High business, parenting costs among MPs’ top concerns on first day of Budget debate

CONCERNS over rising costs – whether for businesses or families – were a recurring theme on the first day of debate on Budget 2023, as Members of Parliament (MPs) suggested ways to mitigate this impact.

But even as some called for more aid, others argued for fiscal prudence amid an uncertain external environment, or emphasised that Singapore must stay competitive to achieve growth.

The debate on the government’s latest fiscal plan began on Wednesday (Feb 22), with 27 MPs speaking on issues ranging from Central Provident Fund (CPF) contributions to the need for upskilling.

Noting that business costs have risen and are likely to keep doing so, some MPs wanted more help for small- and medium-sized enterprises (SMEs) to offset high operating costs, as well as enhanced productivity and digitalisation initiatives.

The government could offer loans with lower interest rates, and review the eligibility for grants – such as the Productivity Solutions Grant – to allow more SMEs to qualify, said Marine Parade Group Representation Constituency (GRC) MP Seah Kian Peng.

To incentivise employers to train workers, the government could make upskilling a compulsory component in evaluating a company’s eligibility for tax relief, and provide complementary training grants, he added.

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Jurong GRC’s Xie Yao Quan wanted rental rates of government-owned and -managed commercial properties, including heartland coffeeshops, to be kept in check – which would also help keep meal prices steady.

Among the announcements in Budget 2023, the impending increase of the CPF salary ceiling drew both concern and calls to do more.

Some businesses – especially smaller firms – worry that the move will add to their cost pressures, noted Bukit Panjang MP Liang Eng Hwa and Bishan-Toa Payoh GRC’s Saktiandi Supaat.

Liang asked if the policy implementation’s timing could be reconsidered. The ceiling is to be raised in four steps from S$6,000 to S$8,000 by 2026.

If the aim is to boost the retirement savings of workers, perhaps the allocation ratio could be tweaked instead, such that a greater share of funds go into the higher-interest-bearing special account, suggested Saktiandi, as well Workers’ Party (WP) chief Pritam Singh.

Another Budget announcement was that platform workers’ CPF contribution rates would be aligned with those of regular employees. Saktiandi asked if this could be extended to other groups – such as self-employed persons, who currently only have to contribute a percentage of their net trade income to Medisave.

Another key concern was the rising cost of living amid high inflation – including the cost of raising children. Several MPs wondered if changing the Working Mothers Child Relief (WMCR) to a fixed dollar amount would discourage some middle-income women from having children, as the amount of relief they can claim will fall.

Calling the move “highly ironic and self-contradictory”, WP MP Louis Chua questioned whether it “truly seeks to reward families with children and encourage married women to remain in the workforce after having children”, estimating that only 20 per cent of mothers will receive more with the change.

He suggested a motherhood tax rebate instead, for the lower- to middle-income working mothers whom the change is meant to benefit.

East Coast GRC MP Jessica Tan suggested a hybrid approach: working mothers earning less than S$54,000 a year can claim a fixed amount, while those who earn more can stay on the current system, where WMCR is a share of earned income.

As Singapore’s social spending needs grow, some opposition MPs argued for other sources of revenue.

WP’s Chua suggested re-introducing the tax on a property’s net annual value, which was removed from the Year of Assessment 2010. The annual value threshold can be set at a high bar, so this functions as a wealth tax, he added.

Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai argued that while “it is not wrong, as a fiscal principle, to spread the tax burden as widely as possible”, middle-class Singaporeans are “already over-taxed relative to their income”.

He called for a reversal of the goods and services tax hike and criticised new hikes to taxes on high-end properties and luxury cars, proposing that these be further limited to houses worth more than S$3 million and cars with an open market value of more than S$60,000.

Laying out PSP’s “alternative Budget”, Leong wanted the returns from Singapore’s invested reserves to be used “more proactively” to benefit the low- and middle-income.

In contrast, MacPherson MP Tin Pei Ling called for greater fiscal prudence, adding that Singapore may need the “financial muscle” should another major crisis hit. She asked if the government, having drawn from the past reserves during the pandemic, could now commit to returning the funds at the earliest opportunity, or in phases.

Meanwhile, West Coast MP Foo Mee Har argued that “redistribution is only possible if the economy continues to grow”. The city-state must therefore continue to stay competitive and relevant so that the “benefits of the growing pie … can be shared with those who need it most”.

She questioned whether Budget moves – such as the S$4 billion top-up of the National Productivity Fund and a new scheme with tax deductions for innovation – “will be sufficient to attract business investment into Singapore”.

With upskilling the workforce being a key aspect of competitiveness, some MPs raised questions about the new “jobs-skills integrators” that will be appointed to optimise training and job placement.

East Coast GRC’s Tan asked which organisations can qualify to be a jobs-skills integrator, what support they will receive, and how they will be funded.

Her fellow GRC MP Cheryl Chan asked how far the current continuous education training curriculum and Industry Transformation Maps – which similarly seek to retrain and place workers – are “pushing the boundaries”.

Nominated MP Raj Joshua Thomas suggested that trusted trade associations and chambers (TACs) be appointed to run such schemes. This was one of several suggestions he had for strengthening TACs, alongside more support for secretariat headcount to execute more ambitious plans.