A potential end-of-term Budget with something for everyone

IN THE run-up to any given general election (GE) – Singapore’s next one is due by November 2025 – almost every Budget might look like an election Budget, to suitably paranoid eyes.

Yet from both an objective fiscal perspective and a more subjective reading of its announcements and schemes, Budget 2024 certainly seems to facilitate – if not indicate – a GE being called before Budget 2025 rolls around.

Firstly, on the fiscal front, an end-of-term Budget is informed by the need for the government to balance the Budget over its full term.

Such a Budget therefore has to make up for deficits in earlier years of the term – or, if there is a cumulative surplus over the term to date, can afford to be a bit more generous.

Prior to Budget 2024, the fiscal position in this term of government was already looking fairly balanced. Following the last GE in 2020, the first two Budgets of this government’s term had planned deficits, but ended up in surplus: S$1.88 billion for FY2021 and S$1.72 billion in FY2022. Conveniently, these combined surpluses would come close to covering the revised S$3.6 billion deficit for FY2023.

Helping this along is FY2024’s planned S$800 million surplus, which Finance Minister Lawrence Wong described as “essentially a balanced fiscal position”.

This continued fiscal balance ensures that if the government term ends before Budget 2025, it will meet the constitutional requirement to balance it across its term.

This does not necessarily mean that the government will choose to do so, of course. But crucially, it enables that choice to be made, in a way that an overly-generous deficit-running Budget would not.

Secondly, conspicuous and wide-ranging generosity often results in the label of an “election Budget”. On this front, Budget 2024 would comfortably earn such a label.

Most tellingly, it contains several elements of broad-based, non-means-tested support.

There is a blanket personal income tax rebate of 50 per cent for the Year of Assessment 2024. This is capped at S$200 “so that the benefits go mostly to our middle-income workers”, noted Wong – but that does not remove the fact that Singapore’s highest earners will still be getting this S$200 treat.

Every Singapore household will get S$600 more in Community Development Council Vouchers, as part of a S$1.9 billion top-up to the Assurance Package – even high-income households for whom this sum is likely to go towards discretionary spending rather than inflation-hit necessities.

All Singaporeans aged 40 and above will get a mid-career S$4,000 SkillsFuture Credit, even if they can well afford to fund their own personal development.

And even as the Majulah Package includes a MediSave Bonus for Singaporeans born in 1973 or earlier – who may need the boost for retirement adequacy – a similar Medisave Bonus will be provided to all adult Singaporeans aged between 21 and 50.

Property tax bands are also being revised, such that property owners will pay less at any given annual value band up to S$140,000.

Granted, this move is being made to keep up with market trends, as annual values have been rising sharply since 2022. But it may still have the happy effect of mollifying better-off property owners who have been feeling hard done by, given the government’s approach of increasing property taxes as a way of taxing wealth.

Some cold-eyed market observers have already come to the conclusion that Budget 2024 sweetens the ground for an impending election.

In a note released within an hour of Wong ending his speech, S&P Global Market Intelligence noted that Budget 2024 focuses “on jobs and cost of living as (the) general election approaches”.

Its emphasis on employment and cost-of-living issues “signals an attempt to address voters’ concerns ahead of the next general election”, it added.

Of course, in the spirit of progressivity and providing help where it is needed most, Budget 2024 contains many more examples of targeted assistance.

The Assurance Package enhancements include a means-tested, one-off cost-of-living special payment, restricted to resident Singaporeans aged 21 and above with no more than S$100,000 in assessable income, and who do not own more than one property.

There are also specific schemes or enhancements for groups such as lower-income workers, lower-income families and people with disabilities.

And in a break with decades of suspicion about the very concept of unemployment support, Singapore will finally be introducing temporary financial support for the involuntarily unemployed – though the details are still being worked out, in the continued spirit of caution.

Through a jaundiced lens, all of the above could be interpreted as part of the “something for everyone” largesse that suffuses election budgets. But even under a less-cynical view, this caring and compassionate generosity is still firmly in line with expectations for an impending election.

This is because Budget 2024 also represents “the first instalment of our Forward Singapore programmes”, as Wong put it.

Forward Singapore is the flagship agenda of the fourth-generation People’s Action Party (PAP) leadership. It will undoubtedly inform the PAP’s next election manifesto, too.

Making Budget 2024 the first of the Forward Singapore Budgets, so to speak, cements the sense that this is a year of transition. Prime Minister Lee Hsien Loong has already indicated his intention to hand over the reins of the country to Wong by this November.

The next GE will be a test – not just of Wong as the new prime minister and his team as the next-generation leadership, but also of the Forward Singapore agenda that was laid out in last October’s report and given concrete policy form in Budget 2024.