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Table of Contents
Annex B-1: Enhancement of Workfare Income Supplement (WIS) Scheme and CPF Contribution Rates for Low-Income Workers ( 276kb)
Please refer to the Singapore Budget 2013 website for more details on the annexes.
B.1. Many Singaporeans, through Our Singapore Conversation platforms, have been sharing their hopes for Singapore – the kind of home we want to build for our families and our children. There has been a rich diversity of views. But a common set of aspirations is emerging, a common vision of the future that Singaporeans want:
- A home with a strong Singaporean identity and sense of belonging
- A Singapore with a robust and vibrant economy, and with good jobs that enable a more fulfilling pace of life
- A home with strong families, and where our seniors can age with dignity
- A society that takes care of the disadvantaged
- A Singapore with affordable living
- A society with greater sense of togetherness, and where the Government and the people have a more collaborative relationship
B.2. This is the Singapore that we want to build together.
B.3. The Government is making major moves to support this endeavour. Since 2010, we have embarked on major steps to transform our economy so as to create better jobs and allow for a better pace and quality of life. We are also making important shifts in social policies, as announced in last year’s Budget, to foster a fair and more inclusive society.
B.4. We will need to make further moves. So that by the end of the decade, we will have a better Singapore, a better future for all Singaporeans.
Immediate Challenges: Housing and Transport
B.5. First, we have pressing challenges in housing and transport. The Government will spare no effort in resolving these problems.
B.6. We want to reduce the cost of housing relative to the income of young Singaporeans. Prices in the HDB resale market and private market have risen too rapidly in the cycle that began as we recovered from the 2009 economic crisis. We have taken major steps to cool the housing market. We have also ramped up the supply of HDB flats which will help first-time buyers book their flats faster as well as ease prices in the resale market. And we have increased supply of private housing through Government Land Sales. The Minister for National Development will speak more in COS about these immediate challenges as well as how we can ensure affordable, quality housing for Singaporeans over the longer term.
B.7. We have to make many improvements in public transport. Congestion and waiting times are a daily problem for Singaporeans. We are ramping up bus capacity, especially feeder services, to improve frequency and add new routes. We are accelerating the rollout of the additional 800 buses that we made provisions for last year. In addition, the Land Transport Authority will be tendering out routes to private operators.
B.8. Our rail network will expand by more than 50% by 2021. That is still eight years away. But in the meantime, we will see improvements that will help relieve congestion. Parts of the Downtown Line will start operating from the end of this year, and new trains will be added to existing lines from next year. We will also introduce other measures to reduce crowding, including significantly enhanced incentives for commuters who travel during the “shoulder” periods before and after the morning peak hour. The Minister for Transport will talk about these measures in the COS.
An Economy and Society in Transition
B.9. While we fix these immediate problems in housing and transport, we have to press on with our priorities to help Singaporeans have a better quality of life over the medium to long term.
B.10. We have to shift gears for an economy and society that is in transition.
B.11. We are no longer a developing economy, but we have not achieved the level of productivity and income of an advanced economy. At the same time, our own workforce is growing more slowly, and is gradually getting older.
B.12. We must make every effort to achieve quality growth: growth that is achieved mainly through innovation and higher productivity, and growth that will benefit all Singaporeans – our children, working families, our elderly and disabled.
B.13. Our strategies for achieving quality growth and an inclusive society are in fact tied inextricably together. Raising productivity is not just our most important economic priority, but enables us to build a better society. Higher productivity is the only sustainable way to raise incomes for ordinary Singaporeans, and provide jobs that give people a sense of responsibility and empowerment. Higher productivity is also necessary for us to shorten working hours over time and allow Singaporeans to enjoy a better work-life balance.
B.14. Our society is also facing the pressures of widening income disparities. This is happening in cities globally and in Asia, but it matters more to us because Singapore is not just a city but also a nation. We must take further steps to temper inequality. We also want to do more to enable our seniors to have a sense of economic security and fulfilment in their retirement years.
B.15. On both economy and society, therefore, we need to shift our thinking. In government: where we are reshaping policies and driving new initiatives, especially to sustain social mobility and strengthen support for older Singaporeans. In the business community: which has to innovate and adjust to the permanent reality of a tight labour market. In our society at large: where we have to accord ordinary workers not just better pay but greater respect. In the community: with non-profits and other voluntary groups pursuing the causes we all believe in, and working with an active partner in the government. And for all of us individuals, to do our best to improve and to contribute to our country in our own ways.
Transforming Our Economy for Better Jobs
B.16. We are restructuring our economy. We began this in earnest in 2010, by:
- Tightening foreign worker inflows;
- Supporting enterprises in their efforts to upgrade operations and improve productivity; and
- Investing in our workers by heavily subsidising their training, in every skill.
B.17. We need to intensify this economic restructuring and skills upgrading so as to achieve quality growth. Although wages are going up in a tight labour market, productivity has lagged. If we do not do better in raising productivity, we will be caught in a situation where businesses lose competitiveness, and wages eventually stagnate. Both workers and businesses will be worse off.
