Expenditure expected to outstrip revenue for third straight year
SINGAPORE — Government spending is expected to outstrip revenue for the third straight year, although the overall fiscal position for FY2017 is expected to be a S$1.9 billion surplus.
Total expenditure (S$75.1 billion) is estimated to be 5.2 per cent higher, mainly because of increased spending in the national development, environment and water resources, health and home affairs ministries. In comparison, revenues are projected to rise by just 1.1 per cent to net the State’s coffers S$69.5 billion.
Noting the smaller budget surplus, Finance Minister Heng Swee Keat said on Monday (Feb 20) that the fiscal position is “prudent” because the Government expects expenditures to continue rising in the long term while it continues supporting firms and households in the midst of continued economic restructuring.
In terms of quantum, national development will get the highest increase in budget (S$1.3 billion, or 39 per cent more), mostly to fund public housing projects. For instance, S$629 million has been budgeted for the Home Improvement Programme and the Enhancement of Active Seniors scheme.
The Ministry of the Environment and Water Resources will get S$1 billion more (up 54.2 per cent) to fund drainage, sewerage and waste management projects, as well as to redevelop Mandai. Major projects to be carried out this financial year include anti-flood measures for Stamford Canal. At Mandai, a mega-nature attraction — including the relocated Bird Park — due to open in 2023 is being built.
Healthcare spending is projected to rise by S$900 million (up 9.6 per cent), mainly to cater for higher patient subsidies as capacity, patient numbers and services expand. Part of the increased spending is also attributable to the funding of Medishield Life premium subsidies.
An additional S$700 million has been given to the Ministry of Home Affairs, mainly to beef up capabilities to “address the heightened security threat environment”, according to the Budget Book.
For instance, there will be new immigration and checkpoint security functions with the opening of Changi Airport Terminal 4 this year. It was previously announced that the terminal will have more self-service immigration facilities to reduce reliance on manpower. These automated lanes will be enhanced with biometric checks.
Revenue collections are expected to rise in motor vehicle taxes (by S$420 million, or 18.2 per cent), customs and excise taxes (by S$380 million, or 13.9 per cent), and goods and services tax (by S$400 million, or 3.7 per cent).
FY2017 is expected to turn a basic deficit of S$8.2 billion. But after factoring in the top-ups to endowment funds and trust funds (S$4 billion), as well as S$14.1 billion in the Net Investment Returns Contribution (NIRC) — now incorporating long term returns made by Temasek Holdings — the estimated outturn is an overall surplus of S$1.9 billion.
Meanwhile, the fiscal position for this financial year is projected to be better than initially expected, despite a projected 2.3 per cent dip in the NIRC. The estimated overall surplus of S$3.45 billion has been revised to S$5.18 billion, the highest since FY2012 (S$5.82 billion).
This was mostly attributable to higher collections from Vehicle Quota Premiums, Stamp Duty, Personal Income Tax and Goods and Services Tax. Spending was also lower than initially expected, primarily in healthcare and housing, partly due to the timing of some projects.