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Singapore’s 2013 budget certainly tries to give Singaporeans what they’ve been clamoring for:
Stricter limits on foreign labour, carrots and sticks to increase local productivity, a more progressive tax structure, more measures to cool house and car prices.
But when we get what we ask for, we also get the consequences:
The devil’s in the details and the implementation…
Debate in Parliament, on the blogs, and in whispers among the moneyed classes has already highlighted concerns about the nitty-gritties. To give a few examples:
(1) Will tightening the foreign labour allocations so quickly send the wrong signal to foreign investors and kill off foreign direct investment?
(2) Is the wage credit scheme to pay 40% of all salary increases for workers earning less than SGD 4,000 per month too much of a cushion to firms that are going to adjust wages up anyway?
(3) Will the pre-school subsidies to create a more-inclusive Singapore create monstrous monopolistic corporations for warehousing our toddlers rather than vibrant early child-care centres?
(4) Is the tax-system becoming too progressive? Don’t we need our super high net worth tax refugees from Europe and the dollars and network they’ll bring?
I’ll leave it to the experts to debate the pros and cons.
What I know is this – Even the best laid plans can go awry. Most plans have unintended consequences.
This is a budget for transition. It won’t be an easy transition.
Productivity gains are hard to make. With fewer foreign workers, I’m expecting more work. There’ll be wage increases but perhaps also less work life balance despite our aspirations to the contrary. There’ll be wage driven inflation. Things will cost more. Whether prices will go up more than our wages I don’t know. That’s an uncertainty. I’m also expecting some small and medium enterprises to fold, or to move across the border to lower cost Malaysia and Indonesia. Foreign investors may take a wait and see attitude. The progressive tax structure may affect house prices. We all need to be prepared to hurt a little, all of us – the salaried, the propertied, the entrepreneurial.
This is what we wanted – a less crowded more productive country. This is what Budget 2013 will help us transition towards.
It’s important to remember we’re all in the same boat. After everything’s been said, I like the closing paragraphs of Finance Minister Tharman Shanmugaratnam’s Debate Roundup Speech, which I quote in full here.
“This is a critical period of transition for Singapore. There is no guarantee that we will succeed; there is no guarantee that any economic or social strategy will succeed. But whether we succeed, depends not on incentives, grants and subsidies. It does not depend on the narrative of incentives, but on the narrative of responsibility and values. Whether we take responsibility together, to strengthen the values that matter the most to Singaporeans – that is what will determine whether we succeed in this important new phase of our national development.
The government has a responsibility – we will play an active role in enabling Singaporeans to achieve their fullest potential, and in enabling them to lead fulfilling lives.
Employers have a role, and I hope they heed the call of many in this House over the last two and a half days: to value every worker, including the elderly and women, and to reshape the workplace to allow every worker to have a fulfilling job.
As individuals too, we all have roles. We all have the responsibility to do better and develop mastery, in every vocation, and stay long enough in a vocation to develop mastery. Each of us too has our responsibility in our own ways, to contribute to a better community and a better Singapore.
So that is what will determine our success in this next phase of development, just like it has done before. It is not about incentives, grants and subsidies. It is about a spirit of responsibility that will determine whether we will transform Singapore by the end of this decade.”