This post was sponsored by the National Youth Council.
On 14 February 2023, Deputy Prime Minister and Finance Minister Lawrence Wong unveiled Budget 2023 to Parliament.
Budgets are documents consisting of anticipated streams of revenue for the government, and proposed spending for the upcoming fiscal year. Since you need money to fund policies and projects, the Budget is an important document as it sets out the priorities of the government.
For example, during the launch of a Community Development Council voucher scheme, DPM Wong alluded to the fact that there would be an emphasis on cost-of-living issues in this year’s Budget.
By exploring Budget statements throughout the years, we can hence learn more about the shifting priorities of the government and where Singaporeans’ money is being spent.
By comparing the data on these statements to statistics from other countries, we can also contextualise Singapore’s spending habits.
Singapore spends way less than other industrialised countries.
At 18% (2019), we can see that government expenditure as a share of Gross Domestic Product is significantly lower in Singapore as compared to other industrialised countries.
Singapore is definitely an outlier. In general, there is a strong positive correlation between economic development and government expenditure. As countries develop and form stronger tax-collecting institutions, they are able to extract tax more effectively, thereby allowing for more spending.
This hasn’t happened in Singapore because of the political leadership’s belief in the country’s vulnerability. They argue that there is a need to be fiscally prudent in order to build up a rainy-day reserve and retain market confidence.
These beliefs have been institutionalised in the constitution, which has provisions that force governments to keep a balanced budget over each term of government. Partially, this also explains why the government recorded on average a fiscal surplus of about $2.2 billion per annum between 1999-2019.
SG is spending less on security and more on social development.
From 2000 to 2022, social development expenditure increased as a proportion of total expenditure from 39.2% to 48.1%.
At the same time, security expenditure decreased from 34.5% to 24.5%.
While social expenditure as a proportion of total expenditure has been steadily increasing since the mid-2000s, it is likely that the trend will continue, and maybe even accelerate.
In last year’s Budget, for example, DPM Wong talked about renewing Singapore’s social compact and suggested that the government wants to further strengthen social programmes and “collective risk sharing”.
Even before the release of this year’s Budget, there was chatter about the government introducing unemployment support for retrenched workers. Social Policies like these likely mean that social development expenditure will continue to increase.
On the other hand, while security and external relations’ share of expenditure has decreased, its total expenditure has not. This is because total government expenditure has increased over the years.
Defence Minister Ng Eng Hen argued in 2017 that this, combined with the fact that there have been sustained and large investments in the armed forces, means that Singapore’s total defence spending will remain steady.
SG is spending more on healthcare and less on education.
Breaking down the different types of social development expenditure, we can see that from 2000 to 2022, health expenditure has been steadily increasing as a proportion of total expenditure, whilst education expenditure has been decreasing.
Due to low birth-rates and longer life-expectancies, Singapore is getting older. The ratio of working age residents to the elderly has decreased significantly from 10:1 to 4:1 over the last 22 years.
This means that there are now more elderly people who are economically inactive (and might not in some cases be able to provide for themselves), and that the economically active population faces a much greater burden providing for them.
In addition, ageing will mean that there is a rise in demand for healthcare and social care. For these reasons, the government expects to increase health expenditure to more than 20% of GDP by 2030.
The Budget Process
So far we’ve established that Budget priorities have shifted significantly over the years. But how exactly do these changes happen? How does the government decide how to allocate expenditure?
Annual strategic review (June): Meetings occur between the permanent secretaries of the Ministry of Finance and spending ministries. These meetings focus on the challenges that spending ministries face.
Budget ceiling established (July): Ministries are provided with budget caps for a financial year. Within the cap, each ministry decides how best to allocate its budget.
Large meetings called (August): The Ministry of Finance convenes a meeting consisting of every permanent secretary. It’s meant to promote coherence and avoid expenditure replication.
Budget allocations submitted (October): After meetings with the Ministry of Finance about budgetary performance in the last fiscal year, spending ministries submit the allocations of their budget ceilings.
Public engagements (Dec-Feb): Government engages the public on budget priorities. This year, for example, the National Youth Council, held the National Youth Dialogue on Budget.
Budget brought to Parliament (February): The finance minister delivers their budget statement, the supply bill is introduced, and debates start in parliament.
National Youth Council Engagements
The National Budget is a strategic financial plan to ensure Singaporeans are able to harness new opportunities and face challenges together.
Young people can also play an important role in shaping these Budgets. As seen in the last slide, before the Budget is brought to Parliament, various agencies – including the National Youth Council (NYC) – engage with citizens, collecting their views and feedback.
On 18 January, for example, NYC held a National Youth Dialogue on Budget 2023. In it, Senior Minister of State Chee Hong Tat and Minister of State Alvin Tan answered questions pertaining to issues like cost of living and social mobility.
Participants also used quadratic voting, a method of collective decision-making, to allocate resources to these issues and discuss the trade-offs that arose. To learn more visit youthopia.sg.
On 28 March, NYC is hosting a Post-Budget 2023 engagement. Join if you are interested in learning more about Singapore’s key priorities, and want to play a role in shaping these priorities.
Sign up here: