PSP calls for ‘expansionary’ Budget 2020 to cope with fallout from Covid-19 outbreak, weak economy

SINGAPORE — Dr Tan Cheng Bock’s Progress Singapore Party (PSP) has been tight-lipped on its policy positions so far, but it has just released a set of seven recommendations ahead of next week’s national Budget statement.

Among the ideas laid out in a press release issued on Wednesday (Feb 12) is a suggestion that Budget 2020 should be “expansionary” to help businesses tide through the economic fallout from the Covid-19 coronavirus outbreak. The economy was already weak before the outbreak.

An expansionary Budget would mean that the Government pumps more money into the economy as a way to stimulate growth and support jobs. It could involve tax cuts, rebates and increased government spending on projects such as infrastructure improvements.

The recommendations were devised by the party’s policy team including its newly appointed second-in-command, 60-year-old Leong Mun Wai, who is the chief executive officer of investment firm Timbre Capital.

Dr Tan, the 79-year-old party leader, is a former People’s Action Party Member of Parliament.

Mr Leong said that Singapore is experiencing the “strongest economic headwinds” since the 2008-2009 global financial crisis and “arguably a long overdue economic transformation”.

These two combined to make Budget 2020 “a very important one”, he added.

The Budget will be delivered in Parliament next Tuesday (Feb 18) at 3pm by Deputy Prime Minister and Finance Minister Heng Swee Keat.

Here are the seven recommendations PSP made:

1. Broader relief package for businesses

PSP said that it welcomes the Government’s immediate short-term relief to help Singaporeans and homegrown companies tide over this “current rough patch” with the added challenge of difficulties brought on by the outbreak. On Feb 6, Transport Minister Khaw Boon Wan mentioned that there would a “strong” package in the Budget to help transport-related firms hurt by the outbreak.

However, PSP said that Budget 2020 should be more broad-based in alleviating costs and maintaining employment to help companies through the uncertain time.

The package should cover not only the transport industry and tourism sector — which is most directly hit by the coronavirus outbreak. The retail and food-and-beverage industries are hurting as well, it added.

2. Boost spending

PSP said that an expansionary Budget is advisable “in such an uncertain economic climate” as it would boost spending by transferring income to the economic segments in need.

This would, in turn, increase output and employment in the economy.

3. Taxpayers should not be burdened by large infrastructure projects

The nation’s long-term infrastructure projects, such as Changi Airport Terminal 5, should stand on their own financial and commercial merits and should not require tax increases to fund them, the party said.

This is given Singapore’s relatively mature economy, it reasoned.

However, projects with “a large social benefit component” should be given different consideration, it added.

4. No to short-term occasional handouts

Rather than “short-term occasional handouts”, PSP said that it would prefer to see more “permanent plans” being put in place which allow Singaporeans to plan their lives and careers better.

Singapore companies should have greater visibility of their future business prospects.

“The fiscal Budget is not a goodie bag,” it added.

5. Prudent approach to expenditures

PSP noted that total government expenditure had grown by 107 per cent from 2008 to 2018, which outpaced Singapore’s gross domestic product (GDP) growth of 79 per cent over the same period.

Without pointing out which aspects of expenditure should be cut, it said that the country should be more prudent by keeping increases in government spending in check, below the rate of GDP growth.

This would be similar to the private sector practice of keeping cost increase below revenue growth.

6. A focus on sustainability

PSP said that it would back a more effective use of the nation’s sizable annual Net Investment Returns Contribution (NIRC) earned from its sovereign wealth funds, noting that Singapore has recorded Budget surpluses from 1971, including an accumulated surplus of about S$15.6 billion for this term of government.

“We support a more effective use of the NIRC to transform our economy, to nurture our local businesses, to spur jobs and training opportunities, and to even conduct a fundamental review of the educational system to better nurture local talents to meet the needs of the future industries.” 

7. No to GST hike

The party is opposing an announced hike in the Goods and Services Tax (GST) from 7 to 9 per cent sometime between 2021 and 2025. The GST hike or a further rise in any other fees should not come in at least the next five years, it said.

Singapore’s strong financial standing should give it the courage to address — with sustainable long-term policies — the mounting concerns of Singaporeans on the following issues:

• Rising cost of living, housing and healthcare

• Competition for jobs from non-Singaporeans

• Retirement inadequacy

• Rising social inequality