SINGAPORE: A public health crisis, an economic shock and a social test rolled into one – the COVID-19 outbreak has been an “unprecedented crisis of a highly complex nature”, Deputy Prime Minister Heng Swee Keat said on Thursday (Mar 26) as he announced what he called a Resilience Budget to help deal with the situation.
In recent weeks, as the novel coronavirus escalated its spread around the world, more countries have ramped up public health measures. These moves have, however, caused severe economic disruptions, with global financial markets roiled in mounting uncertainties.
These global shocks will deeply impact Singapore’s open economy, which could see its “worst economic contraction since independence”, Mr Heng warned. Preliminary figures on Thursday already showed the economy shrinking 2.2 per cent year-on-year in the first quarter.
“This extraordinary situation calls for extraordinary measures,” he said.
With that, Mr Heng, who is also Finance Minister, unveiled an unparalleled S$48 billion package of measures to steer aid to workers and businesses – with more targeted help for those hardest-hit by the coronavirus pandemic – as well as strengthening economic and social resilience.
To fund this supplementary Budget, the Government will draw up to S$17 billion from Singapore’s past reserves, he said. President Halimah Yacob has given her in-principle approval for this.
Together with the S$6.4 billion announced in Budget 2020 last month, Singapore will be setting aside close to S$55 billion, amounting to 11 per cent of gross domestic product (GDP), for the battle against COVID-19.
READ: Singapore’s economy contracts by 2.2% in Q1 as COVID-19 outbreak hits construction, services
READ: President Halimah Yacob gives ‘in-principle support’ to draw on reserves for second COVID-19 assistance package
The Resilience Budget dwarves any other stimulus packages that the Government has announced. The biggest had been the S$20.5 billion Resilience Package rolled out in 2009 during the throes of the global financial crisis. Other off-Budget packages announced during the downturns of 1998, 2001 and 2003 ranged from S$230 million to S$11.3 billion.
“This is a landmark package, and a necessary response to a unique situation,” Mr Heng said.
SAVING JOBS, SUPPORTING WORKERS
More than one-third of the Resilience Budget is dedicated to saving jobs and supporting workers, which remain top of the Government’s priority list, said Mr Heng.
One way is to “significantly” enhance and extend the Jobs Support scheme – first announced in Budget 2020 to help firms defray wage costs – to provide “more impactful and sustained” support. This will cost the Government S$15.1 billion.
Co-funding of wages for every local worker will be raised from 8 per cent to 25 per cent, announced Mr Heng. Sectors that have borne the impact of COVID-19 will receive higher support in wages – 50 per cent for food services and 75 per cent for the most badly-affected aviation and tourism industries.
Apart from raising the monthly qualifying wage ceiling from S$3,600 to S$4,600, the scheme will also be extended for another two quarters until end-2020. Employers will hence receive three payouts in May, July and October this year.
Help will also be set aside for the self-employed to provide them with a “safety net” during this difficult period, said Mr Heng.
This will include direct cash assistance through a new Self-Employed Person Income Relief Scheme (SIRS), for which the Government will set aside S$1.2 billion. Another S$48 million will go into extending a training support scheme until December 2020, while increasing hourly training allowance to S$10 from May 1.
READ: COVID-19 Budget: Self-employed persons, firms, first time jobseekers to receive more support
An array of assistance was also announced for lower-income workers, job seekers and those unemployed.
There will be higher payouts under an enhanced one-off Workfare Special Payment for the lower-income, while jobseekers can look forward to two new initiatives – an SGUnited Traineeships programme and an SGUnited Jobs Initiative that aims to create about 10,000 jobs over the next one year.
The Government also wants to help those that may lose their jobs during the COVID-19 outbreak, said Mr Heng.
For instance, the Government will “exercise more flexibility” when considering applications for the ComCare scheme, which provides those who fall into financial hardship with assistance.
A Temporary Relief Fund will also be set up in April to provide immediate financial assistance to those in need, while a separate COVID-19 Support Grant will provide low- and middle-income workers who lost their jobs with a monthly grant of S$800 for three months.
In total, S$145 million will be set aside for the new schemes and increased flexibilities to ComCare, said Mr Heng.
“Even then, we cannot prevent an economic recession as the external health and economic situation will evolve beyond our control,” he added. “But it will help us mitigate the extent of the downturn and more importantly, help save jobs and protect livelihoods.”
READ: COVID-19 Budget: Unemployment benefits increase; higher cash payouts for adult Singaporeans
Turning to households, the Care and Support Package, which was announced in Budget 2020, will be ramped up in various ways to around S$4.6 billion.
This will include a tripling of the cash payout for all adult Singaporeans, as well as that given to parents with young children. To help needy Singaporeans with daily expenses, especially in the cost of food, grocery vouchers given to them this year will also be tripled to S$300.
Mr Heng also announced other moves to strengthen the network of support for workers and families, such as doubling grants to self-help groups.
The Government will also exercise greater flexibility on its fees and loans during this period, including a freeze on all Government fees and charges for a year until Mar 31, 2021, as well as all loan repayment and interest charges for a year for graduates who have taken a government loan for their university and polytechnic studies.
