Lawrence Wong
Singapore
“Sir, we will provide more information. I see the value of getting Ministries to put out more information, to share more about how their resources are being used and what outcomes they have achieved.”
“Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the investments.”
“Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good.”
“This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.”
“Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis.”
“Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question. To answer the question, we will continue to monitor cost of living across all segments of society.”
The complete record
Every one of 3,205 lines we hold for Lawrence Wong, in date order, each linked to its source. Free to read, in full, without an account. Page 19 of 65.
“Mr Deputy Speaker, may I have your permission to take Question Nos 24 to 31 together as these questions pertain to the holistic set of Government support amidst inflationary pressures?”
“The Government is committed to supporting families with special needs children. The Qualifying Child Relief (QCR) and Handicapped Child Relief (HCR) are provided as recognition for parents in supporting their children and are not intended to defray the costs of raising children. Apart from these tax reliefs, there are various schemes that more directly offset the cost of services to support children with special needs, with more subsidies given to those with greater needs. These include early intervention programmes, such as the Early Intervention Programme for Infants and Children and publicly-funded Special Education schools for students with moderate-to-severe special needs. We continue to support individuals with special needs through adulthood. Work-capable Persons with Disabilities (PwDs) can receive employment support through the Enabling Employment Credit (EEC) and Open Door Programme (ODP) that provides wage offsets and grants, or other employment support services, to those who hire PwDs. Those who are unable to work can attend subsidised programmes at Day Activity Centres. The Government remains committed to support those with special needs, through regular reviews of our policies. The new Enabling Masterplan 2030 will be launched by MSF later this year, as part of a continuing journey to build a more inclusive society in Singapore.”
“Sir, the AAR will be broad-ranging. As I have said, it will look at a whole range of issues. There are many things that the AAR will cover. But the focus will really be on issues of strategic and national importance which will enable us to learn and do better and be better prepared for the next pandemic. I am sure everyone will agree that it is in our shared interest to achieve that objective. The question that Mr Leong Mun Wai has asked, really, is more pertaining to accountability with regard to monies spent, which is an important issue. But I think it is a slightly different one and MOF will be happy to take that up. We do that with regard to all areas of spending and, where relevant, we will put out information on how the monies are spent. But let the AAR focus on the more strategic and important issues that will enable us to be better prepared for the next pandemic.”
“Sir, the AAR has already started, as I mentioned just now. It is, indeed, a whole-of-Government endeavour. Mr Peter Ho has been given access to all information with regard to the Government's response. He will do a thorough exercise in reviewing the Government's response, which is our intent, to learn thoroughly and rigorously from what we have experienced so far, in order that we can do better for the next pandemic, which will surely come. This was also the approach we took when we reviewed the lessons from SARS. Which is why, as Minister Ong Ye Kung said just now, we had put in place a DORSCON framework, we set up the National Centre for Infectious Diseases (NCID). Likewise, we will learn many lessons, many useful lessons from COVID-19, particularly the first phase of the experience. And we will use these lessons to improve our response for the next pandemic. To the second question that Mr Pritam Singh asked, indeed, the lessons that we hope to derive from this AAR will be wide-ranging and will include how we can be more resilient as a nation, how we can improve our supply chains and how we can improve our national resiliency in a broad range of areas.”
“Mr Speaker, Sir, I am taking this question on behalf of the Prime Minister. Sir, last July, in reply to a Parliamentary Question from the Leader of the Opposition, Senior Minister Teo Chee Hean said that the Government will conduct an after-action review (AAR) of our COVID-19 response when the situation has stabilised and we are out of the woods. Sir, our response to COVID-19 can be characterised by two broad phases. In the first phase, which was from the start of the outbreak to August last year, we focused on containing the spread of the virus. Thereafter, when we had vaccinated a high proportion of people in Singapore, we shifted our approach to learn to live with the virus. For now, the pandemic is still not over, but the situation has improved. Therefore, the Government has started work on the AAR, focusing on the first phase of our experience, in other words, what happened from the start of the outbreak till August 2021. The AAR is intended as a broad ranging exercise to thoroughly analyse our experiences and review the lessons learnt, so that we can be better prepared for the next pandemic. We have asked the former Head of Civil Service, Mr Peter Ho, to oversee this process and he has agreed to do so. The Government will share the findings and lessons with the public, when the AAR is completed.”
“This question has been addressed by the joint Ministerial Statement delivered together with Second Minister for Trade and Industry Tan See Leng on 4 April 2022. [Please refer to "Inflation and Business Costs", Official Report, 4 April 2022, Vol 95, Issue 60, Statements by Minister for Finance and Second Minister for Trade and Industry section.]”
“Since May 2020, the Government has started to adopt outcome-based contracts for the procurement of security services. Except in cases where public agencies have requirements which cannot avoid the need for manned operations to meet security outcomes, new tenders are, generally, required to specify outcomes rather than dictate a fixed number of headcounts or the number of shift hours to be performed by the security officers. This allows security service providers to provide optimal security solutions that integrate manpower, technology and processes. Security service providers have the flexibility to decide on the duration of each security officer’s shift. To safeguard the welfare of security officers, their working hours are protected by the Employment Act, which caps overtime work to 72 hours per month. While security service providers were previously granted exemptions to exceed this cap, this has been removed since January 2021. With the shift towards outcome-based contracting, the jobs of security officers have been redesigned. The Government will continue working with tripartite partners to examine ways to further improve the working conditions of security officers.”
“A 2006 study of VAT compliance costs in Sweden estimated that the compliance costs would be reduced, on average, by roughly 30% if a single rate system replaced a multi-rate system2. A 2005 study by the Swedish Government also estimated that borderline cases constitute roughly one-fifth of all dispute cases referred to their tax tribunal. A conservative estimate of the cost of resources in the public and private sector expended on these borderline dispute cases was about 700 million Swedish krona3, or about S$146 million, based on the exchange rate then.”
