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.”
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“Both the WP and PSP have suggested spending more from reserves to meet our rising expenditure. It is tempting to turn to our reserves each time we need more funds. But is this the right thing to do? The Leader of the Opposition, Mr Pritam Singh, has highlighted that the reserves' rules were amended in the past, so, we can easily amend them again now, for example, to adjust the percentage we use from the NIRC. Sir, we have enshrined the fiscal rules in our Constitution to instil discipline in the Government – to spend within our means and maintain a fair and equitable balance between taking care of our needs today and saving for the future needs of today's generation as well as for generations to come. As we have explained before, we last amended the Net Investment Returns (NIR) framework in 2015. That was to include Temasek into the framework and this was done after a robust and thorough debate in this House. We should not, at the first sign of need, push for changes in the rules, just to take the easy way out and to avoid having to raise taxes to meet our growing recurring expenditure needs. That would not be the responsible thing to do. Some argue that they have insufficient information about the reserves or about our fiscal projections to make an informed decision about our fiscal options. In fact, there is already a lot of information published, on the reserves, for example. What we do not disclose is the size of funds managed by GIC, so as not to reveal the full size of our financial reserves. It is not in our national interest to do so. Our reserves are our strategic defence against threats. If we disclose this information, we will be making it easier for potential adversaries to use it against us. Why would we want to do that?”
“Now, if we are able to keep Government expenditures at 20% of GDP in 2030 – so, from 15% to 18% over the last decade, but in 2030, if we can keep it to 20% of GDP – that would already mean a slowing of the rate of increase, compared to a decade ago. I think that would be a good achievement. The Government will do its part by using its fiscal resources prudently and judiciously and ensuring value-for-money in public spending. We will continue to streamline coordination across the whole-of-Government to reap synergies, as Mr Zhulkarnain Abdul Rahim suggested. But there is only so much the Government can do on its own. We also require cooperation from all parties, as Miss Cheryl Chan rightly said – to moderate our own expectations for the Government to keep doing more and to consider how community groups and individuals can also come together to contribute solutions. And I am glad that there are, indeed, many ground-up initiatives taking off, like the #EastCoastBeachPlan started by Ms Samantha Thian. She started cleaning the beach herself when she noticed large amounts of trash piling up there. Then, she started a Telegram group for like-minded individuals to join and undertake clean-ups together. Now the group has grown to 3,300 members and they have conducted more than 400 beach clean-ups. There are many more ground-up projects all over Singapore. They self-organise to tackle issues and solve problems, sometimes even before the Government gets a chance to respond. We will continue to support and encourage such initiatives and find new ways to partner them and work in collaboration together. This will reinforce the spirit of mutual support in our community and will go a long way in strengthening our social compact.”
“They also need elective procedures like cataract operations that help them lead more fulfilling lives. But these, too, require more healthcare spending. So, just the demographic effect of having more seniors alone will already push up healthcare spending significantly. Further increases will happen as better and more costly treatments become available and with the medical inflation that is inevitable, even with the best organised healthcare system. Another reason for more spending is that our social needs are getting more complex, something which several Members have recognised and highlighted, including Senior Minister of State Heng Chee How, Mr Desmond Choo, Dr Wan Rizal and Ms Nadia Ahmad Samdin. These issues are not so easy to resolve through standardised schemes alone. Often, we will need to customise approaches to suit the circumstances and needs of individuals and families facing complex and multiple challenges. We also need strong coordination, which our agencies are continuing to do, not just across public sector agencies, but with social service agencies on the ground, to take a family-centred approach. And to do this well, we need trained counsellors and social workers to befriend, mentor and journey along, handhold the individuals and families and journey along with them, like what we are doing with ComLink and KidSTART. This is important work, it likely to produce better outcomes, but it is also highly resource-intensive and will, invariably, cost more. Over the last decade, Government expenditures rose from 15% to 18% of GDP. This was mainly due to higher spending on healthcare, public transport and significant enhancements to Workfare and the introduction of Silver Support, to name a few. All meritorious programmes, but all requiring significant funding.”
“Because we are raising revenues now, I think Mr Leong Mun Wai and Ms Hazel Poa say we should cut back spending further, but they have conveniently neglected to mention that they and the PSP have made requests on multiple other occasions for the Government to spend more, for example, funding of insurance premiums for MediShield Life and CareShield Life; hiring more teachers, reducing class sizes, all of which cost a lot of money. So, you cannot have it both ways. If we want the Government to do more, then let us be upfront and explain to Singaporeans why additional revenues and tax increases are needed. In many countries, the tendency is for politicians to focus only on the spending side, because it is inconvenient to talk about taxes. As a result, these governments spend beyond their means. They run up unfunded obligations and debt, and they kick the fiscal can down the road. We are not immune to such pressures. Some of the increase in Government spending is necessary and unavoidable. For example, healthcare spending will be the main driver of the increase in social spending. And the key reason why healthcare spending will rise is our rapidly ageing population, as everyone in this House understands. We are living longer. Take the number of people who are aged 90 and above. In 2010, we had about 10,000, aged 90 and above. Now, they have more than doubled to 22,000. Or take the number of centenarians, aged 100 and above. In 2010, we had 700; now, around 1,500. By 2030, the numbers will increase much more. Our seniors will require more medical services – they are more likely to be hospitalised and their length of stay in hospital tends to be longer, compared to younger folks.”
“Many have offered good ideas. They include Mr Cheng Hsing Yao, Mr Henry Kwek, Mr Patrick Tay, Ms Denise Phua, Mr Louis Ng and, just now, Mr Leon Pereira, around social workers and our social safety support schemes, all suggesting for us to do more and to do better for Singaporeans. This is, indeed, what drives every Budget. We will continue to study these suggestions carefully and review all of our schemes. But to do more, we will also need to ensure that we have sufficient revenue. That is what I will move on to very shortly. Sir, on raising revenue, I believe there is broad agreement in this House that additional revenues are needed for the Government to do more. Some have suggested that before we raise revenues, we should put in more effort to slow down expenditure growth. I agree with that. Government spending is about 18% of GDP today. We already run an extremely tight and lean ship, compared to other developed economies, and yet, we have been able to achieve consistently good outcomes. Ms Hazel Poa asked about the effect of the planned 1% budget cuts – let me clarify that the savings from these budget cuts are reallocated towards new priorities, because the Government is always seeking to embark on new initiatives for the benefit of Singaporeans. So, by making these cuts and reallocating to new initiatives, we are able to moderate the increase in our spending. I am glad that several Members, like Mr Yip Hon Weng, recognise that Government spending and revenue are two sides of the same coin. But in every Parliamentary session, I must say that I hear many requests for the Government to do more and much fewer requests for the Government to do less.”
“But I want to be very clear about one thing: we are not closing ourselves to the inflow of foreign workers and professionals. They are, and will remain, integral to our economy and our competitiveness. They are a valuable complement to our Singaporean Core at all levels of the workforce. We continue to welcome all who contribute to us having the strongest teams here, to give Singaporeans, ourselves, the best chance of success amidst intense global competition. And we welcome those with the capabilities and the commitment, who share our values and our way of life, to stay on and help us build the next phase of our Singapore story. I also recognise that certain segments of the economy may need more help. And Members have provided many useful suggestions in this debate. For example, Mr Don Wee and Ms Yeo Wan Ling spoke about self-employed persons (SEPs) who are vulnerable and in need of support. The Government has rolled out several schemes to support self-employed persons through this difficult period. We have also set up the Advisory Committee on Platform Workers, which comprises multiple stakeholders, including our tripartite representatives. The Committee is deliberating on ways to further strengthen protections for these gig workers and will give an update when they are ready. More generally, we will continue to review our social safety nets to ensure that they meet the needs of our workers in a rapidly changing economy and labour market. As I mentioned in the Budget, this is a multi-year agenda. This Budget is just one step among many that we have taken before and will take in the future to renew and strengthen our social compact for a post-pandemic world. In this regard, I am heartened by the various suggestions of Members in this House.”
