Budget 2023 debate: Redistributing wealth is a must to avoid emergence of 'two Singapores', says Pritam

SINGAPORE – Redistribution must be at the core of government policies to avoid the risk of the country being divided into two – one Singapore for the highest earners, and another for the majority of Singaporeans where social mobility is hard to come by, said Leader of the Opposition Pritam Singh.

Speaking during the Budget debate on Wednesday, the Workers’ Party (WP) chief noted that some commentators had described Budget 2023 as a “Robin Hood” Budget, one that pits the rich against the lower and middle classes. “Significant work” is needed to guard against such a split in society, he added.

While he acknowledged the Government’s moves on this front, Mr Singh said: “If Singapore does not do more, a threat that has loomed large on the horizon in the last few years, of the potential emergence of two Singapores, may become reality.”

He described the first Singapore as connected to the world as a hub economy where high salaries and opportunities abound.

“This Singapore gives meaning to the promise and lure of Singapore and how we remain relevant to the world. It is a Singapore that always strives to be at the cutting edge of global developments,” he said.

The second Singapore, where the majority of Singaporeans live, is one that has perceptions of slowing social mobility, connected to the reality of high housing prices.

“Today, the prospect of upgrading to a condominium or a landed property, unlike in decades past, is not as realistic for HDB home owners. Buying a car is an out-of-reach luxury for most people, unlike in many other countries,” he said.

Mr Singh added: “In the past, you may not have done well in school, but if you were prepared to slog and save, you could become rich and successful. Today, the view is that once you have not succeeded academically, even if you slog for years, success, let alone wealth, may not follow.”

He noted that these two Singapores would unavoidably cause friction in society, as the country’s small size means that there is no countryside to retreat to where the pace is slower and prices of things are lower than in the city.

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While the Government tries to keep society open and bring new businesses and opportunities to Singapore and Singaporeans, Mr Singh said: “It is that second Singapore, where a very broad middle of Singapore lives and works and plays, which should never find itself unmoored and cynical about the future of Singapore.”

Noting the tax increases on high-end property and luxury vehicles announced in Budget 2023, Mr Singh said the WP supports the idea of a progressive society where those who earn more pay proportionally more in taxes.

In his Budget speech, Deputy Prime Minister Lawrence Wong also announced that the Central Provident Fund (CPF) monthly salary ceiling would be raised from $6,000 to $8,000, to help middle-income Singaporeans save more for retirement.

Mr Singh said the WP supports the move, but asked if the Government had considered tweaking the percentage of CPF funds credited into the three CPF accounts each CPF member has, and allocating more to the Special Account.

He said reducing the contribution to the Ordinary Account by 1 per cent to 2 per cent in a person’s early years, in favour of the higher interest-bearing Special Account, would better serve Singaporeans’ retirement needs.

On the affordability of Housing Board resale flats, Mr Singh questioned whether the Government considered what effect it would have on property prices to provide higher grants to first-time buyers.

“While these additional grants may appear on the surface to be a panacea, there is a real prospect of home prices rising to match the new grants for eligible first-timers,” he said, adding that price rises could happen because buyers will be tempted to bid more for a flat as they know they can tap the higher grant.

On encouraging more companies to hire senior workers, Mr Singh said he supports the extension of the Senior Employment Credit until 2025, but called for more support to encourage employers to hire senior workers.

He asked if studies have been done on the cost of increasing the credit, and said: “There must be an upside for employers as we undertake this cultural shift towards making the workplace more family-friendly.”

The credit offsets wages of Singaporean workers aged 55 and above who earn up to $4,000 a month. Employers receive up to 8 per cent of the wages paid to these workers, depending on their age and salary.

On a new initiative being piloted for the precision engineering, retail and wholesale trade sectors to improve training and better match training with industry needs, Mr Singh said one should look at past efforts in these sectors to get a sense of how the new Jobs-Skills Integrators measure might fare.

He referenced the industry transformation map (ITM) for the precision engineering sector which the Government in 2016 said would create 3,000 professional, manager, executive and technician jobs by 2020. He urged the Government to provide a proper accounting of the first ITM.

Mr Singh also asked the Government to provide information on which institutions will be the job-skill integrators, what key performance indicators will be used to determine the effectiveness of the pilot, which agencies will anchor the initiative, and how much funding would be set aside for it.

Returning to the metaphor of two Singapores, Mr Singh said an Institute of Policy Studies report on social capital in 2017 found that the sharpest social divisions in Singapore may be based on class, instead of race or religion.

“Fiscal redistribution, better social protections and greater support for our most vulnerable Singaporeans must remain a mainstay of our future budgets,” he said.

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This article was first published in The Straits Times. Permission required for reproduction.