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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“To be clear, the global economic system is in need of reform. Singapore and many others have called for changes, and we have been working with like-minded partners at the WTO to reform its processes. A key concern in America is China – the sense that the US had given away too much in allowing China to join the WTO and that China competes on an unfair basis, for example, by heavily subsidising its own companies, putting up non-tariff barriers and restricting market access to US firms. These concerns should be addressed within the WTO framework. In particular, the trade arrangements and concessions made in the past when China was only 5% of the world's economy should be updated when China now makes up 15% of the world's gross domestic product (GDP). And if there are disagreements, they should be resolved through the WTO's dispute settlement system, which has been paralysed and urgently needs to be restored and reformed. But what the US is doing now is not reform. It is rejecting the very system it created. The US has imposed a blanket 10% tariff on imports for nearly all countries. On top of that, it has layered on higher tariffs, up to 50%, for selected countries, especially those that run a trade surplus with the US. According to the administration, the sweeping tariffs are needed to fix America's trade imbalances. But there is nothing inherently wrong about running a trade deficit. It simply means that American consumers are buying more from the world than the world is buying from America. Moreover, the focus has been solely on the goods trade. That only gives a partial picture. In fact, the US runs a surplus with many of its trading partners in services, exporting software services, education, entertainment, financial and business services.”
“Mr Speaker, we have known for some time that the world is in flux. The familiar signposts are fading, but the contours of a new global system have yet to take shape. We are in a period of transition – uncertain, unsettled and increasingly unstable. The recent "Liberation Day" tariff announcements by the United States (US) confirms this stark reality – the era of rules-based globalisation and free trade is over. This marks a profound turning point. We are entering a new phase in global affairs – one that is more arbitrary, protectionist and dangerous. For nearly 80 years since the end of World War II, America was the anchor for the free market economies of the world. It championed free trade and open markets, and led efforts to build a multilateral trading system. This World Trade Organization (WTO) system ushered in decades of global growth and stability. It allowed trade to flourish and lifted millions out of poverty. It benefited the world and contributed to America's own economic strength. Objectively, America continues to enjoy unrivalled economic heft. In fact, the US rebounded more quickly than other advanced economies from the COVID-19 pandemic. It has surged ahead of all its major competitors in the advanced industrial world. But not all Americans feel this way about their economy. There are hollowed-out towns in what was once America's thriving industrial belt. There are workers whose jobs have disappeared and whose incomes have stagnated. They believe that the American economy is fundamentally broken. Discontent was already visible in the 1990s when protestors disrupted the WTO meeting in Seattle. Frustrations deepened following the Global Financial Crisis of 2008 and more recently, after the COVID-19 pandemic.”
“I do not have the answer now, but you can ask the Minister for National Development at the COS. I am sure he will give you a response. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2025 to 31 March 2026." (proc text)]”
“That is hypothetical. I would not know. But let us put it this way. When my parents bought their Marine Parade flat in the 1970s, it was $30,000 or $30,000 plus. At that time, will they ever, ever imagine that they could sell the flat for $500,000 in the 1990s? No, not at all. But why have flats gone up? It is because of incomes. It is because Singapore has succeeded. It is because our standards of living have gone up. That progress, that success has benefited every homeowner in Singapore. That is what homeownership provides. A concrete stake in our nation's progress and not just that, but eventually, a home and a nest egg which you can tap on for retirement. It is a sound and a key pillar of our social compact, which we will continue to improve, enhance and build upon. [Applause.]”
“But if we apply that same subsidy to localise popular areas, the flats will be more unaffordable, and can we make the subsidy more? Well, we can, but then, you have a problem where there will be a lottery effect. People will immediately know the subsidy is greater in these popular areas, "Let us go for that. And when I win the BTO, I will strike lottery". And that is not good. That is not equitable. So, the right thing to do is to have a Plus and Prime framework where we provide more subsidies in order to bring down the headline price, make it affordable but, at the same time, when the person sells that flat, the additional subsidies is returned to HDB. I think that is a fair and equitable way and that is why we have the Plus and Prime framework. On rental flats, do we want to have home ownerships for all Singaporeans? That has always been a policy. That is what Singaporeans want and I think that gives every Singaporean a stake in our nation's success. So, we will continue with home ownership. It has been the foundation of Singapore society, the foundation of Singapore's success. I think it continues to be a very important key pillar for nation building. We want to ensure a nation of home owners and we will continue to finetune and improve HDB policies to make sure that every Singaporean who wants to, can own their own homes.”
