Tag Archive | "GDP"

Jackpot revenues drive a budget of nice gestures

Jackpot revenues drive a budget of nice gestures

Tags: , , , , , , ,


Fortune God comes to town with gifts for all, Singaporeans stop frowning and feel enthralled.

By Fang Shihan

Now we know what's cooking within that polished head. Photo: RAWBEAN LADEN / Creative Commons

THE budget this year was nothing less than celebratory. After posting a 14.5% GDP growth, Finance Minister Tharman possibly had a field day just deciding who gets what share of the pie, and how. You could almost hear the champagne popping in the background.

This partying, however, came amidst a spat of unhappiness from Singaporeans over the inflation rate, which hit a two-year high of 4.6 percent in December 2010. The income gap has also widened – the gini-coefficient climbed to 0.48 in 2010 from 0.478 in 2009.

But things are changing. As most observers predicted, this budget was about slapping on some cold cream to ease inflationary pains. Cautioning that the measures cannot and should not reduce the infamous government-inculcated work ethic, Tharman opted for a one-time shot of morphine.

Workers under the Workfare Income Supplement (WIS) scheme will receive a one-off special bonus payment of 50% on top of regular workfare payment. This translates to an additional payment of $1,050 if you’ve been receiving $2100 in workfare payment. This cash payout will be distributed in 2 sessions with the first payment on labour day.

Though the bald one also warned against inculcating a sense of entitlement, the nation was really (and don’t deny it you angpao-grubbing buggers) waiting for the annual cash handout. 80% of all citizens are estimated to receive between $600 to $800 in growth dividends with low income citizens or those living in 3 room flats or smaller, receiving larger amounts. As a concession to those unfortunate enough to be drawing a meagre income but living on expensive property, such groups will receive $300.

NSmen and NSFs, including those below 21 years old, will receive an addition $100 also to be received on labour day. Altogether, the government will allocate $6.6 billlion in transfer packages.

In addition to one-time transfers, $10 billion will be spent to upgrade homes in a bid to preserve values of HDB flats and to let the flat depreciate less (vis-a-vis the rising cost of property) over time. Approximately 50,000 flat owners will benefit in 2011 and overall, 300,000 will be affected in the next 5 years.

Under the ‘remaking of the heartland’ initiative , an estimated 700,000 lucky residents in Jurong Lake, East Coast, and Hougang will enjoy the new batch of improvements. Affected opposition parties are SDP, WP, and WP respectively.

Also taking a piece of the pie, “the navy, army and air force will get S$11.53 billion to buy and maintain military equipment, for the upkeep of camps and for payment of salaries.” This was not mentioned by Tharman, but filed in a report by CNA. This will raise the national defence budget by 5.4% this year, totalling $12.08 billion and up from $11.46 billion the previous year (note from author: at this point, I would have photoshopped a picture of Tharman making a rude gesture at the SDP but that would just be….mean).

Another state arm, the broadcast media also received some assistance to remain competitive as Tharman announced the permanent scrapping of radio and TV license fees. In his own words:

“The license fees are losing their relevance. First, ownership of TVs is no longer limited to the middle- and higher-income groups. Today, most households – including 99% of lower-income households – own TVs. Second, with increasing media convergence, Singaporeans can now receive broadcast content over the Internet and mobile devices, which do not attract a license fee.”

Fans of state broadcast can now save on the $100 annual license fees for television, and $27 annual fee for vehicle radios. Tharman estimates that the revenue forgone from the removal of these license fees will be approximately $120 million per year.

Being nice doesn’t come cheap. After factoring the various tax measures and special transfers, Tharman expects a basic deficit of $2.2 billion for FY2011, or about 0.7% of the GDP. The Overall Budget Balance for FY2011 is projected to be a slight surplus of $0.1 billion. Again, considering Singapore was the fastest growing Asian economy in 2010, spending all that surplus was indeed a generous gesture.

Now let’s hope that betting taxes (estimated at S$2.5 billion last year) will make up for our declining manufacturing sector in 2011.