Labour Chief Chan Chun Sing talks budget in a way we can all understand (YoungNTUC pre-budget dialogue 9th March 2016)
Budget is coming up soon, and as usual, people are beginning to speculate how government spending for 2016 will look like. Come 24th March 2016, Minister for Finance, Mr Heng Swee Keat, will deliver Singapore’s FY2016 Budget Statement in Parliament. But how much do Singaporean youths understand about our budget?
At a recent YoungNTUC discussion on the topic of the Singapore Budget, Minister in Prime Minister’s Office and NTUC Secretary General (SG) Chan Chun Sing addressed a room of 30-40 young adults. When presented with the question of how the budget will help young workers brave the foreboding economic downturn, he instead presented the youths in the room with an interesting exercise — to vote for what they believe the budget should be.
Participants listening to SG Chan Chun Sing explain about Current and Past Reserves (YoungNTUC pre-budget dialogue 9th March 2016)
But first, he shared something that may be news to some of us. Did you know that the accumulated Current Reserves would be transferred to Past Reserves at the end of each term of government? This means that budget surpluses, if any, from the last term of government before GE2015, would have been locked away in Past Reserves and the new government would have no access to it, unless authorised by the President.
The Singapore Constitution prevents every new term of Government from drawing on the accumulated fiscal surpluses of the previous term, thus limiting the room for large expenditure early on in a fresh term. According to experts who have studied the 2002, 2007 and 2012 budgets – all at the start of a new term of government — observed a common broad thrust: Taking bold steps to position and steer the economy to greater heights, with an eye on generating revenue for future expenditure.
Chan Chun Sing turned the table around and asked the youths how they would allocate the extra budget (YoungNTUC pre-budget dialogue 9th March 2016)
Then next, SG Chan Chun Sing set the context for all of us in the room that evening. Since it is a new government, and assuming all else says the same, the budget gets a 2% increase, which for ease of discussion, he rounded it off to $1 billion. He then presented us with several options what we can do with that extra $1B. The results were astounding.
The Choices We Were Given and How We Voted
- Bury the extra 2% in the ground, a.k.a add to reserves and save up! (6 votes)
- Same-same, a.k.a. divide the extra 2% in equal parts and distribute across ministries (0 votes)
- Distribute the extra 2% to those ministries that need it more
- defense and security (6 votes)
- social spending (15 votes)
- economic development (19 votes)
- minister pay (0 votes)
- others (1 votes)
Participants shared how they made their decision on how to allocate the extra budget (YoungNTUC pre-budget dialogue 9th March 2016)
Option A, he shared, is a young voter option, a serious choice in what he called the “inter-generational fight”, which arose from countries facing an aging population.
“Indeed, our country is aging rapidly. The burden will be on our youths if we don’t manage it properly. All the saving up is actually for the youths, for the next generation. People are always asking why we save so much in reserves, it’s because we are like a young person saving for retirement. In 2030, you will all be supporting one elderly adult each. It can be a tremendous burden.”
However, Chan also shared that there is also a contending viewpoint that if we save everything instead of carefully investing now, we may not generate sufficient opportunities, and hence, future revenue for our people and nation. I guess at the end of the day, saving the excess may be prudent, but is it wise? Is it good for us? Good thing that Option A had rounded up only six votes.
Option B is a politician’s’ favourite and a cop-out, said Chan. Why so? Because this option sees to it that everything is equally divided and nobody should complain since every ministry gets the same. It’s the easy and also lazy way out, and doesn’t do anyone any good since the areas that could use with more help or stimulation would not get any. Option B has got zero votes! Looks like the roomful of us are all on the same, and right, page!
Option C is where things get a little wooly. Here’s what Chan had to say:
“Between defense and security, social spending and economic development, there is one problem that we will face and we must address. Does giving more money solve the problem? Sometimes, not having money can force people to be more creative. Some of the best ideas in defense came up in the lean years of 2004 after SARS. Crisis focuses the mind.
The same goes for social spending. More spending on healthcare doesn’t necessarily mean a healthier outcome, it depends on what you spend on, how you spend.
Similarly for economic development — don’t bullshit yourself that just because you spend the money, the economy will be good. Japan likes to do this to pump-prime the economy. In some countries, they build roads to nowhere, they give orders to their own companies for the sake of sustaining them.
The biggest problem of this is that the slowdown this year is both cyclical and structural. Cyclical because there are other forces. Structural because some of the industries need to die, and we do need to let some go so they can release the manpower. But nobody likes to die, right? Politically it’s always easy to ask the government to help a bit longer for CPR. If I hold my breath long enough, the bad times will recover and things will be OK again. True for some, not true for most.
For example, retail has gone down. Is it that Singaporeans are buying less? No, physical retail sales may have gone down, e-commerce has gone up. Problem is, can the fellow from the physical retail business be deployed to work in e-commerce? One of the biggest challenges this year is the structural unemployment. It’s not that we’re not creating jobs, we ARE creating jobs. But we are creating jobs that those people who are displaced may not be easily placed.
The structural issue is the most pressing. Shall we give incentives for people to improve their productivity? (…) If you study economics, the problem isn’t about spending money. It’s about getting returns for it. So the problem is after you spend money, will there be returns? (…) My main concern is this: Will Singaporeans get better jobs?”
What about you? Which option would you vote for?
Participants were encouraged to ask questions and share their views on government spending (YoungNTUC pre-budget dialogue 9th March 2016)
NTUC’s Recommendation for the Budget
The exercise that Mr Chan put us through was a surprisingly critical one. Although he had been casual and engaging with us, it was clear it’s a topic that weighs much on his mind. He was walking us through the thinking process by providing us with a peek of what went on behind NTUC’s budget recommendations. Although he had simplified the scenario for the purpose of the exercise, it was still an immensely enlightening session. And yes, it felt like he was giving us a taste of what it’s like to make cabinet decisions like how to spend a billion bucks.
A total of three pre-budget dialogue sessions reaching out to 120 young working adults had been organised since Nov 2015 (YoungNTUC pre-budget dialogue 9th March 2016)
With the discussion at this YoungNTUC’s pre-budget dialogue session as backdrop, I now look at the Labour Movement’s budget recommendations in new light. No longer are they just seven pages of words, they contain the wishlist of the workers, shaped by what NTUC thinks will help ensure our future employability and competitiveness.
The Labour Movement’s recommendations for Budget 2016 focus on four key themes:
- Strengthening the Singaporean Core
- Improving Productivity
- Enhancing Training and Skills Upgrading
- Improving Retirement Adequacy
One of the recommendations is to implement an integrated career counselling system, starting from the preparation students receive in schools, and then to their workplaces so that they can constantly stay relevant to the global marketplace of jobs.
They’re also recommending the expansion of the use of SkillsFuture Credit to include career coaching and guidance, more flexibility in rolling out modular courses for working adults, etc.
Self-employed workers (including freelancers) and contract workers are also not forgotten, as the recommendations include ways to enhance protection for this growing worker segment, including reviewing the Employment Act, and doing more for them in terms of CPF contributions.
Meanwhile, you can follow news of Budget 2016 on the Ministry of Finance microsite.
(Writer’s note: SG’s sharing has been edited lightly for clarity.)