Heng Swee Keat
Singapore
“In a world heading towards greater contest and fragmentation, amid rapid advances in science, technology and innovation, Singaporeans can play a valuable part as bridge-builders and connectors, and Singapore can be a trusted and neutral Global-Asia node of technology, innovation and enterprise.”
“The National Quantum Office has identified specific goals under the National Quantum Strategy (NQS), with resources and efforts directed towards specific quantum areas and technologies accordingly.”
“Mr Speaker, Sir, I would like to thank Member Ms Denise Phua for her comments because her comments reminded me of the tagline that I always said when I was in MOE – that you can learn from anyone, anytime, anywhere. In fact, peer learning is a very important aspect of that learning.”
“But I have laid out the strong basis for my optimism that a small and open economy like Singapore can continue to thrive and secure our next bound of growth. By serving as a trusted node and connector, we can create value by facilitating connections and building new linkages in today's fractured global landscape.”
“Secondly, one other very important thing the Member must bear in mind is that AI is a very rapidly developing field and it is something which our researchers are working hard on, to look at the different techniques of AI – it is not just GenAI, but the whole range of different AI systems that are being used – and how that can be used in c…”
“Assoc Prof Jamus Lim, you do not need an invitation. You are free to provide your suggestion. After all, are you not from WP? And by the way, let me make it clear that I have heard MPs on both aisles speaking about workers, and we have a very strong presence of our union MPs here and they will be speaking even more on this.”
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“Developers, consultants and contractors now realise the urgency to radically improve productivity and reduce the reliance on labour-intensive methods. The GTS for the Built Environment sector will require developers to work closely with their consultants, contractors and suppliers to level up as an eco-system or value chain. Working together to transform and innovate, the alliance members can achieve more than what each alone can do. So, while we continue support the sector’s recovery, we will tilt our support to enable it to transform decisively. Our resolve in achieving transformation of the industry – and, in fact, of all industries – is clear and unwavering. The Minister for National Development will elaborate on this at the COS. I have touched on the first two enablers in our next phase of transformation – to grow a vibrant and connected business sector with a strong spirit of enterprise, and to catalyse a suite of capital tools. Let me now focus on the third enabler – to develop the skills, talents and creativity of our people. Enabling our people to have access to good jobs and job opportunities is the purpose for developing a strong economy. A vibrant economy creates the jobs and opportunities for our people to be at their best. The employment landscape is undergoing fundamental changes, and COVID-19 will accelerate these changes. A digital, innovation-driven economy means that businesses will need highly-skilled workers and deep talent. Our people will need to have both broader and deeper skills and creativity. The workplace is changing. COVID-19 has forced us to work from home and adopt new ways of collaborating with others.”
“Temasek will match the Government’s funds on a one-for-one basis, so the platform will have $1 billion available for its investments. The platform will invest in non-control equity and mezzanine debt of selected LLEs, which are willing to work with the fund manager to pursue their next phases of growth. Temasek will bring its strong commercial discipline to this partnership. The Ministry of Trade and Industry will provide more details on the Fund later. I have touched on our support for companies – from high growth to more mature enterprises, from SMEs to LLEs. The company is the basic economic unit. Each company’s transformation is necessary. But we can reap the full benefits of transformation, when we transform the entire value chain. So, for the next phase of our industry transformation, I will focus on the transformation of entire value chains – where each player in the chain works together to integrate and digitalise processes, and upskill their workers. We will build on the Alliances for Action and begin with a few alliances first. We will start with the Built Environment sector, where I will launch the Growth and Transformation Scheme or GTS. Since the launch of the Construction Industry Transformation Map in 2017, the Government has made a big push to drive transformation in the Built Environment sector. Firms have adopted new ways of doing things, such as Design for Manufacturing and Assembly, or DfMA, and Building Information Modelling. Adoption for DfMA technologies has doubled from 19% in 2017 to 39% in 2020. But it can be much better. This sector has just experienced an existential threat last year and is recovering.”
“Working with NTUC’s e2i, it modernised what was previously tedious manual ordering, tabulation and reporting, saving 20-30% in man-hours. To ensure productivity gains are shared with employees, e2i also negotiated with the company to increase the salary of the impacted older staff. [Please refer to See Annex C-4.] To support businesses in redesigning jobs, I will enhance the Productivity Solutions Grant – Job Redesign, by raising the Government’s co-funding ratio from 70% to 80%, till end-March 2022. To support the growth of local companies, the Government has partnered equity firms to provide growth capital for companies to transform and scale. Thus far, we have largely focused our efforts on small and medium enterprises, or SMEs, with annual revenues of up to $100 million. Companies of this scale traditionally lack attention from private equity players, while larger enterprises tend to have the means to raise capital. However, changes in the global economic landscape and financial markets have made it harder for our large local enterprises, or LLEs to attract private equity. This may mean missed opportunities for companies with strong fundamentals to plug into new areas, as supply chains are reconfigured. Our LLEs have good fundamentals. Over the years, many have expanded overseas, projecting the Singapore brand as a trusted and reliable partner. To ensure growth capital is available for LLEs that are ready to transform or expand overseas on a larger scale, I will complement existing grants and loans, and support them through equity investments, tapping on market players to ensure commercial discipline. I will set aside $500 million to be co-invested with Temasek in a Local Enterprises Funding Platform, to be managed commercially.”
“With this, we expect about $45 million of venture debt to be catalysed over the next year. Second, more mature enterprises, from micro and small, to medium and large enterprises, should also invest in new and emerging technologies to sharpen their competitiveness. To encourage them to do so, the Government will co-fund their adoption of digital solutions and new technologies. The new Emerging Technology Programme will co-fund the costs of trials and adoption of frontier technologies like 5G, artificial intelligence and trust technologies. This will support commercialisation of innovations and diffusion of technology downstream. To help firms to identify and adopt digital solutions, a Chief Technology Officer, or CTO-as-a-Service initiative will provide access to professional IT consultancies. A new Digital Leaders Programme will also support promising firms in hiring a core digital team and in developing and implementing digital transformation roadmap. Beyond these new initiatives, I will also extend the enhanced support levels of up to 80% for existing enterprise schemes such as the Scale-up SG programme, Productivity Solutions Grant, Market Readiness Assistance, and Enterprise Development Grant, to end-March 2022. Including these enhancements, I am setting aside $1 billion for these schemes. [Please refer to Annex C-1.] In the coming years, a critical part of business transformation will be in job redesign. With technological advances, many tasks that are physically demanding or repetitive can be better done by machines. With an ageing workforce, we must leverage technology to develop senior-friendly workplaces. An example is a household name, Tim Ho Wan.”
“On the digital front, we are working with our Indonesian partners to build the Nongsa Digital Park to facilitate collaboration between Singaporean companies and tech talent in Indonesia. As Singapore, Malaysia and Indonesia grow together, benefits will also be reaped by the wider Southeast Asian region. To summarise, the first enabler is to grow a vibrant business community, with a strong spirit of innovation and enterprise, deeply connected with the ASEAN region, Asia and the world. The second enabler is to catalyse a wide range of capital to co-fund and enable businesses, from start-ups to small, medium, and large enterprises, to innovate, transform and scale. Businesses have had to preserve cash flows during these uncertain times. Yet, it is precisely during these extraordinary times, that those that are ready to seize new opportunities will emerge stronger. To catalyse the flow of capital and bridge market gaps, the Government will step up risk-sharing arrangements with providers of capital, and provide grants to support businesses at various stages of growth. First, for high-growth enterprises, including start-ups. I will ensure that they continue to have access to financial capital, by extending and enhancing the Enterprise Financing Scheme - Venture Debt programme. From 2016 to 2019, we have seen an annualised growth rate of 44% in the amount of early-stage funds raised for promising enterprises. Our eco-system of budding entrepreneurs and venture funds is growing. As part of the Venture Debt programme, the Government shares up to 70% of the risk on eligible loans with Participating Financial Institutions. I will continue to support this programme, and increase the cap on loan quantum supported, from $5 million to $8 million.”