B.18. We must help our SME sector revitalise itself. There are however wide divergences in efficiency amongst SMEs even in the same industries. Restructuring will unfortunately lead to some businesses being winnowed out, but the end result must be a vibrant and sustainable local SME sector. Every support must be provided to help the businesses which bring in more efficient techniques and service models, so they can grow in a tight labour market, and where possible make their mark internationally.
B.19. There are already many examples of SMEs transforming themselves, in every sector. For example in furniture manufacturing, local firms are training multi-skilled employees, relocating manpower-intensive activities, developing unique brands and carving a niche for themselves in overseas markets.
B.20. To make this economic transition, we must also harness the value of older Singaporeans and design jobs suited for them, as well as for other potential employees who are unable to work regular, full-time schedules. Flexible work practices must become more common, enabling employees to structure their work so that they have time for their families or for personal development like part-time courses. We should also make it possible for more employees to have the option of telecommuting from home or working from “smart work centres” near their homes, like what they have in Amsterdam and Seoul. The Government will work closely with businesses in these efforts.
Building a Fair and Inclusive Society
B.21. We are also taking major steps to ensure a fair and more inclusive society.
- First, to sustain social mobility. Meritocracy alone will not assure us of this. We therefore want to do more, starting from early in our children’s lives, to give the best leg up to those who start with a disadvantage. We cannot change the fact that children have different family backgrounds that bring very different advantages and disadvantages. But we want to find every way, at the pre-school and primary school levels, to help our children from poorer or less stable families to develop confidence and the self-belief that gives them aspirations of their own, and to help them catch up when they fall behind. And we will provide pathways to develop every skill and ability, so that every child can discover his strengths as he grows up, and can do well.
- Second, we must do more to mitigate inequality. We are making our fiscal system more progressive, by tilting our taxes and benefits in favour of the lower- and middle-income groups. Currently:
- A lower-income older worker receives a significant top-up of his income through Workfare each year.
- A middle-income family with a child in child care gets subsidies of $4,800 per year. If the child is in university, he can receive more than $8,500 in bursaries over the course of his studies, and get a subsidised government loan to pay off the remaining fees and cover study expenses. Children from lower-income families receive far more.
- Singaporeans with disabilities now receive substantially greater support. Both when young through early intervention under EIPIC,3 and as adults, where we provide a substantial incentive through the Special Employment Credit (SEC) for firms to employ them so that they can contribute and lead more independent lives.
- An older Singaporean in need of long term care can receive subsidies of $870 per month for home-based care or $1,200 per month if he is in a nursing home, following the changes we introduced last year. Those who need more help will get it through Medifund.
B.22. We will take further, significant steps in this Budget towards strengthening social mobility and increasing the progressivity and fairness of our system. In particular, with enhancements to Workfare, a low-wage worker who is 60 years old would receive a top-up of his pay of about 30%. This is in addition to what his employer can receive through the SEC, and the new Wage Credit Scheme, to be introduced in this year’s Budget, which will encourage his employer to up his pay.
B.23. While raising incomes is the best way to help lower- and middle- income Singaporeans cope with rising costs, this Budget will also include measures to help them more immediately. The most significant support will go to older Singaporeans, to help them with medical costs.
B.24. Taking all our measures together, including those which will be announced in this Budget, we are providing substantial benefits to lower- and middle-income Singaporeans. The full picture can be seen if we look at benefits over a lifetime, starting from a couple’s needs when they first have children, to the time they get old and need other types of help, especially with healthcare costs.
B.25. In total, over a lifetime, a young low-income couple with two children can expect to receive more than $600,000 in benefits in real terms (2013 dollars). (This comes from subsidies and other means-tested benefits for their children’s education, housing, healthcare, Workfare, the GST Voucher, and other schemes.) This is much more than we used to provide in the past. In the last decade alone, we have more than doubled the lifetime benefits in real terms for such families.
B.26. When we take into account all the taxes that such low-income families will pay (mainly GST), they will get back far more in benefits. In fact, they will get more than five dollars in benefits for every dollar in taxes paid.
B.27. However, today’s generation of older Singaporeans will not benefit as much as younger Singaporeans from the enhancements in Workfare and CPF and other schemes. We want to do more for this senior generation of Singaporeans, who worked over the years, often with low pay, to build a better future for their children. They made today’s Singapore possible. We will do more for them. The Government is reviewing the system of healthcare financing and some other schemes to help them in their retirement years.
B.28. Finally, the Budget will make significant investments to nurture the sports and arts, which play a growing role in enriching life in Singapore. Over the next five years, we will invest 30% more in sports programmes, and more than double our investments to develop regional- and community-level sports facilities. The Government will also create a new Cultural Donation Matching Fund, to provide dollar-for-dollar matching for donations to the arts and culture.
B.29. In short, we are building a better Singapore: a more inclusive and caring society, with an innovative and dynamic economy, so that Singaporeans can have better opportunities and more fulfilling lives.