Singapore Strategy Budget 2024 – The Social Health Ageing Retire Educate (SHARE) Budget
19 Feb 2024- FY2023 overall fiscal deficit was S$3.6bn (0.5% of GDP), much larger than the estimated deficit of S$0.4bn (or 0.1% of GDP). The primary balance was better than expected, but a jump in special transfer (Majulah Package) by S$7.5bn widened the expected deficit. FY2024 is expected to show a surplus of S$0.8bn (or 0.1% of GDP).
- The budget theme was for a SHARED future. Social support for the cost of living and reducing inequality, raising the eligibility of healthcare subsidies, more facilities for the aged, extra payouts for retirees, and more aggressive programs to upskill the workforce.
- Compared to last year’s budget, there is the usual cost of living package, but more focus was given to building up the nest egg for seniors and upskilling the workforce. Absent were higher consumption taxes on the wealthy. The focus on infrastructure spending shifted from climate-related spending to energy transition. The increased spending and handouts for households will benefit consumer spending, especially for staples. Beneficiaries will be supermarkets and suburban malls.
Key Highlights
We break down the budget into 5 key components:
- Social: To cope with the cost of living, S$1.9bn support is provided under the enhanced Assurance Package that provides CDC vouchers for households, special one-off payments, and utility bill rebates. To reduce inequality of wages, there is a raised LQS (or “minimum salary”) from S$1,400 to S$1,600 per month. There is a rise in the wage level for lower-wage workers eligible for cash support.
- Health: To cope with rising healthcare costs, the increase in GST was to pre-fund such expenditure. There is a further one-time MediSave Bonus and a rise in income eligibility for several healthcare subsidies.
- Ageing: Around S$3.5bn set aside for Age Well SG. This includes more active ageing centres, assisted living options, and improved amenities for seniors.
- Retirement: Increased CPF contribution for those aged 55 to 65 by 1.5% points and raised payouts and bonus payments to lower-income retirees. The bonus payments under the Majulah Package will have a lifetime cost of S$8.2bn.
- Education: To skill up mid-career workers, a S$4,000 credit under SkillsFuture Level-Up for all Singaporeans (above 40) for training plus training allowances equivalent to 50% of average income over 24 months.
Sector snippets
- Total expenditure on defence rose almost 17% in FY23 to S$19.7bn. The budget for FY24 is a slower growth of 2.5% to S$20.2bn.
- Additional S$2bn for the Financial Sector Development Fund to largely adopt new technologies and develop green financing in the financial services sector.
- Incremental benefit from a one-time MediSave bonus (S$300) for all adult Singaporeans and a Majulah Package Bonus (S$750-S$1000). Nevertheless, budgeted healthcare sector expenditures are expected to grow 4.6% in FY24 (FY23 +4.9%).
- Additional S$5bn spending on green infrastructure and new fuels such as hydrogen and nuclear not ruled out.
- Widen the ABSD replacement property refund to seniors and developers are granted ABSD remission if they sell 90% (from 100%) of the units in their development.
- The additional S$600 CDC vouchers, cost-of-living special payments, and additional utility rebates will support retail expenditure on consumer staples.
- Alternative basis of taxation based on the net tonnage of the ships.
- Upgrade the National Broadband Network from the current average speed of 1 GBps to 10 GBps.
About the author
Paul Chew
Head of Research
Phillip Securities Research Pte Ltd
Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.
He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.
About the author
Paul Chew
Head of Research
Phillip Securities Research Pte Ltd
Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.
He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.