“As explained during the Budget debate, we have already achieved the effect of multi-tier effective GST rates, with higher effective GST rates for higher-income households. This is achieved by implementing GST with the permanent GST Voucher and the absorption of GST on publicly-subsidised healthcare and education. This is a more effective way of specifically helping the low-income Singaporean households, than exempting certain goods from GST for all who consume them. In fact, various studies have shown that an exemption for a basket of essential goods tends to benefit the well-to-do more, as they spend more on everything, not just luxury items, but basic necessities as well. So, such a move will not help to make our GST system fairer. We do not have estimates of how much it will cost businesses and IRAS to implement a multi-rate GST system in Singapore. What we do know is that these costs will, ultimately, be passed on to Singaporeans, both as consumers and taxpayers. We also know that our conclusion is well supported by the experiences of other jurisdictions with multi-rate GST systems. A 2021 study by the European Parliamentary Research Service noted that "a uniform VAT system, combined with direct instruments, such as direct transfers, would be more efficient"; that "differentiated VAT rates, exemptions, and registration thresholds lead to higher compliance costs"; and that "as a large proportion of compliance costs are fixed and independent of firm size, SMEs are disproportionately burdened". It further cautioned on "the costs of reduced VAT rates that go beyond revenue losses and include, for example, VAT fraud" which "are difficult to quantify"1.”
“A single unwed mother who marries the biological father of their child will be able to claim Working Mother’s Child Relief (WMCR) for the child concerned, from the Year of Assessment immediately following the year of marriage. She can continue to claim WMCR, even if there is an unfortunate breakdown of the marriage in future, as long as she continues to meet the criteria for WMCR, such as maintaining a child who is a Singaporean as at 31 December in the preceding year. A single unwed mother who marries the biological father of their child can claim Parenthood Tax Rebate (PTR) after the marriage, so long as they meet the conditions for the PTR, namely, that they marry before the child turns six years old and the child is a Singapore Citizen at the time of marriage or within 12 months thereafter. PTR will be available from the Year of Assessment immediately following the year of marriage. If there is an unfortunate breakdown of the marriage in future, both she and her ex-husband can continue to claim any unutilised PTR amount.”
“If Mr Leong Mun Wai is asking for this information to assess the outcomes of the various measures taken to protect lives and livelihoods, he can refer to two reports on MOF’s website. The first interim report was released in February 2021, and the second in February 2022. The more recent report assesses how our COVID-19 measures mitigated the short-term impact of the COVID-19 crisis on the economy and health and also helped prevent the longer-term loss of human capital.”
“As explained to the Estimates Committee, the Government had, initially, set aside loan capital in FY2020 in anticipation of a tight credit market. Eventually, the loan capital was not needed, as MAS, using its balance sheet, provided low-interest capital to participating financial institutions for ESG loans. Since then, actual FY2020 spending was lower than our revised estimate published in August 2021. However, the underutilisation was made up for in the COVID-19 Resilience Package at Budget 2021 and our support packages rolled out over the heightened alerts and Stabilisation Phase from May to December 2021. Based on our latest estimates, we can expect the overall spending on COVID-19 for FY2020 and FY2021 to be broadly similar to the Estimates Committee report in August 2021. FY2021 has just come to a close. When the actual spending in FY2021 has been finalised and audited around the third quarter of 2022, we will again take stock of the actual COVID-19 spending. Mr Leong Mun Wai also asked about the object classes for COVID-19 spending. The Government’s expenditure is broken down into object classes based on the nature of spending. The broad categories of object classes are expenditure on manpower, other operating expenditure, grants and transfers. As the nature of Government spending is not only limited to COVID-19, the same object class serves multiple functions, besides COVID-19 management. For example, many of our public officers have incorporated COVID-19-related duties into their day-to-day responsibilities. It would, therefore, not be meaningful or practicable to break down the COVID-19 expenditure items by object classes.”
“Amid the rapidly evolving COVID-19 situation, MOF has been releasing our COVID-19 spending breakdown on several platforms, using the latest available data at that point in time. In every annual Budget Statement, the Minister for Finance accounts for the broad categories of expenditure, including the amounts committed for COVID-19 measures, either in the speech or as an annex to the Budget Statement. Financial Year (FY) 2020 and FY2021 saw COVID-19 measures introduced over multiple Budgets (five Budgets in FY2020 and three Budgets in FY2021) to manage the rapidly-evolving COVID-19 situation. To find the FY2020 breakdown, Mr Leong Mun Wai may refer to the response to the Parliamentary Question (PQ) filed by Ms Foo Mee Har in January 2021 on how the $100 billion set aside to deal with the COVID-19 crisis was spent to support families, workers and businesses. We explained then that, of the $97.3 billion committed in FY2020, $13.8 billion was to support public health efforts, $73.5 billion was to protect livelihoods through support for workers and businesses, and $10 billion was for direct social and household support. We also provided our updated estimates to the Estimate Committee, which published its report in August 2021. In this public report, Mr Leong Mun Wai would be able to find the committed amounts across the FY2020 Budgets, as well as our revised estimates of COVID-19 spending based on the latest available information at that time, broken down into the specific expenditure items, for example, Jobs Support Scheme, SGUnited Jobs and Skills Package and Jobs Growth Incentive. Our revised estimate of overall COVID-19 spending was around $70 billion in FY2020.”
