The 2018 Budget ended up being hijacked by the debate on Finance Minister Heng Swee Keat’s announcement that the Goods and Services Tax (GST) will go up between 2021 and 2025. What a pity!
More important issues like whether it is a panacea for future growth, how much of the reserves we will need to fund social spending and how the surprise surplus of $9.6 billion (instead of the $1.91 billion that was forecast) will be used were barely discussed.
What was staring us in the face but hardly discussed was this question: Could the huge amount of money being set aside for healthcare, infrastructure and education have been anticipated and released in bits and pieces in earlier budgets, instead of all at once with Budget 2018?
The total planned expenditure for the above three areas is $43 billion with healthcare taking a huge share of GDP – from 2.2 per cent today to 3 per cent in the next 10 years. “This is an increase of nearly 0.8 percentage point of GDP, or about $3.6 billion in today’s dollars. Within the next decade, healthcare spending is expected to overtake education,” said the Finance Minister.
Most of it will go into building five more general and community hospitals, four new polyclinics and more nursing homes and eldercare centres in anticipation of a burgeoning senior citizen population.
But looking after the medical and other needs of these older people is not an issue that appeared overnight. As far back as 10 years ago, there were reports of an acute hospital bed crunch. The statistics were there for all to see. According to a Today report, the proportion of patients above the age of 65 admitted to public hospitals went up from 28.6 per cent in 2006 to 33.4 per cent in 2013. How did the government miss the tell-tale signs? Why did it not react quicker – and earlier – to put money aside for the downside of this brewing demographic fallout?
Then there is the all-too familiar story of underinvestment in MRT’s ageing infrastructure that triggered the costly rail meltdowns and embarrassing departure of SMRT’s CEO Saw Phaik Hwa and Transport Minister Lui Tuck Yew.
Take the Bukit Panjang LRT system which started acting up soon after it was opened 18 years ago. Now, $344 million is being set aside in the Budget to upgrade the problematic line. Again, how did the government planners drop the ball?
Overall spending is going up by $10 billion this year compared with 2017, putting huge pressure on raising revenue to meet this ballooning increase. All that time wasted on hair tearing in Parliament about whether GST should be increased might not have happened if the planners had done their job properly. Now the burden falls on Budget 2018, the Finance Minister and the unsuspecting public.
Playing catch up
Playing catch up has become a norm with this government. It was slow to react to a groundswell of negative public sentiment against an indiscriminate immigration policy that saw a rush of foreigners to the country before the 2011 general election. The bitter lesson of a lack of forward planning that led to a shortage of public housing and the transport crush forced upon the country by the lifting of the floodgates to foreigners has not been learned.
Just look at how ComfortDelGro’s business has been battered and bruised by disruptors like Grab and Uber. Its share price for the year 2017-18 went down by 11.5 per cent with its operating profit dropping to $409.2 million. Its taxi fleet has shrunk to an all-time low of 13,244 and 5 per cent of its cabs remain idle. It is not as if Uber and Grab were unknown entities. They were already causing a revolution in the cities they moved into, yet ComfortDelGro was caught sleeping. Meanwhile, the shared bike phenomenon and the use of electric scooters had long been known within transport circles. Yet, only now has the Land Transport Authority has started to act.
A common thread runs through these embarrassing setbacks: A lack of competition and a leadership that is not checking itself constantly. Budget 2018 is a catch-up Budget and is the latest example of a government in danger of losing its direction.
P N Balji is a veteran Singaporean journalist who was formerly chief editor of Today, as well as an editor at The New Paper. He is currently a media consultant. The views expressed are his own.