If you missed the coverage of Budget 2014, here’s all that you need to know about Budget 2014 and how it will affect your lives here. Even though the government had announced that they would like to move towards a “fair and equitable society”, after analysing Budget 2014, we realise that this is (still) not the case.
In fact, the government continues to shirk its responsibilities and not only that, continues to earn from Singaporeans. Read this summary of the 4 articles on Budget 2014 here.
The Government Still Doesn’t Spend A Single Cent (Part 1)
For education, the government announced that they will increase the per capita monthly household income threshold for students to be able to qualify from bursaries, these changes will together cost up to $147 million more each year.
However, the government had given at least $354 million are given to international students each year.
The question then is, if the government can afford to give at least $354 million to international students, would they be able to do more for the fees of Singaporeans other than the subject additional spending of $147 million? $354 million is almost 2.4 times more than the additional $147 million.
Also, the government might be paying out $471 million for the Pioneer Generation Package, the Medisave top-ups for older Singaporeans and the healthcare subsidies, but they would be collecting $860 million more from Singaporeans, or at nearly 2 times more.
The Government Still Doesn’t Spend A Single Cent (Part 2)
Singaporeans Pay 9 Times More Into CPF & Indirect Tax Than Personal Income Tax
In 2014, Singaporeans are expected to pay $8.8 billion in personal income tax. Singaporeans have been told that we pay low personal income tax, but is this the case when we include indirect taxes and our CPF contributions (which is like a social security tax in other countries).
When you look at indirect tax, we would actually pay another $19 billion – or more than 2 times what we pay into personal income tax!
We also pay into CPF in a year may be more than 4 times what we pay into personal income tax!
Now, when you add this together with personal income tax, indirect tax and CPF, Singaporeans would pay about $78.1 billion. This would be nearly 9 times more than what we pay into personal income tax!
In fact, as we had previously compared, the Finns and Swedes would need to pay only about 1.5 times more into indirect tax and social security, whereas you can see that Singaporeans pay 9 times more! So, from a cash flow perspective, what Singaporeans pay isn’t low at all.
Government Only Spends 49% of What Singaporeans Pay
So, when you look at how much the government spends for social protection ($38 billion) in terms of how much Singaporeans have to pay ($78.1 billion), the government would spend only 48.7% of what we pay. In comparison, the Nordic governments would spend between 79% and 93% of what their citizens pay.
Three Things We Missed About The Budget
(1) Education: Expenditure Drops In 2014 & Singapore Government Still Spends The Least Among High-Income Countries
In 2013, the Singapore government had spent only 3.1% of GDP on education – this means that the Singapore government is still spending the lowest as compared to the other high-income countries. In fact, on average, high-income countries would spend about 6.5% of GDP on education. This means that the Singapore government spends only less than half of what it should on education.
The government also announced that it would be giving additional funding to 6 top schools, higher financial assistance and bursaries, yet reduction in the government expenditure for education from $11.6 in 2013 to $11.5 in 2014.
If the government were to spend on par with what a high-income country should be spending – of 6.5%, it should be spending $24 billion. Even if the government were to spend the target that they had set in the 1980s of 6%, they should still be spending $22 billion.
This would be more than enough to provide free education to all Singaporeans across all educational levels.
(2) Healthcare: Singapore Government Still Spends Lowest Among High-Income Countries
Next, in 2013, the Singapore government had spent only 1.5% of GDP on health.
Again, when you compare this with other high-income countries, these countries would spend an average of 8%. This means that what the Singapore government is spending is way off the mark. Not only that, the 1.5% that the Singapore government is spending puts us as one of the lowest in the world!
What this means is that because of the low government expenditure on health, Singaporeans have to spend more than 60% on healthcare from our own savings – which means that Singaporeans have to spend the most out of own pockets, as compared to any citizen in any other high-income country.
But if the government were to spend what it should be spending, it should be spending 8%. So instead of the $7.1 billion that it would be spending, the government should be spending $37.9 billion. This would be more than enough to cover for all the $13 billion health expenditure in Singapore in a year, build several more hospitals to increase the bed capacity, train more doctors and nurses so there would be more manpower and resources and waiting times would be shortened.
(3) Budget 2014: Still Misplaced Priorities And Singaporeans Left Hanging
Currently, the government would spend about 17% of GDP. If the government should spend on par with its responsibility as a high income country, this means that the government should be spending 45% of GDP. This means that there is another $92 billion that the government should be spending, but isn’t spending. On top of the $29 billion that Leong Sze Hian had estimated into undeclared surplus, this would mean that there is a lost expenditure of $121 billion that the government is spending but isn’t spending.
If you look at how much more the government should be spending for education and health, the government should be spending an additional $10.5 billion on education and $30.4 billion on health – this means that the lost expenditure would be able to more than adequately pay for these expenditure of $40.9 billion, and still have more than enough to redistribute to protect Singaporeans who have fallen into unemployment or who should retire. No Singaporeans would have to die because they cannot afford healthcare. All Singaporeans would have a chance at receiving higher education and our ministers won’t need to encourage us not to aspire to do so, simply because they want to save on their expenses.