“If we were to raise the marginal PIT rates for the portion of CI in excess of $120,000 by four-percentage points so as to only affect those whose CI are at least $120,000, the relevant marginal PIT rates will be raised from the current 15%~22% to 19%~26%. This will yield at most an estimated additional $1.8 billion per year. For a six-percentage point increase, the relevant marginal PIT rates will be raised from the current 15%~22% to 21%~28%, and yield, at most, an estimated additional $2.7 billion per year. For an eight-percentage point increase, the relevant marginal PIT rates will be raised from the current 15%~22% to 23%~30%, and yield at most an estimated additional $3.5 billion per year. Effectively, this will mean a sharp increase in taxes for upper-middle-income earners with CI of at least $120,000. The above is a static analysis that assumes the tax base remains unchanged. Realistically, individuals will respond to changes in tax rates. A top marginal PIT rate of 30% will be higher than the Asian average of 28%, and well over the top marginal PIT rate of 17% in Hong Kong. Some Singaporeans or foreigners may choose to work elsewhere. Others may choose to arrange their affairs differently, thus increasing tax administration and compliance costs. In other words, even with an eight-percentage point increase in the marginal PIT rates that affect only the top 10% of taxpayers, we will, very likely, end up generating much less than $3.5 billion in additional taxes per year. The bigger problem is that we will, significantly, undermine our competitiveness for talent, investment and jobs and, ultimately, Singapore and Singaporeans will be worse off.”
“During the Debate on the Budget Statement, Mr Leong Mun Wai claimed that a four-percentage point increase in the marginal PIT rates for the top 10% will generate the same amount of revenue as the two-percentage point GST hike. But he is mistaken. First, Mr Leong Mun Wai has incorrectly applied the personal income tax (PIT) rate to assessable income (AI). The PIT rate should be applied to chargeable income (CI) instead. The CI of an individual is the AI minus any personal reliefs allowed. Second, it is also not correct to apply a change in PIT rate to the total CI of those in the top 10% to derive the additional PIT revenue. Rather, the additional PIT tax payable or additional revenue generated is computed by applying the revised marginal PIT rates for each CI band to only that portion of CI for each taxpayer, and then summing their revised PIT. So, for instance, if Mr Leong Mun Wai simply uses a four-percentage point increase and applies it to the total CI of all taxpayers with CI within the top 10%, he is, in fact, increasing all marginal PIT rates in the entire PIT schedule by four-percentage points. This means that the four-percentage point increase in tax rate applies to all taxpayers, not just those whose CI belong to the top 10%. He can get the revenue yield he wants, but only because the additional tax is collected from all taxpayers, not just those in the top 10%. In Year of Assessment 2020, the top 10% of all taxpayers, whether PIT-paying or not, had a CI of at least $120,000, and the relevant marginal PIT rates are currently 15%~22%.”
“Such an increase in CIT rate will have a major impact on Singapore’s competitiveness. We will find it harder to attract new investments. Ultimately, Singapore and Singaporeans will be the ones who lose out. MOF will continue to review all revenue sources. When we need to raise more revenue, we will ensure that any increase in taxes is implemented in such a way that is fair and inclusive and does not hurt Singapore’s overall competitiveness.”
“The effective tax rate is most useful when looking at the tax burden of a company, after taking into account the design of the corporate tax system, such as further tax deductions, capital allowance and schemes, such as the Partial Tax Exemption (PTE) and Start-Up Tax Exemption (SUTE) schemes. Different companies have different effective tax rates. For the purpose of Ms Hazel Poa’s question relating to overall revenue yield, we have done simulations based on the headline corporate income tax (CIT) rates. To simulate how much the headline CIT rate has to increase to generate $3.5 billion each year, that is, the revenue generated from the GST increase, we used the data for Years of Assessment (YA) 2019 and 2020, so that the data would not be distorted by the effects of COVID-19, and we applied the current parameters of the corporate tax system, such as the recently revised parameters of the SUTE and PTE schemes. We also removed the effect of temporary measures, such as the CIT rebate in YA 2019 and YA 2020. If we assume that the tax base remains unchanged, in other words, that firms do not respond to the change in CIT rates, our simulation shows that to generate an additional $3.5 billion every year, we will need to raise the CIT headline rate by at least five percentage points to 22%. In reality, the above assumption is unlikely to hold. Firms will likely respond to this CIT increase and will move some of their operations out of Singapore, especially since many competitor jurisdictions have lower CIT rates. For example, Thailand’s CIT rate is 20%, Hong Kong’s is 16.5%, Switzerland’s is 14.9% and Ireland’s is 12.5%. A reduction in our tax base means that to raise an additional $3.5 billion from CIT, we will need a headline CIT rate in excess of 22%.”
“But the risk of a wage-price spiral taking place is real and that is why it also means we have to be very careful in designing any future Government interventions, because, if we are not careful, the Government spends more and this feeds into wages and then it may inflate prices and wages, and it may cause inflation to be worse. That is why, as I mentioned just now, the basic strategy and approach are to let whatever we have announced in the Budget, which is already very generous, get implemented properly first, monitor the effects on the economy before we consider next steps, taking into consideration at that time the wider economic situation externally, the economic situation within Singapore and, for that matter, our own fiscal situation. I mean, do not take it for granted that the Government has all the money to do everything because we also have to ensure sound and sustainable public finances at the end of the day.”
“Mr Speaker, just before I reply to Mr Liang Eng Hwa's question, just a quick clarification on my response to Assoc Prof Jamus Lim just now. I said Small Business Recovery Grant is extended to different sectors. Transport, logistics are not eligible. It is for the sectors affected most by SMMs, which mostly are F&B and retail. But the broader point remains, which is, that many of these companies in the transport and logistics sector have made arrangements, fares are going up, they are cost sharing with consumers, who also benefit through the help measures from the Government. So, let us monitor what is happening in this space, the effects of our measures, before we consider next steps. Just a clarification on that point. On Mr Liang Eng Hwa's point, he is absolutely right that we have to watch carefully the dynamics which he talked about, a wage-price spiral potentially taking place. For now, inflation expectations are well-anchored. And as far as the labour market tightness is concerned, there are some ways in which we can help ease the current situation. For example, the opening up of borders will allow more migrant workers to come in, particularly in some of the hard-pressed sectors like construction, marine and process, and this will help ease the situation. Secondly, we are continuing to do everything we can on our productivity efforts, as announced in the Budget, and the more we can push on this front to reduce reliance on labour, to go for automation, productivity initiatives, that will also help ease some of our manpower constraints.”
