WARNING against over-reliance on short-term handouts, Members of Parliament (MPs) instead focused on longer-term moves to support Singapore’s competitiveness during the first day of debate on Budget 2024.

The debate on the government’s latest fiscal plan began on Monday (Feb 26), with 29 MPs making suggestions such as “multi-tiered” financial support for retrenched workers and subsidies for part-time diplomas.

While welcoming the range of help offered in Budget 2024, some MPs questioned the sustainability of handouts such as the S$1.9 billion in enhancements to the Assurance Package.

“We must be very careful to calibrate handouts to ensure these are sustainable, as people may grow to rely on them over time, and it may become a challenge to wean them off expectations of such broad-based support in the future,” said West Coast MP Foo Mee Har.

Foo cautioned that such cost-of-living support may also add to demand and, in turn, fuel rather than cool inflation.

Progress Singapore Party (PSP) Non-Constituency MP (NCMP) Hazel Poa warned against a situation where the bulk of the population relies on handouts such as GST Vouchers.

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Instead of a “patchwork scheme of vouchers, rebates and top-ups”, the government should make systemic reforms, said fellow PSP NCMP Leong Mun Wai, who proposed a “permanent scheme approach” including a minimum living wage.

Instead of broad-based handouts, help should go to the most needy, said Workers’ Party (WP) MP Louis Chua. For instance, instead of Budget 2024’s one-off personal income tax rebate, he suggested raising the bottom marginal rate and increasing the tax-free threshold for chargeable income, to reflect inflation over time.

Meanwhile, noting calls to dip into the reserves to fund handouts and subsidies, People’s Action Party MP Gan Thiam Poh urged prudence in using the reserves.

On the broader issue of fiscal sustainability, Jalan Besar MP Denise Phua said the government must find innovative ways to sustain its growing expenditure.

More resources could be channelled to Temasek and sovereign wealth fund GIC to increase the net investment returns contribution to public coffers, and more public-private-people partnerships could be undertaken “for more innovative and flexible funding”, she said.

Helping older workers retrain

Rather than relying on short-term handouts, Singapore must improve its competitiveness and focus on growth so that both workers and businesses can continue to thrive, said MPs.

To that end, they had further suggestions for the new SkillsFuture Level-Up programme. Meant for Singaporeans aged 40 and above, it includes a S$4,000 SkillsFuture Credit top-up to be used on courses with better employability outcomes.

Leader of the Opposition Pritam Singh called the move “a good step” but noted that many eligible courses may cost more than the top-up. The WP chief renewed calls for an interest-free SkillsFuture education loan for courses in high-growth industries lacking Singaporean manpower, or other economically important areas.

PSP’s Leong suggested enhancing the Skills Development Fund, which provides course fee subsidies and absentee roll funding to companies.

Under the programme, mid-career Singaporeans will also receive full government subsidies for a second full-time diploma. To encourage take-up, Ang Mo Kio GRC MP Darryl David proposed extending this to part-time diplomas, so participants can work while retraining.

Also concerned about take-up was Bishan-Toa Payoh MP Saktiandi Supaat, who asked how likely it is that upper-middle income workers will make use of the changes. He asked for data on SkillsFuture Credit use by income decile.

“We must also ensure that schemes like SkillsFuture are not abused,” he said, citing a syndicate which defrauded SkillsFuture Singapore of S$40 million.

Given that diplomas and degrees are government-funded, WP MP Gerald Giam asked whether there is data showing that these have better employability outcomes – and if so, whether this is due to the skills learned or employers preferring paper qualifications.

Skills can also be gained through apprenticeships, he said, suggesting that these be subsidised too.

Retirement adequacy, unemployment support

Apart from retraining, retirement adequacy and retrenchment are also issues for older workers, noted MPs. Several raised concerns about the closure of the Central Provident Fund Special Account for those aged 55 and above.

As for temporary support for retrenched workers, MPs wanted more details, including a timeline. Details on the scheme were originally expected in the Budget speech, but Wong said then that the details are still being ironed out.

Noting that layoffs are increasingly common, NCMP Poa said: “Any delay in the implementation of this scheme has real consequences on the retrenched employees.”

Kebun Baru MP Henry Kwek proposed a “multi-tier” approach, which includes a basic payout but also other aspects such as freezing housing loans, healthcare and insurance premiums.

But here, too, Saktiandi warned about potential pitfalls: “We will need more details to scrutinise if the scheme can be implemented without eroding our work ethic, and design ways to mitigate the moral hazard of ‘financing unproductivity’.”

Beyond support for individuals, MPs suggested that Singapore’s small and medium-sized enterprises could get more help with manpower shortages.

West Coast MP Ang Wei Neng called for the government to “maintain and not tighten” the foreign worker quota and levy in sectors “that are not favoured by Singaporeans” for the next three years, and have a “more moderate” hike in the S Pass minimum salary.

Mountbatten MP Lim Biow Chuan called for a review of the dependency ratio ceiling – the maximum share of S Pass and Work Permit holders in a company – in “areas where we are quite certain that Singaporeans will not want to work”.

“This will help businesses survive and help keep the costs of labour more manageable,” he added.