“We have also launched cross-border projects through ASEAN platforms. One such project is the YCH Vinh Phuc Inland Container Depot Logistics Centre that was launched last November. This is a joint landmark SuperPort project between Singapore-based YCH Group and T&T Group, a Vietnamese conglomerate. To promote the integration of ASEAN markets, we are pursuing common frameworks in emerging areas. For instance, ASEAN nations have developed the ASEAN Payment Policy Framework to encourage retail payment linkages between ASEAN countries. We will continue to work closely with our ASEAN members, to enhance digital connectivity and cybersecurity, and to get ready for the Fourth Industrial Revolution, building on initiatives such as the ASEAN Smart Cities Network. We will also continue to enhance our infrastructure investments in the region. The Kendal Industrial Park was a joint investment between Singapore’s Sembcorp and Indonesia’s PT Jababeka to build up activities in food processing, building materials, and medical equipment manufacturing, amongst other sectors. In my Statement in October last year, I also announced our intent to enhance cooperation with our most immediate neighbours, through Iskandar Malaysia in Johor, and the islands of Batam, Bintan, and Karimun in the Riau Islands. One of the goals is to build up a cluster of industries around the electronics, medtech, food manufacturing and processing sectors, as these see rising demand in ASEAN nations. The recently launched Southeast Asia Manufacturing Alliance will support these efforts. It serves to promote a network of industrial parks to manufacturers interested to invest in both Singapore and the region, and connect local firms with these manufacturers.”
“In 2019, 31 Singapore companies were supported for projects with enterprises from 11 partner countries. One of them, Xnergy, is a local deep-tech start-up with expertise in contactless charging. Through the Co-Innovation Programme, Xnergy partnered with Balyo, a French multinational, to co-develop contactless charging systems for forklifts. [Please refer to Annex C-4.] As businesses innovate, they will create intellectual property and intangible assets, or IP and IA. They will need to identify and protect, value and manage, and commercialise these. To support businesses in commercialising the fruits of their innovation, we are developing the Singapore Intellectual Property Strategy 2030. This will include equipping businesses with tools to value their IP and IA, and training skilled professionals in these fields. The Intellectual Property Office of Singapore will announce the details on World IP Day in April. Strong connectivity enables our businesses to plug into global and regional supply chains and industry clusters, and deepen our innovation partnerships. We are stepping this up with ASEAN nations. The ASEAN nations had a GDP of US$3.2 trillion collectively in 2019, making it the world’s fifth largest economy. The ASEAN region also became China’s largest trading partner in 2020. There is significant growth potential in this region, with favourable demographics for the next two decades. Last December, ESG, IMDA and EDB launched the inaugural Southeast Asia Open Innovation Challenge which saw participation from Indonesian, Malaysian, Thai, and Vietnamese corporates. To add on to these efforts, the Singapore Business Federation will be officially opening two new overseas offices soon – one in Jakarta and one in Ho Chi Minh City.”
“For example, through the platform, the Building and Construction Authority, was matched with three solution providers, TraceSafe, TagBox and Nervotec, to develop solutions for safe re-opening of worksites. The firms developed real-time systems that helped construction site owners conduct contact tracing and health monitoring of their workers. I will enhance the OIP with new features such as a cloud-based Digital Bench for accelerated virtual prototyping and testing. [Please refer to Annex C-1.] The third platform I will enhance is the Global Innovation Alliance, or GIA. The GIA serves to catalyse cross-border collaboration between Singapore and major innovation hubs globally. Since its inception in 2017, over 650 students and about 780 Singapore businesses have taken part in innovation launchpads overseas. 40% of these were in Southeast Asia. Last year, despite the pandemic, there were over 100 potential business matches between Indonesian and Singapore-based corporates. WaveScan, a Singapore start-up specialising in sensor technology, tapped on GIA and formed a partnership with A.L.I. Technologies, a company in Japan specialising in unmanned miniature aircraft. WaveScan also attracted investments from Leave a Nest, a GIA operating partner in Tokyo. [Please refer to Annex C-4.] The GIA network currently has 15 city links, including four Southeast Asian cities – Bangkok, Ho Chi Minh City, Jakarta and Manila. I will expand it to more than 25 cities around the globe over the next five years. The GIA will also be enhanced through the inclusion of the Co-Innovation Programme. The Programme will support up to 70% of qualifying costs for cross-border innovation and partnership projects.”
“For instance, GovTech is working with local start-up Affinidi, on a software that can quickly verify the authenticity of digital COVID-19 test result certificates and vaccination records. [Please refer to Annex C-4.] Beyond physical connectivity, the post-COVID-19 economy will see two key shifts: First, a shift from physical to digital modes of transactions across geographical borders. Second, a shift from tangible to intangible assets in value creation. Such intangible assets include the knowledge, networks and data that businesses can use to create new technologies and innovations. To remain competitive, businesses will need to innovate and collaborate on a global scale. To support our businesses, I will invest in three key platforms. The first platform is the Corporate Venture Launchpad, which will be piloted this year to drive new innovative ventures. The Launchpad will provide co-funding for corporates to build new ventures through pre-qualified venture studios. This is especially useful for larger businesses which want to rekindle a start-up mindset within their organisations. One such venture studio which I visited recently is BCG Digital Ventures. They collaborated with Olam, a Singapore food and agricultural multinational to build Jiva, a farmer services platform. This platform will help farmers in developing countries to increase crop yield, access credit and connect directly to buyers. This venture helps meet the rising global food demand, while uplifting the income of farmers. [Please refer to Annex C-4.] The second platform is the Open Innovation Platform, or OIP. The OIP facilitates the matching of problems faced by companies and public agencies with solution providers, and co-funds prototyping and deployment.”
“Second, to catalyse a wide range of capital to enable businesses to transform and scale. Third, to create opportunities and redesign jobs, for our people to develop their skills, creativity and talents. Ultimately, the purpose, the raison d'être of our economic transformation is to grow opportunities for our people to realise their full potential and aspirations. Let me now elaborate on how we will invest in these three key enablers. As a small, open city-state, Singapore has maintained the vibrancy of our society by enabling the global flow of goods, ideas, capital and people through our shores. COVID-19 disrupted our physical connectivity but accelerated the rise of the virtual and knowledge economy. To emerge stronger, we must deepen Singapore’s position as a Global-Asia node. We will restore our physical connectivity and transform our aviation sector for recovery. We will also expand our digital connectivity and deepen our capacity to collaborate and innovate with partners around the world. Travel and connectivity have taken a severe hit due to COVID-19, and recovery may be prolonged. In particular, COVID-19 has reshuffled the global web of connectivity, and changed the aviation landscape. Airports will be differentiated by their capabilities in securing public health and enabling safe travel. They will need digitalised systems and the ability to effectively re-route people and goods. To secure our position as a key aviation hub and maintain Changi’s position as a safe, trusted and well-connected airport for travellers and employees alike, we will restore Changi’s connectivity and invest in on-arrival testing and biosafety systems. This includes the Notarise and Verify system being developed by GovTech through private-public partnerships.”