“Mr Speaker, I believe Assoc Prof Jamus Lim is referring to businesses that are running on commercial vehicles and, therefore, impacted by the higher pump prices and that would include taxi drivers, private hire car drivers, delivery drivers and the like. As I mentioned just now, some companies are already making adjustments. They are already raising their fares to help their drivers. For example, some taxi companies are still continuing with rental concessions and there are other companies that are also doing other things to help their delivery drivers. So, these are in place today, which means that the costs are being shared with consumers because the fares go up, delivery rates go up, which means that the costs are shared in part, not just borne solely by these delivery riders but shared with consumers. And as I mentioned, we have helped to cushion the impact on consumers also through different packages that we have in the Budget. We also have a Small Business Recovery Grant that will be applied to all SMEs who are in the affected sectors, including people who are running logistics, delivery. They would be eligible if they meet the criteria. So, the schemes are there. Companies themselves have adjusted. There is some cost sharing now. As I said earlier, let us monitor the effects of all that we are doing, how it percolates through the economy before we decide on our next steps.”
“But the assurance that we continue to give is, we will monitor this very closely and, should there be a worsening of the situation externally and within Singapore, we will, certainly, stand ready to do more.”
“Mr Speaker, the Government will continue to monitor a range of macroeconomic indicators. We look at our economic growth, for example. We look at inflation. We look at the impact of inflation on different groups. We look at real incomes, for example. And on real incomes, I think it is important to highlight it is not possible for the Government to fix nominal wages, to guarantee that real incomes will always be positive. We do not determine wages. But what we can do is continue to work hard on all the things we are doing to restructure, transform the economy, uplift productivity. Those efforts will pay off and will help us year by year to ensure that incomes rise and, hopefully, continue to rise faster than inflation. That must be our economic strategy. You cannot make this happen by fiat. You cannot dictate wages, but you can continue to press ahead with restructuring and transformation, which is what we are doing across all our economic agencies. On the point of how high should inflation have to be before we see more help, I think that is what Dr Lim Wee Kiak is asking. I am not able to give a specific trigger point now. As I have said, we will monitor a range of indicators. Not just the headline of economic growth, inflation, for that matter, unemployment, but also how it impacts different groups and different income groups, different occupations. And then, what is the impact of our current package of measures which has not been implemented? We need to see that properly implemented and feed through the economy as well. So, there are all these different considerations and that is why we cannot so simply distil it to just one key parameter.”
“Mr Speaker, at the risk of sounding like a broken record, whether it is diesel or petrol, fuel duties, aside from the issue of who benefits, also has an important externality consideration and, for that matter, our diesel duties are already not that high, compared to petrol duties. That is the first point. The second point, from an externality point of view, we do need to have that duty in place in order to, as we all talked about, go greener, wanting to embrace more energy-efficient modes of transport, a point which everyone supported, incidentally, in this House, not too long ago. And then now, at the first sign of price rising, we are wanting to withdraw so quickly? So, I think let us have some perspective on seeing the broader considerations and challenges. Yes, we have, indeed, an immediate issue of inflation to tackle. But we also want to press ahead with our net-zero plans and our green transition. These duties are there for that purpose, an important purpose. It does not mean we will not do anything to help the affected groups at all, because we will find other ways to help. And we will continue to monitor the well-being, not just of households, but of the different groups that Members have highlighted: taxi drivers, private hire car drivers, delivery drivers. We will continue to monitor closely their incomes, their well-being and, if need be, as I highlighted just now, we will do more to help them, but we will help them directly, more effectively, rather than through a reduction in duties.”
“Well, we will, as I have said, continue to monitor the situation, assess the impact of what we have already announced and will implement, looking at the global situation. And, as I have said just now, if the situation worsens, the Government will do more. But for now, let us roll out and properly implement all that is in the Budget already, which is already giving considerable support to households.”
“Mr Speaker, when we sized the AP, we already knew that prices were rising. We had anticipated that. We said it in the speech. If you listen to the Budget speech, we highlighted the concerns that Singaporeans had about higher prices then. Prices had already increased because of the tensions in Ukraine. We knew this was coming. So, we did two things. We put in place a HSP of $560 million that will be disbursed this year and we enhanced the AP. And, in fact, we have sized the AP very generously. More than just a GST offset, it also addresses cost of living. That is why the AP will delay the impact of GST by at least five years, for the majority of Singaporeans. And for the lower-income, 10 years. Now, for GST-offset purposes, five years is very generous. We could have said "two to three years of offsets are more than enough", but we sized it deliberately, generously, in order to cushion the impact on Singaporeans, especially the lower-income. And that is why when you combine the HSP and AP together, there is considerable support that will be going out very soon. And that is what we have tried to do in the brochure, to pull it together to show Singaporeans, in one "simple-to-understand" way, all the help that will be coming up in the year ahead. And, to illustrate, for a 4-room household, we are talking about $150 a month of utility rebate this month. Every quarter, there will be another $150, so, $600 altogether. That is enough to cover about four months' worth of their utility bills, even accounting for higher electricity prices. So, that is what we have done. Now, you say: well, what happens, subsequently, in the next half of the year? What if oil prices go up much higher, electricity prices go up much higher?”
