Singapore unveils Budget for the future
PUBLISHED ON 19 Feb 2018
Finance Minister Heng Swee Keat has unveiled a Budget that will ensure a better future for Singapore and its people.
Highlighting the three major structural shifts facing Singapore in the coming decade – the shift in global economic weight towards Asia, the emergence of new technologies and our own ageing demographics - Mr Heng said Budget 2018 will help Singaporeans and Singapore businesses cope with the challenges and to tap the opportunities available by:
  • Developing a more vibrant and innovative economy
  • Building a smart, green and liveable city
  • Fostering a caring and cohesive society
  • Planning ahead for a fiscally sustainable and secure future
To achieve these goals, he announced a slew of initiatives, subsidies and grants that will help Singaporeans of all ages and status. A budget surplus also ensured a one-off SG Bonus of $100-300. The payout to all Singaporeans, aged 21 and above, will be dependent on their income said Mr Heng.

The surplus is markedly higher than the $1.9 billion forecast a year ago, mainly because of "exceptional" Statutory Board contributions of $4.6 billion. These contributions are mainly from the Monetary Authority of Singapore and increased stamp duty collections of $2 billion due to the property market pick-up. "We do not expect either to occur every year," cautioned Mr Heng. "It is not a structural surplus."

Although government spending is expected to increase substantially, Mr Heng announced an increase in the Goods and Services Tax (GST). It will increase 2% between 2021 to 2025. He emphasised that the exact timing will depend on three factors, namely the state of Singapore's economy, the country's expenditures, and how buoyant Singapore's existing taxes are. 

Mr Heng said the GST increase is "necessary, because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap".

Although the increase will provide the Government with revenue of almost 0.7 per cent of Singapore's Gross Domestic Product per year, Mr Heng said the Government will continue to absorb GST on publicly subsidised education and healthcare. The budget position will continue to be expansionary in the 2018 financial year.

Ending off his nearly two hour-long speech, Mr Heng urged all Singaporeans “to come together, to work together, to make our aspirations today, the reality tomorrow.” By doing so he said we can make a better for all.

Enhanced care for Silver Generation
Earlier, he announced that the Eldershield scheme, which is under review, remains affordable, premium subsidies for lower- and middle-income Singaporeans will be provided. To that end, Mr Heng announced the setting aside $2 billion in premium subsidies. The insurance scheme helps those with severe disabilities to cope with the financial demands of their daily care.

To better manage the challenges of an ageing society, the government will combine all social and health services for seniors and caregivers under the Agency for Integrated Care (AIC), which will come under the purview of the Ministry of Health. The Pioneer Generation Office (PGO) will also merge with the AIC, and handle its outreach efforts through the Community Network for Seniors initiative.

There will also be a $300 million top-up to the Community Silver Trust, which provides dollar-to-dollar matching, for donations to eligible voluntary welfare organisations providing long-term care services.

The Seniors' Mobility and Enabling Fund, which provides subsidies for assistive devices and consumables for seniors, will receive a $100 million top-up. Another $150 million will be spent over the next five years on transport to subsidised eldercare and dialysis centres.

Investing in our Young

He reiterated that Singapore needs to ensure a future which our young generation can look forward to. As part of its strategy to invest in the young, the government will spend close to $200 million, to provide more financial support for students - particularly lower-income students - with increased annual Edusave contributions and an updated income eligibility criteria for bursaries.

“Education helps our children realise their full potential,” he said. “We invest heavily in every child, to ensure that everyone, regardless of background, has access to a quality education.” The government will do so in three ways.
Firstly, the annual Edusave contributions will be increased from $200 to $230 for each primary school student, and from $240 to $290 for each secondary school student. This will take effect from January 2019.
To expand support to students from lower- to middle-income families, the Government will update the income eligibility criteria for the Edusave Merit Bursary and the Independent School Bursary. The Edusave Merit Bursary is awarded to Singaporean students, who are in the top 25 per cent of their level and course, and whose household income does not exceed the prescribed income criteria.
Currently, the income eligibility criteria for the Edusave Merit Bursary is $6,000 in gross monthly household income or $1,500 in gross monthly household per capita income. Mr Heng announced that this will be increased to $6,900 and $1,725 respectively from this year.
For students from lower-income families, the MOE Financial Assistance Scheme will be enhanced, by raising the annual bursary quantum for pre-university students from $750 to $900. At the same time, more meals will also be covered for secondary school students under the School Meals Programme. Students in special education schools will also benefit from the enhancements. The details will be provided at the Education Ministry’s Committee of Supply debate.

