Budget 2025 is more than just an election budget
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You're listening to a CNA Podcast. Hi everyone, welcome back to another episode of the Deep Dive Podcast.

We usually release a fresh episode on Friday, but we're coming to you earlier because yesterday, Steve, was the big budget announcement in Parliament. That's right. By now, you've probably all heard about it. All the goodies we are getting and I'm sure a whole bunch of WhatsApp chat groups are saying, Hey, what about this? What about that? What are you going to spend your money on? Yeah, I got quite a few of those. Like, oh, so many goodies. Steve, what did you do a double take on when you read through some of the budget goodies? Oh.

The fact that they were giving away so much money to each of us. So that caught me a bit by surprise. I expected some CDC vouchers, but I didn't expect quite so many. And of course, with SG60, you expected something too, but then again, wow. I was quite blown away by how generous the direct disbursements were. Just to recap, $800 worth of CDC vouchers, $500 in May, $500 in June,

$300 in January next year. Not forgetting we actually got it last month too, right? That's right, $300. Yeah. And on top of that, because it's 60 for us this year, Singapore's SG60, so we get another $600 in July.

So that's for us. For those above 60, they get $800. Yeah. So that's pretty sweet. That's pretty sweet. Yeah. Which clearly means the elections are so close by. Okay. So it looks like the government is tackling cost of living head on, right? But we want to take a step back and explain what the big moves were and what it means for us going into an election year. ♪

With us today in studio, we have Dr Annie Koh. She is Professor Emeritus of Finance at the Lee Kong Chien School of Business at SMU. Delighted to be here. Dr Yao Hui Chua. He is Assistant Professor in Economics at the Nanyang Technological University. Thanks for having me.

Good to be here. Just very quickly, your reaction to the budget. I actually thought like you, you know, Steve, it's goodier than I thought. Yeah. And I think to be fair, it's actually more than just the CDC vouchers. I think if you look at it as a whole package, it's actually looking at both short term and medium term.

For all the packages, it's beyond just about vouchers. It's about training grants. And I think even businesses have something to be happy for. Definitely a budget for everyone, as what Prime Minister actually alluded to before the start of this presentation. From retailers to households, we have those SG60 celebrations. It's happy to see everything coming together. People were quite happy about the CDC vouchers. And the SG60 ones go to every citizen, right? So it's not just a household thing.

So that's the cherry on top this year. But the question we wanted to ask is, cost of living is tangible. We feel it every single day. The vouchers definitely help. How far do you think this will go in soothing some of those concerns? If you look at it at the short term, it helps because I think a lot of people are very worried about

And within the next six months, with the uncertainty politically, even with the disruptions in supply chain, at least they say, I can last for at least six months. So if you notice, the timing of the vouchers is coming up in the first half of the year. So I think the confidence factor is a very critical part of it. Now, of course, it's dynamic. The world is changing and we really hope that maybe inflationary pressures will not be as high.

The giving part of it is part of the celebration. So it's also good that sometime in August, in September, we are also getting money coming in. Yeah, so it's kind of spread out over a period of time. In terms of the mental health of the country, the confidence level of the country. But is it enough? Because if I'm thinking I'm worried about my job, for instance, I say I'd rather get my job assurance than CDC vouchers, right? What do you think, Yahui?

To be clear about inflation, it's defined formally as an increase in general price level. So we know that inflation has actually gone down from the year 2023 to 2024. So in 2023, it was like 4.8%. And last year, 2024, it was like 2.4%. So it actually went down. But it doesn't feel that way. But it certainly doesn't feel that way, right? Precisely, because inflation is actually a rate of change of price levels. So price levels are going up. So it doesn't mean that inflation is going down with experience of falling prices.

So indeed, people are still experiencing a higher price level, even though at a slower rate. So that's a key point I'd like to clarify with the listeners. So what you're saying is inflation might go down, but we will still see...

stay the same or go up? So price levels is different from inflation rate, which defines the change in price levels. Okay. So this is a bigger problem, right? It's not something that the government can solve by giving X amount of vouchers, etc. If you relate it to what Steve was asking, I'm worried about jobs.

