13 March 2012

Budget 2012 — Memorable Quotes

Benefits for the not-so-wealthy
[I]n the last 5 years, the transfers we provided to the low-income group — net of the taxes that they pay, which is basically GST — amounted to [19 per cent] of their incomes.  This is a significant increase from the previous 5 years...  [O]ver a lifetime for a low-income household... for every dollar that the low-income household pays in taxes, they get back [$4.25] in [permanent] benefits.  A whole set of benefits add up to this — which includes Workfare, housing grants, and means-tested healthcare and education subsidies.
Tharman Shanmugaratnam (1 Mar 2012)

For the middle income family that owns a car... they get back about 80 cents [in lifetime permanent benefits] for every dollar in taxes paid.  Without car ownership, they could get back $1.50 in [lifetime permanent] benefits for every dollar in taxes paid.
Tharman Shanmugaratnam (1 Mar 2012)

Affordability of HDB flats
[O]ur enhanced housing grants for lower income families are such that a family with a monthly income of as low as $1,000 can now purchase a small flat.  98 per cent of our younger cohorts, those who are below 35, earn at least $1,000 of income a month.  A family that earns a bit more, say $1,500, can purchase a medium-sized flat.
Tharman Shanmugaratnam (1 Mar 2012)

CPF Minimum Sum
The Minimum Sum that is to be set aside at age 55 is set at a level necessary to meet the typical expenditure needs of retiree households in the lower-middle income group...  It should cover the needs of those in the second quintile... of households by incomes.  It would therefore also cover the needs of those in the lower, first quintile...  A member who is 55 today and who has the full Minimum Sum in his CPF can expect to receive a monthly payout that is just enough for an average two-member retiree household in the lower-middle income group — or the 2nd quintile...  The percentage of active CPF members who meet their Minimum Sum at 55 [was]... 45 per cent in 2011.
Tharman Shanmugaratnam (5 Mar 2012)

Subsidising commuters

[T]he reality of the matter is that the $1.1 billion Government package, or $110 million per year, is a subsidy for public transport commuters, and not a subsidy for the PTOs [public transport operators].  It will improve service levels for commuters, not the profits of the PTOs.  The $1.1 billion package is expected to cover the losses on the 550 buses — in other words, the additional costs net of revenues.  Of the $1.1 billion package, $280 million is budgeted for the purchase of the 550 buses over the next five years, and $820 million to cover the net operating costs over the 10 years.
Tharman Shanmugaratnam (1 Mar 2012)

Health care
[H]ealth care spending... is going to be the biggest driver of our expenditures over the next 10, 15 and 20 years.  We are currently spending 1.6 per cent of our GDP on healthcare.  By 2016, it will go up to 2 per cent of GDP.  However, if we extend healthcare spending all the way to 2030, which is when the aging of our population has set in more fully, then it will increase to around 3.5 per cent of GDP...  Ms Sylvia Lim suggested that we follow other developed countries, and spend an average of 6 per cent of GDP on healthcare.  Mr Low Thia Khiang also spoke about a first-world social safety net.  I do not like the idea of a first-world safety net because what it also means is first-world taxes or first-world debts, and I do not like both ideas...  If we have to take our healthcare spending to 6 per cent of GDP which is around the global average, it means that we will have to raise taxes very significantly to generate the necessary revenue to fund the system.  It would mean increasing the GST to about 20 per cent.  Or raising corporate income taxes to above 40 per cent.  Or lifting personal income taxes across the board and with the top rate moving to 60 per cent...  And even if we think of using a combination of these different taxes, it is still a significant increase in each of these taxes... [W]e should focus on healthcare outcomes, instead of spending, as a measure of our healthcare system.  We are already getting relatively good outcomes — it is not a perfect system, but one of the better healthcare systems in the world when we look at outcomes.  This is despite spending much less, both through government and private spending.
Tharman Shanmugaratnam (1 Mar 2012)

Defence expenditure
[T]he Government is prepared to spend up to 6 per cent of GDP on defence, but MINDEF only asks for what we need each year.  Our overall approach is to maintain a stable defence budget that grows gradually in absolute terms, and to manage that prudently.  So over the last five years, defence expenditure has grown steadily by about 4 per cent annually on average.  It was $10.7 billion in 2008 and... it is $12.3 billion this year.  Such steady spending is a critical enabler.  It has allowed MINDEF to take a long-term view and obtain the best value for our defence investments.  It allows the SAF to steadily build up its capabilities, exploit nascent technologies — ... we can actually spot the technology that will come on the market even before it has and exploit it — minimise disruptions, and effectively network its various services so that the combined capability is more powerful than its individual parts...  MINDEF is mindful of our responsibility to spend carefully and wisely.  We are acutely aware that we are a major share of the government budget.  We buy only what we need, scrutinise available options for the most cost-effective solution...  We only acquire new platforms when the capabilities they provide are considered critical.
Ng Eng Hen (6 Mar 2012)

New EduSave character award
As we place more emphasis on holistic education and character development, it is timely that we align our recognition framework. We will therefore improve our Edusave Awards to recognise students who have shown exemplary values, character and civic responsibility through their actions... We will introduce a Character Award.
Heng Swee Keat (8 Mar 2012)

