Heng’s Mini Budget Provides No New Funds. The Claimed $8 Billion Support Is Money ALREADY Allocated in Previous Budgets and the Measures Don’t Go Anywhere Far Enough to Help Singaporeans Through Covid or the RecessionPublished: 18th August 2020
FOR IMMEDIATE RELEASE
Today in a ministerial statement Finance Minister Heng announced what he termed a further $8 billion of support measures for the economy including the extension of the Jobs Support Scheme (JSS) till March next year.
However, as he admitted later on in his statement, this was not new money but money that had already been allocated in previous Budgets.
This vindicates the Reform Party’s Secretary General who pointed out here
that the Government was not being honest when it claimed just before the election that it
had already spent $92 billion on Singaporeans to combat the economic effects of the pandemic. Apart from $17 billion which went straight from the Net Investment Returns Contribution (NIRC) into long-term endowments and trust funds (not current spending and may never be spent) Heng also allocated $13 billionto the contingency reserve. Again, this was not current spending.
Therefore, the true figure for Covid spending was more like $44 billion, of which a substantial proportion will go straight back to the Government through payments under the Jobs Support Scheme (JSS) to Temasek companies. If the Government applied the same standards under the Prevention of Online Falsehoods and Manipulation Act (POFMA) to its own Ministers and MPs as it does to the Opposition, then both Ms Tin Pei Ling, who said that the Government had spent $23,000 on every Singaporean, and Mr Heng should have received Correction Notices.
The Reform Party believes that the Government needs “to do whatever it takes” to combat the economic effects of this pandemic and keep the economy from collapsing during the worst economic recession since the Great Depression of the 1930s. If this means very large deficits and printing money, particularly when inflation and interest rates are close to zero, then this is a necessary priceto pay to avoid years of lost output. Rather than worrying about depleting the reserves, the Government needs to be replacing lost external demand from the drop in exports with domestic demand. That means substantially increasing spending including increasing above current levels rather than looking to cut back.
The Government should also be changing the way it is supporting the economy .At the moment this is principally through the JSS which Heng says has so far cost the Government about $18 billion. While the JSS does help to prevent mass layoffs it has several drawbacks:
- Much of it goes back to the Government which is the biggest employer.
- The10% wage subsidy to be applied to most sectors is less than employer CPF
payments so will not be expansionary.
- It subsidises low productivity and the longer it continues the more workers risk being trapped in industries andsectors where there is little future.
- It is an export subsidy designed for the pre-Covid world.
- As such it is part of the PAP model of austerity and export-driven growth. This discourages consumption and keeps labour costs low through allowing companies easy access to foreign workers.
Chan Chun Sing talked a few days ago about “not returning to a pre-Covid world” but it is clear that he and the rest of the PAP Ministers are only paying lip service to that and really believe that in a few months they can get back to the “business as usual” of running massive external and Government surpluses while trying to replace money spent from the reserves through higher taxes such as the planned GST increase which should be rescinded.
By contrast to the $18 billion spent on the JSS, Heng says the Government has spent only $90 million on helping 60,000 people directly, PRs as well as citizens, or about $1,500 per recipient. This barely begins to deal with the vast numbers of self-employed and unemployed Singaporeans who have suffered a big downturn in income and find other support schemes difficult to access, most likely by design. During the election we called for a New Deal for Singaporeans under the slogan “Build Back Better Fairer”. We want to see up to 3% of our reserves, or potentially $50 billion p.a. or more, spent on programmes like universal health care, cash payments to families and seniors as well as free university education. Permanent increases in spending of this magnitude will bring a much-needed reorientation of the economy away from running massive export surpluses and reserve accumulation and towards domestic consumption. In the new model it will be Singaporeans who will benefit not just the spouses and relatives of Government Ministers and MPs employed to manage the reserves and run the companies in the massive state sector, which like an iceberg, manages to remain largely hidden from view.