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Those with their eye on the goodies will tell you that they are hoping for an early hong bao from the Government in the Budget to be delivered one week from now.
But political watchers who have been reading the Government's signals know that this year's Budget will not simply be a one-off distribution of goodies, but the foundation of a new social compact.
For decades, "welfare" has been a distasteful word in a society that has stressed that there are no free lunches. Observers said that while this philosophy remains, it has been tempered by a sobering realisation: With an open economy in a globalised world, the poor in Singapore will get only poorer if nothing is done to give them a leg up on the social ladder.
From this Budget onward, in a systematic and calibrated manner, this help will be dished out. Last year's one-off Workfare bonus of up to $600, which was distributed to low-wage workers aged 40 and above, will become a permanent social safety pillar for the future.
But in a uniquely Singapore fashion, low wage workers — or those earning $1,500 or less a month — will have to help themselves first before the Government will help them. MPs such as Charles Chong (Pasir Ris-Ponggol GRC) are confident of a very generous offset package for the low income that could even take the form of monthly salary top-ups.
Said Mr Chong: "Prime Minister Lee Hsien Loong had earlier said that the poor will receive 'far more' than what they pay in higher prices. So I think we can expect a very generous package for them, otherwise the point of raising the GST will be lost."
Little wonder that economists are projecting this year's budget to be substantially bigger than last year's — which was $30.6 billion, or 14.8 per cent of GDP — or what Mr Chong coined a "hong bao Budget".
Citigroup economist Chua Hak Bin thinks that the two percentage point GST hike will add $1.5 billion in tax revenue, and the recognition of realised capital gains as part of net investment income will add another $2 billion to $3 billion to the kitty.
"This should provide sufficient fiscal room for not just an enhanced social safety net of around $2 billion to $3 billion, but also cuts in corporate tax rates and investments in our future," said Mr Chua.
The last offset package in 2003 when the GST was raised from 3 to 5 per cent was mainly in the form of Economic Restructuring Shares costing $3.6 billion.
Last year, $2.6 billion was allocated to the Progress Package, of which Workfare was a key plank comprising for around $1 billion. As of January this year, around $157 million was disbursed to around 340,000 low wage workers for their work done in 2005.
Some MPs expressed concern that the number of low wage workers who received the Workfare bonus fell short of the estimated 400,000 who should qualify. How can the new Workfare reach out to all who need it?
Mdm Ho Geok Choo (MP for West Coast GRC) said: "I feel that more social workers will be needed to minimise those that fall through the cracks."
Mr Lee has proposed using Medisave contributions as an eligibility criterion for Workfare. This means the "blunt tool" that is CPF could also be nuanced. Workers who earn less than $500 a month currently do not have make CPF or Medisave contributions. While the government has suggested a 6 to 8 per cent Medisave contribution — the current rate for workers up to 60 years old — the labour movement has reflected that this quantum may prove too daunting for the cash-strapped poor.
Ms Cham Hui Fong, Nominated MP and National Trades Union Congress director of industrial relations, said that there are around 100,000 Singaporean contract workers, with a substantial number probably not on the CPF scheme.
"We have proposed a phasing in of the contribution amount to make it less painful for contract workers. We are also urging them to blow the whistle if their company does not pay them CPF," she said.
CPF is no longer one-size-fits all. Employer contribution rates for the middle income could be raised. And they could be lowered for low-wage workers to keep them competitive in the job market — with the government making up the difference with top-ups in the worker's CPF account.
Dr Lee Soo Ann, senior fellow at the National University of Singapore Department of Economics suggested an even more tailored approach: "The CPF contribution rate can be higher for those who are married and planning to stay in public housing, and less for singles who need not save so much," he said.
Some observers pointed out that singles might need more retirement funds – as they may not have family support in their old age. Nevertheless, the debate has begun. CPF has started evolving and an unmistakeable helping hand is being held out. The Budget will show the way. — TODAY/fa
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