Pork barrel politics hint at early polls in Singapore

Singapore’s Finance Minister Heng Swee Keat delivered a closely watched budget statement earlier this week, unveiling an expansionary spending plan for 2019. Widely viewed as one of the key events of the city-state’s political calendar, the latest budget points towards the probability of a snap election later this year.

Speculation has been rife since Prime Minister Lee Hsien Loong hinted last year that early elections could be called in 2019, more than a year before his government’s mandate ends. As external uncertainties weigh against the island-nation’s trade-reliant growth, some analysts see early polls as a hedge against holding them later in a potentially dimmer, less-predictable economic environment.

Data released ahead of the latest budget proposal showed that Singapore’s economy grew at its slowest pace in more than two years in the fourth quarter of 2018. As such, all eyes were on Heng for signals on how the long-ruling People’s Action Party (PAP) plans to stave off economic headwinds in the financial year ahead.

The budget statement was the first major policy speech given by Heng since he was designated to succeed Lee as Singapore’s next prime minister, following a protracted selection process that saw the city-state abuzz with political guesswork. Some wondered whether the finance minister might now showcase a more campaign-oriented persona.

Instead, he delved into policy details – terrain where analysts see him as being more comfortable – while offering up justifications for certain spending decisions and reiterating themes familiar to his three previous budget addresses: fiscal and environmental sustainability, economic transformation and mitigating widening social inequality.

The prime minister-in-waiting unveiled S$10.5 billion (US$7.7 billion) worth of subsidies and cash handouts in what some analysts see as a possible signal that a snap election is on the near-term horizon. The PAP government similarly dipped into its coffers to fund generous cash bonuses and subsidy schemes ahead of the last two general elections in 2011 and 2015.

Valued at S$6.1 billion ($4.5 billion), the Merdeka Generation Package is the centerpiece of this year’s budget, offering various healthcare subsidies to the generation born in the 1950s who experienced the tail-end of British colonial rule and the dawn of Merdeka, or “independence” in Malay, the eldest of whom are now 69-years-old.

Heng said the package would benefit nearly half-a-million Singaporeans in all and cost more than S$8 billion ($5.9 billion) over their lifetimes, describing the initiative as “a gesture of our nation’s gratitude” for their contributions. Singapore faces a key demographic challenge in the years ahead as it anticipates the rising costs of caring for an aging population.

By 2050, almost half of Singapore’s total population will be aged 65 or older. Many policy watchers wonder to what extent the PAP – which has traditionally been averse to social spending and notions of “welfarism” – will go to offset the higher healthcare and social costs its greying population will incur in the decades ahead.

During a segment of his speech lauding elderly participation in the workforce, Heng eschewed welfare schemes in place in other countries, which he said “weaken people’s sense of agency and independence” and vowed to meet “recurrent spending in areas such as healthcare” with recurrent revenues rather than borrowing.

Apart from tax collection, government revenue relies on the net investment returns contribution (NIRC) scheme, which refers to interest earned on the wealthy city-state’s outsized financial reserves. The total value of those reserves, estimated at over S$500 billion ($370 billion), is a state secret withheld to prevent market speculation.

Another big-ticket item on offer is the S$1.1 billion ($813.6 million) Bicentennial Bonus package, in which an estimated 1.4 million Singaporeans will be eligible to claim various top-ups to their state-sanctioned health and educational accounts, in addition to a tax rebate capped at S$300 ($221) in cash and a separate cash bonus for eligible lower-income workers.

The city-state is commemorating its “bicentennial” this year, marking the 200th anniversary of the 1819 landing of British colonialist Sir Stamford Raffles, who established a British settlement and trading port on the island. Raffles has long been celebrated as the “founder” of modern Singapore and his colonial-era statue still stands in the island’s civic district.

Some analysts see parallels with celebrations in 2015, when Singapore commemorated its Golden Jubilee marking 50 years since independence was achieved in 1965. The PAP resoundingly won re-election that year, helped by a buoyant public mood and national mourning for the passing of Lee Kuan Yew, Singapore’s first prime minister and national founder, who passed away at 91.

Tan Ern Ser, a sociologist at the National University of Singapore, told Asia Times that snap polls could be called later this year in the midst of the colonial bicentennial’s celebratory wake. “Clues are to be found outside as well as inside the budget. There is no mention of tax hikes, which could sour the basket of provisions,” he said.

“The budget is somewhat ambivalent as to whether a general election is on the horizon,” said Eugene Tan, an associate professor of law at Singapore Management University (SMU). He told Asia Times that the government aims to shore up a “feel-good” factor after going through a relatively tough patch made worse by a variety of lapses.

“Budget 2019 will be penultimate, if not the last, budget before the next election. With accumulated surpluses by the current government topping more than S$20 billion, there is powder left in the keg to have an even more generous budget in 2020,” he said. Economists estimate that the government has so far accumulated budget surpluses of about S$19 billion ($14 billion).

Heng said the government will log a deficit of S$3.5 billion ($2.5 billion) with total spending amounting to S$80.3 billion ($59.4 billion), a 1.6% increase over the previous year. About 30% of total expenditure will go towards defense, security and diplomacy, which Mustafa Izzuddin, a fellow at the ISEAS-Yusof Ishak Institute in Singapore, sees as a reflection of rising regional security challenges.

“The bilateral tension in Malaysia-Singapore relations after the 2018 Malaysian election and the unpredictability in Indonesia-Singapore relations given that Indonesia is going to the polls this year factored into the strategic calculations of Singaporean policymakers,” he says, pointing to a rise of nationalist sentiment in Singapore’s immediate neighborhood.

“This budget is a mirror image of the one delivered just prior to the last general election [with] significant boosts to social spending,” says Garry Rodan, director of the Asia Research Center at Australia’s Murdoch University, which he senses has “a strong election ring to it.”

“However, there is also scope for opposition parties to highlight the PAP’s reticence to address social inequalities through a needs-based strategy of social redistribution, “ he said. “This budget statement offers no fundamental policy shift towards a more egalitarian society,” he added while acknowledging that the plan is still likely to enjoy wide electoral support.

“Many of the payments have an expiry timeline and are demographic-specific, rather than marking a turning point in social equity,” Rodan said.

A statement issued by the opposition Singapore Democratic Party (SDP) in response to the budget drew similar conclusions, pointing to a tax-hike due after the next general election.

“Nothing in the current budget addresses the high cost of living in the world’s most expensive city, the seriously unaffordable public housing, and an outmoded education system that does not prepare our children for the future,” it said, adding that the PAP is “engaging in short-term pork-barreling to entice votes.”