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Feb 8, 2011
BUDGET PREVIEW SERIES
Inflation: a spectre to be slayed
This year's highly anticipated Budget will be unveiled on Feb 18. In a special 10-part series starting today, The Straits Times explores some of the key issues that are expected to be tackled in Budget 2011 and the possible measures the Government could take to address these concerns.
By Li Xueying, Political Correspondent
THE Foos, a family of four, are fretting about rising costs on various fronts.
At home, they spend more on groceries and utilities now than a year ago.
At work, Mrs Foo Moi Eng, 56, who brings home under $3,000 a month from her hair salon business, has to contend with increases in rent and workers' pay.
Her husband Franco Foo, 58, who stopped working as a cabby after a stroke five years ago, worries about rising medical costs. Meanwhile, their children, aged 27 and 31, who want to get married, are daunted by the high cost of new flats.
Says Mrs Foo: 'The Government says the economy is doing better, but we don't feel that we are better off.'
The family's concerns are a snapshot of the inflation spectre stalking Singaporeans. To help them, observers are calling for a litany of measures, ranging from Central Provident Fund (CPF) top-ups to more generous housing grants.
Topping their list is a one-off cash handout to help tackle the scourge of rising prices. Inflation hit a two-year high last December and is expected to rise further in the first quarter of this year before moderating.
Beyond the cash gift, analysts and economists expect more targeted help. For instance, the poor, who are harder hit by rising prices of food, housing and health care, will probably receive more generous Medisave top-ups.
While particular attention will be paid to the poor, the middle-income would not be forgotten too.
Speaking at a community event last month, Prime Minister Lee Hsien Loong said the Government will have the resources to help the poor cope with the pain of rising costs.
'The broader range of Singaporeans - well, we'll see how things go and what is necessary to be done,' he added. For them, transport and education costs are areas of concern.
PM Lee's assurance to Singaporeans comes amid a struggle by governments around the world to keep a lid on prices as inflation becomes a political hot potato.
Indeed, Singapore government leaders have made it clear in the past month that they are aware of the pain that rising prices are inflicting.
Mr Lee, Senior Minister Goh Chok Tong and Finance Minister Tharman Shanmugaratnam had, on at least seven occasions over the past month, signalled that inflation will be a key issue to be addressed in the Budget.
Mr Tharman said on Jan 30: 'It's uncomfortable for many people and we know that and we make sure we help families where we can.'
So, what form of help will the Government extend?
Much of the answer can be found in the measures taken in 2008, the last time Singapore was gripped by inflation worries.
These include the use of the exchange rate to moderate imported inflation, Growth Dividends of $868 million for adult Singaporeans, Edusave and Medisave top-ups, and income tax rebates.
This time round, the observers expect these - and more.
For the poor, in particular, there could be CPF top-ups, utilities rebates and pumped-up Workfare payouts.
To counter rising health-care costs, MP Halimah Yacob wants Medisave top-ups. 'Many, particularly older Singaporeans, would welcome Medisave top-ups, especially now that Medisave can be used for a number of outpatient treatments as well,' she says.
As for housing costs, Singapore Management University economist Davin Chor urged the Government to be more generous with subsidies.
'This is an issue that has far-reaching repercussions, as a high cost of housing can certainly affect when young couples decide to marry and have children.'
For middle-income families, Citigroup economists Kit Wei Zheng and Brian Tan suggest that the threshold of income tax rebates be raised to a 'more generous' 30 to 40 per cent instead of 2008's 20 per cent for individuals earning below $155,000.
The costs of childcare is another major issue that should be addressed, says Madam Halimah, who wants the monthly income ceiling for financial aid eligibility to be revised from $1,800 to $2,500.
For businesses, it would be helpful if costs, like licensing charges levied by government agencies, were waived, said the Singapore Chinese Chamber of Commerce and Industry.
Employers, the Citi economists noted, face rising wages in a tight labour market plus hikes in foreign worker levies.
Some pre-emptive strikes, however, appear to have been taken to defer future inflation. For instance, the annual public transport fare review exercise would be deferred this year.
Meanwhile, Mrs Foo has a fervent hope: 'Please don't let the electricity bills and rentals go up any further.'
