On Dec. 13, 1965, then finance minister Lim Kim San issued Singapore's first-ever Budget as an independent country.

It was merely four months after Singapore left Malaysia.

It lasted for one hour and 20 minutes.

His Budget speech was given full coverage by The Straits Times the next day.

Less reliance on port trading

As a newly-minted country, Singapore's goal was to develop her economy and create jobs for Singaporeans.

The reality then was that by the 1960s, Singapore's population had ballooned so much that relying on port trading alone could not generate enough jobs nor earn enough revenue.

The goal was for Singapore to move towards industrialisation.

The entrepot trade on which we thrived and prospered in the past is not expanding fast enough to provide the jobs for the increasing population, nor is it capable of generating sufficient revenue to maintain the level of education, housing, medical and welfare services that a modern civilised society expects. Hence, five years ago we charted the course for industrialisation to complement entrepot trade.

- Lim Kim San, Dec. 13, 1965

Lim highlighted that one-third of Malaysia's trade was with Singapore and one-quarter of ours was with them, hence, the need for trade policies that bring both markets "mutual advantage".

He also added that Singapore would never initiate policies that cause further rift between the two countries.

However, just as the two countries separated on an uneasy note, economic cooperation was not a bed of roses.

Testy times for economic cooperation with Malaysia

Lim highlighted in his speech that while Singapore made many proposals to Kuala Lumpur, particularly on currency and taxation matters, the Singapore government did not receive any "positive rejoinder" from its Malaysian counterpart.

If they're sincere in working towards economic co-operation, let us in turn hear from them what their proposals are.

- Lim Kim San, Dec. 13, 1965

Particularly acrimonious was the discussion on trade restrictions.

The Singapore government felt that both parties should first establish some principles of economic cooperation before dismantling trade restrictions between both countries.

Malaysia, on the other hand, wanted trade restrictions to be removed before parties discussed economic cooperation.

Eventually, both countries agreed to remove trade restrictions mutually and commence negotiations, albeit rather slowly.

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The dream of a common market was one of the draws for Singapore to join Malaysia.

Singapore's departure from Malaysia dealt an economic blow to the country. Singapore always recognised she had no natural resources, and since Aug. 9 1965, a drastically smaller market.

Talks of a limited common market had been floating around since September 1965, when Lim visited his Malaysian counterpart in Kuala Lumpur.

What did we spend on?

With Singapore leaving the Malaysian Federal government, there were many sectors that had to be paid out of Singapore's wallet, such as security (home security and defence), telecommunications, and foreign affairs, to name a few.

The government expected to gain S$537 million in revenue and spend $506.56 million.

After returning S$30 million to the Development Fund, the government would have been left with half a million dollars surplus.

Adjusted to today's value, S$500,000 in the 1960s is equivalent to about S$2 million in 2017.

For context, the estimated expenditure for fiscal year 2017 was S$75.07 billion.

The estimated surplus for 2017 is expected to be between S$2 billion and S$3 billion.

The surplus is essentially the government's likely revenue after spending. Government revenue is derived from avenues such as corporate income tax receipts and stamp duties.

Here are some key portions of the first-ever Budget worth noting:

Education: S$129.2 million

Education made up the biggest part of the Budget (almost 20 percent) and the 1966 estimates were 13 percent higher than what the government had forecast to spend in 1965.

According to Lim, this increase in spending was due to the higher number of primary school graduates enrolling into secondary schools.

Education was a means to train a workforce to take on industrialisation.

Hospital Services: S$43.6 million 

The 1966 estimate was an increase of about 13 percent from 1965 expenditure because of the need to expand hospital services in 1966.

Public Health Division: S$28.8 million 

The expected 1966 expenditure for the Public Health Division saw an increase of about 2 percent that went into improving the cleanliness of the city.

The following sectors were new additions to the Budget as Singapore became a new nation. These were previously under the central government's expenditure when Singapore was part of Malaysia.

Police: S$40.3 million

Armed Forces: S$30 million 

Foreign Ministry: S$4.2 million 

Different times, different priorities

Singapore's first Budget as an independent country was pretty indicative of the priorities of our society at that time.

In 1966, it was the need to equip a workforce with the right skills to grow the economy. It was about spending on the essentials to ensure Singapore's survival.

Fast forward to today, our aging population and public transport infrastructure present a different set of challenges, and a different set of priorities.

Top image via NewspaperSG

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