Yes. Right? I'm worried about retrenchments. You need to look at it side by side with the job assurance scheme and the programs that's coming from there. And if you can get productivity levels up, then the higher wages could be justified.

So we actually have to look at the whole thing as Singaporeans, not just as consumers, but Singaporeans as producers as well. Yeah, because that way, if I can do better in that, then my income will increase and therefore I won't feel the pinch so much, right? That's right. And to add on, for example, CDC vouchers shouldn't be normalised too much. So in fact, everybody's expecting CDC vouchers all the time. Me too, definitely. Why not? I don't think we should normalise it.

Definitely. But it's already normalised. It's too late, right? I mean, now we all expect it. We keep getting it. We keep getting it. So unlike GST vouchers, which are to help the lower income households, which is more formalised in a way, so I would think we need to be very careful that we should not overly celebrate CDC vouchers. It just means things are more expensive.

and we need some support. Hopefully, with more upgrading of skills, with higher income, these CDC vouchers would go away. So the longer-term thing is that hopefully your incomes will go up. And then you would not need this kind of help for your daily expenses. Or the level of help may not be as high.

And it may be calibrated for those who are at the bottom of the pyramid. So it will be a little bit more differentiated and customised. Okay. So ironically, when they stop giving us CDC vouchers, it means things are better. Because it means your job is better, you're getting paid more, you don't need the support anymore. But the support...

The surpluses were so good. Over $6 million. Why? We're going to ask you all why. Because we have some inclination that it's because the elections are around the corner, they've got a budget to kind of spend and they figured, let's spend it. So as what Prime Minister has mentioned, a big surplus of it is actually due to the increase in corporate income tax. And corporate income tax is actually the largest proportion now of the revenue.

as compared to previous years. But that corporate income tax is because we did better in terms of business. More people coming in, more people paying tax, right? Precisely. More company. More companies paying tax. More companies coming in. Not personal. That's right. So because of more companies coming in, we're doing well, but it might not be so sustainable because we're not sure whether what would be changed in a geopolitical climate. For example, we have this...

rules going on so we need to be very careful of that in a way. Okay. So we need to be selective on the kinds of companies coming in. So if it's companies coming in because of low cost drivers easy come easy go. So if they are selecting us in spite the higher cost relative to our neighbouring countries then

It must be because they like the security, they like the talent pool, or they like that safety and soundness. Those elements means that it can be more sticky. Right, it's more sustainable or long-term. So they're coming because they see the full picture, the ecosystem is there to support them versus in just low taxes. Let's talk about large families. That was another big thing, right, in this budget. I was personally quite surprised because...

In my mind, it's quite hard to convince people to even marry and have one kid. Here, we are saying, have three children and you will reap the benefits. So,

Why do you think the government is focusing on large families? This year, the TFR, the total fertility rate, really went below one at 0.97. That's very worrisome because if we depend on our own domestic population to procreate, they can't even replace the parents. Yep.

something needs to be done and we are not too sure I think for years we have been giving baby bonuses as well yeah but we found that giving money doesn't make people want to have more kids right because the kids cost way more than whatever money the government can give me I would love to see wonderful case studies I think Minister did put up families that have more than two children

and how they are actually thriving and how the packages would help them. But working women, we have to juggle between work and home. At the end of the day, I know many young men are pulling their weight these days. So my son-in-law, they are doing all that.

But even then, if you have two working couple in a family and the kids have to be sent to school, the weight of having to worry about their learning. Child care, infant care. Mentoring. Yes, the whole works. You have two children. Two young children. That's right. Would you have another? Maybe after this policy change. Wow!

Okay, there will be a routine for you. So back to the question. So to increase TFR, I think there are two possible ways. So one way is to encourage couples to have their first child. And a second way to encourage people who already have children like me to have a third child or fourth child, for example. So this is a challenge now, which is easier. Is it easier to convince couples

It wasn't to give the first child or the third or fourth child, in a way. Oh, you got a good point. That's a fair point, actually. Yeah, because to have a first child, it's going to be a lifestyle change, totally. You need to plan to buy a baby cot. There's a lot of fixed costs involved. So, in a way, the incentives were there really to just help those along the journey. Not to say, go and have a kid because I'll give you money, but more like, if you do, we can make it easier for you. So, the delta in having that first child has been tried many times. Yeah.

