As we all know, Budget 2024 came out a few days ago.
There have been many burning questions after Deputy Prime Minister and Finance Minister Lawrence Wong’s Budget 2024 speech on 16 February.
Mr Wong answered everything in a 47-minute Q&A titled “Ask the Finance Minister 2024”.
He sat down with host Steven Chia and panellists May Leena Krishnan, Jeevan Ananthan, Pauline Tay and Abdul Samad Abdul Wahab.
Ms Krishnan and Mr Ananthan are entrepreneurs who run a coffeeshop, while Prof Tay is a professor of sociology at Singapore Management University (SMU).
As for Mr Samad, he is the vice president of NTUC.
Not everyone has 47 minutes to listen to a video, so here’s a handy summary.
Preschool Concerns
Ms Krishnan noted that Budget 2024 announced that the government would reduce preschool fees to make them more affordable and comparable with primary school fees.
However, fees under the Anchor Operator (AOP) scheme are $640, while fees under the Partner Operator Scheme are $690.
The fees starkly contrast with primary school fees, which are $13 per term.
Thus, she wondered how the government would reconcile the different figures.
Mr Wong clarified that in his speech, he said that preschool fees would become comparable to primary school and after-school care, which comes up to about $300.
Mr Ananthan queried about the number of preschool vacancies, adding that there wasn’t enough for the demand.
He noted that nowadays, parents must apply for preschools one or two years in advance to secure their child’s place.
Providing him and Ms Krishnan’s shared experience in finding a childcare centre for their daughter, he explained that the couple applied ten months in advance for a childcare centre, only to be informed that the school had no vacancy.
In 2021, Singapore could accommodate at least 234,079 children across infant care, childcare and preschool services.
However, about 20% of the slots were not taken up.
In 2022, it was reported that parents in Punggol were having difficulty securing a slot for their child in a preschool near their homes.
On the other hand, a preschool in Tiong Bahru was less than half-filled, even though it had more than 100 vacancies.
Mr Wong acknowledged the lack of vacancies, especially for preschools in young estates with many young parents.
Thus, the government is implementing more centres.
This process takes time, but Mr Wong reassured the couple that the government is “ramping up the supply”.
He added that one constraint is getting enough teachers.
In response, the government is ramping up the training as well.
Ms Krishnan then asked if the government had any plans to have bigger preschools comparable to the size of a primary school.
Mr Wong noted that Singapore already has large-scale centres in Punggol and Woodlands.
Furthermore, Singaporeans can expect to see more of such centres soon, as the government is building more of them.
He added that the lack of vacancies in such institutions is location-specific, and not all estates have the same demand for preschool services.
On Lower-income Households
Mr Samad acknowledged that the Welfare Income Supplement scheme increased from $2,500 to $3,000.
However, he questioned why this increment is tied to overtime work.
Prof Tay added that Singaporeans will appreciate the gifts they’ll get this year.
You know, “angbaos” like CDC vouchers?
Thanks gahmen!
However, she wondered about the sustainability of such initiatives.
Furthermore, though income inequality is concerning, other inequalities may not require government assistance.
Thus, she called for the help of non-government organisations like philanthropies to fill the gap and help create communities with high social capital.
Basically, she highlighted the importance of revitalising the kampung spirit in Singapore, where neighbours can rely on one another.
Mr Wong acknowledged the importance of sustainable monetary initiatives.
In his view, the best way to ensure that would be to “maintain the current level of fiscal discipline and responsibility” in the government’s policies.
He added that another way to ensure sustainability would be to design schemes that do not lead to unintended consequences.
He noted the importance of maintaining resilience at individual and family levels.
He agreed that other organisations can also play a part, which is why the government is encouraging high-net-worth individuals to “adopt” a rental block or lower-income families.
Essentially, Budget 2024 aims to encourage a giving mindset.
He noted that help doesn’t always have to be financial, but can also be done through social initiatives like befriending and mentoring.
Families in Singapore
Mr Wong added that Budget 2024 focused on other aspects of families in Singapore.
One such initiative is making housing more affordable for young couples by providing vouchers they can use to rent a flat before getting a Build-to-Order (BTO) flat.
This year, there’s also a focus on healthcare for seniors and retirement needs.
I mean, who doesn’t want to retire in peace?
Singapore’s Ageing Population
Prof Tay suggested that members of society above 65 should not be seen as “dormant”.
After all, with their wealth of experience, there’s a lot they can do for the community.
She suggested building infrastructure to facilitate social interaction and provide opportunities for older adults to volunteer.
Mr Wong acknowledged that life spans are increasing and that staying connected and engaged is the secret to a healthy life.
Thus, Healthier SG exists to push more on preventative health.
Furthermore, Age Well SG ensures seniors are socially connected and engaged after retirement.
Notably, Singapore is an ageing society.
By 2030, it is expected that one in four citizens will be aged 65 and above.
Thus, government initiatives need to cater to this growing demographic.
Changes to CPF
If you didn’t already know, Budget 2024 announced some adjustments to the Central Provident Fund (CPF) system.
The CPF contribution rates for workers aged 55 to 65 would be raised by 1.5% in 2025.
More importantly, CPF members above 55 would have their Special Accounts closed.
The savings in their Special Accounts would be transferred to their Retirement Account up to the Full Retirement Sum to enable individuals to earn the long-term interest rate.
The remaining savings beyond the Full Retirement Sum would be transferred to the Ordinary Account.
Of course, this shift caused people to talk.
So, what does Mr Wong have to say about Singaporean’s concerns?
Mr Wong explained that the shifts are aligned with the purpose of CPF, which is to secure Singaporean’s retirement.
