SINGAPORE — On the first day of the Budget debate, several Members of Parliament (MP) called for more efforts to help low- and middle-income households with the rising cost of living, while questioning whether the Government's approach of handing out vouchers and rebates is sustainable and the best method. 

A S$1.9 billion enhancement to the Assurance Package will include cost-of-living special payments of between S$200 and S$400 in cash for around 2.5 million Singaporeans aged 21 and above.

All Singaporean households will also receive an extra S$600 in Community Development Council (CDC) vouchers, while eligible households living in Housing and Development Board (HDB) flats whose members do not own more than one property will receive 2.5 times the amount of regular Goods and Services Tax (GST) Voucher – U-Save rebates in financial year 2024.

In a debate lasting more than seven hours in Parliament on Monday (Feb 26), several MPs discussed the role of direct government assistance, as some cautioned against over-reliance on broad-based handouts. 

'ONE-OFF HANDOUTS'

While cash payouts, vouchers and rebates may offer short-term relief for rising costs of living and GST expenses, some MPs highlighted the importance of addressing the root cause of these increases.

Non-Constituency MP Hazel Poa of the Progress Singapore Party (PSP) said that domestic factors such as rising property prices, population policy and increased GST have an impact on prices.

While providing handouts may be “easier”, she suggested that containing costs, such as exempting a list of basic necessities from GST, and raising wages to keep pace with rising costs would be a better long-term solution.

Mr Lim Biow Chuan, MP for Mountbatten, said that high rental prices for commercial properties and labour costs lead businesses to inflate cost, which can be regulated by the Government setting restrictions on rental prices for commercial properties and a review of the foreign worker dependency ratio.

In contrast, handouts can only help individuals mitigate increased expenses in the short term and citizens may ask for “more and more” of such measures and develop a “crutch mentality” for such handouts, he added.

Workers’ Party (WP) MP Louis Chua emphasised the need for “structural changes” rather than one-off handouts, as new schemes or schemes that have to be refreshed every year could “(create) much uncertainty” among Singaporeans. 

These schemes would also incur administrative costs and resources for the civil service to operate, he added. 

SUSTAINABILITY OF HANDOUTS 

Finance Minister Lawrence Wong said in his Budget statement that despite inflation moderating, it remained on the “high side”, adding that the enhanced Assurance Package would not be a permanent solution in dealing with inflation. 

During Monday’s debate, some MPs warned that cost-of-living payouts could potentially contribute to inflationary pressures and questioned whether a reliance on handouts would be sustainable in the long run. 

Ms Foo Mee Har, MP for West Coast Group Representation Constituency (GRC), said that although the mix of cash, vouchers and rebates will boost individual cash flows, a careful and calibrated approach in delivering handouts is needed to ensure that people do not become reliant on handouts over time.

Government handouts to fight inflation may run the risk of prolonging inflationary pressures and create a “vicious escalation in prices” as demand increases.

“The generous direct transfers to cushion residents from elevated inflation may, ironically, add to further demand and reverse the early signs of moderation on inflation,” Ms Foo added. 

Similarly, East Coast GRC MP Cheryl Chan said that the long-term provision of vouchers to cushion the rising cost of living would place a fiscal burden on the Government. 

While such schemes may have an “instant effect” in addressing current inflation, Ms Chan suggested that the impact of such packages should be continually tracked and benchmarked with the intent of the package. 

Several MPs also cautioned against encouraging a dependency on government assistance to deal with cost-of-living pressures. 

In November last year, Leader of the Opposition Pritam Singh proposed various “structural changes” to existing policies to move beyond one-time fiscal handouts, during a parliamentary motion tabled by the WP on cost of living concerns. 

On direct assistance measures introduced in Budget 2024, Non-Constituency MP Leong Mun Wai from PSP said that a “traditional handout approach” by the Government would not “empower the individual” in taking the initiative to improve his circumstances. 

Low-income workers may have little incentive to improve themselves and end up having “lower self-esteem” if their basic pay is still very low, he added.

Instead of a "patchwork scheme of vouchers, rebates and top-ups", he highlighted his party’s “permanent scheme” approach to provide a minimum level of support and incentive mechanism for Singaporeans through a consolidated few permanent, national schemes such as a minimum living wage and PSP’s affordable homes scheme. 

SUPPORT GEARED TOWARDS 'TARGETED GROUPS'

Some MPs also questioned the permanency of cost-of-living payments, vouchers and rebates, and whether these benefits should continue to be provided for most of the population. 

WP's Mr Chua said that the CDC voucher scheme, for instance, had evolved from being aimed at helping low-income Singaporean households defray their cost of living in 2020 to one where all Singaporean households are eligible.

Rather than “broad-based” handouts to everyone, Mr Chua said that it is important to direct resources to “those who need them the most”. 

He also raised the question on whether the CDC voucher scheme would become a permanent one that would continue to benefit all households and what the vouchers would be worth, given that the amounts have “varied quite significantly” across different disbursements. 

Financial support should be provided to targeted groups of individuals and those who cannot manage without assistance, but Ms Chan from East Coast GRC also questioned how the Government would fund support schemes such as the Assurance Package and CDC vouchers should they be made permanent. 

“Everybody likes ‘free money’, but it is important we always prioritise our fellow Singaporeans who might need a bit more help and continue to support them as a national family,” she said. 

Tanjong Pagar GRC MP Joan Pereira said that the S$6 billion top-up to the GST voucher fund would “secure the permanent defrayment of GST expenses” for low- and middle-income households, but suggested that this or future batches of vouchers could be pegged to the number of persons in each household. 

For example, three or four generations or an extended family could all reside in one address due to financial limitations or to facilitate care arrangements, which would make a “headcount-based” CDC voucher system more appropriate.

Ms Pereira also appealed for more middle- and long-term support for the “sandwich generation”, or those who have to look after both their elderly parents and young children, while preparing for their own retirement needs.