So maybe if you already have two children, the incremental delta is less. That's true. And you'll think like, oh, maybe it's not so bad. Maybe we could consider it. And you're quite cool. You've already got two kids. You have the experience. Our colleague here, he's getting a number five soon. Well done. So he's done well. No, but I think

I'm talking to the wrong people because all my friends and colleagues have two kids. I asked them, can you have a third one? And they're like, absolutely no. They work in this office, right? Yes. They're just here.

Except for you The idea is that They want to make it easier For families To ease a little bit Of the burden And they are doing The right thing You know Having more children For Singapore So in a way It's like We want to say Thank you And I thought It was interesting Because one of it Was standardise the fees Because that has been A real bugbear For many young parents I really like that

Very much. Tell us why. I guess those are not the private operators in a way. For many of households, sending the kids to preschool is actually costing more than the primary and kindergarten. So if you do level up the fuel, they will say, yeah, it's a little bit more affordable. And the kids, they're getting help because preschool, actually, there are a lot who are full-day preschool. That will help working parents a little bit more. Okay. So the other

thing we wanted to get on because you can't talk about families and raising children without talking about work because both parents work right and so there was quite a bit on the local workforce making them more productive giving them more credits you know one of the things was broadening it to part-time courses for example I can imagine you know you're a young parent you have a full-time job your wife has a full-time job there's no way you can take a course right with little kids but part-time

Part-time may be possible. Do you think that's what's driving this? And again, I like that very much. Maybe it could be an online module. So you could do the course and still looking after the kids at home. Still waiting for clarity because they say selected part-time courses. And I would like to think that those part-time courses are maybe tied to workplace as well. So it's not just academic course, but it is allowing you to move up

to different levels of jobs or job redesign. So I actually think that the workfare together with the SSG credit come hand in hand. To add on, for example, I think what's important this time around we can see is that the government is actually working closely with the companies as well because they understand there's a lot of friction involved, you know, to claim money, reimbursement, there's a lot of pain points going on. For this time around, what we see is that the government is aware of these pain points and is working closely through the employers.

So, if a collaboration between employers and so-called the workers together, I think this will be much more smoother in a sense. Okay, the biggest friction I would say though is inertia on the part of the worker, i.e. me. I haven't used any of my credit. No, I haven't, yeah. It's tough. So, it emerges from your employers. So, employers are aware, they can claim easily. Employers, yes, yeah.

You kind of almost need to make it mandatory and say you need to attend one course every year and go use your skills future, that kind of stuff. Yes, so I thought the customization would qualify and I think that's important. So if you were to learn something while you are at work, what would it be? I've been wanting to learn how to fry char kway teow because I love eating it. No, no, no. Come on, come on.

Then what you can use your SSG. Yeah, yeah, yeah. What does frying chocolate have got to do with that? What you're doing, Steve? Well, I mean, to retirement, maybe I'm planning for my second career after I leave media, right? Yes. But I thought the job redesign piece. Sorry.

So if there are certain jobs that are at risk at the workplace and you work together with the employer, and then you try and save the individual and not just the job. Oh, so that's in a way making a very conscious effort to say that your role may be obsolete in a few years. Let's start working on it and getting you ready for the next stage. That's right. So the skill I would pick to learn, I suppose, is social media 101.

Something like that So that you know I might be a little relevant That's right So I think it's more A collaborative effort I guess For many of us We have the money there It's just finding the way A time And a good spot to use it You know Effectively Yeah

Let's move on. Let's talk more about work because there was also a billion dollars in support for research in biotech and semiconductor chips, which seemed to be a big deal in that area. I didn't know that. Yeah, me too. So why do you think there's an emphasis in this area? You know where you are now? You're here with MediaPolis, FusionPolis, Biopolis. Right. So when we talk about the kinds of companies that we are hoping to attract, if they have high R&D...

If they have a place that they will want to locate their innovation centers, this could be the choice place because we have a respect for IP.