“Sir, I would disagree with Mr Leong's characterisation of the PAP Government's policy as refraining or denying Singaporeans from funds, or keeping the funds and not leaving it in the pockets of Singaporeans, as he put it. That is not the case at all. Whatever we collect, we put it back to benefit Singapore and Singaporeans directly. That is what the Budget is about. It is not about the Government holding back something. It is about making sure that all that we collect goes back to Singaporeans in different ways. Some, of course, are direct transfers, but not all of it. After all, the PSP itself says that you should not do so much because this will create entitlement. So, yes, some part of it goes into direct transfers, short-term measures. But a lot of it goes into a whole range of different programmes which benefit Singaporeans. We are putting back the funds to benefit all Singaporeans. That is our approach. On the size of the endowment trust funds, I do not have the figures off-hand. We can deal with that separately in the COS or in a separate Parliamentary Question. On VERS, yes, we know that it is something outstanding and we will provide details. Because the first flat for VERS is not due anytime soon. But eventually, the time will come when we have to do VERS and as we approach that date, we will certainly provide more details. The issue around Plus and Prime flats, let us be very clear. Why did we have to do Plus and Prime flats? Because for Standard flats, we know that the resale market moves up and down in the near term, but we will price the BTO flats not based on resale market alone, but we look at incomes and price for affordability. So, there is a subsidy there.”
“Setting aside the headline statistics, setting aside the fact that CPI inflation is easing, we do recognise that there are real concerns because Singaporeans have to adjust to new price realities. And that is why we are doing more to help them through cost of living support. That is why we are doing more to make sure that Singaporeans will have enough in this Budget to address their concerns on cost of living.”
“Sir, it is not as though we are doing nothing to manage cost of living pressures. I mean, if we have talk about some of the big items of cost of living, what are they? Housing is one of them with, which we have discussed. And I have described exactly how we are helping to manage cost of living pressures precisely by pricing the BTO flats different from what is in the resale market, with growing subsidies, precisely to keep it affordable for Singaporeans. Our approach is, let us get the pricing right. Because if you do not get the pricing right, basically, you are giving a subsidy. Somebody has got to pay. We get the pricing right, then, we will subsidise where there is a need to, and we have, on housing, for example. We can debate how much subsidy is correct, but we are, and we are doing more. And so, all of the measures that we are doing, it is not just about equipping, training, empowering Singaporeans with skills to get better incomes. It is also to strengthen our safety nets. It is also to strengthen our safety nets. It is to make sure Singaporeans are able to afford the basics, be it healthcare, retirement, housing or education, and it is to make sure that we are able to help those who suffer setbacks and enable them to recover and bounce back stronger. On CPI, the Department of Statistics has its methodology. Shrinkflation is a different matter. I think there are different ways in which we can address that. Mr Melvin Yong mentioned some of that, through Price Kaki and also through maybe getting retailers to put out unit prices. These are some measures we can think about. But it is a constant battle to make sure that we ensure Singaporeans have the ability to cope with cost pressures which we know exist. So, we recognise the concerns are real.”
“They often engage industry partners and understand what the latest business trends are, what are the latest requirements, and then customise skills programmes accordingly. So, that is a fundamental approach we take which hopefully will enable us to be quick, nimble and to be able to adjust to new and shifting trends.”
“Sir, I thank Mr Parekh for his comments, especially the point about how we should be appreciative of everything that our forefathers have built and what we have inherited here in Singapore. On the point about how we make our investments sticky, which is really what Mr Parekh talked about, how do we anchor these investments, recognising that they have many options and the MNEs do have leverage. The simple answer and the only answer is that we have to up our game. We cannot just compete on costs. We have to improve our capabilities, offer a value proposition to them. And that is why we are investing in R&D, we are investing in capabilities, we are investing in Singaporean workers, so that the MNEs come here and they see in Singapore an ecosystem which they can plug into and which adds value to their operations. They will say, "Look, this is useful. This adds value to me and I want to do more out of Singapore." That is something we will continue to do. Having good local companies help too, something that Mr Parekh talked about. Because when they have good local companies based here, they supply to the MNEs, they form partnerships with the MNEs, it strengthens the ecosystem. It makes the investments stickier. So, that is what we are committed to doing. That is what all the initiatives in the Budget seek to do. On SkillsFuture and training for future skills, it is inherently a very difficult topic. No one can tell what the new requirements of the future are. But I think there are some basics which we can already train for, there are some fundamentals we can train for, and we are doing that. And in designing many of our programmes and courses, the course providers, our IHLs, the partners we work with, do not just design these courses in a vacuum.”
