Opinion

Budget 2016 Reminds Us Again Why It Pays to Start a Family in Singapore… Literally

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Peter Lin

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Singapore is one of the few countries in the world where you actually get paid to have babies. I mean, I get it – it’s not cheap to raise children in Singapore. Any form of financial assistance is a huge help for those so inclined to start families. Yet, on the other hand, throwing money at couples to encourage them to have more babies really doesn’t seem to make much of a difference.

 

Really? But I thought last year we were so happy that the TFR was going up!

TFR or total fertility rate is a statistic which measures how many babies a woman is expected to have in her lifetime. Singapore’s latest total fertility rate was 1.25 in 2014, up from 1.19 the previous year. When this was announced last year, it was hailed as a huge achievement by Singaporeans. Everyone conveniently ignored the fact that the TFR was 1.29 in 2012, and 1.20 in 2011. In other words, the TFR doesn’t seem to be trending significantly up or down over the past few years.

Yet in the same period, the government was throwing even more money at parents with children, with tweaks to the Child Development Account. The Child Development Account or CDA is part of the Baby Bonus scheme, and it essentially gives parents up to $18,000 per child to use specifically for childcare centre and kindergarten fees, medical expenses and even private integrated shield plans. And if giving you $18,000 isn’t going to encourage more Singaporeans to have more babies, nothing will.

But like that man that just won’t take “no” for an answer, the government isn’t going to stop trying to make you have babies.

 

Budget 2016 reveals yet another CDA grant

At last week’s Budget announcement, Minister for Finance Heng Swee Kiat revealed that all Singaporean children would now get $3,000 in a First Step Grant. This is an interesting twist to the CDA, because it doesn’t change the maximum amount that the government gives you per child. What this First Step Grant does is help parents by allowing them to contribute less to the CDA in order to get the maximum amount from the government.

Confused? Let’s look at an illustration. Say Ms. Zulaiha gave birth to her third child last year. The third child is eligible for government benefits of up to $12,000 in their CDA. If she saves money in her child’s CDA, the government will match it dollar-for-dollar, up to $12,000. To earn the maximum benefit, Ms. Zulaiha needs to deposit at least $12,000 in her child’s CDA.

Now, say Ms. Zulaiha gives birth to her fourth child later this year. The fourth child is also eligible for CDA benefits of up to $12,000. However, once she starts saving money in the CDA, the First Step Grant kicks in and the government automatically puts $3,000 in the CDA. To earn the maximum benefit of $12,000, Ms. Zulaiha only needs to deposit at least $9,000 in her child’s CDA.

Needless to say, although this should benefit most children, it is lower-income families who will find it most helpful, especially those who aren’t able to set aside enough money in their child’s CDA. An extra $3,000, on top of the government matching any savings dollar-for-dollar will go a long way.

 

Who is eligible for this First Step Grant?

Mr Heng was only clear on one point – only babies born from the 24th of March this year (i.e. the date of the Budget announcement) are eligible. The other detail was only made known after the Budget speech – that in order to get the First Step Grant, you have wait till 1 July 2016 to deposit any money in the CDA. Depositing money before that date will result in your child receiving the current dollar-for-dollar matching. As we said above, this doesn’t change the fact that the maximum benefit from the government has not changed.

Presumably, the same eligibility for the rest of the Baby Bonus scheme applies – your child must be a Singapore Citizen, and your child’s parents must be lawfully married. That’s right, unless the government proves me wrong, it seems children of single parents are once again deemed less worthy of governmental aid.

 

What other childcare benefits were announced at the Budget speech?

In addition to the First Step Grant, Mr Heng announced KidSTART, a $20 million project for children up to 6 years of age who have specific needs. While the actual details won’t be revealed till the Committee of Supply debate next week, it is heartening to know that parents of about 1,000 children are expected to benefit.

Mr Heng also elaborated on the Fresh Start Housing Scheme. It was first announced by Prime Minister Lee in his National Day Rally last year, and was meant to help a specific group – families with young children who live in rental flats. Mr Heng revealed that up to $35,000 would be given to eligible families, but that actual details will only be revealed next week.

While I’m still curious about the details, I largely appreciate all these three initiatives. It’s about time the government made the effort to help parents who need more support to give their children a better standard of living.

 

But what if I’m not planning to have children, do I get anything from this year’s Budget?

Of course you do! Well, okay, if you’re rich (or at least live in a rich neighbourhood) you’re probably not eligible for most of them. But for the rest of us, here goes:

 

1. GST Voucher

If you’re 21 and above, earned $26,000 or less in 2014, and the annual value of your home as at 31 December last year was $21,000 or less (and of course, if you don’t own more than one property) then you’re eligible for up to $300, which will be paid in August. This year, the government is also giving an additional one-off special payment of up to $200, which will be paid in November. That’s a total GST Voucher amount of $500! And it’s not even an election year.

As with previous years, you only need to sign up to get the GST Voucher once in your lifetime. For those who have yet to sign up, registration begins 20 June 2016.

 

2. Service & Conservancy Charges Rebate

Depending on what size of HDB flat you live in, you are eligible for up to 3 months rebate for your Service and Conservancy Charges. As with previous years, this rebate will be spread out over the year.

Don’t worry, we’ll remind you of the GST Voucher and the Service & Conservancy Charges Rebate again in July. Even if only to point out that it’s meant to offset your yearly GST expenses, and not a bonus to give you more to spend.

 

Do these grants encourage you to start a family? Or plan to have five or more kids? Share your thoughts with us.

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.