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20 Feb 2019
Ministry of Finance
Suggestion View - 545
Budget 2019 - What are the key issues?

The minister of finance Heng Swee Keat presented the Budget for 2019 to Parliament. The analysts and public commented on the main items covered in the budget. 

I like to talk about the items that he did not cover in the budget. These are the items that are critical to the future of Singapore. 

What are these items?

I will deal with the following:

a) Cost of living
b) National service
c) Low birth rate
d) Health care cost
e) Central Provident Fund
f)  Declining value of HDB flats

Cost of living
We have perhaps the highest cost of living in the world. This is large contributed by the high cost of housing but there are many other factors that contributed to it.

What can we do to bring down the cost of living? One important step is to abolish GST. This will bring down the cost of living by up to 10%. The actual rate of GST is 7% but we should also add the cost to business of handling the GST accounting.

Can we afford to give up this revenue which accounts to about $11 billion a year? We can. We only need to take the land sale (which is estimated to be $10 to $25 billion a year) as revenue. 
National Service
We now spend $15.5 billion a year on defense. We maintain an active reservist force of 1 million trained soldiers. Apart from this high cost, we have in recent months seen many death of NS men and reservists during training.

We need an adequate defense capability. But do we need to spend so much and to have such a large reservist force?

I have done some research on the spending of the size of the military force and spending of other countries in similar situation to Singapore and of our neighboring countries. I conclude that we can afford to spend less on defense and still have an adequate defense capability.

We do not need our male citizens to send two years in full time national service and ten years in active reservists service. This is a heavy burden on them and impact their careers and setting up a family.

Low birth rate
We have one of the lowest birth rate in the world. This is largely cost by the high cost of living, the insecurity of jobs, the inadequacy of wages, the high cost of raising children and the delay in getting married due to national service.

We have faced this problem for more than three decades now. We have adopted many packages in past budgets to encourage families to have more children. They have largely failed. 

We need a new approach to address this issue. It should be a priority measure in the budget. We should provide an adequate allowance to the family to raise each child and reduce the cost of medical and child care. 

Health care cost
International comparison showed that we have a high quality of health care and the cost is quite modest. But this is not the perception of many people. They are are worried about the high cost of health care. Why? 

The main cause is the complicated system of Medisave, Medishield, Medisfund and Careshield. Although the public put in a lot of money into these schemes, they find that these schemes are not able to pay for the cost of treatment. They have to pay a significant portion out of pocket. The accounts of Medishield and Careshield showed big surpluses. It received large annum sums paid in premiums but the payouts are quite low.

We need to introduce control over the prices of medical treatment that is successfully adopted in other countries. The public sector should set their fees based on actual cost and be a benchmark for the private sector.  We have to simplify and streamline our current schemes.

Central Provident Fund
The problems with CPF are the low interest rate, the frequent changes in the rules on the use of the CPF savings, and the delay in withdrawal of the savings. 

Some people wants to withdraw their savings at 55, which was originally promised to them, but they find that the withdrawals are now being delayed to 70 and the money can only be taken out in monthly installments.

We need to change CPF to pay a better rate of return and to provide more flexibility for early withdrawal of savings to meet the financial needs of the members. There is no need to keep most of the savings for the future when the members may need them earlier.

Declining value of HDB flats
The HDB flat owners paid a high price for the HDB flats. They got the impression from past statements of government leaders that the HDB flats will always appreciate in value. They now find that the HDB flats will drop sharply in value after it passed the 40 year mark.

There is nothing much that can be done about the fact that the HDB flat will have zero value at the end of the 99 year lease. However, we can make changes to allow the values to decline gradually and avoid the sharp drop at the 40 year mark. 

I am disappointed that the finance minister had failed to address the key concerns of the citizens in Budget 2019 

Tan Kin Lian

Remember to vote (agree, disagree) to my views.



Agree: 24  Disagree: 1  Vote