NCMP Lina Chiam: Breakthrough Budget, But More Help Needed For Those Who Fall Through The Cracks

NCMP Lina Chiam delivered an impassioned speech during the debate on the Budget. In her critique of Budget 2015, she did acknowledge that the budget was indeed a breakthrough in the eyes of many as it signified a shift in mindset of the PAP towards the underprivileged.

However, she also reminded the members of the house of the stark realities on the ground and how the Budget still fails to help those who fall through the cracks. In her analysis of the various policies addressed, she discusses what more can be done to improve the system.

She took a clear stance against cosmetic changes and argued for more substantial and effective changes. As an analogy, she remarked how the Budget leaves much to be desired as it moves from the mantra of ‘no free lunch’ to that of ‘guarding your lunch’. You can read her speech in its entirety below.

Yes, Budget 2015 is a breakthrough Budget, but there is a need to identify who this breakthrough is for. “There is no free lunch”, this has been the mantra of this Government for a very long time. In keeping with this mantra, for about 50 years, assistance schemes have been kept measly and targeted at a small group of people.

The reality however is that, in any society, some people need free lunches. After pressures from, various quarters and especially from the people of Singapore, there seem to be a mind-shift in the top-echelon about doing more for the less-abled. So, the breakthrough is more for the ruling Party, the Budget is a testament to that, and so must be welcomed.

Silver Support Scheme

The Silver support is a permanent feature of Singapore social safety net which gives assurance in retirement. The scheme will disperse annual payouts targeted for needy elderly Singaporeans which comprise of the bottom 30% lower income and sandwich class aged 65 and older, will cost $350 million for the first year and likely to be raised over the years when more Singaporeans turn 65 and the cost of living rises.

This Scheme is specially welcomed. It is a signature Scheme which the Government officially acknowledges that there are a sizeable number of senior citizens who receive meagre income for sustenance. About 150,000 people will benefit from this scheme.

The scheme should be reviewed every 4 years for future batches of the elderly to prevent under declaring their income which defeats the purpose of promoting strong work ethics.

Senior Citizen Allowance Scheme

While the silver support Scheme is commendable, it benefits a relatively small group of senior citizens. Many citizens over the age of 65 have contributed much to Singapore in their younger days. The Government could have recognised the contributions of these older citizens by a Senior Citizen Allowance Scheme which will give all citizens above the age of 65 $500 two-times in a year. Such a Scheme will be on-top of the Silver Support Scheme. The Scheme should cost the Government about $450 million in the first year.

Budget 2015 should also mention the Social Service Sector, an important sector which provides for social and community services in Singapore.

The government should help this sector to achieve sustainable economies while using resources productively instead of just depending on charity for funding their objectives.

Revise HDB’s Resale Levy Policy

Since the intent of HDB’s Resale Levy Policy is to reduce the second subsidy for second-time HDB flat buyers, it is a fair policy to have. It is the desire of many middle-income families to move to a slightly larger HDB flat. To a considerable number of citizens who aspire to upgrade to a bigger flat, the resale levy, which has to be paid upfront, remains a obstacle. The Resale Levy Policy could be revised where the levy (of between $15,000 to $50,000 depending on the type of flat first-owned) is added to the price of the 2nd-flat, and the 2nd-timer be given an option either upfront in cash or monthly throughout the duration of his mortgage loan.

Car ownership

In Singapore, car ownership is a necessity rather than a luxury for needy commuters. They need a car for various reasons.  The bigger upfront fees (cap on car financing loan) and deposit quantums mean many middle-income commuters who want a car will be priced out of the market. At the time of introducing the curbs on car financing the Finance Minister said that the measures were not permanent and were meant to keep a lid on inflationary pressures and rein in borrowing, As concerns of inflation have now lessened, and as car loans are not unsecured, the Government should lift the cap car loans at up to 60 per cent of purchase price.

