As part of Budget 2023, everyone received a Valentine’s Day present from the Singapore government.
Deputy Prime Minister and Finance Minister Lawrence Wong announced on Tuesday (Feb 14) a series of measures that would provide comprehensive help to all Singaporeans, including first-time home buyers, seniors, parents-to-be, people with disabilities, and small and medium-sized enterprises (SMEs).
During the budget announcement, I anticipated “tough love” from the government, with firm indications of temporary inflation relief measures. Rather than giving handouts continuously, a government should strive to maintain a dynamic economy. Even though a top-up to the Assurance Package was expected, the magnitude of the top-up – bringing the package to S$9.6 billion – appeared generous, but it came with the caveat not to expect it every year.
As a result, we are now getting more equitable taxes, with higher taxes on luxury cars, tobacco, and high-end properties – the so-called wealth taxes are back, but they are more of a Robin Hood-style tax. Budgetary balance and priority-setting were key. The budget’s expenditures and special transfers total nearly S$124 billion, making it the largest outside of the pandemic.
The focus on households is not a bad thing, especially since inflation is a big challenge at this juncture and there is no guarantee that the current brutal inflation streak will ease significantly anytime soon. Singaporeans and their families will receive much-needed relief immediately from GST and CDC voucher schemes, as well as other one-off payments.
It is also important to invest in areas such as addressing the needs of an aging population, improving infrastructure, and enhancing Singapore’s competitiveness.
It’s about upskilling our workforce and building up local capabilities at the end of the day. In a new era of fragmented global economic landscapes where major powers compete more fiercely, this will make Singapore’s economy more resilient in the medium to long term.
Among the areas that Budget 2023 did not address were transition support for the unemployed and manpower squeeze, including foreign manpower policy, especially since the hospitality and food and beverage industries are gearing up for the return of international visitors with China’s reopening. There is still the question of where the workers are going to come from, or whether companies will outbid one another for them.
I am optimistic following the announcement of Budget 2023. The COVID-19 pandemic has been difficult for the economy and Singaporeans, but we have emerged stronger from it.
The right fiscal balance between short- and medium-term priorities will keep Singapore competitive and resilient. If global and domestic growth surprises on the upside this year, we may even see a small surplus in FY2023.