forum 2020
Many contemporary issues were discussed at the annual ESS Post-budget Forum 2020. This was especially so given the tumultuous period Singapore is facing in Q1 2020, ranging from Covid-19 and a new strain of dengue fever, to the slowing down of neighbouring economies and the trade disturbances on the global stage. Elections on the horizon also intensifies the budget’s significance.
First and upmost, the distinguished panel concurred unanimously that the expansionary fiscal budget is needed. The one-off cash handouts to Singaporeans, rental waivers to the five most hard-hit sectors, Passion Card top up for Merdeka generation etc. are good short term injections to counter the Covid-19 economic impacts. Even if it is one-off, such an injection can be good for morale and confidence in these tough times. There were words of caution that if this infection is prolonged, or there is a second round of infection, the government might need to do more; and this is very possible given that Singapore took eight months to shake off the SARS infection back in 2003.
Mr. Manu Bhaskaran, Director of the Centennial Group International, commented that the “Government [is] preserving its bullets for later.”
“Enough has been done so long as the shock is temporary; but if there is a second round of infection, maybe we need a new package.” He mentioned in his speech.
There was also consensus that such a storm was heading towards Singapore even before the Covid-19 saga. The infection is only the triggering event which awoken our vulnerabilities. The panel did emphasize not to worry though, as the goal of Singapore and her government is still unchanged: 1) to ensure Singaporeans keep their jobs, and 2) to ensure other businesses continue to come to Singapore in our high export-oriented economy.
Professor Chia Ngee Choon, Deputy Head of Economics at NUS, reiterated Deputy Prime Minister (DPM) Heng Swee Keat’s budget speech to “Ride the storm with eye on the future”.
Indeed, the Budget 2020 has a slew of policies aimed at retaining employment and attracting businesses. There is the 8% wage grant to non-government organizations for each Singaporean employee from October-December 2019. This is in contrast with past measures where employers’ CPF contributions to employees were lowered, which was not preferred as it decreases savings of regular Singaporeans for retirement. There are also education account top-ups for children as well as another round of SGD500 SkillsFuture top-up so as to encourage Singaporeans to upgrade their skills. These are all welcomed features. Consequently, the panel urged more Singaporeans to use the grant and participate in upgrading.
On the topic of take-up rates, improvements can be desired for other areas that still need more addressing from the budget. Two important issues raised and debated with the audience were 1) retirement preparedness and 2) digitization of Small Medium Enterprises (SMEs).
Although Budget 2020 has the dollar-for-dollar matching government top-up for the elderly up to SGD600 and it expanded the Silver Support Scheme (SSS) to cover up to 250,000 elderlies, SUSS Professor Walter Theseira feels more should be done.
“The literature shows that people who benefit are people who intend to save anyway. They don’t get new savers, they get current smart savers.” As Professor Theseira commented. “Perhaps an auto top-up from the government would have been better.”
On the issue of digitization, Mr. Song Seng Wun, Private Economist from CIMB, also talked about the ideological resistance to digitization from SMEs.
“A lot of [SMEs] tell me that they cannot do it, they have to still rely on foreign labour. I say, you must just try! If not, someone else would beat you to it; it is always possible.”
He also shed light that banks’ credit loan officers are very willing to approve financing as long as the documentation is done to institutes’ requirements. Digitization can greatly improve fund approvals. This is exceptionally pertinent to SMEs which need said funds. Regardless of the virus outbreak, there should still be a push for decreased reliance on foreign labour and move towards digitization.
Overall, there were wide unanimity from the panel and floor that there should be more transparency in the government towards certain statistics. No one knows the true revenue of the government (from GIC, Temasek etc.) and certain spending are opaque. Economists often have to do investigative work in order to ascertain whether certain policy measures are ample or effective. There is also no official government effort to publicly document pressing issues such as elderly poverty.
Mr. Nathan Sundram, CEO of Public Policy Asia Advisors Pte Ltd, also added that we might be heading into a recession and there is speculation of a -0.5% growth in Q1 2020.
“We’re not sure it’s a V-shaped recovery. The government is prepared for a more long term recovery. It all depends on [the] global economy itself, we’re not sure; depends on China’s recovery and response to the outbreak.” He said in his speech.
Indeed, Singapore must look more towards her ASEAN neighbours to diversify her economy, besides relying just on major traders such as China and USA. This Covid-19 outbreak definitely highlights such importance to us. Mr. Sundram also accentuated other important issues in Budget 2020 that should continue to be in our view, such as our coastal defence against climate change rising sea levels, removal of all combustion vehicles on Singapore’s roads by 2050 to be replaced with Electric Vehicles (EVs), and so forth.
As with previous forums, the 2020 ESS post-budget forum was a great dialog and exchange of ideas among panel and audience. Through the discussions from both public and private sector champions, insights were gained on the relative merits of the budget and the challenges facing Singapore in 2020.