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 STโs headline of $๐ญ๐ฌ๐ณ๐ plan refers to the total expenditure, which comprises of $๐ด๐ฎ๐ of operating expenditure to run the government, $๐ฎ๐ฌ๐ of development expenditure and $๐ฑ๐ of financial transfers to help Singaporeans.
2. As the ๐๐ผ๐๐ฎ๐น ๐ผ๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ป๐ด ๐ฟ๐ฒ๐๐ฒ๐ป๐๐ฒ is estimated to be $๐ณ๐ฒ๐ ($2B higher than pre-Covid level in 2019), the ๐ฏ๐ฎ๐๐ถ๐ฐ ๐ฏ๐๐ฑ๐ด๐ฒ๐ ๐ฑ๐ฒ๐ณ๐ถ๐ฐ๐ถ๐ is the difference between $76B (Revenue) and $107B (Expenditure) which is $๐ฏ๐ญ๐.
3. It is the Governmentโs policy to use only half of the investment returns for spending every year so that the other half is retained in the reserves. The ๐ต๐ฎ๐น๐ณ ๐๐๐ฒ๐ฑ in the budget is called the Net Investment Return Contribution (๐ก๐๐ฅ๐).
4. Including the NIRC from our $๐ญ.๐ฏ๐ฑ๐ง in financial assets which is $๐ญ๐ต.๐ฒ๐ (meaning our Net Investment Return for 2021 is estimated to be $๐ฏ๐ต.๐ฎ๐), the overall budget deficit becomes smaller by reducing the shortfall of $31B (Deficit) by $19.6B (NIRC) which gives a ๐ณ๐ถ๐ป๐ฎ๐น ๐ฑ๐ฒ๐ณ๐ถ๐ฐ๐ถ๐ of about $๐ญ๐ญ๐.
5. If ๐ญ๐ฌ๐ฌ% of the Net Investment Return (๐ก๐๐ฅ) of $๐ฏ๐ต.๐ฎ๐ is used, there will actually be ๐ป๐ผ ๐ฑ๐ฒ๐ณ๐ถ๐ฐ๐ถ๐ in 2021. So the NIR provides a very strong financial base for us. Even the $๐ฑ๐ฎ๐ drawdown to fight the Covid-19 only equals to about ๐ผ๐ป๐ฒ ๐ฎ๐ป๐ฑ ๐ฎ ๐ต๐ฎ๐น๐ณ ๐๐ฒ๐ฎ๐ฟ๐ 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 letโs 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
๐๐ค๐ฉ๐๐ก $๐ฑ.๐ต๐
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 $๐ด๐ฌ๐ on economic transformation mainly through A*Star and Enterprise Singapore in the past two decades, a sum that is far greater than the Covid-19โs 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.
