Budget 2020 has been presented against a backdrop of an ongoing Coronavirus 2019 (Covid-19) outbreak and an uncertain economic landscape. And support for frontline agencies fighting the outbreak, the economy and Singaporeans were at the forefront.
Deputy Prime Minister Heng Swee Keat delivered his Budget 2020 speech in Parliament on 18 February 2020.
“This year, we usher in a new decade – one marked by tectonic shifts in our operating environment and major uncertainties,” said Mr Heng.
The Government will set aside $800 million to support frontline agencies that are fighting and containing the outbreak.
According to Mr Heng, the bulk of the sum will go to the Ministry of Health. The amount is on top of the sum already committed to public health each year.
He also expressed thanks to frontline workers for their work in the fight against Covid-19.
“You exemplify the resilience and indomitable spirit of our people. But please take care of yourselves,” said Mr Heng.
He added: “This outbreak will certainly impact our economy. The tourism and aviation industries are most directly affected. Visitor arrivals to Singapore and air traffic through Changi have declined, and with it, hotel occupancy rates."
Mr Heng also announced a $4 billion Stabilisation and Support Package to help workers and businesses in the economic uncertainty.
One highlight of the package consists of a Job Support Scheme that helps businesses retain their local workers. For every local worker, the Government will offset 8 per cent of the wages, to a monthly cap of $3,600 a month, for three months.
The Wage Credit Scheme will also be enhanced to support wage increases for Singaporean workers. The monthly qualifying wage ceiling will be raised from $4,000 to $5,000.
Previously, the Wage Credit Scheme co-funded wage increases for Singaporeans workers earning a gross monthly pay of up to $4,000.
The enhancement will benefit about 700,000 Singaporean workers from 90,000 companies.
The package also will see tourism, aviation, food services and point-to-point transport service get additional support through enhanced support under the Adapt and Grow initiative.
Together with the Jobs Support Scheme, employers will get support to retain and train more than 330,000 workers.
Mr Heng added that the workers could make use of the downtime to train and upskill workers to prepare for economic recovery.
Details of the various measures for the sectors will be announced at the Committee of Supply.
The Deputy Prime Minister also said that the Government will not be raising the GST in 2021 and the GST will remain at 7 per cent. However, Mr Heng added that the GST increase will be needed by 2025 as Singapore will still require sources of revenue to fund spending needs in the medium-term.
“I want to assure everyone that when we raise the GST rate, we will ensure that our taxes and transfers system remain progressive. We will continue to absorb GST on publicly subsidised healthcare and education,” said Mr Heng.
To help cushion the future GST increase, the Government will introduce a $6 billion Assurance Package. Under the package, every adult Singaporean will receive a payout of $700 to $1,600 over five years.
Mr Heng also said that the Government will enhance the GST Voucher scheme once GST is raised.
Continuing with Singapore’s industry transformation efforts, the Government will allocate $8.3 billion over the next three years to drive Singapore’s growth and transformation strategy with three key thrusts.
The first thrust of this strategy will be to strengthen international partnerships.
The second is to deepen enterprise capabilities by enhancing support for start-ups through an Enterprise Grow Package and for mature companies with an Enterprise Transform Package.
The Enterprise Grow Package aims to help enterprises identify business needs, adopt pre-approved digital technologies, and take the first steps to enter new markets.
The Enterprise Transform Package on the other hand will focus on leadership and management capabilities for mature companies.
Over the next three years, the Government aims to support business leaders of 900 enterprises in business transformation, with training and mentorship, according to Mr Heng. He added that the Government will work with institutes of higher learning (IHLs), banks and industry experts.
The third thrust will be to develop people to thrive in the future economy.
For those already in the workforce above the age of 25 as of 31 December 2020, the Government will include a one-off SkillsFuture Credit top-up of $500 from 1 October 2020. This top-up will expire in 5 years, to encourage individuals to use the credit.
Workers aged 40 to 60 will get an additional $500 SkillsFuture Credit top-up. This amount is in addition to the one-off top-up. This top-up is under the SkillsFuture Mid-Career Support Package and will also expire in 5 years.
The Government is also introducing a SkillsFuture Credit for companies. Called SkillsFuture Enterprise Credit, eligible employers will receive a one-off $10,000 credit.
Of the amount, $3,000 will be reserved for workforce transformation programmes while the remaining $7,000 can be used for enterprise transformation programmes.
The SkillsFuture Enterprise Credit is expected to benefit 39,000 companies.
Mr Heng also introduced the Senior Work Support package to help seniors who wish to continue to work.
Under the package, there will be a Senior Employment Credit that will take effect from 2021. The credit will provide wage offsets to employers when they employ Singaporeans over 55.
The Government will also offset half of the employer CPF contribution increase in 2021, under a CPF Transition Offset scheme.
Mr Heng added that the Government will also be introducing a Senior Worker Early Adopter Grant to support companies who raise their retirement and re-employment ages ahead of legislation.
Another grant the Government will introduce will be the Part-Time Re-employment Grant to encourage companies to formalise part-time re-employment for workers.
Touching on foreign manpower policies, Mr Heng said that the Government will reduce the S Pass sub-Dependancy Ratio Ceiling (DRC) in construction, marine shipyard, and process sectors from 20 per cent to 15 per cent.
According to Mr Heng, this will be done gradually in two steps over three years – 20 per cent to 18 per cent on 1 January 2020, and subsequently to 15 per cent on 1 January 2023.
Manufacturing was not included in this year’s tightening of foreign workers.
“Given the economic uncertainties, we will not reduce the S-Pass sub-DRC for the manufacturing sector at this point. But we do want manufacturing companies to make the effort to recruit local skilled workers and technicians too. Therefore when conditions allow, we intend to tighten the S-Pass sub-DRC for manufacturing too,” said DPM Heng.
Mr Heng added that the Government will maintain the foreign worker levy rates given the uncertain economic conditions.
The Government also announced a comprehensive Care and Support Package to provide families and households greater assurance and defray expenses.
Depending on their income, Singaporeans who are 21 and above will receive a one-off cash payout of $300, $200 or $100. On top of this amount, each parent of children aged 20 and below will get an additional $100.
The Government will also double the amount of U-Save rebates through a one-time GST voucher.
Mr Heng also said that he will extend the Service and Conservancy Charges Rebate by another year, with eligible households receiving rebates of between one and a half and three and a half months.
Low-income Singaporeans will also benefit from additional assistance such as the Workfare Special Payment. All Singaporeans on Workfare will receive 20 per cent more for work done in 2019, with a minimum payment of $100 in cash.
Needy Singaporeans will also get Grocery Vouchers worth $100 each year in 2020 and 2021 for use at supermarkets such as NTUC FairPrice.
Mr Heng’s speech also saw him introduce a Matched Retirement Saving Scheme to help those with less CPF savings to save more. This scheme will run from 2020 to 2025.
Under the scheme, the Government will match every dollar of cash top-up made to their CPF Retirement Account, up to an annual cap of $600.
All lower- to middle-income Singaporeans aged 55 to 70 who have not been able to set aside their Basic Retirement Sum will be eligible, which translates to about 435,000 Singaporeans.
