Budget 2017: Need for fiscal prudence, even as Govt helps workers and businesses, say MPs

Budget 2017: Need for fiscal prudence, even as Govt helps workers and businesses, say MPs

Amid the current economic slowdown, helping affected workers was the top concern of some MPs, as was transforming businesses as well as the importance of maintaining fiscal prudence.

Singapore manufacturing, Singapore economy
A manufacturing facility in Singapore. (File photo: AFP/Roslan Rahman)

SINGAPORE: The first day of the debate on Budget 2017 on Tuesday (Feb 28) saw Members of Parliament (MPs) speak on the Government's plans to help workers and enable businesses to reposition for the future, as well as the need for financial prudence.

HELP FOR WORKERS: NOW AND FUTURE

Amid the current economic slowdown, extending a helping hand to affected workers was the top concern of some MPs.

East Coast GRC MP Jessica Tan singled out the middle-class and middle-aged as the segment that is most impacted by the ongoing economic transformation, and called for more attention to be paid to this group.

“There are real fears within our workforce that these changes will not only disrupt jobs, but displace jobs,” she said. “With an ageing population, a highly-educated workforce and PMETs (professionals, managers, executives and technicians) forming more than 50 per cent of our workforce, this group will need attention to manage the transition … We must ensure the measures are effective in enabling this segment to deepen their skills, and adapt and grow.”

But younger Singaporeans are also at risk, noted Tampines GRC MP Desmond Choo. While the millennials and Generation Z are facing “opportunities unseen in a century”, the search for a job has become more trying amid three main challenges.

“Firstly, it is less about what to study or (what) skills to master but what would keep them relevant. Secondly, it is not so much about having no job, but which job will allow them to build up their career and life journey. In short, how do they go about navigating the shifting turbulence of the new job market. Thirdly, businesses are placing greater importance on work experience, rather than academic qualifications,” Mr Choo said.

To counter these challenges, the labour MP said there is a need for mutual-help platforms, the set-up of a national talent bank that includes networking features such as those available on LinkedIn, and a robust network to protect freelancers in the burgeoning gig economy.

MPs also commented on the measures in place to help Singaporeans keep up with the demands of the future workforce.

MP for Pasir Ris-Punggol GRC Sun Xueling said: “For SkillsFuture, Budget 2017 focused on on-the-job skills utilisation to ensure a better match between training and jobs. Such an outcome-based approach ... is the right move for SkillsFuture. With the integration of the SkillsFuture portal with (the) Jobs Bank, the nexus between training and jobs will be even tighter."

She suggested for reviews of training providers to be put in place so as to ensure accountability in the provision of relevant training, and for individuals to be guided by industry practitioners.

Meanwhile, Non-Constituency MP Daniel Goh suggested maximising the availability and accessibility of training programmes, such as expanding the Global Innovation Alliance’s Innovators Academy to include mid-career workers who may want to explore opportunities and build up experiences in innovation.

HELPING COMPANIES DIGITISE, INNOVATE AND GO GLOBAL

Apart from discussing the adequacy of short-term relief measures for companies, MPs also spoke about the need for local enterprises to embrace digital technology, innovate and scale up to stay relevant.

Ms Tan described the newly unveiled SMEs Go Digital Programme as a “necessary initiative”.

“Although many SMEs (small- and medium-sized enterprises) today do see the benefits of leveraging digital technology to transform their business and address the changing business environment, many do not have the skills and resources to do so, and have not done so or do not even have the plan to do so,” she said.

However, cyber security remains a major challenge for companies embracing digitisation, especially SMEs. As such, the programme will need to have “clear plans” on how smaller firms can build up digital resilience, the MP for East Coast GRC said.

For SMEs to embark on successful digital transformations, having the right talent pool is also crucial, noted Ang Mo Kio GRC MP Darryl David. Given that SMEs are not the first choice of employment for most local graduates, going global will boost the attractiveness of SMEs and help them attract talent, he said.

“An SME with a regional or global presence is definitely in a better position to offer attractive careers to digital talents and other professionals, as the scope and nature of the operations will offer job challenge and development opportunities.”

While the International Partnership Fund will help catalyse the internationalisation of SMEs, Mr David cautioned that “the devil is in the details of implementation”. He noted that guidelines and assessment measures must be in place to ensure the S$600 million in Government capital set aside for this new fund goes to SMEs that have the best potential.

With regard to the Industry Transformation Maps (ITMs), MP for Nee Soon GRC Henry Kwek said the roadmaps for 23 industries “must contain bold ideas” and must be rolled out before the end of the financial year.

“The ITMs are supposed to rally their respective industries. Many businesses are stuck in the trenches of disruption and are looking for direction amid the storm. Not all of them found clarity for their sector in the measures provided in this Budget,” he said.

The ITMs - unveiled in 2015’s Budget - will provide more support on research and development (R&D) for local enterprises, said MP for Holland-Bukit Timah GRC Liang Eng Hwa. However, most of these R&D resources are currently being utilised by large firms and there will be a need to “bite-size” R&D funding support so that it benefits smaller enterprises, added Mr Liang.

IMPORTANT TO MAINTAIN FISCAL PRUDENCE

But even as Singapore doubles down on investments to help businesses and workers transform, as well as continue social spending and infrastructure developments, some MPs have voiced concerns about overspending.

MP for West Coast GRC Foo Mee Har noted that Singapore’s weakening fiscal position is a concern, after total expenditure growth outstripped growth in operating revenue for five consecutive years. She also said it is “worrying” that additional funds from Temasek's inclusion in the Net Investment Returns (NIR) framework “appears to have been exhausted quickly”.

“Clearly, Singapore must find a sustainable fiscal footing for our future generations and we need a thorough review of both expenditure and revenue,” said Ms Foo, while proposing a limit on how much the Government can take from the Net Investment Returns Contribution (NIRC) to fund expenses.

While she lauded the Budget’s 2 per cent downward adjustment to the budget caps of all ministries and organs of state as a “strong signal of fiscal prudence”, Ms Foo wanted to know whether other mechanisms are in place to encourage savings across ministries.

Ms Sun echoed that view and suggested binding or matching expenditures to the country’s revenues so that any increases in expenditure are carefully considered in relation to revenue.

The MP for Pasir Ris-Punggol GRC also raised a question about the “inherent risks” of being reliant on the NIRC - the largest source of funds for Singapore’s Budget at about 20 per cent of total revenue. She cited recent comments from Norway’s central bank governor, who warned about a potential 50 per cent loss of capital over the next 10 years for the country’s sovereign wealth fund amid rising expenditure.

While Budget 2017 announced the implementation of a carbon tax and changes to diesel duty, these are taxes “mostly to right-size behaviour”, Ms Sun said. With the rise of the sharing economy and cross-border transactions over Internet platforms, more thought should be put into updating the country’s tax policies to stay “in line with new emerging business models and maintain a level playing field”, she added. “Otherwise, the tax burden may fall unnecessarily on certain segments, individual and consumers over time.”

Nominated MP Thomas Chua, who is also the president of the Singapore Chinese Chamber of Commerce and Industry (SCCCI), said businesses hope that “a new mindset” could be used when planning Government expenditure, with spending likely needed in areas such as social development and healthcare moving forward.

“The economic outlook is not as rosy in the days ahead, and if businesses are unable to raise their competitiveness and increase their profits, tax returns will also not rise. Similarly, the Government’s investments are inextricably linked to the economic situation. If the economy is bearish, then there would be no magical formula to turn stone into gold,” he said.

Source: CNA/sk

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