Thoughts on Singapore Budget 2016

The Singapore Budget was announced on 24 March 2016 with much anticipation, but not because many goodies were expected to be given out. On the contrary, it was a Budget announced in the midst of much uncertainty. With a landslide win in the General Elections juxtaposed against an economic downturn, rising costs of living and doing business, low birthrates and widening income gap, it was anybody's guess what measures the new Finance Minister Heng Swee Kiat would roll out.

Going through the various measures as a parent, it was clear to me that the Finance Minister had an uncharacteristically narrow focus - the very poor and the very old. Nobody would say that these groups don't deserve a helping hand, but there are three areas which I thought the government could have done more, especially with an expected Budget surplus of S$3.45 billion for the Financial Year 2016.

CDA First Step

If you thought that the S$3,000 gift to your child's CDA is a good reason to start cheering (like how the mainstream media are reporting it), think again! At the end of the day, it is a scheme that would only benefit those who can't afford to deposit any money into their child's CDA.

This is because the government's total contribution to a child's CDA didn't change. Before Budget 2016, the government would match dollar-for-dollar, savings that are deposited into the CDA, say up to S$6,000 for the first child. Today, the government will top-up S$3,000 automatically, and then match your CDA savings dollar-for-dollar up to S$3,000 for a total contribution of S$6,000. Same as before!

It's really a repackaging of the way the previous grant was disbursed, rather than a genuine attempt to further incentivise couples to have children.

KidSTART

Well, the speech seemed heartening enough:

We will pilot a new initiative, called KidSTART, for children in their first six years. There is extensive research which shows that experiences in the early years of a child’s life significantly influence his or her physical, cognitive, and social development. 

We have been enhancing development programmes through our preschools and primary schools. However, there is a small group of parents who may need more support to give their children a good start in life. 

KidSTART will draw together government and community resources, to help these children receive appropriate learning, developmental, and health support. We will develop approaches that work best in the Singapore context. 

About 1,000 children are expected to benefit. This pilot is expected to cost more than $20 million. The Minister for Social and Family Development will elaborate on this at COS.

Maybe I'm trying to be a devil's advocate, but there is real danger that the government might end up doing more bad than good with this measure.

We are already living in a world where our kids are overexposed to enrichment classes, tuition and various academic related pursuits, and at ages that are far too young. It worries me that if the government endorses in one way or another that such "developmental/enrichment programmes" are essential for the child's future success, it might worsen the 'arms race' among kiasu parents to do even more in this area.

Also, $20m divided by 1,000 children means S$20,000 per child. Would that send a signal to parents that if you spend anything less than S$20,000 before your child turns 6, you are not giving them a 'good start in life'?

It worries me that instead of encouraging families to spend more quality time together, the government might unintentionally encourage parents to send their kids to more enrichment/developmental classes, albeit high quality ones.

Encouraging more births

Lastly, the government should have done much more to encourage more births. For example, single-parent families continue to be ineligible for CDA top-ups/baby bonus/etc, levies on foreign domestic workers continue to apply for households with kids, second week of paternity leave continues to be non-compulsory.

Also, I thought the government could have rolled out measures such as heavily subsidising the hospital costs associated with pre-mature/complicated births, giving childcare leave based on the number of children, and changing the Working Mother Child Relief to the Working Parent Child Relief.

By not extending a helping hand to couples in bad economic times, I think we are only going to go backwards in terms of the birthrate.