Rise in petrol duties ‘ill-timed’ with electric vehicles not yet a viable option, says Pritam Singh
SINGAPORE: Workers’ Party chief Pritam Singh called a petrol duties hike on Budget day an “ill-timed bolt from the blue” and urged the Government to consider a phased approach to such tax increases, in his Budget debate speech on Wednesday (Feb 24).
As Leader of the Opposition, Mr Singh was the first to speak out of 60 Members of Parliament slated over three days to debate on the Budget delivered by Deputy Prime Minister Heng Swee Keat on Feb 16.
He pointed out that a petrol duty increase of 15 cents per litre kicked in immediately after it was announced on Feb 16, but electric vehicles (EVs) are still not a viable option for most Singaporeans.
While acknowledging that the move towards more environmentally friendly vehicles is a central plank of Singapore’s Green Plan, he said that there was “much frustration and unhappiness on the ground” over the timing of the hike.
“Many Singaporeans are asking: Why do petrol duties go up immediately all at one go? Did DPM consider a phased and gradual increase of the petrol duties in step with the availability of EVs as a realistic consumer choice and a rise in their numbers on the roads in the years to come?” he asked.
He added that this hike is likely to overlap in timing with an upcoming increase in Goods & Services Tax (GST), which could put more pressure on middle-class Singaporeans.
READ: Petrol duty hike - Taxi, private-hire car operators to pass on Govt support measures through rebates, says LTA
The GST hike is expected sometime from 2022 to 2025, but Mr Singh said he expects it to happen by 2023, “well before" the next General Election.
“For middle class Singaporeans or the sandwiched class who do not qualify for the full extent of GST subsidies in particular, and for whom EVs may not be a compelling option in the short term, the next few years may well precipitate added cost of living pressures,” he said.
“I acknowledge the rebates (Mr Heng) has announced alongside the petrol duty hike … Even so, I urge the Government to review this Budget announcement and implement a more thoughtfully phased increase of the petrol duty in proportion to the actual growth of EV usage on the roads.”
He added: “The rebates proposed can be given out in a similarly phased manner. Such a move will be fairer for road users as compared to the minister's current plan, which is also implicitly contingent on a large number of EV charging points becoming available in 12 months’ time, when the subsidies end.”
CLARITY ON S$24B FOR WORKERS
In his speech, Mr Singh also urged greater scrutiny of the use of Budget funds, a review of the wages of frontline workers and questioned the need for Community Development Councils or CDCs.
Mr Singh asked Mr Heng, who is also the Coordinating Minister for Economic Policies and Finance Minister, for more clarity on the use of S$24 billion set aside to transform businesses and workers over the next three years.
The funds will cover a range of industry grants, financing schemes for firms, and training initiatives for workers and job seekers.
“How does the Government plan to release information and account for the tangible and intangible outcomes of the monies spent on these multi-year initiatives?” he asked.
He said that he was surprised at the relatively low number of about 970 Singaporeans helped by the Capability Transfer Programme, which co-funds the salary and training of trainers and local trainees, and asked for more details on the results of the scheme.
He also asked for more information to be released in the jobs situation reports issued by the Government, in particular the salary ranges and ages of those successfully placed in jobs.
“The effectiveness of the government measures should be readily determinable. Without such scrutiny, a perception may crystallise of large sums of money being deployed to address an issue for which effectiveness is hard to establish,” he said.
INDEPENDENT BUDGET OFFICE
Asking for greater scrutiny of use of Budget funds in general, Mr Singh suggested the setting up of an independent parliamentary Budget office to examine the Government's Budget.
“It would be in step with DPM Heng's call for fiscal prudence and add an important element of public accountability and transparency in light of the massive drawdown of reserves to fight COVID-19,” he said.
Singapore is planning to draw on its reserves for a second year running, for up to a total of S$53.7 billion over FY2020 and FY2021 to fund support schemes amid the COVID-19 pandemic.
READ: Budget 2021: Expected deficit of S$11 billion; Government to draw on reserves for 2nd straight year
Mr Singh said that an announcement that the salaries of healthcare workers would be raised was a “high point” for him in the Budget and asked for more to be done.
“Healthcare workers deserve their raise. I would urge the Government to look at reviewing the wages of other frontliners, and particularly essential workers like our waste disposal workers, transport workers, and many others who proved indispensable in this COVID-19 fight," he said.
He also urged the Government to look “more deeply” into the experience on the ground of low-income families living in rental flats.
Citing a study that found that without government transfers, the median income from work in these households fell about 70 per cent post-COVID-19, he asked if authorities could assess how the pandemic has affected low-income households and their employment prospects.
“Moving forward, the disbursement of additional assistance … targeted at households in public rental units should be seriously considered through the course of this financial year,” he said.