“Sir, I mentioned that we would have been in deficit in FY2024 and also FY2025 because of both factors: if we did not do GST; and the unexpected upside in corporate income tax. So, it is both factors, not just GST alone. As I said in my Budget Statement, if we were to plan on previous assumptions for corporate income tax, it would be about 3%-plus of GDP. It has gone up to 4%-plus of GDP now. And when we plan for Budget 2025, we have assumed the higher base. But without that unexpected increase on corporate income tax, without the GST rate increase, certainly FY2025, based on whatever we are proposing to spend in the Budget, would end up in a deficit.”
“And that is what we are doing. We are catching up with supply. And it is because of that disruption in supply that has created that imbalance in the market. That is exactly why we have to build more now to restore that balance, and as I said just now, we can be assured that we will be able to restore balance because HDB flats are only purchased by Singaporeans. And we will be able to build enough HDB flats for every Singaporean household. Finally, on inflation, that is the last point that Mr Leong mentioned and he says the statistics are misleading or does not reflect the reality on the ground. But statistics are what they are. Unless Mr Leong is accusing the Department of Statistics of not collecting CPI data properly. It may happen in other countries. It certainly does not happen in Singapore. We have a proper system of collecting CPI, updating the basket, the inflation basket and the data is what it is. I stand by the data. It has come down. There is no basis to say that GST increase has "turbocharged" inflation. And even MAS itself, in its assessment, would have reflected that in its monetary policy statements.”
“But it gives us the ability to move quickly and to do things for Singaporeans. Having this strong fiscal position does not come at the expense of Singaporeans. If you look at the tax burden, if you look at what we impose as taxes relative to many other advanced economies, our tax burden is in fact quite low. And that is objective data; you just have to compare. And we intend to keep our overall tax burden low. But we will maximise effectiveness from every amount that we spend in order to make sure we maximise the benefits and outcomes for Singaporeans. Thirdly, on public housing and lease decay, what is our solution? The solution is the Voluntary Early Redevelopment Scheme (VERS). We have explained the broad outlines of VERS already and we will provide more details in due course. On BTO flats, how do we ensure affordability? We do so by making sure that the pricing of BTO flats will be done in such a way that Singaporeans will always be able to afford them. So, the pricing will have to look at Singaporeans' incomes. And as I had illustrated with a concrete example, the BTO price for that particular example has been updated in line with median incomes. So, that will be the way we ensure that BTO and HDB will continue to be affordable. Are we worried that we are over building? Here, I am a little puzzled. I thought Mr Leong and PSP are worried about not enough flats. And we had this debate with the WP a few years ago about are we over building and therefore we are going to have a property market crash. So, are we concerned about high prices? Are we concerned about the opposite? If we are concerned about high prices, then we need to build more, particularly because we have to catch up with the disruption in supply that happened during the COVID years.”
“We will not be able to because we do not expect structural surpluses. We expect to run balanced Budgets over the medium term. Okay, that answers the first part on the Budget structure. Next on NIRC. All the NIRC revenue goes into the Consolidated Fund and then we spend from the Consolidated Fund. Mr Leong's objection appears to be some of the spending goes into these funds, the endowment and trust funds, and that these are not real spending. But that is not the case, as I have tried to explain just now. Most of them are drawdown funds. In some instances, like the Changi Airport Fund, we are going to expend, spend the money quite soon when we build Terminal 5. In some cases a bit longer, but certainly within this generation, we will be spending a lot of that money. So, they will be spent. And there are good reasons why we set them aside now in order to spend and make sure that we have the resources we need for these near-term and longer-term expenditures, which will be spent. Mr Leong says better to fund these projects through SINGA. They are, I think he said, lower cost. Actually, SINGA is not lower cost at all. SINGA costs money. It is just that SINGA is a different way of financing. For very large, long asset life projects, we think from an inter-generational equity point of view, it is better to spread it out. And so we have SINGA. So, we are going to do both. We are going to have real spending needs which will be covered through these funds and we will have projects that are funded by SINGA. That is on the NIRC. And overall, if you look at the revenue moves that we have made – GST, as well as the other revenue changes, tax changes we made in this term of Government – as I have explained, we are now in a good fiscal position.”