“With all of these efforts, we look forward to celebrating many more homegrown success stories in the years to come. Another critical aspect of competitiveness is to stay open and connected to the world, something which many Members like Senior Minister of State Chee Hong Tat, Mr Cheng Hsing Yao and Mr Patrick Tay have emphasised. This is not just an option. This is essential, even existential, for us. We must never let anti-foreigner sentiments take root here or give the impression that we are becoming more inward-looking. I caution some in the House who have been shrill on this subject. Take a look at some of the articles that have appeared in the international media recently, wondering if Singapore is closing itself and Singaporeans are becoming less welcoming of foreigners. If global investors conclude that this is so, Singapore will become less attractive to them and it will be ordinary Singaporeans who suffer the most. My colleague, Dr Tan See Leng, the Minister for Manpower, had also sounded a similar warning yesterday. In this Budget, we are adjusting some aspects of our foreign worker policies. This is not a sudden change in policy. We made our intentions very clear in the Economic Strategies Committee report in 2010. Since then, we have been making careful, calibrated adjustments to our foreign worker policies. We recognise that tightening too quickly will hurt our SMEs, but moving too slowly will lessen the incentive for firms to upgrade. So, it is really about maintaining that careful balance. The latest moves we have made in this Budget will help to ensure that the workers coming in are of the right calibre and in areas where we need them and further strengthen the complementarity of our local and foreign workforce.”
“At the same time, as Mr Shawn Huang noted, we are continuing to invest heavily in R&D and technology to strengthen the overall competitiveness of our economy. Ms Sylvia Lim asked why we appear to be lagging behind in some of these knowledge and technology outcomes. In fact, we have been doing better over the years. These investments have a long gestation period. They take time to bear fruit but we are seeing positive results. I am confident we will continue to see more positive results in the years ahead. As I shared in my Budget speech, one area of focus is to strengthen the linkage between research institutes and industry so that companies can readily access frontier technology and high-quality research. We are also paying closer attention to the more promising SMEs to help them scale up faster and expand overseas. Take the example of Cheng Yew Heng, a food manufacturer and food ingredients supplier. It started out as a small family business in 1947, producing candies and preserved fruits. It is now run by the third generation and has embarked on a journey of production innovation, automation and has expanded into overseas markets. Today, it is a leading sugar manufacturer and ingredients supplier and operates its own e-commerce platform. It even launched a food accelerator recently to help startups commercialise food technology, scale up and access new markets. We now have about 800 local enterprises with annual revenues above $100 million. They include many household names like BreadTalk, Koufu and SK Jewellery. Through the new Singapore Global Enterprises initiative, we will provide customised support to help promising businesses scale up and better access the three areas of capital, talent and networks that Ms Janet Ang had mentioned so eloquently in her speech.”
“This reduces the number of licence applications that firms have to fill up and saves up to 14 days of turnaround time. Ms Janet Ang and Mr Edward Chia shared concerns from the business community on the availability of manpower. That is a key concern for many businesses and I fully understand. The current shortage of Work Permit holders is partly due to our border restrictions. As we progressively open our borders, we are giving priority to bringing back workers that businesses urgently need, especially workers for the construction, marine and process sectors. We should be able to clear the shortages within the next few months. At the same time, firms should continue to take full advantage of the various schemes that support job redesign and improve productivity to become more manpower-efficient. In the near term, the Government will also help to offset some of the cost increases. For example, we have the Progressive Wage Credit Scheme to help co-fund wage increases for low-wage workers. But we cannot offset wage and cost increases perpetually as that will not be viable nor desirable. Keeping the cost of employing foreigners low would also mean depressing the wages of local workers over time. Our focus, therefore, is not to hold down labour costs indefinitely but to support efforts by our firms to be more productive and innovative so that they can be competitive and successful even as labour costs gradually increase. That is why we are redoubling our efforts to invest in new capabilities. Mr Seah Kian Peng asked about support for our TACs. We are already doing this through the Local Enterprise and Association Development (LEAD) Programme, which provides funding support for TACs to drive capability development and internationalisation projects.”
“In this Budget, 80% of the payouts from the new and enhanced schemes will flow to SMEs. Of course, not every SME will get the same support. That is because our strategy favours SMEs which are actively training their workers and increasing their productivity. If the SME is prepared to make the effort, it will enjoy very generous co-funding. Under the Productivity Solutions Grant (PSG), firms that undertake productivity solutions this year will receive significant funding support. For a $10,000 productivity project, the Government will pay up to $7,000. With the SkillsFuture Enterprise Credit (SFEC), eligible firms can get additional funding for up to 90% of out-of-pocket expenses for their supported programmes. You can stack both schemes together. If you do so, SMEs only need to pay as little as $300 for a $10,000 productivity project. Mr Derrick Goh, Mr Edward Chia and several Members who have spoken passionately about SMEs will be heartened to know that we will intensify our outreach efforts to the SMEs to let them know about the support schemes and how to take advantage of them. We will proactively reach out to our SMEs through our Trade Associations and Chambers (TACs) and Enterprise Singapore. At the same time, we are making it easier for SMEs to access information on schemes and available support through the GoBusiness portal and SME Centres. I recognise that the operating environment in Singapore can be challenging for businesses. We are no longer competing based on being a low-cost business location. Where we can, the Government will manage the pace of cost increases and make it easier to do business. For example, through GoBusiness Licensing, we have streamlined the number of regulatory touchpoints for food business owners from 14 to one.”
“Several Members, I think Mr Seah Kian Peng and Ms Denise Phua, worry that we are making too many changes at the same time – foreign worker adjustments, progressive wages, CPF, carbon tax and so on – and that all these will add to cost pressures for businesses at a time when demand is still weak for certain segments of the economy. I understand these concerns. That is why we are continuing to provide significant support to the harder-hit sectors, including through the Small Business Recovery Grant. We are also phasing in the new requirements. For example, the carbon tax increase will be staggered over three phases from 2024 to 2030. The changes to the S Pass minimum qualifying salary will be implemented over three steps from this year to 2025. What we are doing is to be upfront, clear and transparent to businesses. We are announcing these moves well ahead of time so that businesses can plan ahead and make the necessary adjustments. Even as we make these policy moves over the coming years, we continue to pay very close attention to our SMEs, something which many Members spoke about. We will continue to help our SMEs upgrade and maintain a vibrant SME sector in Singapore. This includes our heartland enterprises, as mentioned by Mr Melvin Yong. In fact, our support and grant schemes for companies are designed to benefit SMEs the most. Prior to COVID-19, smaller firms were receiving about 12 times more grants from the Government on a grant per dollar of revenue basis, compared to larger firms. Twelve times more grants from the Government on a grant per dollar of revenue basis. And throughout the past two years, SMEs continued to receive significant help through schemes like the Jobs Support Scheme, rental relief and financing schemes.”
“Notwithstanding these near-term uncertainties in the external environment, our overall prospects are good. We are operating from a position of strength and that is why we can make bold moves now, which will position us well to seize the opportunities ahead. One decisive step is to accelerate the decarbonisation of our economy and achieve net-zero by or around the mid-century. All of us will have to adjust to the new levels of carbon tax to facilitate this green transition. But moving decisively will bring many benefits and open up new opportunities. For example, after the Budget, Members may have read that EDP Renewables, a global leader in the renewable energy space, announced plans to invest up to $10 billion through a local firm Sunseap to establish a clean energy hub in Singapore for the Asia Pacific region. As we attract more of such green investments, we will also step up training efforts to equip Singaporeans with the right skills to take on these new green jobs. As several Members, including Ms Poh Li San, Prof Koh Lian Pin and Ms Hany Soh highlighted, this will take a whole-of-society effort to achieve our climate ambition. We will, certainly, move forward in that direction. At the same time, we will continue our R&D efforts in emerging technologies, such as carbon capture and hydrogen, as suggested by Dr Tan Wu Meng. All of these moves will enhance and strengthen Singapore's position as a choice destination for new investments in the green economy and, ultimately, create many more good jobs for Singaporeans.”
