Looking to 2024: Singapore Budget – Navigating present challenges while enhancing long-term social inclusivity and economic sustainability

Since Singapore’s early years, the Budget has played a pivotal role in laying out the nation’s fiscal framework and shaping its economic trajectory. Following independence, its focus was on employment and infrastructure. In the 1980s and 1990s, as the economy accelerated and matured, the focus shifted towards high-value manufacturing and the growth of the services sector.

In more recent times, the Government has signalled increased emphasis on aspects such as the social compact, inclusiveness, social mobility and equality, while balancing the exigent demands of a more uncertain global political and economic environment, and a stepped-up pace of technological disruption and transformation. Sustainability has also emerged as a strong theme. 

Budget Statement 2024 was delivered by Deputy Prime Minister and Minister for Finance Mr Lawrence Wong in Parliament on 16 Feb 2024. What are the key themes that have emerged and how will the measures impact Singapore’s future directions, as well as address the everyday concerns of Singaporeans? 

In this third instalment of the Looking to 2024 series, academics from the NUS Faculty of Arts and Social Sciences, the Institute of Policy Studies at the Lee Kuan Yew School of Public Policy, and NUS Business School share their insights on the salient objectives and initiatives of Budget 2024.

Towards a cohesive and inclusive society 

Dr Kelvin Seah, Senior Lecturer at the Department of Economics, Faculty of Arts and Social Sciences, believes that the Budget continues to build on efforts to shape an inclusive Singapore through a multi-pronged approach that addresses an array of issues through varied initiatives. 

"This year’s Budget is a special one because it bears the fruit of the Forward Singapore exercise – a government endeavour to engage people from all walks of life in collectively shaping Singapore’s future progress. It seeks to unite our people amidst a more uncertain and fragmented international environment. Beyond addressing the immediate cost-of-living concerns and longer-term strategies to raise the productivity of workers and businesses, what stands out to me is its multi-pronged effort to build a fairer and more inclusive Singapore, through initiatives such as the ITE Progression Award to uplift the capabilities and career prospects of ITE graduates, the ComLink + Progress Packages to provide customised support for lower-income families, moves to alleviate the cost pressures on families with children with special needs, and financial help for workers who find themselves involuntarily unemployed. Though the measures are well-intended, there will be challenges – to be successful, many of them will require the buy-in of stakeholders. Clarity of public communication is therefore key. A case in point is the decision to close the CPF Special Accounts for those aged 55 and older. Greater public communication and education through easy-to-comprehend examples should be given, so that the public, particularly the elderly, understand the rationale for the move and how exactly it will affect them."

A balancing act 

Dr Clara Lee, Senior Research Fellow at the Institute of Policy Studies, observed that the Budget seeks to balance near-term and long-term goals, such as assisting households – especially those at the lower-income levels – with more support, while raising overall long-term labour competitiveness and mobility through skills upgrading.  

"Measures to alleviate rising living costs are evident in Budget 2024, with a S$1.9 billion enhancement to the Assurance Package providing cash, rebates and vouchers that will particularly benefit low- and middle-income households. However, it is relatively modest compared to the S$3 billion boost in Budget 2023. This indicates the start of a possible transition away from substantial financial assistance that peaked during the pandemic years, as fiscal prudence remains a priority of policymakers in managing the nation’s economic resources.

Complementing near-term financial relief, the Budget also focuses on building long-term economic resilience by expanding SkillsFuture and supporting the involuntarily unemployed. Possessing relevant skillsets reduces one’s vulnerability to labour market disruptions, but beyond cost concerns that can be addressed through more subsidies and allowances, other barriers that remain will limit its utility, including the lack of time and support from employers and perceived opportunity costs. Initiatives to help the involuntarily unemployed are new to Singapore, and while details are scarce, the government’s intention to foster personal responsibility and a strong work ethic suggests the likelihood of relatively strict conditions, which may encompass active job searches and/or participation in upskilling programmes."

Immediate challenges, long-term goals 

Dr Xu Le, a lecturer at NUS Business School, notes that the Budget seeks to balance the needs of households and businesses in addressing near-term pressures such as inflation, while pressing ahead with efforts to achieve sustainable economic growth, in particular, through a high-skills labour force strongly supported by a robust SkillsFuture ecosystem.

"The Budget 2024 prioritises addressing the immediate challenges encountered by Singaporean households and firms. A comprehensive package, comprising a special cash payment, additional Community Development Council (CDC) vouchers, and household rebates, is being disbursed to financially support Singaporeans in coping with the escalating cost of living amidst a high-inflation environment. In addition, it provides S$1.3 billion in support to companies to manage the rising costs of operation and raw materials.

This initiative aims to alleviate concerns about the cost of living and running a business, as well as offer robust assistance to citizens and firms during periods of global economic headwinds, ongoing inflationary pressures, and sustained high interest rates.

Furthermore, the budget underscored the importance of redistributing social wealth equitably, providing increased support to lower-income families and larger households with seniors and children. This aids in narrowing the wealth disparity between the affluent and the disadvantaged, thereby fostering societal stability and prosperity.

In Budget 2024, there is a strong emphasis on the importance of pursuing stable and sustainable economic growth. This serves as the cornerstone for creating quality jobs and maintaining a high standard of living for citizens. Economic growth will primarily be driven by two key channels. Firstly, a series of new policies will be introduced to promote high-quality investment, bolster our capabilities in high-tech sectors, and support the development of local enterprises. Secondly, the government will significantly enhance the SkillsFuture ecosystem. This entails allocating more government spending towards enhancing labour productivity by encouraging mid-career workers to pursue new diplomas and facilitating upskilling efforts for young ITE graduates. Consequently, this will enable more workers to acquire higher skills, thus enhancing their competitiveness in the labour market."

In the ‘Looking to 2024’ series, our NUS experts weigh in on what readers can expect in the new year.