“To stay on top of these changes, we must bring all stakeholders together swiftly to respond to and seize the diverse opportunities. So, while last year’s Budgets were tilted towards emergency support in a broad-based way, this year’s Budget will focus on accelerating structural adaptations. In the face of major changes, we must move from just counter-cyclical fiscal and monetary stabilisation policies, to structural economic policies to equip our businesses and workers with deep and future-ready capabilities. Like many countries, we have devoted significant resources to preserve lives and livelihoods in the face of this pandemic. But what will continue to distinguish Singapore are our investments for the future. We will invest in our people – so they can bounce back and be ready for opportunities that arise; and we will invest in our businesses – so they can innovate, build deep capabilities and seize growth opportunities. Singapore must never stop thinking of the future, even as we respond swiftly to meet current needs. This is how we stay exceptional, and staying exceptional is how we survive. Over the next three years, I will allocate $24 billion to enable our firms and workers to emerge stronger. The efforts will span several years, but it is crucial that we start today. This builds on the momentum of the transformation push started five years ago, when we launched our Industry Transformation Maps. In this financial year, I will focus on how we can move decisively to build three enablers for this next phase of transformation, to emerge stronger. First, to grow a vibrant business community, with a strong spirit of innovation and enterprise, deeply connected with Asia and the world.”
“But the COVID-19 pandemic has been different. Governments, scientists and industry mobilised to work together at unprecedented speed. COVID-19 vaccines were developed in less than a year, and tests were implemented within weeks to months, in the US, China, Europe and Russia. This collaboration across industries and nations, has been a positive side of the pandemic. But COVID-19 has also accentuated a US-China-centric technology race, into a global race for technological superiority and heightened concerns over supply chain resilience. For Singapore, as global supply chains are reconfigured, we must plug ourselves into critical parts of global networks. Businesses will need to transform and digitalise, to plug into the flow of goods and capital. Second, COVID-19 has hit countries and communities unevenly and widened inequalities. The virus respects no borders. The global economy will remain stunted for as long as there are countries that have yet to suppress COVID-19. This is why Singapore is working with like-minded countries through the COVAX facility, to promote global access to the vaccine and help accelerate the resumption of safe travels. Third, this tiny virus has reminded us of the intricate interdependencies of our ecosystem, and the importance of sustainability and biodiversity. Our human activities have accelerated changes in our environment. We must work together to safeguard this fragile eco-system for our future generations, and take climate change seriously. In short, these three changes – the changing competitive landscape, rising inequalities, and importance of sustainability – are all mega-shifts, that will continue to reshape the world.”
“I will also enhance these packages to support capability development and sector transformation, to encourage the community to deepen skills, go digital and transform business models. We look forward to activities resuming, with greater vibrancy. I will set aside $45 million for the extension and enhancements to these packages. The Ministry of Culture, Community and Youth will announce more details on both packages. I have covered the COVID-19 Resilience Package, which addresses our immediate needs – to safeguard public health, provide support for workers and businesses, and give more help to worst-hit sectors. The past year’s Budgets and the COVID-19 Resilience Package are about preservation and adaptation – to safeguard lives, jobs, supply chains, and core economic capabilities. From 2021, our focus will be on Emerging Stronger, Together. Why is this important? The COVID-19 pandemic has triggered global shifts on the economic, social and political fronts, on a scale arguably greater than the 1929 Great Depression. It has set off new domains for competition and cooperation. It has also accelerated technological advances. To secure our future, we must build new capabilities in our people and businesses, and find new ways to work together effectively. Within and across industries, and beyond our shores. While the post-COVID-19 global economic landscape is being reshaped and remains uncertain, we can discern the broad contours. What are some of the key changes that can affect Singapore? First, the speed of technological advances and re-configuration of global supply chains will reshape competitive advantages. During the 2003 SARS outbreak, by the time vaccines were ready for clinical trials, the virus was already largely contained through public health measures.”
“The COVID-19 Resilience Package also funds the COVID-19 Recovery Grant, which supports workers who lost their jobs or experienced significant income loss. The Grant has been open for applications since 18 January 2021, and more than 5,000 applications have been approved as of 15 February 2021. The third prong of the COVID-19 Resilience Package is to provide more targeted support for the worst-hit sectors, which continue to be adversely affected in 2021. They will need help to maintain capabilities and eventually recover. First, for our aviation sector, the recovery in global air travel will take some time. International borders remain largely closed today. As of end-January this year, total passenger movements in Changi were only about 2% of pre-COVID-19 levels. To preserve core capabilities and Singapore’s strong position built up over the years, I will provide targeted support and extend cost relief for the aviation sector. This will cost the Government $870 million this year. I expect the aviation sector to use this lull to sustain and upgrade its capabilities, and to prepare for the recovery. I will elaborate on this later. In our land transport sector, taxi and private hire car drivers have been hard hit by the pandemic, and will continue to need support in 2021. They will be supported by the COVID-19 Driver Relief Fund, which we announced previously. I have set aside $133 million for this Fund. The arts and culture, and sports sectors, connect our communities and weave the fabric of our society. These sectors have been deeply affected by the pandemic. I will extend the Arts and Culture Resilience Package and Sports Resilience Package in FY2021 to support businesses and self-employed persons in these sectors.”
“Firms in these sectors will receive 30% support for wages paid from April to June 2021, and 10% support for wages paid from July to September 2021. For firms in Tier 2 sectors, such as retail, arts and culture, food services and built environment, I will extend JSS at 10% for three months, covering wages paid up to June 2021. This excludes segments like supermarkets which are classified as Tier 3B. For firms in Tier 3A sectors, JSS will continue covering wages up to March 2021, as previously announced. These sectors are generally recovering. Nightlife establishments such as pubs, and karaoke outlets, are not yet permitted to re-open. They can apply for grants from the Ministry of Trade and Industry and Enterprise Singapore to pivot to other permissible activities or wind down. Overall, the JSS extension will cost $700 million. [Please refer to Annex B-2.] Second, to facilitate workers moving to jobs in growth areas, I will be extending specific schemes within the SGUnited Jobs and Skills Package, including the Jobs Growth Incentive and specific traineeship, attachment and training opportunities. I will elaborate on these later. Last year, I extended the Temporary Bridging Loan Programme and the enhanced Enterprise Financing Scheme – Trade Loan till 30 September 2021, to ensure businesses have continued credit access. I also enhanced the Enterprise Financing Scheme to better support loans for local construction projects. These programmes have helped many companies in the past year, with more than 20,000 taking up over $17 billion of working capital and trade loans. I hope businesses will make full use of these schemes.”