“We will continue to monitor the situation closely and are prepared to take swift action to do more if needed,” he said.
More relief is also in store for businesses, namely in the areas of cash flow, cost and credit.
In the first aspect, Mr Heng said the Government is already doing its best to flow the payouts under the wage support schemes, with more than S$600 million to be disbursed to employers by the end of this month.
To further ease cash flow for businesses, Mr Heng announced on Thursday an automatic deferment of income tax payments for companies and the self-employed for three months.
READ: COVID-19 Budget: Income tax payments for companies, self-employed people delayed for 3 months
When it comes to costs, the property tax rebate will be enhanced with a higher amount and to cover more properties.
Qualifying commercial properties badly affected by the virus outbreak, including hotels, serviced apartments, tourist attractions, shops and restaurants, will pay no property tax for 2020.
For businesses in other non-residential properties, such as offices and industrial properties, a property tax rebate of 30 per cent will be granted.
Reiterating a point he made last month, Mr Heng “strongly” urged landlords to do their part and pass on these rebates to their tenants “fully”.
The Government will lead by example with enhanced rental waivers, he added. For instance, NEA will give stallholders in hawker centres managed by NEA or NEA-appointed operators a three-month rental waiver, up from the one-month waiver announced last month.
As for ensuring access to credit, various financing schemes, such as the Enterprise Financing Scheme – SME Working Capital Loan, Loan Insurance Scheme and the Temporary Bridging Loan Programme, will be enhanced.
The Monetary Authority of Singapore is also working with banks and insurers to see how best to help businesses and individuals with their loan obligations and insurance premium payments, said Mr Heng. More details will be announced.
HELP FOR HARD-HIT SECTORS
For sectors engulfed by the outbreak, more help is on the way, with more than S$1 billion set aside for sectors such as aviation and tourism.
This includes an enhanced Jobs Support Scheme for businesses whose activities are based principally in the aviation sector, so as to ensure that the temporary shock to Singapore’s air hub does not become a permanent one.
A separate S$350 million enhanced aviation support package will be introduced to fund measures, such as rebates on landing and parking charges, and rental relief for airlines, ground handlers and cargo agents.
Other tourism-related industries will also receive a similar enhanced version of the Jobs Support Scheme, as well as an additional S$90 million set aside to help the sector rebound strongly.
READ: COVID-19 Budget: More than S$1 billion for aviation, tourism, other sectors
The food services sector, which has been impacted by people opting to stay at home, will also get an enhanced Jobs Support Scheme for wage support.
Meanwhile, the Point-to-Point Support package will be extended and enhanced to support taxi and private-hire car drivers. This will cost the Government another S$95 million.
Mr Heng also announced an additional S$55 million support package for the arts and culture sector so as to save jobs, support upskilling and digitisation in the sector.
BUILDING RESILIENCE IN ECONOMY, SOCIETY
Even as the country battles the ongoing downturn, it needs to build capabilities for the eventual recovery – a point that Mr Heng also made in last month’s Budget statement.
To do so, S$1.9 billion will be set aside for this.
This will include helping businesses to build long-term capabilities and for this, the Government will be matching S$1 for every S$2 raised by Trade Associations and Chambers or business groups for qualifying initiatives.
The SMEs Go Digital Programme and the Productivity Solutions Grant will also be enhanced.
Explaining the need to draw S$17 billion from the reserves, Mr Heng said the COVID-19 pandemic is exactly the sort of event Singapore has been accumulating its reserves.
“We have saved up for a rainy day. The COVID-19 pandemic is already a mighty storm, and is still growing,” he told the House.
The measures will raise the overall Budget deficit for financial year 2020 to an “unprecedented” S$39.2 billion, or 7.9 per cent of GDP.
READ: Singapore’s reserves are for rainy days, COVID-19 already a ‘mighty storm’: DPM Heng
“We are able to support this unprecedented deficit, and still remain fiscally sustainable, because we have been disciplined in the use of past reserves, tapping on it only in exceptional circumstances like these,” he said.
Mr Heng warned that the fiscal situation remains highly fluid and uncertain with significant risks, stating that it will be affected by both revenue and expenditure.
He also said he expects significant volatility in the economy and financial markets in the near future, adding that the Government will continue to review expenditure plans very carefully and adapt its responses as new developments occur.
“We will adopt a nimble fiscal posture, so that we can quickly channel the resources at hand to the most urgent and important needs of our people,” he added.
MORE PAY CUTS FOR OFFICE HOLDERS
Towards the end of his speech, Mr Heng also announced that all political office holders will take an additional two-month pay cut and have a three-month cut in salary in total.
The President, Speaker and both Deputy Speakers will also take a similar pay cut, he added.
“It is in times of crisis that the character of a nation can be seen. We are all in this together and we must all look after one another in these trying times,” he said.
“This is what it means to be SG United.”
He also said that the months ahead will not be easy, as the situation continues to evolve. But the Government will lead the way in anticipating and responding to developments.
“While we attend to the immediate and urgent tasks, we will also set our sights on the long-term so that Singapore comes out of this crisis stronger as a people,” he said.
The supplementary Budget will now be put before Parliament for debate. After it has been passed by Parliament, it will be presented to the President for her assent.