The Government should also consider moving away from the Certificate of Entitlement system  which curbs car ownership, to a system which is premised on car usage.[1]

Unemployment Insurance

In the Our Singapore Conversation job security emerged as the top 3 concerns of Singapore.[2] In a recent Nielsen Survey Job Security topped the list of concerns for Singaporeans.[3] Even if unemployment rate in Singapore among citizens remain relatively low at 2.6 percent, the Union reported that:

“At the national level, 7,710 workers were retrenched in the first three quarters of 2014, based on figures from the Ministry of Manpower. This is higher than the 7,220 laid off in the corresponding period a year before, as more workers were retrenched in the services sector last year.”

The Budget could have called for the establishment of an insurance scheme as a safety net for middle-income Singaporeans for whom the security of continuous employment is increasingly being thrown into question. The Korean Employment Insurance Scheme (EIS) be studied as a model.[4]

Personal Income Tax Rebate

The Budget will provide for a Personal Income Tax Rebate of 50 per cent, with a cap of $1,000. It must be noted that the majority of Singaporeans (55%) do not pay income tax.[5] So, even if most squeezed middle-income families will not cheer this tax rebate, it will nevertheless benefit a sizeable number of middle-middle income and the high-middle income families.

Foreign Domestic Worker Concessionary Levy

The Budget halves the foreign domestic worker (FDW) concessionary levy – from the current S$120 to S$60 – to help families who are taking care of the elderly, from May 1. The concessionary levy will also be extended to households with children aged below 16 – up from below 12. This levy could  be totally waived for the first FDW for households who employ such workers to care for senior citizens. This would not only further lessen the burden on such households, but will also help the elderly to age in place rather than in a nursing home.

Raising taxes to meet the rising social expenditure

The Budget announced that top marginal income tax rate will go up to 22 per cent, from the current 20 per cent, for the highest income-earners with a chargeable income above S$320,000. There will also be smaller adjustments made to raise income tax for the others in the top 5 per cent bracket. This is done presumably to meet the rising social expenditure.

The budget will be funded by the top 5% of income earners from 2017. What will happen when the economy hits a recession? How do we fund it then?

Tax increases may also affect people’s confidence in government policies when overdone and might affect Singapore competitiveness. The government have to find a balance for it.

Some analysts have predicted that the Government will further raise indirect taxes (like Goods & Services Tax [GST]) to fund the rising social spending.[6] GST is a regressive tax and the Government should not only maintain the GST at the current 7%, but should also identify essential goods and remove the GST on these essential goods.

To help cushion the impact of  the lower income earners, we should exempt GST on certain necessities such as milk powder diapers, medicines, health supplements, mobility aids and exercise equipment for the elderly. Apparently the usage of diapers were rationed in some nursing homes to reduce costs. This is very unhygienic for the wearer.

Yesterday NMP Miss Chia Yong Yong cautioned not to lean too much to the left lest we have nothing much left in social spending. While this idea seems intuitively correct and is consistent with the popular narrative of the economy, but I would also  like to point out , that between countries like Sweden which spends about 30% of their GDP on  social spending and others like Hong Kong which spends about 3%, there is a middle path. Finding the middle path is what Singapore has to get right

The need to raise revenue to meet the rising social spending though is real for the Government and it should consider the following measures:

1. Raise the top-marginal income tax rate to 25 percent. This would still be one of the lowest top-marginal income tax rate in the world and at the same time would raise a revenue of 500 million – 1 billion. The Finance Minister said that the change to top income rates is expected to raise additional revenue of $400 million per year when it comes into effect. So if it is raised by a further 3 per cent , the additional revenue would be about $1 billion.

2. Re-instate Estate Duty at 5% for total assets (without differentiating between residential properties or other assets) between $10m to $15m, and 10% for amounts above that.

3. Raise the casino tax rates to 22.5% for non-premium players and 7.5% for premium players.

4. Include capital receipts (which include revenue from sales of land and capital goods and other capital receipts) as revenue receipt.