“I strongly encourage Singaporeans and residents who are medically eligible to take the vaccine when your turn comes. At the same time, we must continue to contain the spread of the virus, by keeping up our precautionary measures and our multi-layered defence system of contact tracing, testing and safe distancing. Altogether, I will be dedicating $4.8 billion of the COVID-19 Resilience Package towards public health and safe re-opening measures. The second prong of our Package is to continue support for workers and businesses where needed. COVID-19 continues to affect many of our workers and businesses. When COVID-19 first hit, I introduced the Jobs Support Scheme, or JSS, with a clear goal to protect jobs and help firms retain local workers. As the situation deteriorated in the ensuing months, I enhanced the wage support level and its duration, and brought forward the disbursement timeline. As the situation improved, I tapered support for sectors that were recovering well, and extended support to harder-hit sectors. So far, we have committed over $25 billion to the JSS, and supported over 150,000 employers for up to 17 months. The current tranche will continue to cover wages up to March 2021 for most sectors. I am heartened that many employers have managed to retain and reskill their workers. Even as our economy recovers gradually and some sectors grow well, some other sectors remain stressed. I will tailor support to maintain resilience and support growing areas. First, I will continue to provide JSS, targeted towards sectors that continue to be hard-hit. For firms in Tier 1 sectors – aviation, aerospace and tourism, I will extend JSS by six months.”
“I am confident that we, as Singaporeans, can once again summon our resolve to tackle the challenges, and emerge stronger from this unprecedented crisis. Let us seek to build a stronger Singapore: That is economically vibrant, so we can create good jobs for our people and opportunities for our businesses; That is socially cohesive, with a strong social compact and community spirit; That is a welcoming home, green and sustainable for generations to come; That has the fiscal and social reserves to enable continued stability and progress. Budget 2021 deploys our fiscal resources and the energies of our people, to realise our collective aspirations and build our future together. I will now elaborate on our plans, with the details in the Annexes. Let me first focus on our immediate tasks. The global economy is projected to recover to pre-COVID-19 levels this year, but the recovery is uneven across countries and sectors. The Singapore economy is projected to grow between 4% and 6%, with some sectors growing well, and others remaining under stress. I will set aside $11 billion for a COVID-19 Resilience Package. This Package will have three prongs: first, to address our immediate needs to safeguard public health and re-open safely; second, to support workers and businesses where needed; third, to target support for sectors that are still under stress. [Please refer to Annex B-1.] The first prong is to safeguard the health of Singaporeans. Vaccinating our people is key. We started our vaccination programme late last year. As of 14 February this year, close to 250,000 people have received their first dose of the COVID-19 vaccine, of which about 55,000 have also received their second dose.”
“The global battle against COVID-19 is far from over. Many places are still experiencing high levels of infection. The recovery in global economic activity is expected to be long-drawn, highly uncertain, and uneven across sectors and geographies. The arrival of vaccines gives us hope that economies and borders can re-open more quickly. But it is no silver bullet. Vaccinating a large proportion of the population will take some time. The emergence of more infectious variants may raise the threshold for herd immunity and disrupt the resumption of economic activities. If a new strain that is resistant to existing vaccines emerges, a new round of vaccination will be needed, further delaying economic recovery. This uncertainty is accentuated by several structural trends and challenges, including some brought to the fore by the pandemic. I will mention two. First, the rising protectionism over supply chains, resources, data and technology. This has been accelerated by a heightened sense of vulnerability and distrust during the crisis. Second, the unprecedented levels of public debt globally to finance the extraordinary fiscal responses during the pandemic. These add to concerns over long-term sustainability of debt and risks of inflation over time. The trajectory of the pandemic will determine the immediate trajectory of the global economic recovery. As a small, open economy, Singapore’s economic recovery is contingent on how the global situation plays out. Not everything is within our control. We need to adapt nimbly to the wide range of possible outcomes. Since our independence, Singapore has weathered crisis after crisis, and emerged stronger.”
“These measures are also estimated to save or create 155,000 jobs on average over 2020 and 2021, preventing the resident unemployment rate from rising a further two percentage points in 2020. Lower-income households received higher levels of support from some of the COVID-19 measures, such as the Workfare Special Payment and Grocery Vouchers. While fiscal measures did most of the heavy lifting, the measures taken by the Monetary Authority of Singapore, to maintain an accommodative monetary policy stance, ease cash flow constraints and ensure sufficient liquidity in the banking system, complemented the fiscal measures well. The Ministry of Law’s COVID-19 (Temporary Measures) Act 2020 also offered temporary relief to individuals and businesses for rental and various other contractual obligations. On the public health front, community cases have remained low and we have been on a path of gradual re-opening since June last year. We were able to mount a whole-of-Government response to COVID-19 decisively, without incurring a huge debt for future generations, because successive generations have built up strong reserves ahead of this crisis. I thank the President for her support for the use of Past Reserves to fund our response to COVID-19 so far. As we re-opened our economy, we shifted our measures from containment to restructuring, while continuing our support for Singaporeans, workers and businesses. We transitioned our broad-based support to more targeted ones for firms, especially those in the hardest-hit sectors. We introduced measures to preserve core capabilities. We shifted our focus from job retention to job creation, and helped workers secure jobs in growth sectors. We set up the Emerging Stronger Taskforce amid the crisis to respond to the new realities.”
“Mr Speaker, Sir, I beg to move, "That Parliament approves the financial policy of the Government for the financial year 1 April 2021 to 31 March 2022." Last year, I addressed Parliament nine times. I had four Budgets, two Ministerial Statements and the Budget Round-ups. This year, my new year wish is to have one Budget. Members will bear with me that this Budget speech will be very long and I hope that you stay alert over the next two to three hours. We have spent a year fighting the COVID-19 pandemic. Last year, in addition to our usual spending, the Government committed nearly $100 billion through five Budgets to support Singaporeans, help tide businesses over this difficult period, and most importantly, keep everyone safe. We faced the worst recession since independence. The pandemic-triggered recession has hit both demand and supply side simultaneously. Singapore’s GDP contracted by 5.4% in 2020. The overall Budget deficit for Financial Year 2020 is also the largest since Singapore’s independence, at $64.9 billion, or 13.9% of GDP. We averted the worst, and prevented deep economic scarring and permanent impairment of our economic strengths. Last week, the Ministry of Finance released an interim assessment of the COVID-19 Budget measures. Our early findings show that the combination of fiscal, monetary, and transitional measures, mounted as a whole-of-Government response, has helped to avoid a worse recession, avert job losses, and mitigate inequality. Without the fiscal and monetary policy measures, Singapore’s GDP would have shrunk by at least 12.4%, more than double the contraction we experienced.”
“The Government adopts a multi-pronged approach to encourage charitable giving from individuals and businesses. This complements Government funding and support for our charities and their beneficiaries. Currently, the Government provides a 250% tax deduction to qualifying donations1 made to Institutions of A Public Character (IPCs). In addition, through the Business and IPC Partnership Scheme (BIPS), businesses can enjoy 250% tax deduction on wages and related expenses for corporate volunteering. Beyond tax incentives, the Government also supports charitable giving through grants that match donations raised. The current 250% tax deduction on qualifying donations to IPCs is relatively high, compared to other jurisdictions such as Australia, Hong Kong, and United States. Companies that are doing well, and choose to give or volunteer generously, will benefit from lower taxes. However, we must also pay attention to our fiscal position which has been weakened by the impact of COVID-19 on our economy. Hence, we have to strike a balance between granting tax benefits to encourage charitable giving, and ensuring sufficient tax revenue for our recovery and spending needs. We will continue to review how best to encourage sustained giving through tax and non-tax measures.”
“Agencies took care to engage suppliers and evaluate them on who could best meet the requirements while offering value for money. This includes using established contracts as well as establishing new links to diversify and secure emergency supplies that were in short supply globally.”