“Sir, I will attempt to reply to all the points that have been raised. First, on the Budget structure, I think Mr Leong has mischaracterised the Government's position. It is not the bigger the surplus, the merrier. We do not just look at it from that point of view. We adopt a responsible and prudent fiscal approach in budgeting. We are prepared to spend more if they are good ideas. As I said, the issue is not about spending more. The issue is about getting the policies right and making the right decisions to support Singaporeans. And if this entails more spending, we will. As you have seen in our social development spending, it is rising. And I fully expect it to rise further. The issue at hand is really about the approach towards thinking about budgeting. Our approach is one where we recognise that there are fiscal rules. And if there are fiscal rules, let us respect the rules. Let us not just keep thinking about changing the rules the first time we run into trouble and need more money. Let us stay disciplined, operate within these fiscal rules and, if we need more money, we raise the revenues to support and cover the additional spending needs. That is the fundamental approach that we adopt. I think PSP may have a different approach. And they are fine to have a different approach. But as I say, have a care about what you want and how you want to manage our country's finances. You may think it is not a big deal, just spend more, disregard the rules. But step by step, these are sure ways to weaken Singapore fiscally. And when that happens, it is Singaporeans who suffer. He talked about whether we will put back into reserves. I thought I made that clear in my speech: we will not be putting back into the reserves.”
“Mr Speaker, the funds that we have set up are for specific purposes. They are well-established. We highlight what they are and if there is a need for more information on the spending and expenditure associated with each of these funds, we will take a look at how we can put out more information.”
“Sir, I think those specific questions on the Culture Pass are best answered by the Minister in charge of MCCY at the COS debate, and I am sure he will be happy to give a comprehensive response.”
“As I have mentioned just now, and all that I have said in the round-up speech, the bulk of our Government spending is in this, it is directed towards these structural longer-term programmes: in education, SkillsFuture, job training, upgrading Singaporeans, in ensuring that our economy is strong, so that Singaporeans earn higher incomes on a consistent basis, but at the same time, providing a social support system to provide greater assurances on the basics in life and to make sure that if anyone suffers a setback, we are there to catch them and help them recover stronger. Those are the things we are doing. Let us try not to put a wedge between the Government and the people. There is no point in saying the Government is rich and has strong fiscal position and then painting this as being detrimental to the well-being of Singaporeans. A strong fiscal position for Singapore is not at the expense of Singaporeans. In fact, it benefits Singaporeans in so many ways because we are able to invest more in Singaporeans. We are able to provide them with more support. We are able to help them with so many different areas of life and ensure that everyone benefits from a higher standard of living. It is easy to talk about spending more, sailing closer to the wind. You know, we have so much money, let us just be a bit more cavalier and relaxed about our fiscal rules; do not have to be so tight. But at the end of the day, who bears the price? Who pays the price? If something were to go wrong, if a crisis were to hit, if we end up physically weaker as a country, who pays the price? It is not politicians. It is Singaporeans. It is our children and our grandchildren. Let us not gamble with Singaporeans' lives and future. [Applause.]”
“Sir, I will take the second question first. Indeed, there are Lifecycle Funds, Target Date Funds, which provide that kind of glide path that Ms Poa talked about. If you are young, you take higher risk, and then as you get older it, the portfolio becomes a sort of a safer portfolio in order to minimise the risk. Actually, these funds are already available in the market. They tend not to be very popular with Singaporeans for some reason, but they are available and we hope that we can make them more accessible to Singaporeans. But the question that I said just now goes back to not just having choices and options, but whether, on a more structured basis, is there some possibility of looking at redesigning or updating the CPF system? And even with the kind of glide path, Target Date Fund that we talked about, it is not easy to achieve a better outcome across the board on a consistent basis than the risk-free Special Account rate of 4% and up to 6% with extra interest. It is actually very hard. But anyway, as I have highlighted the considerations. We are studying the matter and we will look further into it. On the earlier question on whether we are doing more in terms of structural programmes and schemes to help Singaporeans cope with the cost of living, yes, of course, we are.”