[email protected]
BUDGET PREVIEW SERIES
Inflation: a spectre to be slayed
This year's highly anticipated Budget will be unveiled on Feb 18. In a special 10-part series starting today, The Straits Times explores some of the key issues that are expected to be tackled in Budget 2011 and the possible measures the Government could take to address these concerns.
By Li Xueying, Political Correspondent
THE Foos, a family of four, are fretting about rising costs on various fronts.
At home, they spend more on groceries and utilities now than a year ago.
At work, Mrs Foo Moi Eng, 56, who brings home under $3,000 a month from her hair salon business, has to contend with increases in rent and workers' pay.
Her husband Franco Foo, 58, who stopped working as a cabby after a stroke five years ago, worries about rising medical costs. Meanwhile, their children, aged 27 and 31, who want to get married, are daunted by the high cost of new flats.
Says Mrs Foo: 'The Government says the economy is doing better, but we don't feel that we are better off.'
The family's concerns are a snapshot of the inflation spectre stalking Singaporeans. To help them, observers are calling for a litany of measures, ranging from Central Provident Fund (CPF) top-ups to more generous housing grants.
Topping their list is a one-off cash handout to help tackle the scourge of rising prices. Inflation hit a two-year high last December and is expected to rise further in the first quarter of this year before moderating.
Beyond the cash gift, analysts and economists expect more targeted help. For instance, the poor, who are harder hit by rising prices of food, housing and health care, will probably receive more generous Medisave top-ups.
While particular attention will be paid to the poor, the middle-income would not be forgotten too.
Speaking at a community event last month, Prime Minister Lee Hsien Loong said the Government will have the resources to help the poor cope with the pain of rising costs.
'The broader range of Singaporeans - well, we'll see how things go and what is necessary to be done,' he added. For them, transport and education costs are areas of concern.
PM Lee's assurance to Singaporeans comes amid a struggle by governments around the world to keep a lid on prices as inflation becomes a political hot potato.
Indeed, Singapore government leaders have made it clear in the past month that they are aware of the pain that rising prices are inflicting.
Mr Lee, Senior Minister Goh Chok Tong and Finance Minister Tharman Shanmugaratnam had, on at least seven occasions over the past month, signalled that inflation will be a key issue to be addressed in the Budget.
Mr Tharman said on Jan 30: 'It's uncomfortable for many people and we know that and we make sure we help families where we can.'
So, what form of help will the Government extend?
Much of the answer can be found in the measures taken in 2008, the last time Singapore was gripped by inflation worries.
These include the use of the exchange rate to moderate imported inflation, Growth Dividends of $868 million for adult Singaporeans, Edusave and Medisave top-ups, and income tax rebates.
This time round, the observers expect these - and more.
For the poor, in particular, there could be CPF top-ups, utilities rebates and pumped-up Workfare payouts.
To counter rising health-care costs, MP Halimah Yacob wants Medisave top-ups. 'Many, particularly older Singaporeans, would welcome Medisave top-ups, especially now that Medisave can be used for a number of outpatient treatments as well,' she says.
As for housing costs, Singapore Management University economist Davin Chor urged the Government to be more generous with subsidies.
'This is an issue that has far-reaching repercussions, as a high cost of housing can certainly affect when young couples decide to marry and have children.'
For middle-income families, Citigroup economists Kit Wei Zheng and Brian Tan suggest that the threshold of income tax rebates be raised to a 'more generous' 30 to 40 per cent instead of 2008's 20 per cent for individuals earning below $155,000.
The costs of childcare is another major issue that should be addressed, says Madam Halimah, who wants the monthly income ceiling for financial aid eligibility to be revised from $1,800 to $2,500.
For businesses, it would be helpful if costs, like licensing charges levied by government agencies, were waived, said the Singapore Chinese Chamber of Commerce and Industry.
Employers, the Citi economists noted, face rising wages in a tight labour market plus hikes in foreign worker levies.
Some pre-emptive strikes, however, appear to have been taken to defer future inflation. For instance, the annual public transport fare review exercise would be deferred this year.
Meanwhile, Mrs Foo has a fervent hope: 'Please don't let the electricity bills and rentals go up any further.'
[email protected]