“Through the five Budgets in 2020, the Government committed a total of $97.3 billion to support our economy and society in fighting COVID-19. Over 85% of this comprised direct transfers, grants and loans to eligible individuals, businesses and households, like the Jobs Support Scheme and the Solidarity Payment. A total of $13.8 billion was set aside for Ministries' and Statutory Boards' spending on operational aspects of our COVID-19 response, comprising the following major expenditures: (i) $10 billion under MOH and MTI for medical and emergency operations and supplies. This included the expansion of testing capacity, clinical management of COVID-19 patients, contact tracing capabilities, and securing of critical medical and emergency supplies such as personal protective equipment. (ii) $2.9 billion under MND to set up and operate quarantine and Stay-Home Notice (SHN) dedicated facilities and build new dormitories to reduce the population density and spread of infection. (iii) $0.9 billion under MOM to manage the COVID-19 outbreak in the dormitories. For medical and emergency supplies, 10 agencies awarded contracts to more than 100 suppliers for the provision of relevant equipment and services. For COVID-19 related facilities (quarantine, temporary migrant workers' housing, medical, SHN) and transport arrangements, 13 agencies engaged over 150 suppliers to supply the services. To manage the impact of the COVID-19 outbreak in dormitories, MOM awarded contracts to more than 150 suppliers for the provision of food and telecommunications, among others. When procuring goods and services, we must bear in mind the unprecedented nature of this pandemic and the level of global shortage. This requires us to act swiftly and to adapt.”
“To date, the Temporary Relief Fund, COVID-19 Support Grant and SIRS have helped more than half a million individuals. Beyond the fiscal resources committed, the Government had put in place other measures to support workers and business owners, through the COVID-19 (Temporary Measures) Act. The MAS’s monetary policy stance and measures to ease cashflow and debt obligations for individuals and businesses also formed part of the broader support package. The Government committed $100 billion in FY20 towards these measures, but how much is used depends on the take-up of the schemes we put in place. In some areas, such as the SG United Jobs and Skills programme, take-up has been stronger than expected, whereas less support was needed in other areas where market conditions turned out to be better than earlier expected. Overall, we expect that we will not fully utilise the $100 billion committed in FY2020. But the fight against COVID-19 is not yet over. The pandemic rages on in other parts of the world. More infectious variants of the virus threaten to undo our good work. We will need to continue dedicating resources towards the fight against COVID-19 in FY2021. I will present the revised FY2020 estimates and lay out the Government’s detailed plans for FY2021 at Budget 2021.”
“We also provided additional support for the sectors most adversely affected by the crisis, such as the aviation and tourism sectors. This included the SingapoRediscovers vouchers to catalyse domestic tourism in a safe manner. Beyond emergency relief, we are creating new job, traineeship and skills upgrading opportunities through the SG United Jobs and Skills programme and Jobs Growth Incentive. At the Fortitude Budget, I said that we planned to create 100,000 opportunities. We have in fact exceeded this target since August last year. Our focus now is to match jobseekers to the available opportunities. As at end-December 2020, the SG United Jobs and Skills programme has achieved about 75,000 placements. The Jobs Growth Incentive also encouraged firms to bring forward their hiring plans and accelerate the hiring of locals. We are also helping businesses transform and adapt to a post-COVID world, so that we continue to have viable jobs. For example, we enhanced the Enterprise Development Grant and the Productivity Solutions Grant, which provide up to 80% funding support for businesses to digitalise and upgrade productivity. We are starting to see some signs of stabilisation in the labour market. The Government will continue to monitor this closely and refine our policies. Finally, we devoted $10.0 billion to social and household support. We rolled out the Care and Support Package and Solidarity Payment, as well as the Workfare Special Payment to provide more help to lower-income workers. The Government also gave funding support to charities and self-help groups, and set up the Temporary Relief Fund and COVID-19 Support Grant to help those requiring additional assistance. For Self-Employed Persons (SEPs), we introduced the SEP Income Relief Scheme (SIRS).”
“Our spending to combat the COVID-19 crisis went towards three major areas to protect lives and livelihoods. First, we dedicated $13.8 billion to support public health efforts. Second, we committed $73.5 billion to protect livelihoods, through support for workers and businesses. Third, $10.0 billion went towards social and household support. Our first priority has been to protect lives. $13.8 billion was committed towards public health. We expanded testing and contact tracing capabilities to contain the virus, building up the capacity to carry out over 50,000 tests per day. We secured health supplies to ensure that frontline workers are well-equipped and protected. We stood up additional healthcare capacity to ensure everyone can access the necessary treatment. We secured early access to vaccines – allowing us to be the first Asian country to receive and roll out the Pfizer-BioNTech vaccine. These efforts have helped Singapore to avoid the worst of COVID-19 so far. While we encountered serious challenges, we have kept our death rate low and brought community transmission to a manageable level. This was possible because of the dedication of our frontline workers, and unity and cooperation of our people in fighting COVID-19. Second, we devoted $73.5 billion to protect livelihoods, through support for workers and businesses. At the height of the crisis, we subsidised up to 75% of wages for all resident workers through the Jobs Support Scheme, to which we devoted $26.9 billion. We also provided other cost and credit support to enable businesses to preserve jobs and retain workers. For example, we helped businesses manage costs through tax and rental reliefs, and access credit through the Temporary Bridging Loan Programme and enhanced Enterprise Financing Scheme.”
“Licensed moneychangers that derive more than two-thirds of their revenue from money-changing services are already classified as Tier 1 under the Jobs Support Scheme (JSS). This is in recognition that these firms are heavily reliant on travel and tourism. The list of industries that are eligible for Tier 1 and Tier 2 JSS support, as well as the corresponding criteria, can be found on the Inland Revenue Authority of Singapore's website.”
“As a default, fines are collected in full to reflect their intent of deterring and correcting errant behaviour. Thus, agencies generally do not offer the option to pay fines by instalment upfront. An offender may appeal to agencies for a deadline extension to pay the fine, or for an instalment plan, on the grounds of financial difficulty. Agencies will exercise judgment on whether to grant the appeal, taking into consideration the relevant provisions of the law, the offender’s means to make payments, the size of the fine, and the nature and severity of the offence, among other factors. As the administration of fines is decentralised and under the purview of respective Accounting Officers, MOF does not have the figures requested by the Member. If the Member has a specific agency or type of fine in mind, he may wish to file a Parliamentary Question to the relevant Ministry to obtain the necessary information.”
“The GST Voucher (GSTV) scheme provides support to lower- and middle-income households for their expenses. The eligibility criteria help to ensure that the scheme prioritises those who need more support. To ensure this scheme effectively delivers benefits to those who need it more, eligibility for the cash payout is based on the individual's Assessable Income (AI) and the Annual Value of his or her residence, and he or she should not own more than one property. We use AI as a measure of an individual's means because it includes all forms of income from trade, business, profession or vocation, employment, and rental, and it covers both employees and self-employed persons. AI is more comprehensive, and is a better reflection of an individual's means and income, regardless of source. In comparison, CPF contribution history only takes into account employment and trade income. In the event of an appeal by a Singaporean who does not meet the scheme criterion but who recently experienced a fall in income, we will look at his or her latest income status as well as other supporting documents such as his or her CPF contribution history, in considering the appeal. Besides the GSTV, the Government has put in place additional support schemes to help Singaporean workers and families. This includes schemes like the COVID-19 Support Grant, where we look at recent changes in the individuals' circumstances. This combination of flexibility in reviewing appeals for permanent schemes like the GSTV and the introduction of more responsive COVID-related schemes allow us to provide help to those who need it.”
