Thursday, 26 February 2015

#SGBudget2015: Baas, Mehs and Happy Bleats.

A review of Budget 2015 from the point of view of someone with retired elderly folks, home mortgage to pay for and an upcoming child. All screen caps are taken from the official SG Budget 2015 page.

Meh. How useful are career counsellors? I doubt that someone sitting in an office all day can be equipped with adequate "industry experience and knowledge" to advise job-seekers. I think they should put more effort into the "enhanced internships". Learning is more effective when it's hands-on.

Happy bleats. It sounds promising. The Workforce Development Agency (WDA) website already has a plethora of courses, so the latest announcement is like the icing on the cake, which should entice more Singaporeans to sign up for courses to upgrade their skills. In the past few years, the Government has put in a lot of effort to improve the workforce. I remember when I was reconsidering my career path many years ago, there weren't so many courses available, and if one was not sponsored by an employer, the subsidies were meagre. So good job to the Government for all the improvements made since then.

I am curious, though, about how they intend to monitor the use of the SkillsFuture Credit. And for those who do not use it, what's going to happen to the credits in their account?

The implication of increased subsidies by the Government for job training is that it could lead to an inflation of course fees with more course takers and more people suddenly wanting to become "trainers and consultants". Some of them may not be up to the mark and may be taking advantage of this free for all. I hope the Government can keep an eye on that, and not waste funds on courses conducted by inexperienced trainers.

Baa. The contribution rate is not the problem. The main issue is that the CPF is being treated like an infinite source of cash to fund things like overpriced public housing, education fees, investments, etc. It has veered away from its original aim of being a fund to be withdrawn and used in old age. If we do not address this, it is a sinking ship. It's just taking a longer time to sink. The CPF has achieved a decent ranking when compared with other retirement funds around the world because it was only in the last decade that Singaporeans started spending their CPF extensively even before they reach retirement, mostly on expensive public housing. The full consequences have not hit us yet. Using our retirement savings to buy property makes our retirement fund vulnerable to fluctuations in the property market. An elderly person risks losing a significant portion of his retirement fund by buying and selling property at the wrong time, and this is worsened by the fact that the Government actively encourages people to invest in expensive public housing. There is a real risk here that the tweaking of contribution rate does not address.

Happy bleats. These measures are slightly better as they encourage working and saving in a subtle way.

Only one happy bleat. I was upbeat about this until I saw the line stating that it will only be implemented in 2016. Why not this year?

I am also concerned about the means-testing component. Will it benefit the right people? Those who need help the most are the low-income elderly with children who are earning low income themselves, or who are in the lower middle class with their own families to support.

I know of some low-income elderly with numerous children who are able to support them, or who have rich children who are living on landed property. Because these elderly continue living in their small flats, they collect a lot of Government subsidies and their children do not have to support them even though they can afford to do so. My concern is that the Government may be helping the wrong people if they only focus on the elderly's wages, level of household support and type of housing. Some may think that I am mean for saying this, but it is time that the Government reviews the beneficiaries of its assistance schemes, and those whose financial status have improved should have their welfare payouts removed. There are some elderly who do not need the money as their kids have grown up and are now doing well, and there are people who genuinely need the money but who are not getting it.

One common refrain among social workers that I heard was that "once you start giving them social assistance, you can't take it back even though their financial status has improved". This is not true and a lazy way to go about it. Assistance rendered should not be permanent. There should be review from time to time.

What if after removing their welfare payouts, their rich children refuse to give them money? Well, they can go to the Tribunal for the Maintenance of Parents.

(Off-topic: I am sure there are many offspring around who are not keen to support their parents for various reasons, some of which may be justified. Perhaps one day we can remove the legislation, but pragmatically, I don't think we can do so yet, because the current elderly population from the "Pioneer Generation" are generally not finance-savvy. They were brought up to believe that their children would support them, and that they need not plan for retirement. The day we have a more self-reliant retired population is the day that we can stop legislating filial piety.)

Meh for D1 and happy bleats for D2. Nobody ever complained about having too much money. However, the partnership with childcare operators will need to take into consideration the operators' overhead costs in running the childcare. It would be extremely difficult for them to keep fees affordable and send their teachers for training if rents continue to rise. This issue was highlighted back in 2012. If there isn't already, there should be some form of rent control for operators providing childcare services. Better and cheaper childcare facilities will encourage more women to rejoin the workforce, which is what we want to alleviate our manpower shortage, right?

Happy bleats. These measures are excellent.

Happy bleats. Transport subsidies will definitely be appreciated. A lot of parents complain about transport costs, and with the Government trying to squeeze more tax from vehicles and petrol, the school bus operators may be affected too.

Meh. The first point is not "fostering", right? More like incentivising. 300% is a lot.

Happy bleats. No one has ever complained of having too many GST vouchers.

Happy bleats. I would prefer, though, that they give more rebates to people living in smaller flats. I don't think these rebates are necessary for people living in bigger flats like 5-room and executive. The rebates, however, mean a lot more to those living in 1- and 2-room flats. Their rebate months should have been increased. Three months is too few. 

Meh. A taxi driver once told me how he switched to a lower carbon emission taxi model, but then gave it up because it was inconvenient as the gas his car needed wasn't available at all gas stations. I guess households with cars can now use their savings from the maid levy to pay for the increase in petrol duty.

Baa. I can see that the Government's focus is on taxing the high-income-but-not-super-rich category. Someone earning $320,000 including bonuses may draw a gross salary of about $20,000 plus a month. 

The people earning more than $20,000 a month are certainly not among the super rich. Why stop at "above $320,000"? Shouldn't the increase in income tax target the super rich rather than the somewhat rich?

Is it because the Ministers don't want to be taxed more??? :/
Whether an individual earns $20,000 a month or $200,000 a month, his or her income tax rate is the same. This is the one aspect of SG Budget 2015 that I am least happy about. Bear in mind that the salary scale shown here does not include their substantial bonuses. Their total taxable income is much higher.

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