And we make sure that we collaborate across universities. The stickiness becomes a lot more relevant if you are having a lot of these companies that are concentrating on research and development. And so they need to be at a place where they can feel very comfortable that there's IP protection, that there is talent available.

So we are also open for talent to be placed here. But biotech, they've been doing it for a while, right? Yes, correct. So is this medical technology in that area? That's tough to do. It's very costly. Yes. DNA sequencing using quantum, all right? So the technology has to come together. So it is beyond just biotech. It is bio and tech and talent. Right.

So again, it's an ecosystem. Because we've been doing that for a while. So one could say that we're quite mature to a certain extent in that area. So this is just a further nudge. You know, R&D takes many years. So it's not something you could switch on and switch off. So that top up the enhancement is because we think we are in the right direction. We are seeing companies coming in.

And 8 out of 10 of the world's global pharmaceutical companies are here. That's right. And then they come here and guess what? They pay corporate tax. There you go. Sorry, you might want to add on. No, do you add on

for example semiconductors as well as the big thing too in Singapore right not just biomedical tech semiconductors you know AI is a buzzword for the past one two years and we're all aware of AI technology and there's this tension between US China so these are all good opportunities I think it's the correct direction for us to put our money there to say this is the way for us to have any opportunities available especially these global tensions I'm

I thought the nuclear power one was quite interesting. Yeah. It's been raised before. Yes. It's not terribly new. Yeah. But the fact that it's come up again, it's all linked to clean energy. Yeah. The needs are going up, right? Our energy needs are going up. Then the climate thing comes into play. So it's both a climate risk, you have the push factor, but you also have a pull factor. Yeah.

And I think Minister also said we are constrained. We don't have wind. We don't have waterfalls. That's right. So we can't have hydro. We can't have wind. So what are our resources? Solar energy.

We have some, but it's not going to power all of us. And everything that we need, needs lighting. EV needs charging. That's right. This is the progress. So we can't do it on our own. So it's again ecosystem. So we have to talk with our neighbors and having the SMR. That's right, the modular reactors. So not something that's going to cause risk.

but something manageable. So this is, in a way, a bit more of a push factor where we have no choice but to explore this area, right? Exactly. For future needs. Yeah, because it'll get expensive and we will need that. In Singapore's objective is to make net zero economy, okay? But to do that, we need to focus importantly on power generation.

Right now, it's about 95% of our power generation is from natural gas. And we need to find something to overcome it. And one way is to rely on something called a regional grid. So a regional grid actually can rely on Laos, Thailand, elsewhere and so forth. We pay for it. We buy energy. That's right. But the issue is that it's not so sustainable. It's a risk. One day, they decide to shut off. So that's why we look at other alternatives. So who knows? You might have boats that can carry the SMR. So who says it's got to be on land?

Okay, wow. This is very... Okay, this one's a whole other... I don't know enough to... Exploratory, yes, it's exploratory. It is, it is, but you feel it's important how it plays an important part in the whole

Actually, based on a lot of scientific reports, nuclear energy is actually one of the cheaper ones and cleaner. Okay, so you think this is going to move the needle? We have talked about clean hydrogen before as well. So we explore, as Van Huy says. I guess they're just putting it there so that at least we start thinking about it. And it's been mentioned before so people can explore more in that area.

That's kind of all tied together if you think about it because from one you give to the other to the other and you need that whole, for lack of a better word again, ecosystem to support each other. Is that really the position here? I mean, are they also hoping to rely on this corporate tax to again...

help us financially moving forward. So it's quite interesting that Minister could even forecast next year's budget surplus. I know! But then Trump is in power. I mean, there's some fluidity in the system, right? So to be fair, he did qualify. I think that it's a lot of moving parts. If everything that we have worked into the model go according to plans, we should be able to get a budget surplus.

So that kind of confidence is amazing. A lot of those companies that came in and helped us boost our revenue, they might probably have signed a five-year commitment to invest in the country. We'll stay here and maybe a lot of the tax rebates that come in makes it worth the while. So in a way, it's kind of locked in.