“So, we just have to be prepared. Brace ourselves for a bumpier ride ahead. But at the same time, draw confidence from the fact that our fiscal strength allows us to respond swiftly to any emergency.”
“Sir, on inflation, MAS certainly will do its assessments in due course. The Government will also do the same. But we think it is manageable. As far as the Cost-of-Living Support Package is concerned, this is not new. We have been providing it in previous Budgets. In fact, if you look at the overall amount provided for cost-of-living support in this Budget, it is smaller than in previous years' Budgets – overall amount, not just vouchers alone. If you look at the overall amount, it is smaller. And one reason why it is smaller, is precisely because inflation has eased and we think it is correct to taper the overall size of the Cost-of-Living Support Package. But this year, because of SG60, we have a special package to share the fruits of a nation's progress with all Singaporeans. It is once-off. It is SG60. It is not going to be year after year. And within the parameters and the amounts that we are giving out through SG60, overall, there should be a manageable impact on inflation. The second question on worst case scenarios, I mean, there is a whole range of them that we will have to prepare for. As I have said, it can go from something as extreme as conflict in Asia, which we have not seen for the most part in decades, but we have to be prepared now. The risk is not insignificant; it has certainly gone up. You have hotspots in our part of the world where accidents, miscalculations can happen and it will certainly have a knock-on impact on sentiment, confidence and the whole economy. But you could also have other kinds of emergencies and threats, cybersecurity, pandemics, supply chain disruptions, a whole range of things can happen, and even if they do not happen nearby, within Asia itself, something that happens far away can have knock-on impacts here in Singapore.”
“Sir, we are focused not just on the lower-wage workers. We are pushing their wages through progressive wages, Workfare and many other initiatives. But we are also focused on the middle-income and on the broad middle to ensure that Singaporeans do enjoy continued real wage increases. Generally speaking, we have been able to achieve positive outcomes. I know Assoc Prof Jamus Lim talked about the last five years of data where wages seem to lag behind productivity growth. But you can slice data over any shorter-term period and look at the lags or when sometimes wages will be lagging behind, sometimes wages will be ahead of productivity. Certainly, in the last five years, wages have not caught up with productivity. But if you look at the longer-term time frame, we want to ensure wages do match productivity increases and it has been so. It has been so. And we will continue to ensure this remains. The best way to do that is to ensure a strong, vibrant economy. But not just leaving it to market forces alone, but to support workers with all the investments we are putting into SkillsFuture, which is not only benefiting the lower-wage workers, but supporting the broad middle of our workforce. And that is why we are redoubling efforts, investing more in every worker through a whole range of incentives and schemes and programmes through working with the National Trades Union Congress (NTUC), our brothers and sisters in the Labour Movement through the Company Training Committee (CTC) grants, working with enterprises who are prepared to do work workforce transformation. We are putting in place all the building blocks that are necessary to strengthen our SkillsFuture system and to make sure that Singaporeans continue to enjoy sustained real income increases.”
“Sir, I agree with Mr Liang's first point. Because as I said, there is no free lunch. The capitalisation of these large projects is the right thing to do for inter-generational equity. It is not just to generate near-term fiscal space for us, so we will do more to explain to Singaporeans the treatment of SINGA and why we should not assume that because we are doing this capitalisation accounting treatment, that there is somehow some additional freebie in the near term that allows us to spend more. That is not the motivation from SINGA. On Forward SG expenditures, in last year's Budget, we said it was $5 billion. This year, we will probably spend about $5 billion as well. But overall, if you look at the social initiatives that we are putting together. And a lot of the Forward SG agenda will be on the social spending and the chart I showed just now clearly showed that social spending is rising. So, we fully expect more to be spent on this front – on Forward SG and on social development. It probably will go beyond $40 billion.”