“Singapore’s direct trade linkages with Russia and Ukraine are relatively small. But the conflict will impact the global economy and global energy markets, which will, in turn, affect us. So, we are taking actions to enhance the resilience of our energy supplies. We are coordinating actions across the whole-of-society as some Members have suggested. For example, extending the Temporary Electricity Contracting Support Scheme (TRECS) to help affected consumers, especially the SMEs. We are getting businesses to offer more value-for-money house brands to consumers so that consumers can stretch their dollars. We are extending Price Kaki to help consumers make better, more informed purchasing decisions. And we are standing up the Committee Against Profiteering to take action against unfair price hikes. Where inflation risks are concerned, MAS had taken the pre-emptive step to tighten monetary policy in January. The appreciating exchange rate will moderate the impact of higher global inflation. MAS will continue to assess the appropriate steps to ensure medium-term stability. In this Budget, we introduced the Jobs and Business Support Package to help businesses and workers, as well as the Household Support Package to help households with their daily needs. Let me be clear: this Budget is expansionary, and our fiscal stance is appropriate. We are staggering the tax moves, with the first step of the GST increase taking effect only next year and with generous offsets for all Singaporean households. We are monitoring the external situation and the risks for our economy closely. Risks in terms of both growth and inflation. If the situation worsens, we will not hesitate to take further actions to protect jobs and to help households and businesses deal with increased costs.”
“Mr Speaker, I thank all Members who have spoken and supported the Budget. Many suggestions have been raised and I cannot cover all of them in this round-up speech, but I assure everyone that we have listened to every view and will study your suggestions carefully. Members have also raised many specific questions related to the programmes of the Ministries and these will be addressed at the Committee of Supply (COS). Sir, this Budget sets out the roadmap for Singapore to adapt and thrive in a post-pandemic world. We are charting our way forward together – towards a fairer, greener and more inclusive society. From what I have heard during the debate, there is strong support for these key thrusts of the Budget and I thank everyone for the support. The key issues raised during the debate can be summarised in three broad questions. Are we doing enough to sustain our recovery and position Singapore well for the future? Why do we need more revenues and, in particular, why raise GST and are there alternatives to this? And is the Budget fair to all Singaporeans? I will address these three issues in turn. Let me start with our overall economic situation. Ensuring a strong and vibrant economy is of critical importance because it raises our standard of living, provides good jobs and opportunities for Singaporeans and generates revenues, so that we have the resources to do more, especially for the more vulnerable groups. In my Budget speech, I shared our outlook for the year and some of the risks on the horizon, including the tensions in Eastern Europe. Since then, we all know that the situation has escalated sharply, following Russia’s invasion of Ukraine. The Minister for Trade and Industry has provided an update of the economic outlook.”
“Mr Speaker, if you could just permit me because Mr Leong Mun Wai had asked a question just now about the net impact of GST on the middle-income groups. And, in fact, I believe Assoc Prof Jamus Lim had asked a similar question on the broad impact of the GST and the GST Voucher (GSTV) changes as well as other text changes. Sir, all of these are relevant important questions. In fact, many Members would probably surface them in their subsequent speeches too. But I just want to assure Members that I will give a full response to all of this when I deliver my round-up speech.”
“At the end, the fans in the stadium stood at attention and everyone started singing the National Anthem in unison spontaneously. It was an unforgettable moment. I am sure all of us will have our own memories of how the Singapore spirit shone brilliantly in the darkest hours of the pandemic. Let us draw strength from these experiences and continue to keep faith with one another. Sir, the past was not fore-ordained. Neither is the future predestined. There will be unexpected problems ahead, as there were in the past. They have to be met, grappled with and resolved. But looking back at what we have been through during these COVID-19 years, we have nothing to fear. We will always overcome. We will always prevail, so long as we continue to stand side by side in solidarity with one another, regardless of race, language, or religion. We will chart a new way forward together. We will see through the pandemic today and build a better Singapore tomorrow. Mr Deputy Speaker, Sir, I beg to move. [Applause.]”
“Through these crucibles of fire, we forged our Singapore spirit – a spirit that is resolute and indomitable; that never gives up, and never says die. Adversity has not weakened us. Instead, it has strengthened our steel, deepened our bonds and brought us closer together as one united people. And so, it has been in the last two years of the pandemic. We have made many sacrifices, stood together and measured up as one people. I will never forget the contributions of our frontline warriors – how they displayed tremendous courage, valiantly took on personal risks to fight the virus, and went above and beyond the call of duty. I will always remember how different groups from the public and private sectors joined forces to set up the Community Care Facilities at the Expo in 2020, when we were overwhelmed with our first wave of infection. They worked hand in hand and against all odds, got the facility up and running in a matter of days. Since then, we have launched many more “Singapore Together” projects, involving public-private partnerships and Alliances for Action. They remind us that we are stronger when we stand together. I was especially cheered by the responses of our youth throughout this pandemic. They have taken the restrictions in their stride and found new ways to learn online, and to keep in touch with their friends. In these difficult times, many looked beyond their own circumstances to help others in need. I saw this same resilient spirit at the AFF Suzuki Cup semi-final football match last year. The Lions fought hard and gave it their all. Even though they lost the game in extra-time, many fans stayed on after the match and applauded the team, proud of how they had persevered despite going down to eight men.”
“But all things told, we can be very proud of where we are today. Remember we were once thought to be an improbable nation. We are a little red dot; a most unlikely country. We are the only city in the world with a military and foreign service. We are a diverse city in one of the most highly diverse regions in the world. We are the only city of this size that is also a country and a hub for the world. Throughout our nation’s history, we have faced many crises. Our Pioneers still remember what it was like during the Japanese Occupation. World War II seems very distant to us. But for the survivors, the experiences left them with indelible lessons. There is an exhibition now at the National Museum marking the 80th anniversary of the fall of Singapore, with stories of those who lived through it. One of them is Mdm Sim Soo Wee. She was just seven years old when she lost her parents during the Occupation. She still remembers vividly the hardships of war, and how she and the people around her persevered through the most difficult days and she said: “I hope that the younger generation will continue to stay united and demonstrate the same fortitude and resilience in the face of their own tests”. [Please refer to Annex B-1.] Indeed, over the subsequent decades, we have confronted many other challenges We had the communist insurgency in the 1950s. We went through the tumultuous period of the 1960s and early 1970s, with racial riots, separation from Malaysia and the sudden departure of the British. Since then, we have had to deal with one crisis after another – economic recessions, 9/11 and terrorism, SARS and the Global Financial Crisis.”
“For FY2022, we will set aside $6 billion to maintain a multi-layered public health defence. This is necessary for us to respond nimbly and confidently to the evolving COVID-19 situation. Given the extraordinary nature of this pandemic, we will resource this COVID-19 public health expenditure for FY2022 from Past Reserves. The President has given her in-principle support for this. This brings the total expected draw on past reserves over FY2020 to FY2022 to up to $42.9 billion. This cumulative draw is less than the initial draw of $52 billion that the President had originally agreed to for FY2020. It reflects our prudence in the use of Past Reserves. [Please refer to Annex G-1.] Beyond the crisis, our spending needs will continue to grow, as we tackle structural shifts and invest more to deliver on our longer-term priorities as I had laid out just now in this Budget. In order to meet new spending needs, besides raising revenue, we will continue to manage our expenditure growth. Since FY2017, we have implemented a 2% cut in the budgets of all Ministries and Organs of State to ensure we spend judiciously and achieve good value-for-money outcomes. From FY2023, I will apply a further 1% cut to the budgets of Ministries and Organs of State. Funds from this adjustment will be channelled towards new priorities. Let me now summarise our overall fiscal position. For FY2021, I expect an overall deficit of $5 billion or 0.9% of GDP. For FY2022, our Budget remains expansionary to support the economy. I expect an overall deficit of $3 billion or 0.5% of GDP. [Please refer to Annex G-2.] Mr Deputy Speaker, Singapore has come a long way in our transformation. Life has not been perfect; we have stumbled and struggled, here and there.”