The Budget announced several measures for students from childcare to polytechnic education (e.g. new partner operating scheme, lifting of exam fees, etc) but stopped short of making major announcements for tertiary students (accept for the top-ups to Post-Secondary Education Accounts which the Finance Minister said could be used for offsetting course fees for ITE and Diploma students). This is probably because of the Government’s concern about the graduate glut which it feels could result in “overeducated and underemployed” workers.
I am all for the government’s initiative to build a foundation and create an environment for life long learning which empower each Singaporean young or old to chart their own journey in life and to gain fulfillment at work and even in senior years

I myself obtained my BA in communication and media management  last year from UNISA.


The government appears to be offsetting the effect of increased interests for CPF accounts (for the first $30,000 in CPF accounts from the age of 55) by increasing the contributions of employees aged 55-65 (for both employees and employers). In toto, we believe this signifies the government’s intention to stick to a conservative approach to the CPF. We continue to urge the government towards more flexible options for the usage of CPF savings. This is increasingly because Singaporeans, starting from their late 50s, cannot afford to be cash-strapped.

What’s Missing?

Singaporeans have expressed that budget concerns, especially manpower issues, are not adequately tackled in Budget.

Most importantly the issue of rising costs of business and high rental costs for SMEs was not addressed. Every type of costs should be reviewed, from skills levy, utilities, hiring of workers. For example, some restaurants cannot cope with customers because of workers crunch. This problem may lead to dip in the productivity or stay flat for sectors such as construction, retail and food & beverage.

We need to micro manage the system of hiring work permit holders not just by  giving monetary incentives to boost productivity for companies

Productivity incentives should not be positioned as subsidies. As I mentioined in my last year budget speech, the firms with low productivity should be allowed to be restructured or closed down.

As Singapore face economic uncertainty and global competition like other counties we need to foster deep skills and innovation to be positioned  amongst the leaders in Asia and globally.

The next stage of economic restructuring is to keep the economic vibrant by pushing for innovation beyond productivity.

To meet our future economic and social needs, Singapore is investing in infrastructure for the future such as embarking on the development of Changi’s Airport’s new terminal t5,

Middle income families in Singapore is the group that form the bulk of the community who are generally viewed as helping to maintain society in an even keel. It’s the middle income group that we want to look after. They are also the active stakeholders with investments in infrastructure. They felt the squeeze in the rise of their monthly income compared to households from the top and bottom of the ladder.

Driven by technology advances, these are the Singaporeans who should be most interested in the skills initiatives futures which aims to encourage continuous learning to muster the skills relevant to their work or pick up new ones or hopefully lift up wages.

I hope the skills future initiatives will take a targeted approach by identifying the skills required by each sector to support their development. More details on the skills future credits should be more forthcoming to fund their training costs.

Attrition risk may put firms off future credits and would caution that the skills future initiative may not lead to more job loyalty or higher pay increase because most Singapore employers are rather stingy or because they really cannot afford to pay.

In fact, I would think Skills Future may lead to more job hopping!

Also $500 skills future credit for every Singaporean over the age of 25 and above can also be accumulated for future years may not be ideal.

What’s should be noticed

Special Employment Credit (SEC) and the additional SEC which provide employers with a wage offset encouraging Re-employment beyond age 65.

What can be deduced from Budget 2015

It has taken incremental steps in addressing some of the inequality in our society. But incremental means unnecessary inconveniences and hardships for those that are affected now by these problems and need solutions to it now, and not in the future.

Budget 2015 recognises that many Singaporeans clamor for a more egalitarian society where income inequality is further reduced, but has attempted to address them not in a wholistic manner, but with tokenism.

With it’s lack of sufficient support for Singaporeans wishing to pursue university education to the Schemes to encourage employment beyond age 65, Budget 2015 sets the vision for most Singaporeans to be employed after attaining their ITE or Diploma qualifications and to stay employed to a ripe old age.

Perhaps Budget 2015 has tried to entrench the ‘work till you drop’ mantra because the current Government is concerned that competitors are out to steal the lunch of Singaporeans, and that it is better for us to guard our lunch.

So yes, from ‘no free lunch’ to ‘guarding your lunch’, there has been some progress, and Budget 2015 highlights this.

Madam Speaker, I support the motion.



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