Budget 2021: Six ways for Singapore to emerge stronger

1 BOOSTING COVID-19 DEFENCES

An $11 billion Covid-19 Resilience Package will focus on immediate and ongoing recovery efforts to tackle the pandemic.

Of this sum, $4.8 billion goes towards public health and safe reopening measures, including testing, clinical management and contact tracing, and vaccination for everyone living in Singapore.

Another $700 million goes to extending the Jobs Support Scheme to help firms retain workers, but support will gradually taper off. The hardest-hit sectors, such as aviation and tourism that now get 50 per cent wage support, will see this lowered to 30 per cent for April to June, and 10 per cent for July to September. Sectors like food services and retail, currently getting 30 per cent support, will see this reduced to 10 per cent for April to June.

The worst-hit sectors will continue to get more targeted support to preserve their capabilities, with an extra $870 million for the aviation sector. Taxi and private-hire car drivers will be supported by the $133 million set aside for the Covid-19 Driver Relief Fund, and $45 million will be set aside for the extension of the Arts and Culture Resilience Package and the Sports Resilience Package.

2 RAMPING UP BUSINESS INNOVATION

Economic transformation is key to creating jobs and opportunities for Singaporeans, and $24 billion will be allocated over the next three years to help businesses and workers recover.

A key focus is restoring physical connectivity, and investments will be made in on-arrival testing and biosafety systems, such as the Notarise and Verify systems being developed by GovTech with the private sector to verify Covid-19 test results and vaccination records.

Businesses will also get support with innovating and collaborating beyond Singapore's shores through government investments in three platforms.

A pilot Corporate Venture Launchpad will co-fund corporates building new ventures, and an Open Innovation Platform will match companies and public agencies with solution providers and co-fund the prototyping of new systems, such as for monitoring workers' health. The Global Innovation Alliance will be enhanced to catalyse partnerships with major global innovation hubs, with the network of 15 cities currently growing to more than 25 over the next five years.

A Singapore Intellectual Property Strategy 2030 is also being developed to support businesses in commercialising their innovations.

The Government will also step up risk-sharing arrangements with providers of capital and give grants to support businesses to innovate, transform and scale up.

3 HELPING WORKERS HONE SKILLS

An additional $5.4 billion will be allocated for the second tranche of the SGUnited Jobs and Skills Package to support the hiring of 200,000 locals and provide up to 35,000 training opportunities.

Of this, $5.2 billion goes to extending the Jobs Growth Incentive hiring window to end-September, to support companies in growth sectors, with more for those hiring mature workers, people with disabilities and former offenders.

The SGUnited Skills, Traineeships and Mid-Career Pathways programmes will also be extended till March 31, 2022.

A new Innovation and Enterprise Fellowship Programme will support about 500 fellowships in areas such as cyber security, artificial intelligence and health technology over the next five years.

Salaries will also be enhanced for nurses and other healthcare workers, and government support for wage increments for locals will be supported with the extension of the Wage Credit Scheme for a year. To help the manufacturing sector skill up, the sub-dependency ratio ceiling for S Passes in the sector will be reduced from 20 to 18 per cent from January 2022 and to 15 per cent from January 2023.

4 STRENGTHENING SOCIAL COHESION

A $900 million Household Support Package will continue short-term relief for eligible households, including a one-off GST Voucher - Cash Special Payment of $200 in June, and a GST Voucher - U-Save Special Payment of $120 to $200 in April and July, or an additional 50 per cent, for eligible HDB households. Service and conservancy charges rebates will also be extended for another year.

In addition, every Singaporean child below 21 will get a one-off $200 top-up to their Child Development Account, Edusave Account or Post-Secondary Education Account.

All Singaporean households will also get $100 in Community Development Council (CDC) vouchers to be used at heartland shops and hawker centres.

Looking further ahead, over $200 million more will go to supporting companies that raise their retirement and re-employment ages above the prevailing statutory ages, and that offer part-time employment to older workers who request it.

ComLink - which helps low-income families in rental housing - will be expanded significantly over the next two years to cover 14,000 families, up from 1,000 now. An Inclusive Support Programme will provide early intervention support for children with special needs.

To encourage charitable giving, the 250 per cent tax deduction for donations will be extended by two years, and $20 million will be set aside for a new Change for Charity Grant to match donations raised by businesses that encourage customers to donate while making purchases. Another $50 million will be set aside for a matching grant for the CDC Care and Innovation Fund, to support bottom-up initiatives that address community needs.

5 BUILDING A SUSTAINABLE HOME

Following the launch of the Singapore Green Plan 2030 last week, $60 million will be set aside for a new Agri-Food Cluster Transformation Fund to lift productivity and food resilience.

Another $30 million will be set aside over the next five years to incentivise the switch to electric vehicles, including the installation of 60,000 charging points at public carparks and private premises by 2030. Electric cars will be made more affordable with the lowering of the additional registration fee floor from $5,000 to $0 from January 2022 to December 2023. Road tax bands will also be adjusted.

Petrol duties will also be raised by 15 cents per litre for premium grade petrol to 79 cents a litre, and by 10 cents a litre to 66 cents a litre for intermediate grade petrol.

The Government will take the lead on sustainability by committing public agencies to more ambitious goals under the GreenGov.SG initiative, and issuing green bonds on select public infrastructure projects. Up to $19 billion worth of public sector green projects have been identified, including Tuas Nexus which will integrate waste and water treatment facilities.

A new Enterprise Sustainability Programme will also be launched to help enterprises use resources more efficiently and develop new green products and solutions.

6 MANAGING OUR FINANCES

While this Budget will see a $11 billion draw on past reserves for FY2021 to fund the Covid-19 Resilience Package, the Government does not expect to use $9.3 billion of the $52 billion draw previously approved for FY2020.

Therefore, the total expected draw on the reserves over the two financial years totals $53.7 billion - or an additional $1.7 billion over what it expected to draw to respond to the crisis.

But Singapore's fiscal situation is expected to be tighter in the years ahead, and a few measures will be needed.

The hike in goods and services tax (GST) rate from 7 per cent to 9 per cent will be needed between 2022 and 2025, and sooner rather than later, subject to the economic outlook, if Singapore is to meet rising recurrent spending needs, especially in healthcare. Its impact will, however, be cushioned by the $6 billion Assurance Package announced in last year's main Budget.

At the same time, GST will have to be paid on lower-value goods bought online and imported by air or post from Jan 1, 2023, to ensure a level playing field for local businesses.

The Government also intends to issue new bonds under a proposed Significant Infrastructure Government Loan Act (Singa) to finance major, long-term infrastructure investments that benefit current and future generations. The borrowing limit will be set at $90 billion as a safeguard.

And if the need arises, the Government will seek the President's consideration to use past reserves to support economic investments in new areas. This will enable Singapore to ride on structural changes, transform and emerge stronger.

This article was first published in The Straits Times