B. Tackling Immediate Challenges

 

B. Tackling Immediate Challenges

  1. 13. Sir, we have enjoyed low inflation in Singapore for more than a decade. But inflation rose sharply in 2022, following the outbreak of the war in Ukraine, which led to significant increases in global energy and food prices.
  2. 14. Despite the unprecedented surge in prices, we had good economic growth in 2022. So incomes that year rose faster than inflation and Singaporeans were better off, in real terms.
  3. 15. Unfortunately, this did not happen last year. Inflation had in fact started to moderate. But economic growth also slowed. As a result, real incomes declined.
  4. 16. We had picked up early indicators of this negative trend. And that is why I introduced the Cost-of-Living Support Package in September last year, and enhanced the Assurance Package to over $10 billion.
  5. 17. While we expect the situation to improve this year, there are uncertainties in the outlook as I mentioned just now. So in this Budget, I will do more to support households and further enhance the Assurance Package.
    1. a. First, I will provide an additional $600 in CDC Vouchers for all Singaporean households. The first $300 will be disbursed in end-June this year. The remaining $300 will be disbursed in January next year.
    2. b. Second, I will provide a Cost-of-Living Special Payment of between $200 and $400 in cash. This will be extended to adult Singaporeans with Assessable Income of up to $100,000, and who do not own more than one property.
    3. c. Third, I will provide additional one-off U-Save rebates to help households cope with increases in their utility bills. In total, eligible HDB households can expect to receive two-and-a-half times the amount of regular U-Save rebates, or up to $950, in FY2024. This will cover about four months of utility bills for those living in 3- and 4- room flats.
    4. d. Fourth, I will provide an additional one-off Service and Conservancy Charges (or S&CC) Rebate for HDB flats. Together with the regular S&CC rebates, eligible HDB households will receive up to four months of such rebates in FY2024.
    5. e. Altogether, the additional support under the Assurance Package will cost $1.9 billion. (See Annex B-1 for details of the enhanced Assurance Package.)
  6. 18. We have designed this Package so that lower-income families get more support. We have also ensured that larger households, particularly those with seniors and children, get more support.
  7. 19. Let me give some illustrations:
    1. a. A lower-income household of four, with two young children, will receive about $5,500 in benefits in FY2024. This comprises cash, MediSave top-ups, U-Save and S&CC rebates, and CDC Vouchers.
    2. b. A middle-income household of four, with two young children, will receive about $3,000 in benefits.
    3. c. A middle-income household with six persons – a larger family – including two seniors and two young children, will receive about $8,000 in benefits.
  8. 20. Sir, these are concrete ways to help Singaporeans tackle cost-of-living pressures. Let me assure everyone: we will always have your backs.
  9. 21. Beyond the Assurance Package, I will top up the GST Voucher Fund by $6 billion. This delivers on our commitment to permanently defray GST expenses for lower- and middle-income households, through the GST Voucher scheme.
  10. 22. Businesses also need help to manage rising costs. Many companies have seen increases in their wage bills, rental, and utilities, amongst others. I will therefore introduce an Enterprise Support Package, which will provide $1.3 billion in support to companies.
    1. a. First, companies will receive a 50% Corporate Income Tax Rebate, capped at $40,000, in the Year of Assessment 2024. Not all companies are profitable, and some may not benefit from such a rebate. So I will provide a minimum benefit of $2,000 in cash payouts for companies that employed at least one local employee in 2023.
    2. b. Second, I will enhance the Enterprise Financing Scheme, which helps Singapore enterprises with their financing needs. The maximum working capital loan quantum will be permanently raised to $500,000. I will also extend until 31 March 2025 the enhanced maximum trade loan quantum, as well as the Government’s risk sharing of project loans to support domestic construction projects.
    3. c. Third, I will extend the SkillsFuture Enterprise Credit by a year to 30 June 2025. The Credit provides additional support for eligible employers to cover their out-of-pocket expenses when they embark on workforce and business transformation. With this extension, employers will have another year to claim any unused credit.
    4. d. The measures in this Enterprise Support Package are tilted towards firms that make the effort to restructure and transform. I encourage all firms to make full use of these schemes, so that they can thrive and succeed, amidst a more challenging operating environment. (See Annex B-2 for details of Enterprise Support Package.)
  11. 23. The enhanced Assurance Package and the Enterprise Support Package will provide some near-term relief to Singaporean households and firms. These are needed during this period when inflation, while moderating, remains on the high side. But they are not permanent solutions. In the longer term, the best way to deal with inflation is to ensure that our firms and workers are more productive, and that real incomes continue to rise sustainably.