Budget 2014: One that looks to the future, but does not forget the past
- POSTED: 21 Feb 2014 19:18
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The Singapore government has unveiled a Budget that looks to the future but at the same time does not forget the past.
SINGAPORE: Singapore's Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has unveiled the country's 2014 Budget that looks to the future but at the same time does not forget the past.
The government sets out to honour the first generation of Singaporeans, who helped build the nation in their younger years, by putting aside S$8 billion to fund extra lifelong benefits for them.
Besides the Pioneer Generation Package for older Singaporeans, Mr Tharman said the 2014 Budget also builds on the changes that the country has been making in recent years -- offering more opportunities for the young and transforming the economy to sustain improvement in incomes.
A huge part of looking after the pioneer generation will include helping them take care of healthcare costs.
This group of Singaporeans -- about 450,000 of them -- covers those who were at least 16 years old in 1965, the year Singapore became independent.
Special benefits will be provided to them through healthcare subsidies, which they will receive regardless of income.
This will be provided in three components -- firstly, outpatient care where they will get an additional 50% off subsidised bills at specialist outpatient clinics and polyclinics.
Secondly, their Medisave accounts -- which are part of the country's national savings scheme to help Singaporeans set aside part of their income for healthcare -- will be topped up.
And thirdly, subsidies will be provided to help them pay for their MediShield premiums. MediShield is the national insurance scheme to help Singaporeans pay for hospital bills.
Money to fund these components, amounting to S$8 billion, will be set aside under a Pioneer Generation Fund.
Mr Tharman said with the fund, the government assures the pioneer generation that Singapore will honour its commitment to them, regardless of future economic circumstances.
He said: "The fund also ensures that budgets in subsequent years can focus on the needs and challenges of the future, for all Singaporeans.
"We can never be certain of the future. But the pioneer generation has given us something beyond the material -- it is the pioneering spirit, to be self-reliant, never-say-die and to be united in purpose."
Older Singaporeans who do not qualify for the Pioneer Generation Package are not forgotten.
They too, will get subsidies with top-ups to their Medisave accounts of between S$100 and S$200 annually for the next 5 years.
But managing healthcare costs is not just for the elderly.
Ensuring healthcare remains affordable for all, the government will increase employers' contributions to their workers' Central Provident Fund (CPF), a national co-savings plan to help Singaporeans save for their retirement.
Employers' contribution rate will be raised by one percentage point and the increase will be channelled to the Medisave account.
On top of that, the lower and middle-income groups will get extra subsidies for outpatient treatment and medication.
Outside of healthcare, the Singapore government has also enhanced social mobility measures.
For the young, there will be more assistance with kindergarten fees, and for higher education students in polytechnics and universities, there will be increased bursaries.
Persons with disabilities will find travelling on public transport more affordable with fare concessions.
There will also be higher subsidies for early intervention programmes for children with special needs.
On the business front, Mr Tharman announced incentives for companies to support efforts in upgrading and business transformation.
The government will provide more support for businesses which invest in innovation and skills, as well as give businesses a stronger push to scale up infocomm technology solutions.
To keep them on track to raise productivity, businesses can expect to benefit from enhancements to the Productivity and Innovation Credit (PIC) Scheme. The scheme subsidises investments in innovations and productivity improvements.
Companies that innovate will also be rewarded with more tax incentives.
To raise the bar on the use of infocomm technology in SMEs, a new programme was unveiled to encourage these companies to harness new and existing technology solutions.
There will also be subsidies for them to get onto the high speed connectivity bandwagon.
Small and medium-sized enterprises will benefit most from these measures.
Special attention was also paid to the construction sector, which is an industry which has a heavy reliance on foreign workers.
To discourage the hiring of lower skilled foreign workers, levies for this group of employees will be raised by S$100 from July 2016.
A new market-based skills recognition framework is also being developed to retain workers with better skills and experience.
Mr Tharman said: "Change is happening on the ground -- even within our old economy sectors, individual players are doing things quite differently.
"They show us that change is possible and how, if we scale up such changes across whole industries, we can achieve a major impact in overall productivity."
The Singapore Budget is expected to record a small overall budget deficit of S$1.2 billion, or around 0.3 per cent of GDP, for financial year 2014.