2017 Budget Wrap: What you need to know

More money for sports, older employees, diesel and carbon taxes, higher water prices, higher motorbike prices.

“This strong, can-do spirit will serve us well in the years ahead. Let us go forward together” Mr Heng

• Budget 2017 reaffirms our commitment to keep Singapore a vibrant city.
• Budget 2017 helps us thrive in an uncertain and rapidly changing world.
• Budget 2017 supports families who wish to buy a home and help their children through post-secondary education.
  Overall, a smaller budget surplus of $1.9 billion, or 0.4% of GDP is expected.
• FY17 budget remains expansionary. Ministries' expenditures are expected to be $3.7 billion, or 5.2% higher than in FY2016.
• Government expects basic deficit of $5.6b or 1.6% of GDP in FY 2016.
• Government to introduce two more tiers for more expensive motorcycles.
  • Refinements to vehicle taxes for motorcycles. Buyers are getting expensive motorcycles, which have the same fees similar to small cars. Two more tiers will be introduced for more expensive motorcycles. The ARF for such with OMV up to $5,000 will remain at the current 15%. the next $5,000 will be subjected to rates 50%, and any remaining amount above $10,000 will incur 100%. More than half of new motorcycle buyers will continue to pay the current ARF rate of 15%. 
• Government to apply a permanent 2% downward adjustment to budget caps of all Ministries from FY17 onwards to emphasise the need to be prudent.
• Mr Heng lays out plans for sports and culture
  • Cultural Matching Fund will be boosted with an additional $150m.
  • To help aspiring athletes, government to provide $50m in grants over 5 years. Another $50m will be provided to match sports donations dollar-for-dollar.
  • Government says $50m set aside to support community sports.
  • The Sports-In-Precinct Programme and SportsCares Programme will be enhanced
• Mr Heng says over the next five years, up to $100 m will be provided to develop the capabilities of VWOs and charities.
• He talks about assisting households
  • GST voucher will be increased for up to $120.
  • Families living in two-room HDB flats will get $380 of U-Save rebates each year compared to
  • Those living in 3- and 4-room HDB flats will receive $340 and $300 per year respectively, 
  • Taking into account these higher U-Save rebates, 75% of households will see an average increase of less than $12 in their monthly water expenses. 
  • About 880,000 HDB households will benefit
  • Government will incur an additional $71m per year.
• Mr Heng talks about the support for PWDs and those with mental health conditions
  • We will launch a Third Enabling Masterplan, calling for the government to integrate PWDs in the workforce. Training programs will be available to PWDs.
  • Caregivers will be supported with the establishment of Disability Caregiver Support Centre.
  • Around $400m will be spent on the PWD support programmes.
  • Last year, we MOH launched Dementia-friendly communities. It wil be expanded this year. 
  • Around $160m will be spent in the next five years 
• Mr Heng gives announcement on Post-Secondary Education Institutions
  • Annual bursary amounts will be increased for those attending PSEIs
  • The amount of increase will be boosted to $400 for undergrads, up to $350 for diploma students, and up to $200 for ITE students. 
  • Bursaries will be extended to more families by revising the income eligibility criteria. About 12,000 more Singaporean students are expected to benefit, upping the total number to 71,000.
  • Overall, PSEI bursaries will increase from about $100m to $150m.
• Mr Heng now discusses preschool accessibility
  • Improve accessibility of preschool. Over the last five years, child care places by over 40% to 140,000. 
  • About 4,000 or 8% infants are enrolled in centre-based infant care. We will increase the capacity to over 8,000 by 2020.
• Mr Heng talks about strengthening Singapore households:
  • Government to increase subsidies for those who buy their first HDB homes. CPF housing grants to increase from $30,000 to $50,000 for couples who purchase 4-room or smaller resale flats, and from $30,000 to $40,000 for couples who purchase 5-room or bigger resale flats.Increase water prices by 30% in two phases beginning in July.
  • A couple can now receive a total of up to $110,000 in housing grants when buying a resale flat, depending on the location, type and their income.
• Mr Heng now speaks about water. Water sufficiency is a matter of national survival
  • The cost of water production and transmission has increased. Water prices were last revised in 2000.
  • Water prices will be increased by 30% in two phases, starting July 2017.
• Two vehicle incentive schemes adjustment to encourage the use of cleaner vehicles:
  • Carbon Emissions-based Vehicles Scheme (started in 2013) will be replaced by a scheme that will consider other pollutants on top of CO2. This will run for two years starting next year.
  • We will enhance and extend the early turnover scheme for commercial diesel vehicles. It started in 2013, since then owners have switched 27,000 vehicles to cleaner ones.This will be extended until July 2019
• The current Carbon Emissions-based Vehicle Scheme (CEVS) was implemented in 2013 to encourage the take-up of cars and taxis with low carbon emissions. Government will replace it with a new Vehicular Emissions Scheme, which will consider four other pollutants on top of carbon dioxide, so as to account more holistically for the health and environmental impact of vehicular emissions.
• The special tax reduction will offset the impact of diesel duty for the majority of drivers. Taxi firms must pass the tax reduction to drivers. To help firms adjust, 100% road tax rebates for one year will be given for commercial diesel vehicles.
• Another source of pollution is diesel. The overuse of diesel vehicles in other cities like London has resulted in a big envelope of smog in recent years. Singapore must learn from this.
• Public consultations for carbon tax will begin in March. 
• Government is looking at a tax rate of between $10 and $20 per tonne of greenhouse gas emissions.
• Government plans to implement a carbon tax from 2019 on the emission of greenhouse gases. 
