Wrapping up Budget 2016 – Thank you for your views and suggestions!
Following the launch of our public consultation exercise on 1 Feb 2016, we received over 3,600 suggestions and items of feedback! These were gathered through various platforms, such as the pre-Budget Listening Points located within the heartlands, as well as REACH’s feedback channels. An MOF-REACH Pre-Budget 2016 Conversation was also held on 17 Feb 2016, during which various ideas for Budget 2016 were extensively discussed. We would like to share how some of your feedback have helped to shape Budget 2016.
Transforming our Economy through Enterprise and Innovation
Singaporeans who gave their feedback on this issue recognised that the global economic situation is uncertain, and expressed concerns about this on the impact of jobs locally. Related to this, they wanted to know more about the measures which the Government would introduce to stabilise the economy, and help workers reskill and be ready for future job opportunities in the changing global economy. These are important concerns, as Singapore faces near-term cyclical weaknesses and medium-term structural challenges. However, we started restructuring early, and are in a good position to meet these headwinds.
To address near-term business concerns, the Government will provide continued support from the Transition Support Package, such as through the Wage Credit Scheme, under which firms received $1.9 billion in March 2016 for qualifying wage increases. The Corporate Income Tax (CIT) Rebate has also been increased from 30% to 50% of tax payable, with a cap of $20,000 rebate per year for YA2016 and YA2017. In addition, we have extended the Special Employment Credit (SEC) to 2018, to offset wages for older workers. To support viable SMEs that may have cash flow concerns or wish to continue to grow their business, the Government introduced an SME Working Capital Loan scheme, for loans of up to $300,000, per SME.
Even as we address near term concerns, we must continue to transform Singapore’s economy for the future. We thus launched a new $4.5 billion Industry Transformation Programme to help firms and industries to create new value and drive growth. This will integrate our different restructuring efforts through a more targeted and sector-focused approach to better meet the needs of firms in each sector.
One key area raised by contributors was about how technology and innovation were key drivers of productivity growth, but were challenging for businesses to adopt and had high costs. They thus called for more to be done to help companies and workers adopt and adapt to new technologies. Budget 2016 addresses this by setting aside over $400 million to support companies to automate, drive productivity and scale up under the Automation Support Package, while several financial incentives such as the expansion of the SME Mezzanine Growth Fund will help to support firms as they scale-up. To grow their top line, SME owners had also commented that they hoped to receive more help from the Government to tide them through their restructuring efforts and venture overseas. To support firms to internationalise, the Government has extended the Double Tax Deduction for Internationalisation scheme till 31 March 2020.
We will also build common platforms to support industry transformation. We are starting with the next-generation National Trade Platform to support our firms in international trade, and the National Robotics Programme to encourage our businesses to adapt and adopt high-impact robotics technology on a wider scale.
Nonetheless, industry-level transformation works best if firms partner one another, or if industry associations lead the effort, as they know their industry’s needs best. As suggested by several trade associations, we will deepen the partnerships between government and the industry, and among industry players, to identify challenges and develop solutions to support transformation, and place a stronger emphasis on technology adoption and innovation. On this, the Government will support Trade Associations and Chambers to strengthen capabilities and drive industry-wide solutions through the new Local Enterprise Association and Development (LEAD) Plus programme.
Also, to transform Singapore’s companies through innovation and deepen our capabilities in Research and Development, we have set aside up to $4 billion for industry-research collaboration under the Research, Innovation and Enterprise (RIE 2020) plan. The Government will also promote start-ups, in new and existing industries, by setting up a new entity called “SG-Innovate”, which would help to match budding entrepreneurs with mentors, and facilitate access to technology, talents and markets.
Our people are another key part of this transformation. Some contributors also highlighted concerns of losing professionals, managers, executives and technicians (PMETs) jobs. We have taken in feedback on the need for enhanced short-term assistance particularly for the mid-career professionals by introducing the Adapt and Grow initiative. Through this, we will expand wage support schemes to encourage hiring in firms, particularly for mature PMETs. We have also ramped up professional conversion programmes to assist mid-career jobseekers to acquire new skills and take on new jobs. Overall, we will commit an additional $35 million a year from the Lifelong Learning Endowment Fund and Skills Development Fund to support these initiatives.
We also received feedback on tax matters, where contributors suggested more tax-related measures to help SMEs cope with the current challenging economic conditions. Besides raising the existing CIT rebate to help SMEs address immediate concerns, we have also enhanced the Merger & Acquisitions (M&A) scheme to support SMEs that wish to expand. With the enhancement, M&A allowance will be granted on up to $40 million of the consideration paid for the qualifying M&A deal, instead of the current cap of $20 million. Further, to provide upfront certainty to companies for their corporate restructuring, we have extended the non-taxation of companies’ gains on disposal of their equity investments, based on the existing scheme parameters, until 31 May 2022.
Supporting Middle- and Low-Income Families, Helping Households Cope with Cost of Living
Many contributors asked for more financial aid (e.g. in terms of cash pay-outs, GST vouchers, as well as rebates on utilities, and service and conservancy charges) for middle- and low-income families, so that they could better cope with the cost of living. While some contributors recognised that the Government has strengthened social safety nets for vulnerable groups, they felt that more could be done to help other groups of Singaporeans, including singles, young adults taking care of their elderly parents and children, and our seniors.
To support households amid current economic conditions, the Government will provide a one-off GST Voucher – Cash Special Payment of up to $200 for eligible GST Voucher – Cash recipients. In total, eligible households can receive up to $500 in GSTV – Cash in 2016. The Government will also provide one to three months of Service & Conservancy Charges (S&CC) rebate. 1- and 2-room HDB households will receive a total of three months of rebates for this year, while 3- and 4-room households will receive two months of rebates.
In addition, the Silver Support scheme will be implemented. It supports the bottom 20% of Singaporeans aged 65 and above, with a smaller degree of support extended to cover up to 30% of seniors. It can be a modest but meaningful supplement to their retirement incomes. To enable our seniors to stay active, healthy and meaningfully engaged, we will pilot Community Networks for Seniors. These networks will comprise local stakeholders, such as Voluntary Welfare Organisations, community volunteers, schools and businesses, and will provide more targeted and coordinated health and social support for our seniors.
Budget 2016 also builds on existing substantial support for families with children, such as significant subsidies for pre-school education. For each eligible child, parents may receive a Baby Bonus Cash Gift of $8,000 or $10,000 depending on birth order; the Medisave Grant for Newborns of $4,000; and now, the new CDA First Step grant of $3,000. For a small group of young children who may need more support, the KidStart pilot will draw together government and community resources to provide these children with learning, developmental, and health support, even before they enter school.
Building a Caring Society
Through the feedback exercises, students commented that more could be done to strengthen our social resilience and national identity through national education as well as ground-up campaigns and events, such as last year’s SG50 activities. In Budget 2016, the Government will set up a new fund, called Our Singapore Fund. This will help the community come together in partnership to share our strengths, share our loves, create something more and better together, to build our Singapore together. This collective effort will help build a caring and resilient society.
We appreciate your views in helping to shape Budget 2016. Your feedback has been invaluable to us in improving our public policies with the aim of building a fairer, more inclusive, and stronger Singapore. Thank you!
Last updated on 11 May 2016