What should we expect to see in Budget 2019?
Budget 2019 will be delivered on Monday, 18th February - which is 4 days from now.
What do we expect to see in the Budget 2019?
Focus on skills
In the 1980s through 1990s, increased female labour force participation allowed Singapore’s productive capacity to increase, bringing about sustained growth. From 1990s through 2011, growth in foreign labour force did the same.
Since 2011, we’ve tightened on our foreign immigration policy and pushed for a significantly moderated growth in the foreign labour force. This however means that potential growth would have to depend on increases in labour productivity / automation / use of technology.
It is however not easy, to push for an increase in labour productivity as this means costly investments in workers upgrading / re-skilling / re-training which may not definitely bear fruit.
In Budget 2019, we expect that there will be a continued emphasis on skills upgrading.
At present, efforts has been made in many ways to breed the mindset of ‘live-long learning’. Courses across tertiary educations have now been opened up to working adults who can now take part time courses. It is perhaps however worth tweaking the SkillsFuture credit scheme of $500 per adult Singaporean to something more substantial. Instead of a blanket “$500” provided to every single adult Singaporean, perhaps provide subsidy on a need-based approach, e.g. close to full subsidy for ‘risky’ industries where jobs may be slashed.
Dealing with weaker growth & possibility of economic downturn
It has been 10 years since the Global Financial Crisis of 2008 and the last time Singapore was in a recession was 2009. We are approaching the end of the trade cycle and a downturn seems inevitable.
The trade war between U.S. & China is likely to affect global economic growth - and there does not appear to be any immediate resolution to the issue. Exports have recently declined, as have our balance of payments.
While there is no immediate urgency to deal with a downturn there is not here yet, we should hope that Budget 2019 provides for some form of ‘fiscal stimulus’ through announced new infrastructural projects that should provide a domestic boost to spending in the event that trade continues to dampen.
Social policies and addressing income inequity
Given increasingly the odds that this could be an ‘election year’ - we would be expecting social policies to provide different types of transfer payments to select groups of the population & to the entire population at large. What has already been announced is that there will be a “Merdeka Generation Package” which we would expect to provide similar perks as seen in the Pioneer Generation Package but perhaps to a smaller monetary scale.
What such mentioned policies would indirectly do - would also be to reduce income inequity in Singapore.
This year’s budget would likely have similar focus as previous years - which is primarily on skills growth, but with also provisions for an ‘election’ budget as well as some form of preparation for a potential economic downturn!