The “Mother” of all Budgets
So $20.5 billion for companies and individuals, with the bulk of the money going towards firms.
The biggest component of Budget 2009 must certainly be the innovative and interesting CPF-cut, that is not a CPF-Cut.
Called the Jobs Credit, the $4.5 billion package is in essence a wage-subsidy direct from the Government to companies.
Everyone was expecting a CPF contribution cut despite many political leaders insisting that they would not cut it. And why not? AFter all many have said and are still saying this is the worst recession. Ever. Singapore will possibly contract at a massive 5%, the deepest worst recession. Ever. In 1998 CPF was cut because it was the fastest and most potent way to cut costs for companies. Compared to that Asian Financial Crisis, this global downturn is probably 10 times worse, given that it afflicts everyone.
So instead of cutting CPF rates, the Govenrment will give cash to companies, which means that it is shouldering the burden instead. Well, not actually. Because they are funding the subsidies with money from higher GST. So we are actually paying for it in other ways. We just don’t quite feel it.
The other big point is that the Government is not only running a huge-ass deficit but also dipping into past reserves. OMG. This is like what!
For its prudish stance towards spending on savings, the Government has decided this time that the time was right. It will darw $4.9 billion from reserves estimated to be some $600 billion large. This is barely 1%.
But more than the amounts involved, this move has a potent signaling effect. One, it signals that the Govt is treating this recession seriously and is doing serious things in return. Two, it is justifying its past insistence on balancing the budget with its dip into the reserves now. These are potent political messages that will not be lost on the average citizen. ie We are only able to weather the storm now because we made the right decisions then. So trust us.
That leads on to the next question and one that will have people speculating
Is this an election budget?
No. When one says it is an election budget, it means the electio