“We are saying we will help people who are affected, we will continue to help them. We have been helping and we will continue to monitor the situation and, for those who need more help and if the situation worsens, we will certainly do more. But the better way of helping is not through a reduction in fuel duties. The better way of helping is to directly help those who are impacted through other means and we have these different means to help those who are impacted, be it households or businesses.”
“Mr Speaker, I think I had tried to explain very comprehensively why it is not a good idea to reduce fuel duties. Let me try again in light of Mr Murali Pillai's three questions. We collect fuel duties for both revenue as well as externality reasons. The revenues generated are not small and they are used for a range of very important things, to subsidise many activities: public transport, whole range of things, amongst others. So, we should think carefully about giving up these sources of revenue, particularly when we are facing considerable revenue challenges already and we had a long discussion in the Budget debate about all the revenue and fiscal challenges we face. That is number one. Secondly, as I mentioned just now, there are the considerations of who benefits from this. And as I have highlighted, only four in 10 Singaporean households own cars. In fact, four in 10 is the average. For the bottom 20%, one in 10; for the top 20%, it is six in 10. So, in the end, the ones who benefit more are the better-off when you do something like that. So, is that the best use of subsidies? Thirdly, we will be moving in the wrong direction because fuel duties price in the negative externalities, as we all understand, to society and to the environment. In a way, you can think of them akin, in part, to a carbon tax on vehicles, because we do not apply carbon tax on fuel. Fuel duties are akin, in part, to carbon tax on vehicles. So, we are already moving on carbon tax: to raise carbon tax, to accelerate our green transition and to achieve our net-zero target. It will not be consistent as we move on that front to, on the other hand, reduce fuel duties. That is why, on balance, we think the better approach is not to intervene in this way.”
“Sir, the $920 million I cited refers to fuel duties collected at the pump for petrol and diesel.”
“Mr Speaker, we understand the concerns that the lower-income groups face and, as I mentioned just now, we are focused on providing more help to them, particularly during this period when they face the pressures of higher prices. So, we are already going to extend ComCare for a minimum duration of six months for all new ComCare SMTA applicants and extend ComCare SMTA by another three months for those who require further assistance. The question is: why not make that automatic? The circumstances differ from case-to-case. So, at this stage, rather than making it automatic, for those who need it, they will get it and that is the assurance. And we will streamline the process, make it easy for them to apply, there is no need to re-submit so many different documents all over again, it should not be a burden to them, nor should it create stress. For those who need it, the assurance is that the support will be given to them.”
“But when viewed against the global context and our own experience, I hope we can better understand the causes of higher prices and what we can do to manage this together. We must not let this become a blame game of Government versus people, of sellers versus buyers, of hawkers versus consumers. Or worse, think that if Singapore were to lie low and remain silent on the war in Ukraine, we could somehow all enjoy lower pump prices today. What we are experiencing today in Singapore is the result of external forces that impact the entire global economy. We cannot do very much to change this. But what we can do is to continue to keep faith with one another, as we have done over the last two years – look out for one another, help those in need and never waver from the conviction that we will always have one another's backs.”
“During the oil crises of the 1970s, Singapore's inflation rate peaked as high as 30% year-on-year in the first half of 1974 and around 10% in the second quarter of 1980. These events underscored our vulnerabilities to inflation, as a price-taking small and open economy. And, in response, in the early 1980s, we developed a unique exchange rate-centred monetary policy that helped tame imported inflation. The Labour Movement played a vital role in stabilising prices with the establishment of NTUC Welcome, which evolved to become the NTUC FairPrice of today. By buying essentials like rice in bulk and passing on the savings to consumers, NTUC not only tackled profiteering among wholesalers, but also helped workers and Singaporeans beat inflation. NTUC FairPrice continues to help mitigate cost of living pressures through various initiatives and discount schemes. In the 2008-2009 Global Financial Crisis, we acted quickly to save jobs amidst a global recession, implementing the Jobs Credit Scheme, the precursor to our more recent Jobs Support Scheme. As a result of this and other interventions, our economy rebounded swiftly in 2010. Of course, all of these crises paled in comparison to the COVID-19 pandemic and also our worst recession, since Independence, in 2020. Our swift and decisive action to protect lives and livelihoods enabled resident employment and incomes to quickly recover to pre-COVID-19 levels by 2021 while keeping COVID-19 deaths low. Now, before we have had the chance to see through the pandemic, we are faced with yet another economic challenge. After many years of relative price stability, the recent surge of inflation has, understandably, come as a shock to many.”
“Therefore, we cannot offset these costs perpetually. Instead, a better approach, a more viable approach is to redouble our economic restructuring and transformation efforts, to become more innovative, productive and energy-efficient. These efforts will help our economy become more resilient to external shocks. And this is also how we sustain continued income growth for Singaporeans, with earnings rising faster than inflation, so that we can retain and grow our purchasing power and achieve higher standards of living. Sometimes, it does take a crisis to jolt all of us into action because, for many years, to illustrate, the Government had highlighted the importance of digitalisation. But take-up rates for digitalisation schemes were uneven. Then, when COVID-19 struck, businesses had to adjust quickly and, within two years, we managed to achieve much more in our digitalisation efforts than all the combined efforts over the past decade. In the same way, I hope that the current increase in business costs and energy prices will motivate firms to change their mindsets, processes and practices. The Government has put in place many schemes in this Budget and in previous Budgets, to help companies improve their productivity and energy efficiency. And Minister Tan See Leng will elaborate further on them later. I urge businesses to make full use of this support and to accelerate their restructuring and transformation efforts. Doing so will strengthen their abilities to withstand shocks and position them well for the future. Mr Speaker, this is not the first time we have had to deal with such challenging external economic conditions.”