“This is how we will fund our common aspirations for tomorrow. Sir, let me now go through our fiscal outlook. At the onset of COVID-19 in FY2020, we were looking to draw up to $52 billion from Past Reserves to protect lives and livelihoods. Given the uncertainty of the crisis at that time, we had to set aside sufficient resources to handle any downside scenarios. We now expect to utilise a lower amount of $31.9 billion from Past Reserves for COVID-19 relief in FY2020. This is the result of our swift and decisive response, which allowed us to avert worse public health outcomes. We saw a stronger-than-expected rebound in our economy and businesses, and did not need to utilise measures like loan loss provisions which we had set aside. For FY2021, we had planned to draw up to $11 billion from Past Reserves for the COVID-19 Resilience Package. We now expect to draw a lower amount of $5 billion from Past Reserves. This is mainly due to a reduced expenditure of $10 billion for the COVID-19 Resilience Package, underutilisation of Ministries’ expenditures primarily due to projects delayed by COVID-19, as well as one-off revenue upsides, including from Vehicle Quota Premiums and stamp duties. We also tapped on our existing resources first to provide short-term relief when we had to tighten restrictions periodically last year. For example, the $2 billion worth of economic relief measures introduced during the Heightened Alerts last year was resourced through a re-allocation of funds. During the Stabilisation Phase, we introduced $1.4 billion worth of support measures. For timely implementation of these measures, we took an advance from the Contingencies Fund. I will now replace the advances through the Supplementary Budget for FY2021.”
“Besides the offsets in the Assurance Package, the permanent GSTV ensures that they will receive significant support on a continuing basis. This is why the GST increase will not hurt low-income households. For them, the impact of the increase in GST will be neutralised. Mr Deputy Speaker, the Budget is about using our collective resources to build our nation and to improve the lives of all Singaporeans. The Budget supports spending on programmes for all, in areas like security, housing, education, health. Every dollar collected flows back to our taxpayers in one way or another. The benefits show up in many ways: in our seniors’ Silver Support payments; in our lower-wage workers’ Workfare payouts; in the subsidies for our loved ones for healthcare; in the childcare subsidies that parents enjoy; in the quality education every child receives. We are reminded of them every day when we look around – our roads, MRT lines, hospitals, schools, the beautiful parks. In the safety and security our families enjoy. But when it comes to paying for these benefits, we should not shirk from our responsibilities. No one likes to talk about taxes. But there are no painless solutions. Ultimately, every need must be paid by someone – every dollar not paid by one person will have to be made up by someone else, either today or in the future. But what we can and will always do is to ensure that we have a fair and progressive system in Singapore. This means that those with more will contribute more taxes than the benefits they receive. Those with less will still contribute, but a lesser amount and they will receive more benefits in return. This reflects our values and who we are as a society. This is how we strengthen our social compact.”
“Over and above the transitional support provided by the Assurance Package, I will enhance the GST Voucher or GSTV scheme which is a permanent feature of our system. The permanent GSTV scheme currently has three components – a cash payout, MediSave top-up and utilities rebates. I will enhance it in three ways. First, the Service and Conservancy Charges (S&CC) Rebate will be made a permanent component of the GSTV scheme. Second, the Assessable Income threshold for GSTV – Cash will increase from $28,000 to $34,000. This will cover more Singaporeans. Third, I will increase the quantum of the GSTV – Cash payout to $500 for those residing in homes with Annual Values of $13,000 and below; and to $250, for those residing in homes with Annual Values of between $13,000 and $21,000. Details are provided in the Annex. [Please refer to Annex F-4.] The enhanced permanent GSTV scheme will provide continuing offsets for the GST expenses of lower-to middle-income households, and most retiree households, beyond the transitional period covered by the Assurance Package. The enhanced GSTV will fully offset the total GST that retiree households living in 1- to 4-room HDB flats have to pay. Many retiree households in bigger flats will also have their GST offset by a significant amount. For low-income households who do not have elderly members, the GSTV will offset about half their total GST expenses every year. Both the Assurance Package and the enhanced permanent GSTV scheme will be implemented together, before the GST rate increase, so that Singaporeans can benefit from both schemes at the same time. [Please refer to Annex F-3.] Low-income households, in particular, will be well looked after.”
“The vouchers can be used at all participating heartland merchants and hawkers, as well as major supermarkets. Details are in the Annex. [Please refer to Annex F-2.] For the majority of Singaporean households, the offsets from the Assurance Package will cover at least five years of additional GST expenses. For lower-income households, they will receive more – with offsets covering about 10 years’ worth of additional GST expenses. For example, take a middle-income family of four in a 4-room flat, with two school-going children and a household income of about $8,000 a month. They will receive a total of around $4,000 in benefits, around five times the additional GST they are expected to incur a year. If I were to choose a lower-income family, the benefits they receive will be larger and the offsets will cover more years of additional GST expenses. Seniors will also get more benefits. Take the example of a retired couple in a 3-room flat. They will receive even more support from the Assurance Package, at around $6,800. This far exceeds 10 times the additional GST they are expected to incur a year. [Please refer to Annex F-3.] Even with these offsets, some vulnerable households may require more support. These households with urgent needs can approach their Citizens’ Consultative Committees (CCC) for assistance. To further support vulnerable households, I will top up the CCC ComCare Fund by $5 million over five years. I will also provide a total of $12 million over four years to our Self-Help Groups. In addition, businesses may need to adjust to the GST increase. So, I will set aside close to $40 million under the Productivity Solutions Grant for businesses to apply for subsidised accounting and point of sale solutions.”
“I want to assure all Singaporeans that we will continue to implement the GST in our unique Singaporean way, with features and schemes that support the less well-off. I will continue to absorb GST on publicly subsidised healthcare and education. I will provide Town Councils with an additional $15 million per year to absorb the additional GST payable on Service and Conservancy Charges. I will not increase Government fees and charges for one year from 1 January 2023. This will apply to license fees, as well as fees charged by Government agencies for the provision of services. This includes school fees, ITE and Polytechnic fees, and charges in public carparks. [Please refer to Annex F-1.] To address concerns that businesses could use GST as a cover to raise prices, the Government will stand up a Committee Against Profiteering. The Committee will be chaired by Minister of State for Trade and Industry Ms Low Yen Ling. We had earlier announced a $6 billion Assurance Package to cushion the impact of the GST increase for all Singaporeans. I will provide an additional top-up of $640 million to the Assurance Package. The enhanced Assurance Package will provide significant payouts to Singaporeans over the next five years. Every adult Singaporean will receive cash payouts totalling $700 to $1,600. Eligible seniors will receive a special GSTV – Cash (Seniors’ Bonus) totalling $600 to $900. Eligible HDB households will receive additional U-Save rebates totalling $330 to $570 depending on flat type. All Singaporean children and seniors will receive MediSave top-ups totalling $450. All Singaporean households will receive two tranches of CDC vouchers worth $200 each in 2023 and 2024.”
“] The increases in property tax rates will be implemented in two steps, starting with the tax payable in 2023. When fully implemented, they will raise our property tax revenue by about $380 million per year. I will also tax luxury cars at a higher rate to make our vehicle tax system more progressive. I will introduce an additional ARF tier for cars at a rate of 220% for the portion of Open Market Value in excess of $80,000. The new rates will apply to all cars registered with COEs obtained from the second COE bidding round this month. The additional ARF is expected to generate an additional $50 million in revenue per year. [Please refer to Annex C-2.] Finally, the GST. The revenue from the increase in GST will go towards supporting our healthcare expenditure and to take care of our seniors. In fact, the GST revenue by itself will not be sufficient to cover our additional healthcare spending. Further, as I shared earlier, other areas of social spending are rising too. And this is why we need not only the GST increase but also the changes to personal income tax, property tax and vehicle tax which I have just announced. Where the timing of GST is concerned, I have carefully considered the overall situation – the ongoing pandemic, the state of our economy and the outlook for inflation. Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices. I have therefore decided to delay the GST increase to 2023 and stagger the increase over two steps. The first increase will take place on 1 January 2023 from 7% to 8%, and the second increase on 1 January 2024 from 8% to 9%.”