“On whether a property owner can claim the concession and seek a refund of the excess property tax paid after he has sold the property, IRAS will need to look at the specific circumstances. If the Member has any specific case in hand, he can approach IRAS for a review of the case.”
“Residential properties are subject to property tax, with higher-value residential properties being taxed at higher rates. Owner-occupied residential properties enjoy concessionary property tax rates. Properties which are rented out or vacant do not enjoy this concession. IRAS publicises information on the property tax rates, including the concession, through various platforms such as its website and annual property tax notice. Property owners are free to buy one or more properties, and choose to live in any or none of the properties they own. Hence, it is necessary for the property owner to inform IRAS about owner occupation to qualify for the concession. We do not have statistics on how many property owners live in their own properties but do not enjoy concessionary tax rates. That said, IRAS has put in place measures for taxpayers’ convenience. First, IRAS grants concessionary rates automatically to all buyers of HDB and DBSS flats, as well as new ECs. These forms of housing are meant for owner occupation. Second, IRAS has been extending the concession automatically to a buyer of a private property or resale EC bought on or after 1 January 2011, if he is a Singapore Citizen or Permanent Resident, and neither he nor his spouse is enjoying the concession on any other residential property. Residential property owners who are granted the concession automatically are required to inform IRAS if the residential property is not being owner-occupied, and the concession will be withdrawn. For residential properties bought before 2011, there may be cases which could be eligible for the concession, but the owners did not apply for it. IRAS sent letters during a 2012 exercise to invite them to apply for the concession if they were residing in their property.”
“The $5.9 billion in household transfers comprises the Solidarity Payment, Solidarity Utilities Credit, and measures under the Care and Support Package such as the Care and Support – Cash, PAssion card top-up, Workfare Special Payment, additional GST Voucher – U-Save rebate, Service and Conservancy Charges (S&CC) Rebate, Grocery Vouchers, and grants to self-help groups and Community Development Councils (CDCs). Of the $5.9 billion, $0.2 billion are the additional grants to self-help groups and CDCs for them to use to help needy families and children during this pandemic. These grants are on top of the usual subvention provided to them by the government in our annual Budgets to support them in their work for the community. This $0.2 billion is an indirect transfer and is not included in the breakdown. Of the $5.7 billion in household transfers, 26% went to households in the bottom 20% (by per capita monthly household income), with an average of about $2,000 received per household member. Households in the middle 20% received 20% of the household transfers, with an average of about $1,500 received per household member. Households in the top 20% received 12% of the household transfers, with an average of about $900 received per household member. These household transfers are over and above other additional measures to help Singaporean workers during this difficult period such as the Jobs Support Scheme (JSS), Self-Employed Person Income Relief Scheme (SIRS), COVID-19 Support Grant, and the extensive existing education, healthcare, and housing subsidies and structural household support measures like the GST Voucher scheme.”
“The Workfare Income Supplement is intended to help supplement the incomes of Singaporean workers in the bottom 20%, with a smaller degree of support for those slightly above. During this challenging period, the one-off Workfare Special Payment is an additional support component provided to those receiving the Workfare Income Supplement for Work Years 2019 or 2020. Given that Workfare and the Workfare Special Payment are intended for lower-wage workers with limited household resources, using the total income earned by the worker from all employment sources is a fairer way to assess their eligibility for the additional support, together with other criteria such as the Annual Value of residence and income of their spouse. We recognise that this is a difficult period for many Singaporeans. Many lower-wage workers would also have received higher Care and Support – Cash payments, and support under government schemes such as the GST Voucher scheme. Those who require further financial support may seek help through the MSF Social Service Offices.”
“Under our personal income tax regime, the first $20,000 of a tax resident individual's chargeable income (that is, taxable income after netting off tax deductions and personal income tax reliefs) is not taxed. This $20,000 threshold, together with our progressive tax rates, tax reliefs, and tax rebate, ensures that low- and middle-income earners pay no or low income taxes. Currently, about half of our workers do not pay personal income tax. Among the individuals who do pay personal income tax, 80% of them have an effective tax rate of less than 4%. The Government reviews our tax system periodically, and will continue to do so to ensure that our personal income tax regime remains competitive, fiscally resilient and progressive.”
“The Government shares the Member’s desire to inform Singaporeans about the various benefits and help schemes that they are eligible for, and has undertaken communication and outreach in various forms. In July 2020, we distributed a Budget booklet to all households, describing the support measures announced at the Unity, Resilience, and Solidarity Budgets. For each scheme (like Workfare Special Payment, GST Voucher), customised letters are sent to each eligible citizen. For the Care and Support Package which has different components and payout timelines, letters to eligible beneficiaries provide information on what they can expect to receive. For GST Voucher – U-Save and the Solidarity Utilities Credit, we informed households of how much they would receive through additional inserts in their monthly utility bills from SP Services. As some COVID-19 support measures are provided on an application basis, we stepped up our efforts to communicate these schemes so that those who needed additional support would be aware of how to apply for them. For instance, posters and infographics were put on the Digital Display Panels located within HDB estates. Information on the various COVID-19 support schemes was consolidated on the "Support Go Where" website, with links to the various schemes’ application webpages, where relevant. The Silver Generation Office (SGO) and its volunteers have also been actively reaching out to seniors, continuing over telephone during the Circuit Breaker period, to inform seniors of the support schemes available. We will continue to improve the ways we inform fellow citizens of the help available to them.”
“We have discussed the relationship between the Government and its investment entities many times in this House. Ms Sylvia Lim had a similar question earlier in October on whether the Government will use its shareholder influence to accomplish other objectives. Our answer remains unchanged. The Government maintains an arm’s-length relationship with its investment entities. We do not direct or influence their commercial or operational decisions. This principle applies likewise to their portfolio companies.”
“We will continue to review our social policies, taking into account the changes in our socio-economic landscape and our economic circumstances.”
“All Singaporeans benefited from the Care and Support Package in 2020, with more benefits going to the lower income. b. One in four households also received support for unemployment or income loss through the Temporary Relief Fund, COVID-19 Support Grant, or Self-Employed Person Income Relief Scheme. Nearly 80% of recipients came from households at the 60th household income percentile and below. c. Singaporeans living in 2-room or smaller HDB flats, including rental flats, have also received $300 in Grocery Vouchers in 2020, and will receive an additional $100 in 2021. d. The Community Development Council (CDC) Vouchers Scheme launched on 12 June 2020 has helped up to 400,000 lower-income Singaporean households – identified through various Government help schemes – with vouchers that can be used to redeem food, essential items, and services at local hawker stalls and heartland merchant shops near their homes. We regularly review our policies to better support the needs of Singaporeans. In particular, we study if our schemes are reaching the intended groups, and also if adjustments are needed to the amount of assistance. a. For example, the Silver Support Scheme, which was introduced in 2016, will be enhanced from 2021 to benefit about 100,000 more seniors. The payouts will also be increased by 20%, to up to $900 per quarter, as announced in the Unity Budget in February 2020. b. For lower wage workers, the tripartite partners have agreed to form a Tripartite Workgroup on Lower Wage Workers, to study how to expand the Progressive Wage Model and provide wage growth and job progression opportunities to these workers. We look forward to their recommendations.”