With some caveats in case there's some storms on the horizon. We can never forecast how companies will react and how maybe they can be politically motivated otherwise. But that's one thing we have been pretty good at doing, saving money. Here in Singapore, over the years, we've never been broke, broke, right? Yeah. And that has given us a very strong advantage, especially in COVID. We realised those resources were vital in keeping us going, right? Yeah.

So all the things, all the cards that have been played now, does it then suggest that everything is moving very quickly towards the general election? It feels that way too. They have to, right? They have to have elections by the end of the year. Okay, but our question is timing. Timing. Okay, so you saw the calendar where the goodies are being dished out, right? So, Mo,

Most of it lands in the middle of the year. But I guess it's by construction because the budget begins in April. So we only have a few months to deal with. And we can't give them too late as well and not too early in fact because of the fact that we do have CDC vouchers in January. So we should space them out to prevent people from overspending and spread out across the years. Our thing is too hard

It's hard to say. You cannot use the title to call it an election budget. I won't call it an election budget. I'll call it a celebratory budget. Oh, okay. Yeah, because if you notice, the bulk of it is before August 9th. Yeah. So to celebrate, you have a few months in your vouchers. Wow, then what is an election budget? Even Goodyear Goodyear? I don't know.

That would be part of this whole process Right, right, right But I love the idea that it's an SG60 budget Okay, so she looks at it more like a Singapore celebration And this is a year of celebration We have a big birthday It's coincidence then, it's election year Okay, but no, if we had to pin you down for Pick a month Pick a month School holidays School holidays? But half the country is gone That's when Ah

early part of the school holidays. Okay, okay. For logistics reasons, right? School holidays, right? Like early June, you're saying? June or September, right? There's only two possibilities, right? June or September. September don't have a long break. It's a one-week break, yeah. Yeah, just for logistics reasons. But...

How can you ask two professors who don't know anything about politics? We do economics. And everybody's got a say on this. We all have an opinion, right? Yes, exactly. So there's no right or wrong. Come on, it's in all our WhatsApp chats. Down to the dicks. Okay, I'll check after this. There's only one man who knows right now and he hasn't shared it with his WhatsApp chat group yet. I think he hasn't told the guys. Hey, hey.

He's a bit under the weather. Any last things that you want to point out about the budget? Like what surprised you? You know, what do you think is a little bit more work in progress? I like the elderly part as well. And the help that is given to a lot of home care and the home caregivers. So I thought that was very good. It's very inclusive. And I think it is also one of the big worries that's in the heads of a lot of our sandwich population. That's right. Yeah. So I quite like that piece.

I like the fact that they actually did not mention much about foreign workers this time around. Because for the past few budgets, they did mention about foreign workers' limitations and so forth. But this time around, we did not put it in. So I thought it's quite interesting. Because for the past few years, we've experienced, for example, when the government restricted foreign workers' quota, we changed the local qualifying salary and so forth, because in hope to have more locals being employed in a way. But this time around, we can see the focus is a bit shifted to more of the skills future, in which we actually added

make sure that people actually have more skills involved. And so subsequently, we have this part-time training and so that actually we can rely more on ourselves than limiting foreign workers. So an emphasis more on Singaporeans and Singapore workers, right? Yeah, that's also a good interpretation. Yeah, but I think they're worried about the Singapore workers, you know, in terms of job displacement because of AI and etc. Good to concentrate your attention on what can be done ourselves.

Yeah, and now we're giving you the resources, more money, so to speak, to help you elevate. I call it, we own that destiny. So the first 60 and the next 60. Okay. So if we could use those funding and those training well, then we are leaving behind for our children and the grandchildren something for their next 60. So spend your CDC vouchers wisely, guys. In fact, you can spend it quickly too because there's another one coming quite soon.

Can you spend beyond that $5 chakwitia? Yeah, okay, okay, okay. I'll try. Go to my favourite supermarket. So thanks so much for joining us. This has been Deep Dive. Of course, if you have any comments and thoughts to share with us, do drop us a note. But otherwise, a shout out to our team. Tiffany Ah, Janani Johari, Joanne Chan, Sayawin and Hanida Amin. Bye for now. Bye.