The new move allows the accounts of those aged 55 and above to be streamlined into a singular one for the long term.
He assured Singaporeans that the new shift would allow them to earn the same interest rate as the Special Account.
This means that most Singaporeans would get more CPF payouts for life.
Thus, the move would give Singaporeans more moolah to enjoy their retirement.
Businesses in Singapore
Mr Ananthan and Ms Krishnan acknowledged that the corporate tax rebate would help businesses.
In addition, the Progressive Wage Credit Scheme (PWCS) would help low-wage workers.
PWCS is a scheme where the government co-funds wage increases of lower-wage workers with employers.
Mr Wong said that the government wants to help local businesses with expansion plans.
He also hoped that the government could help more businesses expand overseas.
However, he noted that some schemes, like Partnership for Capability Transformation (PACT), may only apply to some companies.
For instance, PACT only applies to local companies that supply to a multinational corporation (MNC).
However, companies that are eligible under PACT can expand rapidly.
Mr Wong assured that companies who don’t qualify for PACT can still look out for other schemes to help them scale up.
Mr Ananthan also asked about ways to change Singaporean’s mindset about doing certain jobs.
Jobs he referred to include working in spaces like coffeeshops.
According to the Singapore Labour Force Survey in 2022, Singapore is facing a scarcity of tradespeople.
The number of resident employees in such trades has fallen by 40% to 50% over the last decade.
Mr Wong acknowledged that it is “not easy” to convince local workers, especially young Singaporeans, to work in such industries.
Though salary is essential, a meaningful career is also crucial to finding contentment in life.
Therefore, Mr Wong hoped that continued efforts to improve salary prospects, careers and the recognition of workers in such areas would shift societal mindsets over time.
Rising Costs in F&B
Referencing that the cost of staffing and utilities are rising in the F&B industry, Ms Krishnan asked about the future of the industry in terms of prices.
She was especially concerned since it is an industry where prices are expected to be low.
One Channel News Asia article from 2023 suggested that Singaporeans see F&B establishments like hawker centres as a social good, which is why prices of meals are expected to be low.
However, the article reported that hawkers have difficulty maintaining such expectations with rising operation costs.
Mr Wong noted that manpower in Singapore will always be a challenge since it is a small country.
Furthermore, as businesses are growing and there are vacancies to be filled, individuals can choose where they want to work.
Thus, he highlighted the importance of industries like F&B to adapt to automation and find new ways to improve productivity.
Moreover, some grants enable F&B operators to do so.
SkillsFuture Level-Up Programme
The programme sounds like getting a superpower in a video game, which sums up what it is in reality.
All Singaporeans over 40 will receive a top-up of $4,000 worth of SkillsFuture credits from May 2024.
It’s raining money, and it all goes to your upscaling.
During the Q&A, Mr Wong said that the initiative’s purpose was to help people in an economy with accelerating technological advances to upscale their capabilities.
Although some job roles may become obsolete, new jobs will be created.
Thus, those in the middle of their careers must boost their skills.
Mr Samad suggested the possibility of employers being reluctant to let their workers upscale, even though it is beneficial for the company in the long run.
After all, Rome wasn’t built in a day, and workers definitely cannot learn a new skill without having the time to do so.
In response, Mr Wong said that shifting employer’s mindsets is important.
Thus, the government will continue to work closely with different industries and support employers.
He hoped that more employers would join the government in normalising upscaling.
However, Mr Wong added that people would gravitate towards progressive employers.
He thus hopes that the market pressure will eventually change the mindsets of employers who may be reluctant to do so.
Rethinking Work and Productivity
In an ageing society, Prof Tay noted the importance of redesigning jobs to fit the population demographic.
While innovation may help businesses, it may not be the final solution.
Mr Wong conceded that even when the overall economy is doing well, it doesn’t mean that growth in every industry is equal.
Furthermore, some industries, like hawkers and coffeeshops, perform more than an economic role.
In the case of such industries, they often perform a social role as well and serve as a place of shared memories.
Thus, the government will continue supporting such industries in ways other than grants.
For instance, CDC couchers can be used in participating heartland shops, including hawker centres.
Although the average starting pay of students from the Institute of Technical Education (ITE) has increased by $570, they still earn half of what their tertiary counterparts do.
During Budget 2024, it was announced that more funding would go to supporting ITE graduates.
They will get $15,000 in top-ups when enrolling in and completing a diploma programme.
Prof Tay noted the importance of this move.
However, she questioned if polytechnics are ready to accept ITE graduates, especially since they’re older.
The government has a history of providing vast resources for ITE’s development.
However, some stereotypes of ITE graduates remain, including negative ones like lacking discipline and having low self-esteem.
Prof Tay pointed out that inserting ITE graduates into existing polytechnic classes may limit their success.
Thus, Singapore must accept older students and develop a new curriculum to cater to their needs.
In Mr Wong’s opinion, Institutes of Higher Learning (IHLs) are adapting.
He added that he is confident that IHLs will be willing to accept adult learners.
Furthermore, the range of courses offered is now much higher.
For instance, ITE offers its own technical diplomas and work-study diplomas.
ITE also works with a “growing pool” of companies so students can work and study simultaneously.
Mr Samad pointed out that employers must also accept ITE graduates for the new initiatives to succeed.
He added that if everyone gets a university degree, the vacuum in specialised trade industries may widen.
Mr Wong clarified that the purpose of encouraging ITE students to get a diploma is to deepen their skill sets.
For instance, you could study to be a lift technician in ITE, then go to a polytechnic to study the same area.