MAKE SURE CDC VOUCHERS BENEFIT HEARTLAND SHOPS
Mr Singh also touched on the CDC vouchers that will be issued to all Singapore households, suggesting that the scheme should be designed to benefit heartland shops and not supermarket chains.
In the Budget, Mr Heng had promised S$100 CDC vouchers for all Singaporean households to be used at heartland shops and hawker centres. The vouchers are to thank Singaporeans for their “discipline” in observing COVID-19 safety measures, and to help local merchants and hawkers affected by these measures, Mr Heng had said.
Mr Singh asked the Deputy Prime Minister to clarify whether the vouchers could be used at supermarkets like FairPrice and Sheng Siong.
“I would suggest that the current scheme be focused solely on heartland shops and hawkers … If the major supermarket chains are involved, the scheme could effectively mirror a cash top-up,” he said.
The Aljunied GRC MP then questioned the relevance of the CDCs and having full-time mayors for them, saying that they have come into the spotlight following the 2020 General Election.
“Many Singaporeans are of the view that the salaries of mayors are outrageous, principally because they are not perceived to be commensurate with a mayor's roles and functions,” he said.
“Other Singaporeans are of the view that the CDCs' functions can be carried out by other existing entities.”
He asked why the CDCs are the implementing agency of the voucher scheme when it appears that other bodies like the Citizen’s Consultative Committees are “even more closely connected to the ground”.
“It would appear to me as if the Government is trying to find some way to make the CDCs relevant in view of the relative absence in the public mindshare,” said Mr Singh.
In his conclusion, he reiterated that the relevance of institutions whose roles and functions overlap with other state agencies should be reconsidered, as part of a closer scrutiny of government expenditure.
“With a tighter fiscal environment in the years ahead, as stressed by DPM Heng over many speeches, closer scrutiny of expenditure should not be seen one-dimensionally as political one-upmanship, but as an administrative necessity,” he said.
MPS QUESTION TIMING OF PETROL DUTY, FISCAL POLICY
Two other Workers’ Party MPs spoke on Wednesday, with fellow Aljunied GRC MP Faisal Manap echoing Mr Singh’s concerns about the petrol duty increase.
“Most would agree the need to take urgent step action in order to address climate change, however, the decision to increase the duties on petrol at this time is a case of ‘doing the right thing but with the wrong timing’,” he said, calling for a review on the immediate hike in the petrol duty rates.
He also lauded the Government’s impending move to raise the pay of healthcare workers, noting that Singapore nurses’ salaries lag behind those of other advanced economies.
“We have been able to attract nurses from other countries to come and work in Singapore. They make up for the shortage of local nurses,” he said.
“However, if remuneration levels are not considered adequate, we face the potential of our nurses being drawn to foreign shores. This will make it even harder for us to handle the ageing population.”
He thus suggested pegging the salaries of nurses here to a weighted basket of salaries from the countries of similar economic status as Singapore. Another possibility is to use the salary scales of the country’s uniformed services as a benchmark, he said.
Sengkang GRC MP Louis Chua touched on support for Singapore SMEs and workers, and raised questions about the Government’s fiscal policy, asking why it was necessary to raise the GST.
On local SMEs, he said that Singapore should “double down” on efforts to help SMEs scale up and internationalise.
“In 2017, it was revealed in Parliament that while 80 per cent of government contracts in number are awarded to SMEs, only half by contract value is awarded to SMEs," he said.
“Could more be done to provide greater opportunities to local SMEs, to give them the chance to scale up, and build up a requisite track record in our very own home market?”
He raised again WP’s proposal in its manifesto to introduce unemployment insurance in light of the shortening of business cycles and accelerated technological disruption.
“We may need to think of implementing automatic stabilisers instead of discretionary, ad-hoc schemes to enhance the resilience of our workforce,” he said, referring to ad-hoc support measures introduced during the pandemic such as the COVID-19 Recovery Grant.
READ: Budget 2021: Jobs Support Scheme extended for worst-hit sectors as part of S$11 billion package
Mr Chua also questioned the need to raise the GST by 2025, citing figures that suggest that government surpluses are larger than officially reported, due to Singapore’s “unique budgetary policies”, which are based on revenues that the government of the day can spend under the Constitution.
He calculated that using a different model of deducting total estimated government expenditure from total receipts, FY2021’s estimated S$11 billion deficit (2.2 per cent of GDP) would be a “more modest” S$3.5 billion (0.7 per cent of GDP).
He also highlighted that using this method of calculation, the Government cash surplus from 2011 to 2019 is S$261 billion in total.
“The bottom-line to me then is therefore that we must caution against being overzealous in strengthening our revenue position through multiple pathways, such as the impending GST hike, especially amidst the macroeconomic uncertainties of today,” he said.