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     FrontPage Edition: Sun 19 Feb 2006

Budget 2006 - Sharing the Fruits of Growth with all Singaporeans

Source: www.gov.sg

Budget Speech 2006

An Excerpt
Share the Fruits of Growth with all Singaporeans
Growth Dividends
First, I will distribute Growth Dividends to all adult citizens.
The Growth Dividends differ from previous surplus sharing schemes like the New Singapore Shares (NSS) and Economic Restructuring Shares (ERS) in two respects.
Previously, we gave NSS and ERS in the form of shares, on which Singaporeans could earn dividends over time if they did not encash their shares. Many chose to encash their shares early instead of waiting for the dividends, despite the attractive interest rates.
I have therefore decided to distribute the Growth Dividends in the form of cash which can be collected immediately upon allotment.
Second, those who are less well-off will receive more Growth Dividends. The amount that a person receives will depend on two factors: his income and his wealth.
His income will be assessed by the Inland Revenue Authority of Singapore (IRAS). We will use what IRAS calls Assessable Income (AI). Those earning not more than $24,000 per year will get more. I have decided on $24,000 as the cut-off as this is roughly the median income for Singaporean workers.
I will use the Annual Value (AV) of his property, as assessed by IRAS, as a proxy for his wealth.
Those living in properties with AV less than or equal to $6,000 will get more. $6,000 will cover all those who live in 1, 2, and 3-room HDB flats and almost everyone who lives in a 4-room HDB flat.
At the top end, those living in properties with AV of more than $10,000, which are the larger private properties, will get a smaller amount.

Table 2. Structure of Growth Dividends

  Annual Value of Home $6,000 or less Annual Value of Home more than $6,000 and up to $10,000 Annual Value of Home more than $10,000
Annual Assessable Income $24,000 or less

$800

$600

$200

　
Annual Assessable Income more than $24,000

$600

$400

If your property has an AV of $6,000 or less and you earn $24,000 or less a year, you will qualify for the largest quantum of $800.
If you live in a property with AV more than $10,000, you will get $200.
From time to time lower middle-income Singaporeans remind me that they too need a helping hand, as they earn only slightly more than the lower-income groups but often just miss out on our social safety nets. I understand their concerns. This is why the highest quantum of $800 will cover 45% of the population, not just the lower-income but also the lower middle-income earners.
Singaporeans can look forward to receiving their Growth Dividends on 1 May 2006. The Growth Dividends are expected to cost the Government $1.4 billion.
Reward Low-Wage Workers for Work
Workfare Bonus
Second, I will give a one-off Workfare Bonus to older, lower-income workers.
As recommended by the Low Wage Workers Committee, the Workfare Bonus will target the lowest 20% of income earners aged 40 and above.
But to be fair to those who earn slightly more, the Government has decided to give the Bonus also to those up to the 30th income percentile, or a monthly income of up to $1,500, provided they live in properties with Annual Value (AV) of not more than $10,000.
This will cover most older low-wage workers living in HDB flats. Between 300,000 and 400,000 Singaporeans will benefit from the Workfare Bonus.
The Bonus quantum will depend on an individual¨s income.
The Committee had recommended a one month bonus for those earning up to $900 and half a month bonus for those earning more than $900 up to $1,200.
I have decided to be a bit more generous. Nearly all full-time workers earn more than $400. Those earning more than $400 and up to $900 will therefore receive $1,200.
Those earning more than $900 to $1,200 will get a bonus of $800, while those earning more than $1,200 to $1,500 will get $400.
There may be a few regular workers who earn $400 or less a month. These exceptional cases will receive a bonus of three months of their income.
To help workers save for their longer-term healthcare needs, 10% of the Workfare Bonus will be set aside and credited into the Medisave account.
The Workfare Bonus is a reward for regular and productive work. The Bonus will be split into two portions.
Eligible workers who have worked continuously for at least six months in 2005 will receive the first portion of the Bonus on 1 May 2006.
If they continue to work for at least six consecutive months in 2006, they will be paid the second portion of the bonus on 1 May 2007. The bonus for each year will depend on their average monthly income for the period they had worked in that year. The Government will set aside $400 million for the Workfare Bonus.

Table 3. Structure of Workfare Bonus

Average Monthly Income Bonus to be paid on 1st May, 2006 and 2007*
$400 and below 1.5 months salary with minimum bonus of $75
Above $400 to $900 $600
Above $900 to $1,200 $400
Above $1,200 to $1,500 $200

* Bonus to be paid in 2006 for working at least 6 continuous months in 2005 and to be paid in 2007 for working at least 6 continuous months in 2006.
Help Lower-Income Households
Utilities-Save Scheme
Third, to help lower-income households cope with living expenses, I have decided to extend the Utilities-Save rebates for another year.
Households in 1- and 2-room HDB flats will continue to enjoy $200 in rebates in FY2006; those living in 3-room HDB flats will get $100 in rebates; those living in 4-room HDB flats $80 and those living in 5-room HDB flats $60. The rebates will cost the Government $60 million.
Rebates for Service & Conservancy Charges and Rent
HDB households will also continue to benefit from the S&CC and rental rebates that were given out as part of a five-year package in FY02.
In FY06 and FY07, households will receive between half a month to four months of S&CC waivers, with more for those living in 1-, 2- and 3-room flats. In addition, those living in 1- and 2-room HDB flats will also enjoy between one to three months of rental waivers...
40th Anniversary NS Bonus
The Fourth RECORD committee chaired by Minister Ng Eng Hen has recommended that we give more to NSmen in this year¨s surplus-sharing exercise. The 40th Anniversary of National Service is approaching.
One and a half generations of male Singaporeans have served NS. 400,000 have completed their full time and Operationally Ready National Service (ORNS) training cycle, and handed on their duties to the current batches of NSmen.
To show our gratitude to these ex-NSmen and NSmen who have completed their ORNS training cycle, we will give them a 40th Anniversary NS Bonus of $400.
National servicemen who are still serving, either in the full time or ORNS units, and have not yet completed their ORNS training cycle, will receive a 40th Anniversary NS Bonus of $100.
The 40th Anniversary NS Bonus will be paid on 1 May 2006. It will cost the Government $200 million.
ORNS Completion Award
Beyond this one-off package, the RECORD IV committee has also recommended several permanent schemes. First, when NSmen complete their ORNS cycle in future, they will receive an ORNS Completion Award of $300...
Notification letters will be sent out in late March to all Singaporeans informing them of the total amount that they can expect under the Progress Package.
To accept this Package, all they need to do is to sign up through ATMs, the website or hard copy forms.
Singaporeans can look forward to receiving their Growth Dividends, Workfare Bonus and 40th Anniversary NS Bonus, and the CPF top-ups on 1 May 2006.
In total, the Government will share $2.6 billion with Singaporeans under the Progress Package. Every citizen will benefit. This package will help us achieve our social objectives of helping the lower-income groups, looking after the elderly, investing in the young and recognising the efforts of our NSmen.

Full Text of Budget Speech

Source: www.gov.sg Press Release 17 Feb 2006

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