“We support Singaporeans in meeting their retirement needs. The CPF system helps Singaporeans build their retirement wealth by providing risk-free interest rates of up to 6%. The Government provides regular top-ups to the MediSave accounts of lower-income Singaporeans and seniors through the GST Voucher scheme. Further, Silver Support helps seniors who had lower incomes throughout life and who now have little or no family support. Fifth, healthcare: a. For healthcare, Singaporeans receive subsidies of up to 80% for hospitalisations, with the lower-income receiving more. Lower- and middle-income households also receive higher subsidies for outpatient treatment, and for MediShield Life and CareShield Life premiums. b. Together with MediShield Life and MediSave, 7 in 10 subsidised hospitalisation bills incurred no cash payment in 2018. Lastly, social assistance: a. Social and community assistance is available to those with higher needs. ComCare provides Short-to-Medium-Term Assistance for lower-income Singaporeans who are temporarily unable to work or looking for employment and require financial assistance, as well as Long-Term Assistance for those unable to work due to old age, illness, or disability. b. Lower- and middle-income Singaporeans also receive support under the GST Voucher scheme, to offset some of their GST expenses. c. We also provide grants to the Social Service Agencies to run key programmes for the vulnerable, such as befriending services for Persons with Disabilities (PWDs) and seniors, at subsidised rates. In this difficult time, the Government has taken unprecedented measures to provide Singaporeans relief from the economic impact of COVID-19. a.”
“Those who go on to an IHL, which most students do, benefit from another $15,000 to $22,000 in subsidies per year.2 c. Students from lower-income families will receive more as: i. Families can pay as little as $3 per month for full-day childcare, and have their primary and secondary school fees fully subsidised. Additional support is also available through the Opportunity Fund and for transport. ii. We have also recently enhanced tertiary bursaries for students from the 2020 Academic Year so that students from lower-income households pay fees as low as $150 per year for their polytechnic education, and can receive further support for their living expenses. Second, work: a. We provide significant support to help workers stay employed as we believe that a job is the best form of welfare. b. We uplift the wages and productivity of lower-income workers through the Workfare Income Supplement scheme and Progressive Wage Model. We also made a Workfare Special Payment of $3,000 in 2020. c. We also provide help for lower-income workers to upgrade their skills and boost their career mobility through the Workfare Skills Support scheme. Third, housing: a. We provide significant subsidies to Singaporean households for housing, with the bulk of the subsidies going to the lower- and middle-income. Heavily subsidised rental housing is available for the lower-income who are unable to afford to purchase a flat of their own. b. Those purchasing an HDB flat for the first time can receive up to $160,000 in housing subsidies, including the Enhanced CPF Housing Grant. c. In 2019, about 85% of the bottom 20% of households owned a home, which is much higher than even the overall homeownership rates in many other countries. Fourth, retirement: a.”
“The Government is committed to building a caring and inclusive society, bridging gaps and reducing inequalities for a fair and just society. Over the years we have steadily increased our social expenditure. We now spend three times as much on social programmes each year than we did 15 years ago. The underlying philosophy of our system is that everyone contributes according to their means, and wealth is redistributed by the state. All Singaporeans benefit, but those with less receive more and those with the least receive the most. a. Lower- and middle-income households receive significantly more transfers and subsidies than the taxes they pay, whereas higher-income groups contribute far more in taxes than the transfers and subsidies they receive. b. For instance, the bottom 20% of households account for less than 10% of all taxes paid, but receive almost 30% of all benefits disbursed1. In contrast, the top 20% of households account for 55% of taxes, and receive a smaller amount – about 10% – of the benefits. Handout 1: Share of Taxes and Benefits I will now elaborate on how our lower- and middle-income households are supported in the areas of education, work, housing, retirement, healthcare, and social assistance. First, education: a. We believe that the best form of support for all Singaporeans is developing the individual at every stage of life and giving them access to opportunities through good education and continued employment. Education from pre-school to Institutes of Higher Learning (IHLs) is heavily subsidised. b. By the time a Singaporean child reaches 16, he or she would have benefitted from more than $180,000 in education subsidies, including pre-school subsidies.”
“He was very concerned about the public discussions that we are having, particularly on the use of reserves. Let me quote. He said, "Singapore could not afford instability, not like big countries. Once our reserves are used up, Singapore is gone. It will be forever gone. We do not have natural resources to fall back on." So, Mr Speaker, Sir, I thank all Members for your comments and I leave you with this sobering thought from one of our citizens. [Applause.]”
“So, I am prepared to propose to the President a further draw on our Past Reserves should it be necessary for us to do so. In the medium to longer term, our approach is to adapt and find new ways to generate growth. We must work hard to get ourselves back in a position where our economy is growing and we can build up reserves for the future again. This is the sustainable and prudent way forward. Mr Speaker, Sir, let me conclude. This COVID-19 crisis is a test of how far we have come as a global city and a nation. How we respond will determine how far we will go. Singapore's dual identity as both a city and a nation has given us agency, nimbleness and unique strengths. But it has also conferred upon us some unique challenges which we have turned into successes. In the face of new threats and opportunities, we must continue to stay open as a global city yet closely-knit as one people and one nation. Over the next few months, we will continue to study ways to help our businesses and people emerge stronger. Our consultations for Budget 2021 have already begun. The Emerging Stronger Taskforce is pressing on with the Alliances for Action to seize growth opportunities for Singapore, even as we deal with COVID-19. I have also set up teams to look into how we can better support workers and households in the post-COVID-19 world. Our battle with COVID-19 is far from over and the road ahead in a post-COVID-19 world will be uncertain. But I am confident that if we stay open and stay united, we will continue thriving as an exciting and vibrant global city and emerge stronger as a more cohesive and resilient nation. And most important of all, we must retain our core values. Three days ago, one Mr Sim, who was on medical leave wrote to us.”
“" In the short span of 100 days since the Unity Budget when Mr Singh made these remarks, we have delivered three more Budgets and had to propose a draw of up to $52 billion from our Past Reserves to help save lives and livelihoods. Therefore, as you can see, we face great uncertainties. It is too early to conclude that we have unlimited space. So, we need to be more circumspect when it comes to using more reserves, as we are confronted with greater uncertainties ahead. First, the global economy and financial system will be more volatile. The build-up of debt globally introduces instability in the financial system, which can lead to or exacerbate crises. Second, we are seeing increasing risk of geopolitical conflicts and deglobalisation. Third, scientists have warned of the risk of another serious international epidemic caused by a new unknown disease, Disease X. Not if, but when. Sir, I am sure that we all want Singapore to be here for the long haul. As long as Singapore continues to exist, the question is not whether there will be an externally induced crisis but when. If we spend more or even all the returns from our reserves annually, future generations will likely have a smaller buffer in a world of greater uncertainty. We must therefore ensure that we continue to spend within our means and hand over to our children more than what we have inherited from our previous generations. Mr Liang Eng Hwa asked whether the Government would consider a further draw on reserves, considering the magnitude and severity of this crisis. Indeed, there is profound uncertainty in this trajectory of this pandemic and its economic impact. We must act early and decisively to support our workers and businesses when needed.”