“Singapore is not alone in facing such challenges. Countries like Germany, France and Denmark have stopped levying taxes on individuals’ net wealth. The number of OECD countries that levy net wealth taxes has dropped from 12 in 1990 to only three in 2020. And this is partly because of the difficulties in effectively implementing net wealth taxes. We will continue to study the experiences of other countries and explore options to tax wealth effectively. In the meantime, we will strengthen our current system of taxes. In particular, I will make several adjustments to property tax, which is currently our principal means of taxing wealth. I will increase the property tax rates for non-owner-occupied residential properties, which includes investment properties. For such properties, I will increase the property tax rates from 10% to 20% which is the current range, to 12% to 36%. All non-owner-occupied residential properties will face higher property taxes and the increase will be more significant for properties at the high end. With these changes, a large non-owner-occupied detached house in the central area with Annual Value of $150,000 will see an annual property tax bill of about $43,000 per year. [Please refer to Annex C-2.] For owner-occupied residential properties, I will increase the property tax rates for the portion of Annual Value in excess of $30,000, from today’s 4% to 16%, to 6% to 32%. This increase will impact the top 7% of owner-occupied residential properties. The increase will be higher for properties at the top end. To illustrate with the same landed property with Annual Value of $150,000, if this is owner-occupied, the new property tax bill will be about $28,000 a year. [Please refer to Annex C-2.”
“We will have to take this into consideration and ensure that Singapore remains one of the best places in the world for business. We will, therefore, need more time to study these issues thoroughly and will announce changes in the corporate tax system when we are ready. Where personal income tax is concerned, there is room for greater progressivity, so that those who earn more, contribute more. I will therefore increase the top marginal personal income tax, or PIT rate with effect from the Year of Assessment 2024. The portion of chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24%; both up from 22% today. [Please refer to Annex C-2.] This increase is expected to affect the top 1.2% of personal income taxpayers and will raise $170 million of additional tax revenue per year. Next, wealth taxes. This is an important part of the tax system. Apart from generating revenue, they also help to recirculate a portion of the wealth stock into our economy and in so doing, mitigate social inequalities. Wealth taxes are therefore needed to build a fairer society where everyone can aspire to succeed regardless of their backgrounds. Currently, we tax wealth in several ways – through property tax, stamp duties and the Additional Registration Fee or ARF for motor vehicles. So, the higher value the residential property or motor vehicle, the higher the tax rate. Ideally, we would want to tax the net wealth of individuals. But such a tax is not easy to implement effectively. Estimating wealth accurately and fairly is a more complex exercise than estimating incomes. Further, many forms of wealth are mobile and as long as there are differences in wealth taxes across jurisdictions, such wealth can and will move.”
“Pillar 2 introduces, amongst other things, a global minimum effective tax rate of 15% for MNE groups with annual global revenues of 750 million euros or more, under its Global Anti-Base Erosion or GloBE Model Rules. What this means is that if such an MNE were to have an effective tax rate of less than 15% in Singapore at the group level, other jurisdictions such as its home jurisdiction can collect the difference up to 15%. We will adjust our tax system in response to Pillar 2 GloBE rules. We are exploring a top-up tax called the Minimum Effective Tax Rate, or “METR”. The METR will top up the MNE group’s effective tax rate in Singapore to 15%. IRAS will study this further and consult the industry on the design of METR. We will also continue to closely monitor international developments before making any decisions on the METR. At this stage, it is premature and difficult to determine the eventual fiscal impact of both pillars. As I mentioned just now, there will be a negative revenue impact under Pillar 1. METR might yield some additional tax revenue in the short term, but the eventual impact of Pillar 2 on our revenue will depend on how governments and companies respond. The net impact of both Pillars depends on the rules and details, which are still being developed by the Inclusive Framework on BEPS. While BEPS 2.0 may have reduced the scope for tax competition, it has not reduced global competition for investments. In fact, competition is likely to intensify as governments worldwide seek to restore and rebuild their economies after the effects of the pandemic. So, there may be less tax competition but there will be other forms of competition.”
“To strengthen our High Performance Sports ecosystem, I will extend the One Team Singapore Fund for another five years. This will provide dollar-for-dollar matching for donations to rally support for our Team Singapore athletes. To further encourage cultural philanthropy, I will provide a top-up of $150 million to the Cultural Matching Fund for three years, which provides dollar-for-dollar matching for donations made to Arts and Heritage charities. Mr Deputy Speaker, Sir, I have outlined some of the key moves that the Government will make to strengthen our social compact. We will continually review every aspect of our social policies to see what needs to be further adjusted and improved. This is a major multi-year agenda, to strengthen our solidarity with one another, as we prepare Singapore for the next bound. Sir, to bring all the plans I have just laid out to fruition, we will need more revenues. I will therefore make major enhancements to strengthen our tax structure. Our corporate tax system will need to be updated due to global tax developments relating to the Base Erosion and Profit Shifting initiative, or BEPS 2.0. There are two pillars in BEPS 2.0. Pillar 1 re-allocates the profit of the largest and most profitable Multinational Enterprises, or MNEs, from where activities are conducted to where consumers are located. There are ongoing international discussions on how to determine the jurisdictions which will surrender profits for re-allocation to the markets under Pillar 1 and how much each will have to surrender. Given our small domestic market and the extent of activities conducted here by MNEs, Singapore will lose tax revenue under Pillar 1.”
“Later this year, we will launch the Enabling Masterplan 2030 to further strengthen support in areas like employment, lifelong learning and respite care. The community plays a critical role in building a caring and inclusive home. Through the course of the pandemic, we have seen an outpouring of generosity, kindness and support from Singaporeans. Donations received at Giving.sg, an online donation portal, last year increased by nearly threefold to around $100 million. I will build on this momentum to strengthen the culture of giving in our society. To provide more support for the charity sector and to encourage giving, I will provide a top-up of $100 million to extend the Government’s support for Tote Board’s Enhanced Fund-Raising Programme for three years until end-FY2024. Charities can apply to receive dollar-for-dollar matching for eligible donations, up to a cap of $250,000 per charity every year. [Please refer to Annex E-4.] Earlier we had established the Community Capability Trust, to strengthen the capabilities of Social Service Agencies. I will provide similar support for charities. I will therefore provide a top-up of $26 million to the Charities Capability Fund for five years. This will help to nurture a more productive and innovative charity sector and enable them to do more for the community. [Please refer to Annex E-4.] I will also continue to support our Arts and Sports sectors. Arts and sports provide meaningful outlets for self-expression and discovery. They help to strengthen our shared culture and our sense of identity, and they unite us as one people. Last year, all of us cheered our Olympians and Paralympians as they flew the Singapore flag high in Tokyo.”
“It will entail a review of our resourcing approach and healthcare financing schemes, as well as the need for more upstream investments in preventive healthcare. This will be a challenging long-term effort involving many components and stakeholders. But if we succeed, we will be able to use our resources more effectively while providing quality care and enabling Singaporeans to stay healthy. Another aspect of healthcare that has been brought to the fore during the pandemic is mental health. The pandemic has been a stressful period for Singaporeans. But the issues of mental health that we face are not caused only by COVID-19. We want to make sure that the lessons learnt are embedded into our healthcare and social support system, in a sustainable and permanent manner. Therefore, we have established an Interagency Taskforce on Mental Health and Well-being to coordinate efforts across public agencies and other stakeholders, and to enhance and integrate mental health and social services in the community. Sir, we have a full agenda for healthcare and the Minister for Health will elaborate on the plans and strategies at the COS. Beyond healthcare, we have, over the last decade, made progress in ensuring that Persons with Disabilities, or PwDs, lead dignified lives and are empowered to fulfil their potential across different life stages. We supported them through their early and schooling years with Early Intervention programmes and Special Education schools. We built inclusive playgrounds across the island so that children with special needs can play with their peers. Through SG Enable, the employment of PwDs has increased and workplaces have been made more inclusive to cater for the needs of PwDs. We will continue to do more for this group.”