GST Vouchers and S&CC Rebates

To provide more help for lower-income households, the government will also enhance the permanent GST Voucher (GSTV) scheme when the GST is increased, to provide more help to lower-income households and seniors. About $800 million is disbursed ever year currently under this scheme. The Government will top up the GSTV fund by $2 billion this year.
Nearly 900,000 HDB households will also receive Service and Conservancy Charges (S&CC) rebates. Eligible households living in 1 and 2-room flats will receive 3.5 months of rebate, while those in 3 and 4-room flats will receive 2.5 months of rebate. The rebate will be two months for households in 5-room flats, and 1.5 months for those living in executive and multi-generational flats. The Government will spend $126 million on these rebates, which will be disbursed on a quarterly basis. In the last financial year, 880,000 households received $120 million worth of rebates. 

Managing costs and boosting skills

As businesses form the foundation of our economy, the government will spend some $1.8 billion over the next three years, to help businesses manage costs, and help secure jobs for Singaporeans.
Mr Heng announced that the government will extend the Wage Credit Scheme (WCS) for another three years to 2020. The WCS was first launched in 2013 and later extended in 2015 to help businesses cope with wage increases. It will provide co-funding of 20 per cent for 2018, 15 per cent for 2019 and 10 per cent for 2020. Under the scheme, Singapore employees must be earning a gross monthly wage of up to S$4,000 and receive pay rises of at least S$50. 
Another important dimension is raising the skills of the Singapore workers, and towards this, the government will set aside an additional $145 million for the Tech Skills Accelerator (TeSA) programme. Noting that as digital technologies continue to transform economies, firms and people must develop digital capabilities, Mt Heng said “TeSA will also support more people to learn emerging digital skills such as in data analytics, artificial intelligence, the Internet of Things and cybersecurity”.
Mr Heng also said that 650 small- and medium-sized enterprises (SMEs) have benefitted from the SMEs Go Digital Programme. The Ministry of Finance, together with the Singapore Business Federation and other industry partners, will look at the development of a nationwide e-invoicing framework, to help support companies improve productivity and enhance cash flow.
With an eye on keeping Singapore’s business costs competitive, Mr Heng also announced that the Corporate Income Tax (CIT) rebate will go up to 40 per cent of tax payable, capped at S$15,000, for the Year of Assessment 2018. This is a rise from the current 20 per cent of tax payable, capped at S$10,000. 
The CIT rebate will also be extended for another year at a rate of 20 per cent of tax payable, capped at S$10,000. 

Strengthening our infrastructure
With the shift in global economic weight towards Asia, Mr Heng also announced two measures, to help Singapore businesses to develop strong partnerships locally and beyond our shores.
The Government will combine various partnership support measures into a single scheme called PACT, which will provide companies with up to 70 per cent co-funding, for projects undertaken in partnership with others.

Given Asia’s strong demand for infrastructural development, Mr Heng announced the formation of an Infrastructure Office, which will bring together local and international companies from across the value chain, to develop, finance and execute infrastructure projects. The Infrastructure Office will enable local companies to tap opportunities in the region, said Mr Heng.

"As our region grows, there will be important needs to address - in infrastructure, healthcare, and other areas," said Mr Heng. "We need to develop a good understanding of these needs, so that we can innovative solutions to contribute to our region's development."

To enhance and maintain Singapore’s status as a transportation hub, it is essential that it stays at the forefront to better tap the opportunities of a growing region. Mr Heng also pointed out that some of this year's surplus will be put aside for future spending, including $5 billion for the Rail Infrastructure Fund, which will be launched this year to save for major upcoming rail lines.