“And as I mentioned earlier, those whose incomes are impacted and are in need of financial assistance can approach the SSOs, CCs or self-help groups for more help. Overall, the better way to help Singaporeans cope with the rise in petrol prices, as with inflation in general, is to provide them with the support measures that we have catered for in the Budget. Through these measures, we are extending concrete tangible help directly to Singaporeans to cope with their different areas of needs, including their utility bills, children's education and daily essentials, and we are providing more targeted help for the lower-income groups. Sir, I have outlined some specific actions we will be taking to help Singaporeans cope with higher prices. We will continue to monitor the external situation and the risks for our economy closely – risks, both in terms of growth and inflation. And where inflation is concerned, we are monitoring this closely, not just the headline figure but also the impact of inflation on different income groups and even the issue of shrinkflation, which Ms He Ting Ru asked about. As the Government has assured this House previously, if the situation worsens, we will not hesitate to take further actions to protect jobs and to help households and businesses deal with the increased costs. Sir, we are now dealing with a war-induced increase in prices, especially in electricity and fuel. But even without the war, we would, eventually, have to adjust to a secular increase in energy prices, as we seek to decarbonise our economy. Likewise, on the manpower front, we will continue to face a tight labour market, given our rapidly-ageing population. In short, labour and carbon are permanent – not temporary – constraints for our economy.”
“These include spending on public transport, for which we provide significant capital investments, as well as operating subsidies to ensure an affordable and world-class public transport system. Given the recent increase in pump prices, I can understand why some Members have asked to reduce or suspend fuel duties, or to provide road tax rebates. But doing so effectively amounts to a subsidy on private transport and will have counter-productive effects. Let me explain. Fewer than four in 10 households in Singapore own cars and, amongst the lowest quintile, only about one in 10 do. Four in 10 is the overall but, if you look at the lowest quintile, the bottom 20% of households by income, only one in 10 owns cars. Such subsidies on private transport would, therefore, benefit a relatively small but generally better-off group. Cutting fuel duties also means that some of the subsidies will flow back, in part, to producers and suppliers themselves, not just to consumers, as the pump price may not fall as much as the reduction in duty. More importantly, such subsidies will reduce the incentive to switch to more energy-efficient modes of transport, which is a critical element in our plans for sustainable living. I recognise that there are several groups like taxi and private hire car drivers and delivery riders, who are affected by the increases in petrol and diesel prices. Various taxi and private hire car operators have implemented temporary increases in fares to help cushion the higher fuel prices for drivers and to have consumers share the burden. They also have tie-ups with petrol companies to offer fuel at discounted prices to help drivers and riders manage higher fuel costs.”
“Third, we will do more to help the lower-income groups with their public transport fares. We had earlier disbursed Public Transport Vouchers, or PTVs, to every household that received a PTV in the last exercise and that includes over 30,000 ComCare beneficiaries. We will do another round of disbursements this month for these ComCare recipients. So, they will receive $60 of PTVs, which will roughly cover the additional fares paid by a family of four this year arising from the fare increase last December. Besides these ComCare recipients, PTVs are also available to all households whose monthly income per member does not exceed $1,600. Applications for PTVs are open from now to 31 October this year. Eligible households which had already received the first voucher and who need a second voucher can also apply again. Lower-income persons with disabilities who require point-to-point services to commute can also apply for the Taxi Subsidy Scheme, which covers up to 80% of the taxi fares that they pay going to school, work or training. This cushions them from the impact of recent fare surcharges introduced by taxi and ride-hailing app operators. Next, let me respond to the queries raised by several Members on fuel duties and road tax rebates. We collect fuel duties and road taxes for revenue and also to price the negative externalities of vehicle transport, such as the impact on public health and the environment. Fuel duties collected averaged $920 million a year over the last five years. The revenue from these duties and taxes adds to the pool of resources available for various programmes and subsidies that directly benefit Singaporeans.”
“For businesses, I will bring forward the disbursement of the Small Business Recovery Grant. This provides up to $10,000 for SMEs most affected by COVID-19 restrictions over the past year. Most eligible businesses will be able to receive the grant by June. The recent easing up of safe management measures (SMMs) should also provide some additional revenue support for local businesses, especially in the retail and F&B sectors. Second, we will provide more help for lower-income households, which will be more impacted during this period of higher prices. In particular, the Social Service Offices, or SSOs, will provide a minimum duration of six months' support for all new ComCare Short- to Medium-Term Assistance (SMTA) clients who apply between April and September this year; so, a minimum duration of six months' support for ComCare SMTA. Households which are already on ComCare SMTA can also have their assistance extended for at least another three months if they require further assistance. SSOs will continue to exercise flexibility to provide those in need with financial assistance and support. This includes providing ComCare recipients with more cash assistance during this period to cope with inflationary pressures. The COVID-19 Recovery Grant is also in place until the end of this year and this will help lower- to middle-income households experiencing job losses or sustained income losses. And families who need help can also approach their Community Centres, or CCs, and the Self-Help Groups. As announced at Budget 2022, I will top up the CCC ComCare Fund by $5 million over five years and provide a total of $12 million over four years to our Self-Help Groups. These schemes complement our national schemes, bringing more help closer to residents.”
“This is on top of the $100 disbursed four months ago in December last year and will help Singaporeans with their daily expenses. The Budget also included rebates for Service and Conservancy Charges (S&CC) and utility bills. We will disburse the first tranche of S&CC rebates and U-Save rebates to eligible households this month. This will address a key cost of living component which several Members have asked about. To illustrate, households living in 4-room HDB flats will receive $150 in U-Save rebates this month, and that is equivalent to about a full month's worth of their utility bills, on average. That is the first tranche of the rebates. But the rest of the U-Save and S&CC rebates will be disbursed in the coming quarters – in July and October this year, and in January next year. So, for the whole of Financial Year (FY) 2022, households living in 4-room flats, to give an illustration, will receive about four months of rebates on their utility bills, and that is even accounting for the higher electricity prices, and two-and-a-half months of rebates on their S&CC. We also have other forms of help for households, including top-ups to the Child Development Account, Edusave Account, or Post-Secondary Education Account of every Singaporean child, as well as the GST Voucher in terms of cash and MediSave top-ups. We will continue to ensure that these are disbursed to Singaporeans in a timely manner. And, Mr Speaker, with your permission, I would like to distribute a handout, which will provide a schedule of the various support measures that households can expect in FY2022.”