“If our current healthcare expenditure, excluding COVID-19-related expenditure, continues to increase at a similar rate over the coming decade, we will spend about $27 billion or around 3.5% of GDP by 2030. The Government can and must spend more on healthcare for Singaporeans. But the current trajectory of increase is not sustainable. We therefore need to fundamentally rethink the way we deliver healthcare. An important aspect of this is to bring care closer and make it more accessible to the community. A strong primary care sector will serve as the bedrock of our healthcare system and allow us to go upstream for preventive care and better manage chronic conditions. This can improve our quality of life and reduce the risk of costly downstream complications. It will also enable our hospitals to focus on complex conditions and emergency cases. Our healthcare ecosystem must therefore be restructured over the longer term to centre the healthcare system around the patient. It must be designed to keep patients healthy and provide care in the most appropriate setting. For example, patients with diabetes will require dietary and lifestyle changes to manage the condition well. These are best coordinated by a trusted primary care doctor. So, to do all these, we will need to build closer partnerships between our healthcare clusters and community partners, especially with the GPs. We will also need to integrate our healthcare IT systems so that information can flow beyond hospitals to community healthcare providers, to enable quality care and maximise convenience to patients. We are thinking through this “Healthier SG” strategy carefully.”
“We will do so as we scale up Community Link, or ComLink, which provides targeted support for families with children living in rental housing. This involves taking a family-centred approach to address each family’s challenges so that they can keep their family situations stable, become self-reliant and eventually achieve social mobility. We will partner each ComLink family to develop an action plan that is customised to address their specific needs and aspirations. Each family will have dedicated and trained befrienders to support them towards achieving their action plans. These befrienders will be the bridge with other community partners and Government agencies so that families can receive timely and holistic support. The Minister for Social and Family Development will share more about this at the COS. Let me now return to healthcare, which is a critical priority for Singapore’s future. We have made heavy investments in healthcare over the years. For example, we have added five new polyclinics and doubled the number of beds in community hospitals in the last decade. To encourage ageing in place, we have injected a significant supply of aged care services, especially in home and community care. We have improved the quality of care while keeping our healthcare affordable and accessible for all. We have achieved better overall healthcare outcomes, with Singaporeans living longer and healthier lives. But there are challenges ahead. As one of the fastest-ageing nations in the world, our healthcare costs will increase significantly. Government healthcare expenditure has already tripled from $3.7 billion in 2010 to $11.3 billion in 2019.”
“Another effective intervention is the KidSTART programme, which taps on a network of community partners to provide upstream support for eligible families with young children. Under KidSTART, parents and caregivers are guided to support their child’s development at home, in the community and in preschools. KidSTART is on track to support 5,000 children by 2023. Thereafter, we will scale up nationwide progressively to support even more eligible families. To complement KidSTART, we started an UPLIFT Community Pilot to strengthen support for school-going children in disadvantaged families. This includes connecting them with social service agencies and befrienders who check in with them regularly and provide mentorship. The pilot has yielded positive outcomes, with school attendance improving for most of the students placed on the programme. So, we will expand the pilot into a nationwide UPLIFT Community Network to benefit more students, starting with eight additional towns this year and more in the coming years. As our agencies develop more schemes to help different segments, there is a need for closer coordination and integration across these different services. The challenges faced by lower-income families are often multi-faceted and inter-connected. For example, a child could be absent from school because of employment or health issues faced by his or her parents. In such cases, it is not enough to provide financial assistance. We also need to address the underlying issues faced by the family and support them in taking steps to achieve sustainable change. We will therefore integrate the delivery of our social services to more effectively uplift lower-income families.”
“] Additionally, with rising standards of living, we will adjust the CPF Basic Retirement Sum, or BRS, to provide members with higher monthly CPF payouts in their retirement years. We will raise the BRS by 3.5% per year for the next five cohorts turning 55 from 2023 to 2027. [Please refer to Annex E-3.] There is no requirement for members to top up their CPF if they are unable to set aside their BRS. Those who set aside the BRS when they turn 55 in 2027 will receive payouts of close to $1,000 per month when they are 65, and these payouts will continue for the rest of their lives. This will give them greater assurance for their basic retirement needs. Just as we uplift our vulnerable groups, we will also continue to enhance social mobility. The Government is committed to ensuring that all Singaporeans have the opportunities to do well for themselves, no matter their background or starting points. This is why we continue to invest heavily in our children to give every Singaporean child the best possible start in life. We are now doing more upstream – starting with preschool years to provide additional support for children from low-income families. Yet, we know that some vulnerable children fall out of or behind in our education system because of difficult conditions at home. Early intervention in their formative years can make a big difference in their lives. One important intervention is to provide these children with a more conducive living environment to grow up in. For second-timer low-income families, we have the Fresh Start Housing Scheme to help them purchase a home of their own. We will enhance the scheme to better support families in their journey towards home ownership. And the Minister for National Development will share more at the COS.”
“And I will extend this same maximum payout tier to all persons with disabilities, regardless of their age. The enhanced Workfare is expected to benefit more than half a million workers. [Please refer to Annex E-1.] Our moves on Progressive Wages will cover around 94% of our full-time lower-wage workers. The enhanced Workfare will provide further support to all eligible Singaporean lower-wage workers. So, through the combination of Progressive Wages and Workfare, we expect the incomes of our lower-wage workers to grow faster than the median wage growth over the coming decade. So, as our economy grows and society progresses, we will reduce income disparities in our workforce. In aggregate, we will spend an average of $1.8 billion per year over the next five years, or $9 billion in total for the PWCS and the enhanced Workfare. It is a significant increase and it reflects our shared commitment to uplift our lower-wage workers in Singapore. [Applause.] Next, we will enhance the retirement adequacy of Singaporeans, especially for senior workers who are preparing for retirement. Following the recommendations of the Tripartite Workgroup on Older Workers, we will continue to increase the employer and employee CPF contribution rates for workers aged 55 to 70. We implemented the first increase this year and have been providing employers with a one-year CPF Transition Offset equivalent to half of the increase in employer CPF contributions. We will continue with the next step of the increase in 2023, and provide employers with a similar offset. This means that workers aged 55 to 70 will see a total increase of three- to four-percentage points in their CPF contribution rates over these two years. [Please refer to Annex E-2.”
“I will therefore introduce the Progressive Wage Credit Scheme, or PWCS, to provide transitional support for businesses. Under the PWCS, the Government will co-fund the wage increases of lower-wage workers between 2022 and 2026. For workers earning up to $2,500, the PWCS co-funding rate will be 50% in the first two years, 30% in the next two years, before tapering to 15% in 2026. We will also provide some support for workers earning above $2,500 and up to $3,000, at a lower co-funding ratio. With this, the Government will be co-sharing with employers a significant portion of the cost increase. We will set up a PWCS fund for this purpose and start with a $2 billion injection this year. This will provide certainty of funding for the wage increases over the next five years. [Please refer to Annex E-1.] To complement the moves on Progressive Wages, I will also significantly enhance the Workfare Income Supplement. This will give a further boost to our lower-wage workers. From 1 January 2023, I will raise the qualifying income cap from the current $2,300 to $2,500 per month. This means more workers will get to benefit from Workfare. I will introduce a minimum income criterion for Workfare at $500 per month to encourage part-timers and casual workers to take up regular, full-time work. I will extend Workfare to younger workers aged 30 to 34 so that they can start saving for housing and retirement earlier in their careers. They will receive a maximum annual payout of $2,100. I will also raise Workfare payouts. Those aged 35 to 44 will receive a maximum annual payout of $3,000; those aged 45 to 59 will receive a maximum annual payout of $3,600. Those aged 60 and above will receive the highest maximum payout tier of $4,200 annually.”
“In every area of spending, however, it is not just a matter of spending more, but also how we spend – to achieve the right outcomes and to preserve the values of individual responsibility and mutual support from the community, even as the Government steps in to do more. These are complex issues. We are studying them systematically in an effort to renew and strengthen our social compact for a post-pandemic world. We will start with a few major moves in this Budget, which I will explain in turn. First, we will do more to uplift lower-wage workers. The Government has accepted and will implement the recommendations of the Tripartite Workgroup on Lower-Wage Workers. So, over the next two years, we will extend the Progressive Wage Model to the retail, food services, and waste management sectors. We will also extend it to in-house cleaners, security officers, landscape workers, administrators and drivers across all sectors. Companies employing foreign workers will be required to pay all their local employees at least the Local Qualifying Salary, which is currently set at $1,400 per month. We will also launch a Progressive Wage Mark or PW Mark to accredit firms that pay Progressive Wages and the Local Qualifying Salary. The Government will require all our eligible suppliers to be accredited with the PW Mark when they contract with us from March 2023. All of us – businesses, consumers and taxpayers – will have to do our part and contribute to uplifting our lower-wage workers. I recognise that some firms may need time to adjust to these changes. Some have locked in long-term contracts based on certain wage assumptions and now face higher manpower costs. Others may find it difficult to raise prices in the short term to support the wage increases.”
