Every year, the Budget is an arithmetic puzzle. Even financial professionals like me have problems piecing everything together because you have to go beyond the smoke screen and look for the detailed data, which are often incomplete.
However, I do get a sense of the overall picture and I am going to share my understanding here.
1. The ST’s headline of $𝟭𝟬𝟳𝗕 plan refers to the total expenditure, which comprises of $𝟴𝟮𝗕 of operating expenditure to run the government, $𝟮𝟬𝗕 of development expenditure and $𝟱𝗕 of financial transfers to help Singaporeans.
2. As the 𝘁𝗼𝘁𝗮𝗹 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗿𝗲𝘃𝗲𝗻𝘂𝗲 is estimated to be $𝟳𝟲𝗕 ($2B higher than pre-Covid level in 2019), the 𝗯𝗮𝘀𝗶𝗰 𝗯𝘂𝗱𝗴𝗲𝘁 𝗱𝗲𝗳𝗶𝗰𝗶𝘁 is the difference between $76B (Revenue) and $107B (Expenditure) which is $𝟯𝟭𝗕.
3. It is the Government’s policy to use only half of the investment returns for spending every year so that the other half is retained in the reserves. The 𝗵𝗮𝗹𝗳 𝘂𝘀𝗲𝗱 in the budget is called the Net Investment Return Contribution (𝗡𝗜𝗥𝗖).
4. Including the NIRC from our $𝟭.𝟯𝟱𝗧 in financial assets which is $𝟭𝟵.𝟲𝗕 (meaning our Net Investment Return for 2021 is estimated to be $𝟯𝟵.𝟮𝗕), the overall budget deficit becomes smaller by reducing the shortfall of $31B (Deficit) by $19.6B (NIRC) which gives a 𝗳𝗶𝗻𝗮𝗹 𝗱𝗲𝗳𝗶𝗰𝗶𝘁 of about $𝟭𝟭𝗕.
5. If 𝟭𝟬𝟬% of the Net Investment Return (𝗡𝗜𝗥) of $𝟯𝟵.𝟮𝗕 is used, there will actually be 𝗻𝗼 𝗱𝗲𝗳𝗶𝗰𝗶𝘁 in 2021. So the NIR provides a very strong financial base for us. Even the $𝟱𝟮𝗕 drawdown to fight the Covid-19 only equals to about 𝗼𝗻𝗲 𝗮𝗻𝗱 𝗮 𝗵𝗮𝗹𝗳 𝘆𝗲𝗮𝗿𝘀 of our investment returns. There is little damage done to our overall financial reserves and position even when we are fighting the worst crisis of a lifetime to date.
6. Needless to say, we are not encouraging reckless spending but are raising awareness that we do have the resources to help our Singaporeans do better. So let’s see how much of the 2021 Budget is additional help for Singaporeans. The direct benefits to qualifying Singaporeans are as follows:
Job Support Scheme $2.9B
SG United Jobs and Skills Package, SG Growth Initiative $1.5B
Covid-19 Recovery Grant $0.4B
SingapoRediscover Vouchers $0.2B
Household Support Package (GST voucher special etc.) $0.9B
7. Overall, Budget 2021 has touched on the right pressure points especially in the continuing effort to help Singaporeans upgrade to participate in our economic transformation through research, innovation and enterprise (RIE), tide over Covid-19 via the additional household support, and the enhanced focus on sustainability.
8. However, many of the key budget measures are short term, ad-hoc payouts which do not tackle the root cause of the problem. Middle-class Singaporeans continue to feel stressed because the rising housing, healthcare, education costs are still there.
9. Further, the measures for economic transformation are from the old mold which had proven to be not successful despite having spent about $𝟴𝟬𝗕 on economic transformation mainly through A*Star and Enterprise Singapore in the past two decades, a sum that is far greater than the Covid-19’s drawdown. More of the same may still not work.
10. I will comment further on these points in my speech during the Budget Debate from 24-26 Feb 2021.