Calibrated strategy versus policy shifts
Mr Low Thia Khiang and Mr Chen Show Mao, I think now recognise that we have to maintain a very careful balance in how we go about our foreign worker policy.  I think you have shifted your position because I have checked what was said previously during the 2010 and 2011 Budget and COS [Committee of Supply] debates and also your Workers‟ Party Manifesto in last year‟s General Election when you criticised the Government for allowing in too many foreign workers.
Tharman Shanmugaratnam (1 Mar 2012)

This [moderating growth of foreign workers] is not a sudden change in policy.  It is a graduated and calibrated strategy.  We made our intentions very clear two years ago...  We introduced a 3 year programme of increasing foreign worker levies.  Last year...  This year...  It will not be our last move.  We have to watch how rapidly the foreign workforce grows this year.  And if need be, we will have to make further moves.
Tharman Shanmugaratnam (1 Mar 2012)

Foreign workers
[L]et me first make clear that foreign workers are and will remain integral to our economy and to our competitiveness.  They are a valuable complement to the Singaporean core that we must keep building up in every segment of our workforce.  They are arms and legs, and part of the brain, of a competitive global city.  Foreign employees are a valuable complement to our Singaporean core.  Our strategy of allowing foreign workers at all levels of our workforce — those with low skills and in areas where you do not normally find Singaporeans; those with technical skills; and those with the higher skills, the talented or entrepreneurial individuals who bring specialised skills, networks and opportunities for Singapore — this strategy has by and large worked.
Tharman Shanmugaratnam (1 Mar 2012)

Importance of foreign talent
Half of our personal income taxes are paid by non-citizens.  [T]hey are mobile.
Tharman Shanmugaratnam (1 Mar 2012)

Finding new sources of revenue
We must therefore have a strategy to fund our expenditures for the next 10 to 15 years after 2016.  We should not be forced to cut back on funding for education, defence, and the other fundamentals that keep Singapore going...  [W]e need to find new sources of revenues.  Our Budget is fine for the next five years.  That is why we have been setting aside monies now in trust funds and endowment funds, to fund future spending, whilst we still have the resources.  But beyond the next 5 years, we will have to think of raising revenues.
Tharman Shanmugaratnam (1 Mar 2012)

Although our traditional fiscal strategy is to keep Singapore’s corporate and personal income tax rates low to compete with the likes of Hong Kong, there is merit to consider strengthening the progressive nature of the personal income tax system...  Singapore is reputed to have the highest proportion of millionaires in the world.  Perhaps those who are most blessed can be persuaded to bear more responsibility for the society in which they live.  I ask the Government to review the personal taxation system and consider having Singapore’s top income earners who have benefited from Singapore’s solid infrastructure, growth policies and public goods to bear some of the responsibility of funding the transfers to the poor and needy in society.
Denise Phua Lay Peng (28 Feb 2012)

[O]n financing increased social spending for the future.  If it is part of a shared vision to strengthen social cohesion, I am sure the more well-to-do Singaporeans can be convinced to finance this with higher income taxes, instead of needing to increase GST again.  The era of racing to the bottom in global tax competition is over.  But... people would need to be convinced that we are exhausting other options, like re-allocating budgets across ministries and maximising the net investment return contribution...
Laurence Lien (29 Feb 2012)

Progressive tax system
Our fiscal system is a progressive one, which means that the poor get far more benefits compared to the taxes they pay, and the better-off pay more taxes.  The top 20 per cent of households pay 80 per cent of [personal] income taxes collected.  We shifted to progressive property taxes last year, and they should become more so over time.
Tharman Shanmugaratnam (17 Feb 2012)

The changes we are making continue the process begun five years ago, of making our system of taxes and benefits more progressive.
Tharman Shanmugaratnam (17 Feb 2012)

We will make our system more progressive over time, particularly with regard to property taxes.  But there is a limit to how high taxes can go at the top end, without hurting our competitiveness...  [W]e avoid imposing too heavy a burden on the middle-class.
Tharman Shanmugaratnam (1 Mar 2012)

Budgeting process
[A]s a general rule in this country, we do not earmark Government revenues for particular spending.  Therefore, the discussions of how particular spending programmes would be funded would of necessity entail a discussion of our total Government revenues and our spending.
Chen Show Mao (29 Feb 2012)

Another major problem that I have with our Budget statements in general, not just this Budget 2012, is that there is little evaluation of past policies and programmes.
Laurence Lien (29 Feb 2012)

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Note:

1. Mr Tharman Shanmugaratnam is Deputy Prime Minister, Minister for Finance and Minister for Manpower.

2. Dr Ng Eng Hen is Minister for Defence.

3. Mr Heng Swee Keat is Minister for Education.

4. Ms Denise Phua Lay Peng is a People's Action Party Member of Parliament.

5. Mr Low Thia Khiang, Ms Sylvia Lim and Mr Chen Show Mao are The Workers' Party Members of Parliament.

6. Mr Laurence Lien is a Nominated Member of Parliament.


This article was updated on 14 March 2012

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