Singapore’s Populist Budget

The ruling People’s Action Party has presented a populist looking budget for Singapore. Is that a bad thing?

Singapore’s ruling People’s Action Party, which has been in power since the 1950s, has been accused of populism by its critics following the presentation of the 2012 state budget. According to the opposition, the budget contains several expenditure items that reflect the desperation of the PAP to regain the trust of voters and party supporters who have expressed dissatisfaction with its traditional brand of leadership.

But PAP could defend the populist measures as concrete proof that the government is willing to try new ideas when necessary to ease the hardships suffered by ordinary Singaporeans. Indeed, PAP could argue that it's not at all wrong for any government to draft a budget program that seeks to build a fair and inclusive society. It can cite, for example, the cash incentives to seniors, the support programs for persons with disabilities, and the subsidies for low-income families as targeted measures to extend emergency assistance to vulnerable groups in society. For a party accused of being indifferent to the situation of its citizens, these “shock and awe” populist measures represent a welcome and refreshing change in the mindset of the party's ageing leadership.

Meanwhile, the commitment to lessening the country's dependence on foreign labor, and the allocation of $1.1 billion to boost the capacity of public buses, directly address two of the principal issues in last year’s elections: the influx of foreign labor, which locals blame for their dwindling job prospects, and the worsening traffic congestion in the city state. 

The government has recognized that simply importing labor isn’t sustainable. According to the budget brief, hiring more foreign workers “will test the limits of our space and infrastructure. Plus, if foreign labor is too easily available, companies will have less incentive to upgrade, design better jobs and raise productivity.” Aside from giving tax breaks to firms that hire locals, especially seniors and disabled workers, the government has reduced the Dependency Ratio Ceilings for various key sectors of the economy. This means companies must employ more locals in the next two years. 

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But perhaps the most controversial item in the budget is the proposed infusion of $1.1 billion to buy 550 public transport buses to reduce crowding and waiting times. Many people are now questioning the rationale of using public funds to help a privately listed transport company. They are also worried about the higher operating cost that could lead to higher bus fares. As an alternative, they want the money to be issued as a loan to the company. Or maybe it’s time to reconsider the opposition proposal to re-nationalize the transport industry. 

The budget has also been criticized for its lack of stimulus programs to help revive weak spots in the domestic economy, and there are also suggestions that more should be given to fund sectors that are currently mired with low productivity. 

The big challenge for the Singapore government is how to convince the public about its sincerity in instituting major policy reforms in government and the economy. What politicians have to do is to simply back up their rhetoric with swift action. Otherwise, the 2012 budget will be caricatured as a grand document with empty populist promises. If this happens, it could spell the end for the 50-year reign of the PAP. 

In the meantime, the public is right to anticipate the initial benefits of the healthy doses of populism that the PAP has injected into the budget.