SDP’s response to Budget 2013

February 26, 2013
Singapore Democrats

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Singapore Democrats

While the 2013 Budget attempts toaddress systemic problems that ail the nation, it continues to fallshort, as with past Budgets, of addressing what Singapore reallyneeds.$CUT$

The SDP welcomes Finance MinisterTharman Shanmugaratnam’s acknowledgment of the income disparity inSingapore and his effort to tackle the problem through the WageCredit Scheme (WCS). We note, however, that the Scheme is similar tothe Workfare Income Scheme (WIS) in that it pays out to employers toraise wages of workers.

The WIS has shown not to be helpful inachieving its objectives as income inequality in Singapore continuesto widen despite it having been in effect since 2007. The Ginicoefficient has risen in the last few years and continued to worsenin 2012 (from0.473 in 2011 to 0.478 in 2012).

Without addressing the root cause ofthe income gap in Singapore, which is the continued downward pressureon wages brought about by the importation of lower-waged foreignlabour, the WCS will not be an effective remedy. Such a piecemealeffort is inadequate in addressing a deep-seated problem which canonly be addressed by the introduction of a minimum wage law which theGovernment continues to resist.

It is also instructive that WCS will beavailable for three years, covering the period till the next generalelections. This raises the suspicion that the initiative is aimed atshoring up the PAP’s political support.

The SDP also welcomes the FinanceMinister’s attempt to control the inflow of migrant workers byraising the foreign workers levy for 2014 and 2015. This isconsistent with the previous Budget.

However, the fact the Governmentintends to continue to increase the intake of foreign workers by anaverage of 100,000 per year until 6 million in 2020 as announced inits recently published White Paper, the increase in the levy serveslittle purpose. Against such a backdrop, raising the levy onlyincreases the cost of doing business without affecting our dependenceon foreign workers.

If the Government is sincere aboutnarrowing the income gap, it should rethink its policy of importingmore foreign workers and introduce minimum wage.

Finally, it is heartening to note thatthe Budget will increase funding of Eldercare, a programme which theSDP supports.

The topping up of Medifund from $1billion to $4 billion, however, remains a case of throwing good moneyafter bad. The 3M-system of Medisave, Medishield and Medifund isunwieldy and opaque. It has shown to be inadequate to take care ofthe healthcare needs of the nation. Tweaking the amount for Medifunddoes not make our healthcare system affordable.

Instead, the 3Ms should be replaced bya single-payer system with the Government raising its healthcareexpenditure from the current 30 percent to the international norm ofabout 70 percent.

The SDP will address the 2013 Budget’sshortcomings in our Shadow Budget and propose an alternative and moreefficient way of prioritizing our nation’s expenditure estimates.

Vincent Wijeysingha
Treasurer
Singapore Democratic Party