Budget 2015: Watershed moment as government goes back to basics

 Budget 2015 has been seen as a crowd-pleasing measure to take care of lower income Singaporeans.  Photo: Shutterstock.

Budget 2015 has been seen as a crowd-pleasing measure to take care of lower income Singaporeans. Photo: Shutterstock.

There will be a bigger helping hand ahead for low to middle income households, the elderly, and school children.

In addition, the government is doing more to help workers upgrade their skills to stay relevant in an increasingly changing business environment while companies will get more incentives.

That is the key takeaway from the recent Budget 2015 as Singapore forges ahead in a new landscape amid a tighter labour market due to lesser reliance on foreign workers.

Call it the pro-Singaporean budget if you will.

However, it does appear the Singapore government is going back to basics by taking care of its citizens first and investing more in infrastructure.

As the city-state celebrates 50 years of independence this year, the announcement made by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam marks a watershed moment as Singapore faces more challenges.

The city has an increasingly educated electorate who have no qualms voicing their grievances on social media.

Bread and butter issues that have recently dominated the public sphere include the current state of Singapore’s public infrastructure, to policies on immigration and CPF.

Increase in CPF salary ceiling, domestic worker concession will indirectly benefit property market

While there were no measures specific to the residential property market announced in Budget 2015, the various goodies dished out to low and middle income households will have an indirect benefit to residents.

For instance, the increase in the CPF salary ceiling and cut in maid levy will mean more cash and CPF on hand for Singaporeans to pay for their housing mortgage.

This will provide much needed relief for lower income families, especially those struggling with day to day necessities.

In addition, by halving the domestic concessionary maid levy, families can now afford to hire maids while freeing up their time to continue with full time employment.

This is especially so for those having to take care of elderly parents and/or young children.

Improving public infrastructure and its impact on property

So far, the government has announced the development of a new airport terminal – Changi Airport Terminal 5 – and enhancements in the maritime sector.

These will give a spillover boost to the property market across all sectors as it will mean more tourist arrivals.

Properties in the hospitality and retail sector will benefit the most.

So far, there have been no new announcements on the public transport sector, aside from the new MRT lines coming up.

Therefore, the impact on residential property would be rather negligible except for properties that are close to the lines under construction – the Downtown Line, Thomson Line, Jurong Region Line and Cross Island Line.

Pro-Singaporean budget to tackle income gap

Singapore has never made secret its plan to attract the wealthy to reside in the city-state as the government believes it will be good for the economy.

For example, in 1993, the Urban Redevelopment Authority (URA) approved the master plan for Sentosa Cove meant as an exclusive enclave for the well-heeled.

A decade ago, the country embarked on a bold, new immigration policy whereby those with at least S$20 million would be granted permanent residency.

In less than 10 years, Singapore transformed into a playground for the rich attracting, among others, Chinese actress Gong Li and investment guru Jim Rogers, who now call Singapore home.

According to Boston Consulting Group, in 2012, Singapore had the third highest concentration of millionaires in the world after Qatar and Switzerland.

As the city ushered in the era of attracting new wealth, glitzy events became the de rigueur society to-do-list.

The first Formula One Night Race in 2008 and the opening of Singapore’s two casinos in 2010, helped to put the city-state on the global radar and enhance its tourism position.

However, it also contributed to a widening income gap.

In fact, Singapore has one of the widest income inequalities among advanced economies.

According to the Department of Statistics, Singapore’s Gini coefficient, which measures income gap, was 0.478 in 2012.

In all fairness, however, it has narrowed over the years thanks to concerted efforts by the government via the various measures imposed during Budget 2014.

For instance, it dropped to 0.463 in 2013.

Still reeling from the impact of the ruling party’s lowest vote margin during the 2011 general election, the government abolished the immigration policy that targets the rich in 2013.

So from the looks of it, the government is doing more to listen to those who matter – its electorate.

At best, Budget 2015 is seen as a crowd-pleasing measure to take care of low to middle income families via tax rebates, GST vouchers and waiver of exam fees, just to name a few.

At worst, Budget 2015 will see the wealthy being taxed more – the top 5.0 percent of income earners will be affected.

Whatever it is, Budget 2015 shows the government is prepared to do more to win back the hearts and minds of the people.

This article was first published by PropertyGuru Singapore.

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