“We also added new pillars of support. First, we put in place ComCare to help people through temporary difficulties and get support while they are being trained for new jobs. Second, we implemented Workfare to uplift our lower-wage workers. To complement Workfare, we introduced Silver Support to provide an additional plank of support for seniors with limited lifetime earnings. Besides these five pillars of social support, we have invested more heavily in education as a social leveller and a source of opportunity for every Singaporean. In recent years, we have been investing more, not just in the formal years of schooling, but also through life – starting with KidSTART, preschool and extending through adulthood through SkillsFuture. Over the past year, we have engaged around 6,000 participants in our Conversations on Singapore Women’s Development. Many good ideas have come up, from better support for caregivers, to stronger measures against workplace discrimination. When the plans are ready, the Government will commit resources and work with our partners to realise them. So, we have been doing more to strengthen our social compact over the years and across many fronts. But as new stresses emerge and as we enter a more volatile and unpredictable environment, we will take further decisive steps to strengthen the architecture of social security and opportunity for all Singaporeans. Our healthcare needs, in particular, will grow as our population ages. We will need to help revamp our healthcare ecosystem to cater to more geriatric needs across various care settings. Healthcare will therefore be the major driver of increased social spending in the coming decade.”
“To do this, infrastructure upgrades will be necessary and the financing can come from green bonds. Mr Deputy Speaker, Singapore is fully committed to doing our part on the global climate change agenda. Various Ministers will elaborate more on our efforts under the Singapore Green Plan at the COS, because this is truly a whole-of-Government effort. In advancing our green transition, we will strive to be a bright green spark and to secure a more sustainable future for ourselves and for the world. Sir, the priority of this Government has always been to build a fair and just society, where every citizen is able to develop to their fullest potential and share in the country’s progress. And we are continually evolving our policies, as circumstances change, to achieve these goals. In our earlier decades, we had three pillars in our social security system: (a) subsidised public housing through HDB to make home ownership a reality for the vast majority of Singaporeans. (b) the CPF to help every working Singaporean save in order to own a home and build a nest-egg for retirement. (c) the 3Ms of MediSave, MediShield and MediFund, together with Government subsidies, to provide Singaporeans with affordable and quality healthcare. Over the years, we have strengthened these pillars. We enhanced the CPF so that members with lower balances can benefit from extra interest on their retirement savings. In public housing, we are not just helping Singaporeans own a home, but also upgrading older flats and rejuvenating estates. In healthcare, we have gone beyond the original 3Ms. We introduced MediShield Life to provide life-long universal insurance for hospital bills. And as elderly care needs grew, we introduced CareShield Life and ElderFund to support our seniors.”
“This will include bonds issued by the Government, as well as Statutory Boards. The Government will also publish a Singapore Green Bond Framework and issue its inaugural green bond later this year. Green finance is just one of many exciting new areas of green growth. As I mentioned just now, there are many more such opportunities across every sector of the economy. We aim to move Singapore into the forefront of green technologies – where new innovations are developed, trialled, scaled-up and eventually exported to the rest of the world. We will work hard to grab first-mover advantage and develop new engines of growth in the green economy. Another important pillar of the Singapore Green Plan is to transform our living environment, make it a greener and more sustainable home, and a beautiful city in nature for all to enjoy. And one aspect we have been focusing on is transport. We aim to be a car-lite city, supported by a comprehensive public transport network, which is the cleanest and most energy-efficient mode of transport. And this is why we are maintaining our policy of zero growth rate for private vehicles. We are perhaps the only city in the world which has taken this bold step. For those who wish to drive, we want their vehicles to be cleaner. Hence, we had announced our intention to phase out internal combustion engine vehicles by 2040. For passenger vehicles, the most promising clean energy option is electric vehicles or EVs. We have provided significant incentives for EV adoption. In fact, within a year, the EV share of new car registrations has jumped from just 0.2% in 2020 to around 4% last year. Given this momentum, we will further accelerate EV adoption by building more charging points closer to where we live.”
“Costly investments may be required, for example, to import or generate low-carbon energy. But now is the time when we must move decisively towards the future of a net zero world. This will allow us to tap fully on the many exciting possibilities in this green transition. And that is why we launched the Singapore Green Plan 2030 last year, to bring everyone on board our sustainability movement. Over the coming decade, we expect to see a “greening” of traditional sectors of our economy, like aviation, energy and tourism. At the same time, emerging green sectors like green finance and carbon services will grow in prominence. Millions of new green jobs will be created around the world and demand for talent with green skills will increase. Moving quickly will position Singapore to build on our competitive advantages to capture these opportunities. We can become the go-to location in Asia for expertise in carbon services and the trusted regional marketplace for carbon credits. As a key node for international air and sea transport networks, we can become a frontrunner in the development of sustainable aviation and marine fuels. In the financial services sector, for example, green finance is one of the fastest growing segments. Singapore now accounts for close to half of the ASEAN green bond and loan market. We aim to do more, so that banks and financial institutions will use Singapore as a base to develop their capabilities and to develop innovative green financial solutions to service their customers all over Asia and the world. The public sector will do its part to develop a robust green finance market. We aim to issue up to $35 billion of green bonds by 2030 to fund public sector green infrastructure projects.”
“This will help mitigate the impact on business costs, while still encouraging decarbonisation. We will continue to engage affected companies on the design of the framework prior to its implementation in 2024. From 2024, we will also allow businesses to use high-quality, international carbon credits to offset up to 5% of their taxable emissions, in lieu of paying carbon tax. This will moderate the impact for companies. It will also help create local demand for high-quality carbon credits and catalyse the development of well-functioning and regulated carbon markets. We will also do more to support companies, especially SMEs, to invest in energy-efficient equipment and decarbonisation solutions. For households, the higher carbon tax will be felt mainly through an increase in utility bills. At $25 per tonne, this would translate to an increase of about $4 per month in the utility bills for an average 4-room HDB household. We will provide support, such as additional U-Save rebates, to help cushion the impact during the transition. More details will be announced next year, ahead of the carbon tax increase in 2024. I should clarify that I do not expect to derive additional revenue from this increase in the carbon tax. Some of the revenue will be used to cushion the impact on households and businesses. A large part of the revenue will be used to support a decisive shift towards decarbonisation through investments in new low-carbon and more energy efficient solutions. These investments will help to lower our emissions and bring us closer towards our net zero goal. The path towards net zero will entail significant economic restructuring and changes in how we live and work in the future. All of us – the public, businesses, the Government – will face difficult choices.”
“When we introduced the carbon tax in 2019, we kept the initial tax low – at $5 per tonne of emissions – to give our businesses time to adjust. To move decisively to achieve our new net zero ambition, we will need a higher carbon tax. I will therefore raise our carbon tax to $25 per tonne in 2024 and 2025 and $45 per tonne in 2026 and 2027, with a view to reaching $50 to $80 per tonne by 2030. The current tax of $5 per tonne will remain unchanged until 2023, as previously stated. And we are pacing the increases to the carbon tax between now and 2030, and will announce subsequent increases ahead of time. This will provide certainty for businesses. Besides this, we will not impose an additional carbon tax on the use of petrol, diesel and compressed natural gas. These already have excise duties that encourage users to moderate their fuel consumption and hence emissions. We will continue to review and adjust these fuel excise duties periodically. I appreciate that some businesses and households may require support as they adjust to the carbon tax increase. For example, we are mindful that firms in our emissions-intensive and trade-exposed sectors may face higher costs than those in countries with lower or no carbon tax. Some will need a little more time to make the necessary reduction in emissions or investment in cleaner technologies. So, to support such firms and manage the near-term impact on their competitiveness, we will put in place a transition framework. Such transition frameworks are found in many countries with carbon taxes. They provide existing companies with allowances for a share of their emissions. For our framework, the allowances will be determined based on efficiency standards and decarbonisation targets.”