“We had earlier anticipated some of these risks and had taken prompt actions through both monetary and fiscal policies. In particular, MAS had pre-emptively raised the rate of appreciation of its exchange rate policy band in October last year and also in an off-cycle move in January this year, to help dampen inflationary pressures. Monetary policy will continue to do its part to ensure medium-term price stability. MAS is watching closely the impact of geopolitical and pandemic-related shocks on the Singapore economy and inflation and will be putting out its monetary policy statement, as scheduled, later this month. Where fiscal policy is concerned, we had taken into account the risks in the global economy and rolled out an expansionary Budget this year. We had also implemented very comprehensive and substantial support packages to help households and businesses cope with higher prices. Several Members asked whether the Government will consider enhancing the support measures announced in the Budget. The measures in the Budget have just been announced and will be implemented soon. We will need time to allow these measures to take effect and feed through the economy before we monitor their impact, assess the overall situation and then consider what additional steps we might want to take. Nevertheless, I understand the concerns that many households and businesses have about the current situation and have decided to take the following immediate actions. First, where possible, I will bring forward the implementation of our Budget measures. In particular, the $100 CDC Vouchers for every Singaporean household will be disbursed by the middle of next month.”
“So, amidst this backdrop, the central banks of several major economies have shifted their position to take a stronger stance against inflation. The US Federal Reserve and the Bank of England have raised interest rates to tackle inflation, with the European Central Bank expected to follow suit. But central banks in these major economies also face a very difficult dilemma. If they were to raise interest rates too sharply to tackle inflation, they will slow down economic activity or even trigger a recession. On the other hand, if they do not raise interest rates sufficiently, they will find it hard to anchor longer-term inflation expectations. They will then risk prices drifting persistently higher and becoming harder to control over time. This is why some economists have drawn analogies between the current situation and what happened in the 1970s. At that time, there was also excess demand, as the US had pursued expansionary policies to push for economic and employment growth. When the oil crisis hit in 1973, the effect was immediate and dire. Oil prices shot up and inflation rose sharply. It took the US Federal Reserve many years to bring inflation under control and this was eventually achieved only at great cost to the economy. History does not repeat itself but, as the saying goes, it often rhymes. No doubt, the global economy today is very different from what it was in the 1970s and central banks and market institutions have also evolved greatly in sophistication since then. But the downside risks of higher inflation and slower growth for the global economy have increased significantly. If these downside risks were to materialise, they will have a major impact on Singapore as a small and open economy.”
“We all hope that attempts to de-escalate are successful, and a diplomatic solution can be found at the negotiating table. But we must be prepared for a prolonged conflict, or even further escalation, which will cause further supply disruptions and additional inflationary pressures. Besides the war, there are other factors contributing to rising prices. The global economy is continuing to grapple with supply chain issues due to COVID-19. The recent lockdowns in Chinese cities like Shenzhen and Shanghai have worsened strains in shipping and supply chains. If there are continued periodic lockdowns in China or other major economies in the coming months, for example, to prevent the spread of a new and more dangerous variant, then we can expect further supply disruptions. Furthermore, both the pandemic-related disruptions and the Russian invasion of Ukraine have prompted companies to take supply chain risks more seriously. There is renewed momentum to re-shore production, either back to the home countries of multinational corporations, or to more locations across different markets, so as to avoid single points of failure. In other words, the highly efficient, just-in-time global supply chain network is being reconfigured to account for once-unimaginable tail risks. This can help make supply chains more resilient but will add to production and transport costs. In the longer term, global warming and increased adverse weather events could affect agricultural productivity and reduce food production, putting upward pressure on prices. Over time, the global economy will also have to internalise the cost of carbon in our overall consumption, as part of the green transition.”
“We must, therefore, expect oil and gas prices to remain high for some time. The tightness in the energy market will also have downstream impact on other related sectors. For example, many refineries in Germany rely exclusively on piped gas from Russia for their operations. If the Russian gas supply is disrupted, these refineries will have to shut their operations and there will be adverse impact on the downstream production of chemical products, from plastics and fertilisers to fibres and solvents. Several Members asked about food prices. The war has impacted global food supplies, resulting in higher food prices. Russia and Ukraine are major exporters of agricultural products, such as wheat, corn and barley, as well as fertilisers. In fact, Ukraine is sometimes called the "bread basket of Europe". With the war, food exports from these countries will be significantly impacted. Fertiliser shortages will also reduce crop yields elsewhere, resulting in a smaller harvest in the coming year. As a result, prices of a range of agricultural commodities, not just wheat and corn, are now at cyclical highs, pointing to potentially tight stocks this year. Besides the two key areas of energy and food, production is affected in other areas too. For example, Russia is a significant exporter of important industrial metals like palladium, used in catalytic converters for cars, and nickel, used in steel and batteries. About half the world's neon, which is used in the chip production process, is produced in Ukraine. In short, the war has contributed to a further spike in inflation experienced around the world. Inflation in Germany and America has already risen to nearly 8%, the highest in 40 years. No one can tell how the war in Ukraine will unfold.”
