Measures to support workers, cost-of-living 'handouts' among top issues raised by MPs in Budget 2024 debate

Measures to support workers, cost-of-living 'handouts' among top issues raised by MPs in Budget 2024 debate
PHOTO: The Straits Times file

The government's?'handouts' to address cost-of-living worries featured prominently during the first day of the Budget debate on Monday (Feb 26).?

Several MPs also raised concerns about the adjustments to the Central Provident Fund (CPF) system, and offered suggestions to the measures to support Singaporeans in the various stages of their career.?

In all, more than 20 office holders, including?Non-Constituency Members of Parliament (NCMP) and Nominated Members of the Parliament (NMP) debated the 2024 Budget for over seven hours.?

Here are some of the issues that will likely dominate the House over the rest of the week.

Measures to help with cost of living

Deputy Prime Minister Lawrence Wong said in his Budget speech that some Singaporeans will get a "cost-of-living special payment" of between $200 and $400.

An additional $600 in Community Development Council (CDC) Vouchers Scheme will also be distributed to households.

One-off U-Save rebates of up to $950 will also be given to Housing Board households to help them cope with increase in their utility bills.

In response, several MPs stood up to?raise?concerns about the long-term sustainability of these government handouts in Parliament today.?

MP Foo Mee Har (West Coast GRC) said that helping Singaporeans cope with rising costs is a worthy policy, but it must be balanced against the risk of prolonging inflationary pressures.

"We must be very careful to calibrate the handouts to ensure that these are sustainable, as people may grow to rely on them over time," she added.

Domestic forces also driving prices: Hazel Poa

NCMP Hazel Poa from the Progress Singapore Party (PSP) said that the government's response to provide subsidies and rebates are short-term measures that do not address the root cause behind the rising cost of living.

"While it is true that rising prices are subject to global forces, like oil prices, food prices, disruption to supply chains due to pandemics, wars or climate change, there are also domestic forces driving prices," she said, adding that rising rent is one root cause.

Poa also hoped that the government would reconsider exempting a list of basic necessities from GST, which she added form part of the cost of living.

"It may be the easier route to provide handouts to cope with the cost of living but we must focus on taking steps to keep costs in check," she said.

Fellow PSP NCMP Leong Mun Wai said that the government's "traditional handout approach" will "breed dependency" instead of empowering individual Singaporeans.

"Although the government has increased social spending since 2011, it does not seem to improve the financial well being of Singaporeans proportionately," he added.

Leong reiterated a "permanent scheme" approach that he had been advocating, in three parts - the Affordable Homes Scheme, a minimum living wage and a Government-funded national health insurance scheme.

Meanwhile, MP Joan Pereira (Tanjong Pagar GRC) suggested pegging CDC Vouchers to the number of people in a household.

She said several generations of an extended family may live at one address for financial reasons.

On the other hand, those who choose to live together for mutual care should not be "penalised", Pereira added.

Adjustments to CPF system

Wong announced in his Budget speech that the government will close the Central Provident Fund (CPF) Special Account (SA) for those aged 55 and above from 2025.

The money in there, up to the Full Retirement Sum, will be transferred to their Retirement Account. The balance will then go into their Ordinary Account.

In another move to "rationalise the CPF system", Wong said that the government will raise the Enhanced Retirement Sum, which is the maximum amount that people can put into their CPF Retirement Account to receive monthly payouts after they turn 65.

CPF contribution rates for those aged 55 to 65 will be increased by a further 1.5 percentage points in 2025, Wong said.

But several MPs said that a number of elderly residents in their constituencies have raised concerns about the impending closure of the SA.

Foo said that the move will affect many middle-income seniors, adding that many seniors rely on CPF savings as a key source of funding for retirement.

"This sudden unexpected change disrupts their retirement planning."

Foo proposed that it "may be fairer" to grandfather the scheme for those who are already 55 and above.

SA closure a 'step backwards': Louis?Chua

Workers' Party MP Louis Chua (Sengkang GRC) called the SA closure a "step backwards" in ensuring retirement adequacy, and reiterated calls for CPF interest rates to increase.

He suggested letting Singaporeans invest part of their CPF monies with GIC, which has a 20-year nominal rate of return of 6.9 per cent per annum, compared with the OA's interest rate of 2.5 per cent.

MP Yip Hon Weng (Yio Chu Kang SMC) asked the government to explore ways to "minimise the impact of the SA closure", particularly regarding withdrawal flexibility.

He said that his residents are concerned about the SA closure.

"Years of financial planning based on the SA's higher interest rate are disrupted, leaving them with limited time to adjust," Yip added.

Supporting workers through upgrading

Wong had earlier announced a raft of measures to incentivise and support Singaporeans through various stages in their careers.

On the SkillsFuture credit top up for Singaporeans aged 40 and above, MP Wan Rizal (Jalan Besar GRC) said that it is a "visionary" initiative aimed at future-proofing Singapore's workforce.

"The substantial increase in SkillsFuture credits highlights the imperative of ongoing training and upskilling in navigating the complexities of the contemporary job market," he said.

Wan Rizal raised concerns that individuals need guidance on the right programme while businesses want assurances that the training of individuals would benefit the company.

He suggested the government explore innovative ways to make the courses and programmes more flexible and accessible to meet the diverse needs of learners, who may have to balance training with work and family commitments.

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In his speech to support the debate, MP Saktiandi Supaat (Bishan-Toa Payoh GRC) asked how likely it is that those in the higher income bracket will use SkillsFuture enhancements aimed at helping mid-career workers to upskill.

And MP Gerald Giam (Aljunied GRC) pointed out that the $4,000 SkillsFuture top up is to be used for selected training programmes with "better employability outcomes", including part-time, full time diplomas and undergraduate programmes.

He asked how the government arrived at the conclusion that these programmes have "better employability outcomes".

Wong also announced a new ITE Progression Award for ITE graduates - a $5,000 top-up to their post-secondary education accounts when they enrol in a diploma programme.

MP Denise Phua (Jalan Besar GRC) said "the devil is in the details" and several questions remain unanswered.

"It is unclear how many are eligible for these targeted courses and whether the opportunity costs of not working will deter them," she said. "And whether they will receive adequate career guidance to align with their strength and job market needs."

Another announcement made during the Budget statement is the support for retrenched workers in the form of a temporary financial support scheme.

More details will be announced later this year, according to Wong.

In Parliament today, MP Henry Kwek (Kebun Baru SMC) suggested options for those who have lost their jobs to help with their cash flow, including fully or partially freezing housing loans, and the availability of Government transfers such as GST rebates ahead of schedule.

"In implementing unemployment support, [Singapore] must find a way forward," he said. "And we must do so by ensuring personal responsibility. Government support must complement and not undermine each other."

ALSO READ:?Budget 2024 makes significant policy shifts to better position Singapore for future: DPM Wong

chingshijie@asiaone.com

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