“We do not have the land for wind or solar energy to be sufficient for our own needs. But thankfully, green technologies have been improving by leaps and bounds. Alternative low-carbon solutions, like carbon capture, utilisation and storage, and hydrogen, are starting to look more plausible. Carbon markets are also growing steadily. At COP26, Singapore helped to finalise a landmark decision on Article 6 of the Paris Agreement, which unlocks the door for carbon credits to be traded on a global basis. Such developments give us greater confidence to review our long-term climate goals. Two years ago, we made an international commitment to peak our emissions around 2030. And we also announced our Long-Term Low-Emissions Development Strategy, or LEDS, to halve our emissions from its peak by 2050 and to achieve net zero emissions as soon as viable in the second half of the century. Singapore takes these commitments very seriously. We are on track to achieving our 2030 target. We have since reviewed our longer-term plans. With advances in technology and new opportunities for international collaboration in areas like carbon markets, we believe we can bring forward our net zero timeline. We will therefore raise our ambition to achieve net zero emissions by or around mid-century. We will consult closely with industry and citizen stakeholder groups to firm up and finalise our plans before making a formal revision of our LEDS later this year. To achieve this net zero ambition, we will need to set the right price of carbon, so that businesses and individuals will be able to internalise the costs of carbon and take actions to moderate their emissions.”
“Sir, let me emphasise that Singapore will continue to stay open and welcome talent from around the world. The adjustments in our foreign worker policies apply mainly to the broad middle of the workforce. This is where we have Singaporeans doing the jobs, but we need to continually adjust our rules to ensure better complementarity between our foreign and local workforce. At the higher end of the workforce, where there are acute skill shortages, we will continue to bring in professionals with the right abilities to be part of Team Singapore. Ultimately, our investments to develop stronger capabilities across our businesses and workforce reflect our mindset of continuous improvement. We must always strive to do better and achieve more. This will put us in good stead to meet the challenges of the future. Mr Deputy Speaker, I will now speak about our green transition. Climate change is a global crisis that becomes more pressing with each passing year. At last year’s UN Climate Change Conference in Glasgow (COP26), countries were urged to get to net zero emissions by or around the middle of the century, to keep alive the ambition of limiting global warming to 1.5 degrees celsius above pre-industrial levels. Twenty-fifty is still about 30 years away. But unless deep reductions in CO2 and other greenhouse gas emissions occur in the coming decades, global warming will exceed 1.5 degrees, or even two degrees in this century. So, the world needs to take urgent action. Singapore is fully committed to doing our part in the global movement to tackle climate change. But, unlike many other countries, we are highly disadvantaged by a lack of natural renewable energy sources. We do not have huge rivers or hot springs to draw hydro or geothermal power.”
“In the first step, we will raise the minimum qualifying salary for new S Pass applicants from the current $2,500 to $3,000 in September this year. We will introduce a higher minimum qualifying salary of $3,500 for the financial services sector. And the qualifying salaries for older S Pass holders will be raised in tandem. Thereafter, the minimum qualifying salary for new S Pass applicants will be raised in September next year and, again, in September 2025. The specific salary values will be announced closer to the implementation date, based on the prevailing local wages then. And similar to EP, the changes will apply to renewal applications one year later, to give businesses time to adjust. In addition, we currently regulate the number of S Pass holders with sub-Dependency Ratio Ceilings and levies. To better manage the flow of S Pass holders, we will progressively raise the Tier 1 levy from the current $330 to $650 by 2025. Finally, our work permit policies in the construction and process sectors will be adjusted, to spur greater productivity improvements and support more manpower-efficient solutions. This will help transform the sectors that have been more heavily dependent on foreign workers. The Dependency Ratio Ceiling, or DRC, will be reduced from the current 1:7 to 1:5. The current Man-Year Entitlement, or MYE, framework will be replaced with a new levy framework that will encourage firms to support more offsite work and employ more higher-skilled work permit holders. And to give companies time to prepare for the moves, these changes will take effect from 1 January 2024. The Minister for Manpower will elaborate further on the foreign worker policy changes at the COS.”
“EP holders should be professionals and senior executives who can contribute to our economy, sharpen the skills of those they work with, and strengthen our workforce. To ensure that EP holders are of the right calibre, we adjust the minimum qualifying salary from time to time – because how much the employer is prepared to pay is a practical indicator of the quality of the EP holder. We will aim to ensure that incoming EP holders are comparable in quality to the top one-third of our local PMET workforce, those with professional, managerial, executive and technical jobs. Therefore, from September this year, the minimum qualifying salary for new EP applicants will be raised from the current $4,500 to $5,000. For the financial services sector, which has higher salary norms, this will be raised from the current $5,000 to $5,500. The qualifying salaries for older EP applicants, which increase progressively with age, will also be raised in tandem. For renewal applications, these changes will apply from September next year to give businesses sufficient time to adjust. Beyond the qualifying salary, we will refine how we assess EP applications, to improve the complementarity and diversity of our foreign workforce, and also to increase certainty and transparency for businesses. Likewise, for S Pass holders, we have a minimum qualifying salary to ensure that those coming in are of the right quality. We will aim for the S Pass holders to be comparable in quality to the top one-third of local Associate Professionals and Technicians. Similar to the EP framework, we will increase the qualifying salary for S Pass holders to achieve this and we will do so in phases.”
“In other cases, an attach-and-train modality may be more appropriate, for example, if a company is not yet ready to commit upfront to hiring more staff. Under the SGUnited Mid-Career Pathways Programme, we have provided company attachments for mid-career workers to undergo skills upgrading with a training allowance. We will make such company attachments for mature mid-career workers a permanent feature of our training and placement ecosystem. [Please refer to Annex C-3.] Finally, there is the train-and-place route, where individuals first attend training in areas with good hiring opportunities, before searching for a new employer. In recent years and especially during the pandemic, we have significantly expanded such training opportunities. We will continue to enhance our provision of high-quality, industry-oriented training courses through a new SkillsFuture Career Transition Programme. These courses will be highly subsidised and after the training, we will provide employment facilitation services to maximise the jobseekers’ prospects. [Please refer to Annex C-3.] Even as we invest in Singaporeans, we must continue to stay open and bring in manpower and skills from around the world. By combining local and foreign professionals, we form the best teams in Singapore to create value together. This gives us that extra advantage to excel amidst intense global competition and to create many more good jobs and career choices for Singaporeans. We have in place a comprehensive foreign worker policy framework to allow companies to access a diverse pool of manpower. We continually review and adjust the key policy parameters in the framework and will introduce several changes. [Please refer to Annex C-4.] First, we will update the framework for Employment Pass or EP holders.”
“Through the support of the CTC, he has acquired new skills and will be well positioned to excel in his career. [Please refer to Annex B-1.] NTUC would like to do more. I will therefore set aside about $100 million to support NTUC in its efforts to scale up the CTCs. Part of this will go into a new grant which will be administered by NTUC, to support companies that have set up CTCs to implement their transformation plans. Besides the CTCs, we will continue to extend our outreach, especially to smaller companies, through other platforms. This includes partnering with industry leaders or Queen Bee companies to provide training and advice to smaller companies and working closely with the trade associations and chambers as well as the Singapore Business Federation. We will also pay special attention to our mid-career workers, especially those in their 40s and 50s. They are more vulnerable to churn and disruptions in the workplace. But they have valuable experience to contribute and, with some help, many are able to learn, adapt and do well in new jobs. For example, Mr Manokaran was 58 years old when his job as an events manager was badly affected by the pandemic. He decided to move to a new area and took a leap of faith into digital marketing. Through the Career Conversion Programme for Digital Advertising Professionals, he joined an IT business solutions company and picked up new skills. Now, he is a Digital Marketing Manager, a job with good prospects in the digital economy. [Please refer to Annex B-1.] Today, we have a range of support measures to help mid-career workers. For Mr Manokaran and his employer, what worked was a place-and-train arrangement where he was first hired and then given on-the-job training by the company.”