“In particular, there were more unexpected gas production outages during this period. The supply constraints were exacerbated by the under-investment in fossil fuel production over the past few years, due in part to the global push for greener sources of power. But these renewable sources of power have not been able to scale up quickly enough. There have also been continued supply chain pressures due to COVID-19, such as port congestion and freight capacity constraints. These pressures have impacted all industries, some more than others. Furthermore, several major advanced economies face labour tightness, which have driven up labour costs and these have, in turn, passed through to inflation. All of these factors led to a rise in inflation in the major economies last year. At the start of 2022, there were some initial hopes that global inflationary pressures would ease over the course of the year as the supply situation improved. But with the war in Ukraine, it is now likely that global inflation will be higher for longer. There are several reasons for this. Global energy supplies will remain tight, given that Russia is one of the world's largest oil and gas exporters. For now, Russian gas is still flowing into Europe. But this may not continue for long. Countries, such as Germany and Austria, which are highly reliant on Russian gas, are already putting in place their first phase of rationing of gas, in anticipation of a disruption of supplies from Russia. The US is releasing a record amount of oil from its emergency reserves and exporting LNG to Europe. But this may not be sufficient to make up for the potential supply loss from Russia. Furthermore, it will take time for any new infrastructure to be built and additional oil and gas production to be brought to market.”
“Mr Speaker, Sir, the Minister for Trade and Industry last updated the House on the economic impact of the conflict in Ukraine during the Budget Debate at the end of February. Today, I will give an update on the macroeconomic situation and explain the Government's approach on inflation, fuel duties, and support for households. The Second Minister for Trade and Industry will then speak on energy costs, supply chains and support for businesses, as well as the Committee Against Profiteering. Together, our Ministerial Statements will answer Question Nos 1 to 15 and also Question Nos 14 to 16 and 29 to 30 for Written Answer in today's Order Paper. Several Members, namely, Mr Christopher de Souza, Dr Wan Rizal1, Mr Liang Eng Hwa2, Mr Gerald Giam, Mr Darryl David3 and Mr Alex Yam4 have filed Questions for Oral and Written Answers scheduled for future Sittings on these issues. As today's Ministerial Statements will address these questions, I would invite these Members to seek clarifications on these issues after the Ministerial Statements, if need be. If their questions are sufficiently addressed, it may not be necessary for them to proceed with the Questions for future Sittings. Sir, the increase in prices we have been experiencing over the last few months is not unique to Singapore. It is happening worldwide. In fact, global prices were already rising last year, and there are a few reasons for this. Major economies like the US and the Eurozone have pursued expansionary macroeconomic policies and these were to stimulate their economies since the pandemic hit. This contributed to a surge in demand, including for energy, especially after these economies began to ease up on their COVID-19 restrictions. But supply was unable to catch up with demand.”
“Sir, may the Second Minister for Trade and Industry and I answer Question Nos 1 to 15 in our Ministerial Statements on Inflation and Business Costs to be delivered later at today's Sitting?”
“Mr Speaker, the prevailing income tax rules will apply to income derived from transactions of non-fungible tokens or NFTs. The income tax treatment for NFTs will be determined based on the nature and use of the NFT. Generally, a person deriving income from NFT transactions or from trading in NFTs will be subject to income tax on such income. However, a person may also derive capital gains from NFT transactions. As Singapore does not have a capital gains tax regime, such gains will not be taxable.”
“The National Environment Agency has six existing contracts with Public Waste Collectors which provide services across the whole of Singapore. These contracts will expire after 2024. These contracts make up over 90% of Government’s waste management contracts by value. In addition, there are over 100 smaller contracts for general waste management services by various Government agencies, which will mostly end by 2024. The Tripartite Cluster for Waste Management, comprising representatives from employers, unions, Government agencies and service buyers, had decided to implement the Progressive Wage Model (PWM) for the waste management sector from 1 July 2023, allowing a lead time of about 1.5 years from its announcement. Contracts made after the announcement will factor in the impact of PWM. To support employers in uplifting lower-wage workers, the Government has introduced the Progressive Wage Credit Scheme from 2022 to 2026. This transitional support will help to cushion the increase in PWM wages in the waste management sector for existing contracts, while employers work towards factoring wage increases in their new contracts. MOF will work with MSE to issue an advisory to Government agencies on the appropriate treatment for their existing contracts with waste management service providers. For contracts made before the announcement of the PWM, agencies may consider contract variations with their service providers if there is justification to do so or mutually agree to terminate the contract to pave the way for a new tender to be called. This way, we work together to ensure that the PWM is implemented smoothly for our waste management contracts.”
“Mr Speaker, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." [(proc text) Question put, and agreed to. (proc text)] [(proc text) Resolutions accordingly agreed to. (proc text)]”
“Mr Speaker, I beg to report that the Committee of Supply has come to certain resolutions. [(proc text) First Resolution reported, (proc text)] [(proc text) "That the sum of $2,703,060,500 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Second Supplementary Main Estimates of Expenditure for the financial year 1 April 2021 to 31 March 2022, contained in Paper Cmd 13 of 2022." (proc text)] [(proc text) Second Resolution reported, (proc text)] [(proc text) "That the sum of $233,868,400 shall be supplied to the Government under the Heads of Expenditure for the public services shown in the Second Supplementary Development Estimates of Expenditure for the financial year 1 April 2021 to 31 March 2022, contained in Paper Cmd 13 of 2022." (proc text)]”
“The new Local Qualifying Salary (LQS) requirement will take effect soon, from 1 September this year.”
“The new Local Qualifying Salary (LQS) will take effect soon, from 1 April this year. [Please refer to Official Report, 2 March 2022, Vol 95, Issue No 52, Debate on Annual Budget Statement section.] [(proc text) Written statement by Mr Lawrence Wong circulated with leave of the Speaker in accordance with Standing Order No 29(5): (proc text)] I wish to make the following factual correction to my round-up speech during the Debate on the Annual Budget Statement at the Sitting of 2 March 2022. My speech should read as follows:”