Exposing the Hypocrisy
(1) The Government Would Increase Foreign Worker Levies and CPF Contribution Rates But Wouldn’t Implement Minimum Wage Even Though Costs Would Increase For Both
In Budget 2014, the government had once again said that, they can “only sustain wage increases if we succeed in boosting productivity” and that, “if we try to push wages up, we will end up with either higher consumer prices or squeezed profit margins that hurt both businesses and ultimately jobs”. It was also said that this would, “become a zero-sum game between business profits and wages, that no one benefits from”.
Which is why it was inconsistent when the government would once against raise the foreign worker levies and CPF contribution rates, even as it would add to the costs as well. Nominated Member of Parliament Tan Su Shan had said that, “The one per cent CPF increase in employer contribution will increase the burden of SMEs in the short term,” and that, “it is going to affect overall costs for SMEs”.
Thus the first hypocrisy of the government exposed – “costs” is just an excuse thrown around by the government, to be used as and when it suits their needs. You see, there is little incentive for the government to increase wages because any increases goes direct to our pockets and our savings – why would they want that? It doesn’t benefit them or increase their coffers.
(2) Government Would Increase CPF Contribution Rates But Would Not Increase CPF Interest Rates and Payouts
Next, the government claims that they have increased the CPF contribution rates “to increase the retirement savings of workers” and ”to better provide for the future medical needs of Singaporeans”.
However, as discussed, when the CPF is trapped inside, how does raising the CPF contribution rates help to increase your retirement savings? It does not.
The government has made us accumulated vast balances – $60 billion in Medisave and a total of $253 billion in CPF – and yet would give us only a puny 1.3% from Medisave and 5.9% from CPF out. Where is our money?
This is the hypocrisy – if the government is truly concerned that Singaporeans would be able to “increase our retirement savings” and “provide for our future healthcare needs”, then the government would do what Prof Lim Chong Yah had recommended – to increase CPF pay-outs to low-wage workers, and also increase the interest on our CPF and Medisave by returning the interest earned back to us.
(3) Highest Wage Growth On Zero And Negative Productivity Growth?
Finally, on the oft-mentioned we can ”only sustain wage increases if we succeed in boosting productivity” again, the irony lies in the fact that it was reported in Channel NewsAsia that, “Singapore’s labour productivity registered zero growth for 2013”. And not only that, the Ministry of Trade and Industry had even said that, “this is an improvement over the negative growth of minus two per cent seen in the year before” and that, “last year’s (zero) growth is the first improvement in three years”.
Yet, it was also announced that, “median wages have increased by about 9% in real terms in the five years to 2013″ and “significantly better than in the other Asian Newly Industrialised Economies”. Leong Sze Hian has also already dispelled the notion that our real wages had actually increased so dramatically and that real wages over the last 13 years had actually declined.
More importantly, here is the truth about wage increases. It was found that, “a 10% increase in the minimum wage would increase food prices by no more than 4% and overall prices by no more than 0.4%“. In fact, it has also been said by Dr Tan Meng Wah from the Lee Kuan Yew School of Public Policy that, there is a “limit in linking productivity to wage increases is that the concept of productivity tends to undervalue the efforts of low-wage workers while overvaluing those of the top executives“.
In 2010, Associate Professor Hui Weng Tat from the Lee Kuan Yew School of Public Policy had also said that, “In contrast, a mandatory minimum wage would boost wages and morale. Workers who benefit from a mandated minimum wage will feel better and more fairly treated. This would help build goodwill towards the nation among transient foreign workers who will eventually return to their home countries. When all these factors are considered, it becomes clear that a minimum wage would raise productivity and improve workers’ welfare.”
(4) The Blatant Hypocrisy Right In Your Face
I do not know about you but the hypocrisy is becoming increasingly blatant for anyone to turn a blind eye to. It is simply not right for a government which is one of the richest in the world to pay themselves so well, while treating its citizens like dirt by paying such low wages, yet whilst trying to whitewash them by telling them that their lives are getting better, that they are being paid better, when you can just ask a low-income person, and they would try to put up a brave front, but from beneath the wrinkles on their hardened faces, you can see that some of us have never even worked as hard as they have, but what have they done to deserve such mistreatment by their government?
Just simply because they were not born rich and did not have the right connections to the top few?
I don’t know if this is the kind of society that I want to be in, which claims meritocracy as a guiding principle but the underhanded methods to get to where they want are actually getting more and more blatant, where the whole “to build a democratic society based on justice and equality” is now a lost vision that has now gone down the drain, as everyone is forced to bite at each other just to survive.
No, this is not the kind of society that I want to live in. And I think we can change this.