• Singapore has joined more than 130 countries in having ratifed the Paris Agreement, reaffirming its commitment to address climate change.
• A vibrant city must have diverse social spaces. The government is currently working on developing the design of Jurong Lake Gardens.
• We must try remain a vibrant and well-connected city. In this way, our people are constantly in touch.
• We will invest in critical infrastructure such as New Changi Airport Terminal 5, the HSR to deepen Singapore’s connectivity to global markets.
• We are also investing in shared infrastructure for economic clusters.  
• Mr Heng explains the plans to boost SkillsFuture movement
  • This will be over and above the $4.5b set aside last year for the industry transformation programme.
  • Government putting aside $2.4b over the next four years to implement the CFE strategies. 
  • Government will top up National Research Fund by $500m to support innovation efforts.
  • The National Productivity Fund will be given another $1b to support industry transformation.
  • Government agencies need to play enabling roles to help realize new ideas.
• Government will develop ITM for 23 sectors. Six have already been launched. The remaining 17 will be launched over FY17.
• Industry Transformation Maps (ITM) are integrative platforms bringing together stakeholders to transform each sector.
• Employers and unions must play an active role in conducting training for their workers
• We must make sure that skilled workers are placed in jobs matching their skills
• Besides learning new skills, our people must also apply and use skills on their jobs.
• Two areas: new skills to operate overseas, and deepening skill sets to help them operate on the job
• The Government will also help individuals deepen their capabilities.
• Government aims to groom 800 potential leaders over 3 years. Government to allot $100 million to build capabilities under the Global Innovation Alliance and Leadership Development Initiative.
• Government to launch initiatives to help enterprises go international, go digital, and to innovate.
• These enhancements will enable more companies to take on more overseas projects.
• We will continue to develop smart financing ecosystem. We will commit $600m in government capital for a new international partnership fund to help firms internationalise.
• With increased digitalisation, data will become an important asset for firms, and strong cybersecurity is needed for our networks to function smoothly. More than $80 million will be made available for data and cybersecurity programmes.
• The Government will introduce SMEs GoDigital Programme to help them develop digital capabilities. Its 3 components are:
  • SMEs will get step by step advice on the technologies to use at each stage of their growth.
  • SMEs will get in-person help at SME centres and the new SME tech hub to be set up by IMDA.
  • SMEs will receive advice and funding support. 
• The Additional Special Employment Credit will be extended until 2019. This will benefit about 120,000 workers  and 55,000 employers, and will cost about $160m. These measures will give businesses support of over $1.4b over the next year.
• Two measures to support firms
  • This year, corporate income tax rebate will be raised to $25,000. Rebates will remain 50% of tax payable. CIT rebates will be extended for another year at a reduced rates of 20% of tax payable capped at $10,000. This will cost an additional $310m over 2017 to 2018.
  • We will provide more support to firms hiring old workers. MoM raises reemployment age from 65 to 67. 
• Over the next two to three years, some firms may need help to manage costs and cash flows. We will continue to receive support from schemes:
  • The Wage Credit Scheme will continue to help firms cope with rising wages. More than $600 million are expected to be paid out to businesses next month. About 70% of this amount will be to SMEs.
  • The Special Employment Credit will continue to provide employers with support for the wages of older workers till 2019. More than $300m, which will benefit 370,000 workers, will be paid out in FY2017.
  • The SME Working Capital Loan will continue to be available for the next two years. 
• An additional sum of up to $26m a year will be committed from the Lifelong Learning Endowment Fund and the Skills Development Fund to support these initiatives.
• Government will introduce an Attach and Train programme for sectors that have good growth prospects but where companies may not be ready to hire yet. Industry participants can send workers for training and attachments. This will increase the chances of these workers to find a job later.
• Government will strengthen this under the Career Support Programme, the Professional Conversion Programme, and the Work Trial Programme.
• Last year MOM launched an Adapt and Grow initiative to help workers find new jobs.
• Government will help workers to adjust to the structural shifts in the economy.
• Firms and workers in retail will need to embrace digital capabilities to stay viable.
• Construction firms will be able to bid for and participate in these projects.
• To support the construction sector, we also bring forward $700m worth of public sector infrastructure projects to start in FY17-18
• Budget 2017 will take a learning and adaptive approach to refine and adjust our goals.
• Resident employments increased, foreign employment contracted.
• Overall unemployment rate was 2.1% in 2016. Redundancies increasing and workers take longer to find jobs.
• Last year, we achieved a growth of 2%. This relies on uneven performance across sectors such as electronics, ICT, and education did well. Some sectors are hit by weaknesses like marine and offshore and construction.
• Sectors like retail are facing structural shifts.
• The picture of the labour market is mixed. Unemployment rates remained low at 2.1% in 2016.
• We can achieve 2-3% growth if everyone who wants to work can find a place in the labour force.
• Budget 2017 will take a learning and adaptive approach to refine and adjust our goals.
• These deep shifts around the world will create opportunities around the world.
• BUDGET THEME: Moving forward together