“How long it will take also depend on the choices we make as a country and Government – whether we continue to manage our resources prudently. We remain committed to running a broadly balanced Budget over each term of Government and will assess the viability of returning the amount drawn, depending on our fiscal position. Mr Leong Mun Wai has suggested the amount of reserves drawn is much less than $52 billion and he has cited several figures in his speech. I will not repeat his computation but I will just make two points. First, the NIR framework is based on expected long-term returns, not actual returns. So, it is incorrect to estimate the actual return by multiplying the NIRC by two. Second, in considering the amount that we are spending from our reserves, it is wrong to subtract the returns from the $52 billion to derive a net spending figure. In addition to the draw, we continue to spend NIRC which also comes from our reserves. And furthermore, the amount drawn from the reserves would have generated returns in perpetuity without a draw. So, the draw of $52 billion is unprecedented and no one should downplay its size or significance. The COVID-19 pandemic has shown us how our reserves allowed us to remain nimble in times of uncertainty. When I delivered the Unity Budget in February, we did not foresee a need to draw on our Past Reserves. In fact, Mr Pritam Singh said at the debate then that the Government had, and I quote, "the privilege of far more budgetary elbow room, both political and fiscal, than any previous government in Singapore's history.”
“In Singapore, we are fortunate to have a rainy-day fund built up over the generations that has allowed us to mount a quick and strong response. We are drawing up to $52 billion from our past reserves to fund the support packages. Several Members have asked for clarifications on this $52 billion draw. So, let me address them. Mr Louis Chua asked how the draw on reserves would impact the Net Investment Returns Contribution or NIRC. Yes, there will be some impact to NIRC but the design of the NIR framework is to provide a stable, sustainable source of income to our Budget, smoothed out over market cycles. This means that when the projected returns and value of the net asset base goes down, we do not see an immediate proportionate decrease in NIRC. In the same way, in periods of sharp spikes in the market and asset values go up, we do not see an immediate increase and overspend. Mr Gerald Giam asked about the Government's plans to put back the sums drawn from our reserves. To be clear, under our Constitution, there is no legal obligation for the Government to put back the amount drawn from our past reserves. Rather, it is about having the moral obligation and sense of duty to current and future generations and the recognition that we are stewards of our reserves which have not come by easily. So, it is not possible for me to be definitive on how long it will take for us to build up sufficient surpluses to make up the $52 billion. I would like to remind everyone that the COVID-19 crisis is not over. The scars it will have on our economy and the global economy are still unknown. But I can say that it will not be two years, and I certainly hope it will not take us 50 years.”
“We expect collections to continue to be lower than usual until international travel recovers fully, which we expect to be at least a couple of years away. However, let me assure Ms Foo that we remain committed to helping our people manage the impact of the GST rate increase. We have already set aside a $6 billion Assurance Package for GST to cushion the increase for Singaporeans when the GST rate is eventually raised. For most households, this will offset at least five years' worth of additional GST expenses incurred and for those living in 1- to 3- room HDB flats, equivalent to about 10 years' worth of additional GST expenses. On top of the transitional support, we have the permanent GST Voucher scheme, which will be enhanced to provide more help to lower income households and seniors. I would also like to point out that over 60% of the GST borne by all individuals and households is from foreigners residing in Singapore, tourists and the top 20% of resident households. Mr Leong Mun Wai's suggestions to shelf the GST rate increase indefinitely means that we lose the additional revenues from this group which we can use to improve the lives of Singaporeans. I do not know if Mr Leong is aware of this. Mr Speaker, Sir, over the five support packages this year, we are committing about $100 billion to fight COVID-19. And as what Mr Murali Pillai has just showed us in a chart earlier, our fiscal support is very significant, very significant for Singapore and very significant compared to many other countries. And we did not incur a cent of debt to fund our package. This is unlike many other countries, which had to borrow further to fund their COVID-19 response, despite already being at high levels of debt.”
“This will help to spread out the hefty upfront costs equitably across current and future generations who will benefit from such investments. Our approach will be a principled and prudent one. We will borrow only for infrastructure that benefit multiple generations, and ensure that our debt level and future repayments are sustainable. I am glad that Mr Louis Chua echoed our stance to maintain a disciplined use of borrowing for projects that will benefit multiple generations of Singaporeans We will not borrow just to make up for revenue shortfalls or be opportunistic in timing the market. However, for recurrent spending like healthcare and education that benefits the current generations, the responsible way is to pay for them using what we earn, through recurrent revenues like taxes. This discipline ensures that every generation earns and pays its share. Several Members have asked about the timing of the GST rate increase. In February this year, I announced that the GST rate will remain at 7% in 2021. However, we cannot defer the GST rate increase indefinitely. The GST rate increase is to support our future needs in healthcare and pre-school education. We will continue to study the timing of increasing the GST rate carefully, taking into account the pace of our economic recovery, our revenue outlook and how much spending we can defer to later years, without jeopardising our long-term needs. Ms Foo Mee Har asked if our assumptions behind the GST rate increase have been affected by COVID-19. Indeed, GST collections this year are projected to be down by 14% from what we had estimated before the start of the year, mainly due to the travel disruptions and the impact of the circuit breaker.”
“For example, the construction of Changi Airport Terminal 5 has been put on hold for two years amid uncertainties over how COVID-19 will change the aviation sector. There could be further deferments or reductions in scale, if demand takes longer to recover. Conversely, we may also need to build in more resilience and safety features, which could raise project costs. Mr Liang Eng Hwa asked how we would balance our Budget. I thank Mr Liang Eng Hwa for being forward-looking. In fact, looking ahead, our fiscal situation will get tighter. Our revenues in the medium term are expected to be subdued and uncertain for two reasons. First, global economic growth will likely remain weakened for several years. Second, we can expect global competition for tax revenue to intensify. Many advanced economies have accumulated more debt to fund their COVID-19 responses, which they will need to repay. There is added impetus globally to push for "re-allocation" of taxing rights under the Base Erosion and Profit Shifting project, or BEPS in short. So, even as we contend with these revenue challenges, we cannot lose sight of our goal to secure the long-term needs of Singapore. As I have shared on multiple occasions, we expect expenditure to increase in public healthcare and pre-school education. This is vital to ensuring we can take better care of our old and young. In order for Singapore to continue thriving as a global city tomorrow, we must ensure our financial security as a nation today. We are therefore making the responsible decision today, to study how we can strengthen our fiscal toolkit. Even before COVID-19 struck, we have explained that we are looking into borrowing for major long-term infrastructure.”
“As a nation, we have spending priorities that cities do not have. Yet unlike other cities, we do not have a federal government to bail us out. As a nation, our planning horizon cannot be just 10, 20 or even 50 years like a company or an individual. We have to think about the countless generations that come after us. This is why it is critical that we remain fiscally prudent, to make sure that we spend within our means, and also leave something behind for future Singaporeans. For this latest Fifth Support Package, we are able to fund it entirely from Budget reallocation. As mentioned in my Ministerial Statement earlier, our guiding principle is prudence, not austerity. The Government did an extensive scan, Ministry by Ministry, to identify deferment or reductions in expenditure. Some expenditures such as those for MRT lines, HDB upgrading, and sewerage and drainage works were deferred arising from delays due to the circuit breaker and the safe re-opening of the construction sector thereafter. Some expenditures were also lower than earlier projected due to COVID-19 and safe distancing measures. However, most of these are not savings but delayed spending which will still be incurred in future years as Mr Liang Eng Hwa has rightly pointed out. Mr Xie Yao Quan suggested that we should not delay critical projects. Indeed, for projects that are critically important, we will resume these. These projects are needed to raise Singaporeans’ standard of living and our economic development. We will push ahead when the conditions allow. We are also already reviewing major infrastructure projects to account for the longer term impact of COVID-19.”