The Budget

Singapore had too many budgets last year I kind of lost track. There was a lot of support from the government here and there; it was good the new leaders are demonstrating that they are able to draw from the reserves during times of need and try and direct it towards those who need them. This is very different from our government’s approach in the earlier years of managing the economy. Of course, there will be some people who think of these as dangerously populist.

This year we have 1 budget so far (to be fair the year has really kind of just started), and things looks pretty boring in my view. It is a very safe, ‘same-old’ kind of budget, which in my opinion, reflects once again a lack of imagination. There’s a lot of just recycling old materials, old scripts, and to a large extent, wishful thinking. Job supports/subsidy assumes that the economy will recover or that firms are not just taking advantage of them to keep zombie operations alive. They are also generally contingent on those sectors eventually getting an uptick by the time subsidies end. Government tried to signal that if needed, they’ll step in again (as DPM Heng mentioned during the CNA programme), which reeks of moral hazard.

There had been talks about the desire to make manufacturing a significant part of our economy; but somehow the budget doesn’t seem to be devoting much to that area. Little doubt we are still stuck with thinking we would just be using tax incentives to attract MNCs to position themselves in Singapore. How about developing the domestic sector? We do have excellent firms which are local firms part of the international semiconductor value chain – can we cultivate more of that? Are we doing any R&D necessary to help these firms? Are our polytechnics and university working with these firms? Are we developing a workforce that can enter jobs created by these firms? How is the government spending its budget to make these things happen?

There is more ‘enforced spending’ kind of stimulus in the form of vouchers again. This time it’s called CDC vouchers for heartland kind of spending – hawker centres and shops. Maybe that will help to ramp up digitalisation more; and you are also handing out small sums to many people so the marginal propensity to spend is high, and that can generate some multiplier effect. But what is the longer-term supply-side impacts of such measures? Likely nil. Why not use those funds to pay for all the digitalisation stuff in schools to facilitate more remote learning? Why rely on means-tested subsidies rather than blanket subsidies? In any case the rich people already get iPads and they can be given the chance to opt out of the free one if they already have one. That saves the hassle of the poor people making applications, going through means-testing, etc.

Then there’s the question of funding our budget – which of course is not exactly clear since we drew from reserves and there’s no mention of returning the funds to the reserves. How about enforcing our claims on intellectual property generated through our research grants and all the money that NRF has put to work? How about putting those IP to use in terms of commercialising something that we can manufacture domestically? Or if they are not yet ready, how about selling it to some private sector in Singapore at a concessionary price and then part of the upside income from the commercialisation of the IP goes to our national coffers?

I’m just throwing out new ideas and they could all be bad ideas. But to me, the problem I’m observing with our budget is that there’s insufficient bad ideas because there isn’t much new ideas. And that playing safe, that ‘it’s always been done this way’ kind of calculations in the background, is getting more dangerous in this brave new world.