Budget 2023 and the real elephant in the room

Have been asked what’s my opinion on the budget. General sense is that it’s a more labour and average resident friendly budget than one to spur investment and enterprise. I spent some time reading the full statement and also the various appendixes. I selected some key screenshots of interest to share.

Interesting to know govt is now spending an increasing sum on early childhood. Was asked before during a tea session if I think we need to nationalize this space and my instinctive answer was a YES. Level the field from early childhood so that all Singaporeans have a chance to succeed in life.

The 51b loss is Covid spending mainly. So it’s great we did not need to get into debt and used reserves to pay for it. If it was debt; we would be servicing 1-2b in interest payment yearly. Thats half of the projected gst increase in revenues!

Good to know the actual manpower expenses are just about 10-11% of total govt spend.

Defence spending always high. Don’t question the need for it; but the point about making sure each dollar is well spent is key.

A few key observations on big trends and issues :

1) govt spending has increased quite a fair bit between 2017 to 2023. In 2017, we spent 55.6b  on EOM (manpower), OOE (other operating exp), grants/injections and transfers. In 2023 we expect it to be 83.6b. That’s a 50% increase! 

GDP of our nation during same period I estimate will have increased from 343b usd to 425b usd. So that’s a expansion of 24%.

Broadly this means our govt has gotten bigger as a proportion of  GDP. This in itself is not a bad thing as i can see visibly that our healthcare sector has expanded, our public education has broadened  to include preschool and that there is much broad based support and resources spent to improve wages at low end via pwm and various credit schemes.

My big concern here is that with public service spending and investing more, all the more we must ensure governance, appropriate top level targets, productivity of each ministry and statboard workforce, benchmarking etc are done at top notch level. The total budget is 104b or about 18-19% of overall sg gdp - it’s critical the entire civil service continues to perform and improve at the highest global level. To me this means aiming to run as well as top global private firms with similar headcount at least in key areas of strategy planning, scenario planning and talent recruitment/retention. 

2) We can also see govt projects a small deficit this year.  The NIRC at 23.8b is a very significant component of our govt budget. This NIRC is from our nations wealth kept with Temasek, GIC and it’s there because of the collective efforts of past generations who ran TLCs, sold land and invested budget surpluses well. 

My comment here is we again must not rest on our laurels and need to keep the reserves growing by ensuring Temasek and GIC run at the highest standards globally. This means going beyond governance and going into benchmarking against and beating or meeting top PE and balanced indexes globally.

My sense is Temasek has a much harder job as it has a portfolio of local TLCs which have a lot of history and which unfortunately is a mixed bag when it comes to their success going overseas and growing beyond their local (often case) monopoly. They don’t handle disruption well but we own a big chunk of them. One way out is superior hands-on boards and management that are incentivized to truly build and grow. And be quick to fire bad performers. It’s not wise to always think ex scholars make great tlc leaders. Or at least complement them with commercial chairmen that govt trust to really push them on delivering results.

3) My biggest comment which is not spoken about in budget speech is really about population/manpower. It has been 12 years since 2011 elections. A lot has changed and infrastructure and conditions have improved much to me.

I would ask for leadership and clarity from govt to convince fellow Singaporeans it’s time to come to a consensus on how our society can continue to grow in the years ahead. 

Our working resident population is 2.35m. Our working population is 3.7m or so. We already run an economy that is beyond our local capacity. And we need to spend more in the years ahead to look after all citizens well. 

With our TFR at 1.1, we are doomed as a nation unless we deliberately and consciously add to our ranks. And the best way to do this is to have a proper manpower strategy that adds the talent we want with a view to convert a nice pool of them each year to be PR and citizens. 

5.6m population is not a lot compared to other small nations in the developed world. A 7-8m population Singapore where about 5.5m are resident will really help us thrive as a nation. Better job opportunities, more vibrant local economy , more social variety and better tax situation for individuals too. Each resident pays less tax if our economy is larger.

So what I am asking is for a conversation to start. And we try to have a consensus on common points and see if with those common points, a clearer path can charted on our population strategy. 

As a father of 4 sons, I think it would be remiss if we keep letting electoral vagaries determine how we communicate, educate, lead and agree on this existential issue.