THIS year's Budget, unlike the last few, is different in that it is more centred on households. The theme for this year is aptly "an inclusive society, a stronger Singapore".
Besides some measures targeted at businesses, the other three main areas of focus are social mobility, support for the elderly and disabled, and building a more equitable tax system in Singapore.
Finance Minister Tharman Shanmugaratnam, who read out this year's Budget in Parliament on 17 Feb, called it a "Budget for the future". The focus is not to provide a counter-cyclical boost to the economy, but on addressing Singapore's longer-term challenges and building a better future for Singaporeans.
For businesses clamouring for immediate help in managing rising costs and a slowdown in demand, there appears to be little in this year’s Budget for them.
With the exception of the SME Cash Grant, a grant pegged at 5 per cent of companies’ revenues in Year of Assessment 2012 and capped at $5,000, there is no other direct Government handout to help companies offset business costs.
The Government's primary targets continue to be on getting companies to increase their productivity, reducing the country’s reliance of cheap foreign labour, and on creating more employment for Singaporeans.
To moderate the growth of the foreign workforce, the Dependency Ratio Ceilings (DRCs), which specify the maximum proportion of foreign workers that companies can hire, has been reduced by 5 percentage points across both the manufacturing and services sectors.
Carrots, however, are dangled to encourage businesses that innovate to grow, improve productivity and design better jobs to attract local workers. They include the Special Employment Credit (SEC) for employing older workers, and enhanced training and support for small and medium-sized enterprises (SMEs).
While the Finance Minister did not heed calls to reintroduce the Jobs Credit Scheme, the SEC is in fact a modified Jobs Credit Scheme, which is targeted to encourage businesses to employ Singaporean workers aged 50 and above. Businesses which hire these older workers who earn up to $3,000 a month will receive an SEC of 8 per cent of their wages. A lower amount will be paid out for older employees who earn between $3,000 and $4,000.
SMEs will also get stronger training support with 90 per cent course subsidy for courses certified by the Workforce Development Agency (WDA), and Academic CET (Continuing Education and Training) programmes at polytechnics and the Institute of Education. Absentee payroll also went from $4.50 an hour to $7 hour.
Grants for capability development to support SME upgrading will also be raised from 50 per cent to 70 per cent over the next three years. Companies can also claim more for the renovation and refurbishments, up from $150,000 to $300,000.
Other sweeteners such as doubling the cash payouts under the Productivity and Innovation Credit (PIC) scheme from $30,000 to $60,000 and making disbursements quarterly instead of annually, enhancing the PIC scheme to make it more attractive to businesses in the service sector, deductibility of mergers and acquisitions transaction costs, and guidelines that provide more certainty on the taxability of gains on disposal of equity investments will also serve businesses and investors well.
Though these measures, along with others introduced at the last few Budgets, do not address short-term cost issues directly, they are targeted at helping companies gear up for longer-term growth.
Much attention is given to ensuring that the lower rung of society has not been forgotten and left behind as Singapore progresses.
To encourage older workers to return to the labour market, the Central Provident Fund (CPF) contribution rates of those aged 50 and above will be increased. The elderly will also receive more help in unlocking their biggest asset, their homes, to fund their retirement with an Enhanced Lease Buyback Scheme and Silver Housing Bonus.
The disabled and the low-income are not forgotten with programmes to strengthen early intervention and education for those with disabilities, and more financial assistance for children from lower-income families to provide a foundation for social mobility.
To ensure that the tax system does not hurt the poor hardest, a new permanent goods and services tax (GST) voucher system has been introduced.
What it aims to do is to fully offset the 7 per cent GST that the lower half of retiree households pay on their expenses. Many of those in the upper half of the retiree households will also receive a significant offset.
Those from lower-income families without elderly members will also be able to offset about half their told GST bills with the GST Voucher.
Coupled with other benefits through schemes such as Workfare, housing, education and healthcare, the older citizens and lower income will get much more than the GST they pay.
Taken in totality, this year's Budget shows a shift in the Government's attitudes and policy mindset. In the past, it was centred on each individual taking responsibility of their own needs, and any support for individuals and households tended to be through once-off measures.
However, the approach this year seems to suggest that they are moving to a new social compact where the Government is taking on a greater role of taking care of individuals and households.
The aim is very much on ensuring the long-term growth of Singapore, and providing focused and targeted measures to give a hand to those who need it the most.