SINGAPORE: Singapore may take years to recover from the effects of the COVID-19 pandemic, and must work to prevent a “COVID generation” of workers and students in Singapore, said Deputy Prime Minister Heng Swee Keat on Friday (Jun 5) as he wrapped up the debate on the Fortitude Budget.
The Budget, which Mr Heng announced on May 26, is the fourth tranche of relief measures to fight the COVID-19 outbreak in Singapore, and will cost the Government S$33 billion.
“The road to recovery will be long, as we deal with persistent economic impact on workers, jobs, and business. Beyond economic costs, there will be immense human and social costs,” he said in Parliament.
“The world took eight to 10 years following the Great Depression and global financial crisis to recover to pre-crisis unemployment levels, and we should not be surprised that it takes as long, if not longer, to bounce back from the effects of COVID-19.”
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Speaking of the disruptions to lives and livelihoods COVID-19 has brought around the world, Mr Heng said that there is talk of a global “lockdown generation” that will have their skills, employability and incomes permanently affected.
“We must work to prevent a ‘COVID generation’ of workers and students in Singapore,” said Mr Heng, who is also the Finance Minister.
But Singapore has managed to avert some of the harsher outcomes of COVID-19, he said.
“We were able to act boldly, as Singaporeans stood in unity, trusted the Government and worked together to save lives and livelihoods.”
“NEW UNCERTAIN REALITY”
Singapore has just emerged from a “circuit breaker” period on Jun 2 and is gradually reopening after the number of cases in the general community declined to single digits.
While the number of coronavirus cases is high – with most found in the migrant worker community, authorities have said that this is partly due to “aggressive testing”. Twenty-four people have died from complications due to COVID-19 so far, which is less than 1 per cent of the 37,183 cases here.
As Singapore reopens, it faces a “new uncertain reality” which includes higher standards of personal and public hygiene, reduced social contact and new ways of working, said the Deputy Prime Minister.
“Singaporeans must learn and adapt to the new reality … Changing habits is difficult, but we must all do our best,” he said.
The measures in the Budget are thus designed not only to respond to the crisis but also to enable Singapore to emerge stronger, by repositioning workers, businesses and the community to respond to major shifts, and seize opportunities in new growth areas, said Mr Heng.
“We have put our people at the centre of our Budgets. Our measures on protecting livelihoods centre on helping people to stay employed, and businesses to stay viable,” he said.
More than S$72 billion, or close to 80 per cent of the S$93 billion for COVID-19 support measures, is committed to helping workers stay in their jobs, supporting businesses and their employees, “which in turn support social resilience”, he added.
The number of unemployed Singapore residents could rise from around 73,000 in 2019 to more than 100,000 in 2020. Beyond that, those who keep their jobs may suffer income loss and under-employment, Mr Heng said.
“The Jobs Support Scheme, which I enhanced over the four Budgets, will flow a total of S$23.5 billion to support 1.9 million jobs over 10 months. Close to two-thirds of these jobs are in our SMEs. Over S$11 billion has already gone out to help employers defray wage costs,” he said, while emphasising that the scheme supports jobs, and not businesses for their own sakes.
"Again, I stress the effort we are making is unprecedented. Never before in our history have we set out to preserve so many jobs as well as create so many new opportunities – 100,000," he added.
Responding to speeches by Members of Parliament who called for the nation to respond quickly to structural shifts in the economy, Mr Heng said that accelerating economic transformation is “indeed a national priority”.
“We must undertake this great exercise of economic restructuring together, as equal partners and as one people, in the creation of a new Singapore,” said Mr Heng.
Addressing concerns over the financial resources that will be pumped into the COVID-19 response, Mr Heng said that Singapore should focus fully on making the best use of the resources that have been deployed.
DRAWING ON PAST RESERVES
Of the S$93 billion Singapore is spending on its COVID-19 response, S$52 billion comes from past reserves.
“Adding the COVID-19 response to our usual spending, the total size of our four Budgets stands at S$193 billion. This is more than double the size of our annual Budgets in preceding years,” said Mr Heng.
“In other words, we are looking to spend in one year what we would have done in two years or more in normal times.”
Singapore’s four Budgets are estimated to help its economy avert an average output loss of 5 percentage points, or S$23.4 billion per year, over 2020 and 2021, Mr Heng said, citing a recent study by the Monetary Authority of Singapore.
“These decisions have been made after careful deliberations, based on the best information available at the time. As the COVID-19 situation develops, we have continued to enhance and refine our schemes,” he said.
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MPs Foo Mee Har and Tin Pei Ling had asked during the Budget debate if the Government would restore the amount drawn from past reserves.
Mr Heng said that there is no legal or constitutional obligation for the Government to do so: “The amount that we are tapping on is S$52 billion. So how long would it take to build this back? We cannot be definitive.
“At this moment, we must focus our minds fully on making the best use of the resources that we have deployed, be prepared to work hard in the years to come, and have the resolve to rebuild our economy … But rest assured that we are committed to rebuild not just our reserves, but also to continue developing Singaporeans and building Singapore.”
GST INCREASE BY 2025
Speaking of the benefits of drawing on Singapore reserves instead of borrowing, he said that if the Government borrowed to fund the relief measures, future generations will be required to shoulder this debt.
“Future generations will also be affected in other ways. In order to service debt repayment, there will be less fiscal room to invest in human capital or infrastructure,” he said. “The ‘lockdown generation’ in these countries will end up paying for this crisis a long way down the road.”
He reiterated that the Singapore Government does not borrow to fund recurrent spending, but the Government is considering borrowing for major long-term infrastructure.
Mr Heng added that while an upcoming GST rate increase will not take effect in 2021, it will be needed by 2025.
"When the GST rate increase does take place, we will cushion the impact for Singaporeans," he said. "We will also continue to absorb GST on publicly-subsidised healthcare and education."
“FORTITUDE IN ACTION”
Mr Heng also said that he was inspired to call this budget the Fortitude Budget by Singapore’s people and companies.
“During this time, I have seen and felt Singaporeans’ fortitude in action. We have been driven and inspired by the fortitude of our people and companies,” he said.
He pointed out that more than 10,000 people have stepped forward over the last two months to volunteer, running errands for seniors living alone, distributing care packs and delivering food supplies to migrant workers and vulnerable families.
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“(Fortitude) is forged in crises past, and hardened in crises present. It comes from the strength of mind and character. In the case of Singapore, our fortitude comes too from the strength of our reserves – the financial reserves that I have just spoken about, and just as important, our deep reserves of social capital.”
Elaborating, Mr Heng said that Singapore’s social capital is made up of the intangible bonds that unite its multiracial society and the bonds of trust between the people and the Government, among other things.
“Moments of crisis are a test of the strength of our reserves. And we have the strength – not least in all of us, in ourselves as a people. We have the fortitude to each do our part, and emerge stronger.”