“What is going to happen? What is the next move going to be? Will it be more tit-for-tat-type taxes or will there be some global cooperation? It is really unclear. And that is why we are unable to provide any immediate updates to our corporate income tax revenues from BEPS in the near term. But certainly, as the situation gets clearer, we remain committed to providing further updates on our medium-term fiscal position, including revenues from BEPS, if any, pluses or minuses, and we will continue to publish these figures. But in the meantime, we are fortunate that even before the domestic top-up tax, the minimum corporate income tax, has kicked in, companies have started to do more substantial activities out of Singapore and our corporate income tax collections have gone up. That is a big plus for us. But as I have explained, it is too early to tell whether this is a lasting trend. But whatever it is, it is good that we are in such a position and we will make good use of the revenues to ensure that Singaporeans benefit, to ensure that we continue to advance our goals. Next, on the occasional papers, I mentioned that we will be committed to publishing and updating them. There are no significant updates that we have been able to make in recent times given the very complex global situation. That is why we have not given an update to the occasional paper recently. But as I have said just now, when we get better clarity around our revenue position, in particular, we will certainly be committed to providing an update to the occasional paper.”
“Actually, at that time, there was no certainty at all that corporate income tax would go up, even with BEPS. Because, remember, a stated objective of BEPS, the explicit-stated objective, one of it, is to transfer and re-allocate profits to market jurisdictions – large economies, markets. We are going to be impacted by that very move. We would have profits re-allocated from us and we would be suffering. It has not worked out or it still has not been implemented, this part of BEPS. But that was the beginning, what they wanted to do. That is why we were concerned and that is why we did not think that we would be able to get more revenues from corporate income tax. Later on, BEPS evolved and people started talking about having a minimum corporate tax of 15% applied across all countries. Yes, but that did not mean that competition would disappear and everyone would just operate with a 15% corporate income tax. As I have explained, even with a consensus earlier struck on a minimum corporate income tax, countries were already carving out manoeuvring space for themselves to introduce all sorts of different kinds of incentives in order to attract investments. This was the reality that we were faced with. So, even if the domestic top-up tax yields more revenue, we are very likely to have to also spend more to maintain our competitiveness. Thirdly, the situation today has gotten a lot fuzzier because the US has pulled out of the OECD consensus and we have no clue at all how this will emerge in the coming years. And that is why it is so difficult to say, let us give an updated projection. We do not even know what the global tax arrangement will be like in the next one, two years, given the unpredictabilities we face now. Even the Europeans are worried. The consensus has frayed.”
“Sir, I thank the Leader of the Opposition for the opportunity to clarify these points. On Climate Voucher, I should just reiterate, I understand his explanation. I was just making the point that this is not a cost of living support measure, the Climate Voucher. It is meant to encourage everyone to go for energy efficiency. Members have asked for this, residents themselves have asked for this and we think that, in the broader scheme of things, it is a move we can make. I mean, the WP is free to object to it if they feel like it is not worth doing. And if they feel that they do not want to support this, please say so. But we think it is a worthwhile move to make to encourage energy efficiency. On "turbocharging" of inflation and the explanation that Mr Singh provided, I think he would have also, if he had read the reply he cited, read other MAS statements, which stated very clearly the impact of GST on price levels is once-off and it is transitory. The impact on inflation is transitory. And the explanation he gave that the impact of GST on inflation, the once-off effect or the transitory effect, is high as a proportion of the base inflation, actually does not make sense. Because if I take that view, then I really should be raising GST at the time of very high inflation, then the proportionate impact would be quite small, because the 1% on a very high inflation base means that there is very little impact. But if that is the case and that is what the WP feels, then really there should not be any concern about the timing of the GST increase. The third set of questions around corporate tax, they are related. Let me explain what the situation is. Go back to the beginning of the decade when we started looking at tax revenues.”
“Mr Speaker, to conclude, the world is going through unprecedented changes. We are contending with tectonic shifts on multiple fronts: geopolitics and trade, technology and energy, demographics and culture. Thriving amidst adversity is never easy but that is what the Singapore story is all about from the very beginning, and we have strong foundations today that give us confidence to move forward. We have a strong fiscal footing built up over years of careful stewardship by our forefathers. We have a clear plan for the road ahead, anchored on our Forward SG agenda. We are grounded in our shared values of solidarity and unity. This year's Budget paves the way for us to chart Singapore's next lap, to navigate uncertainties with gumption and strength, to address immediate challenges decisively, and to secure our long-term future with confidence. It is a Budget put together by Singaporeans, with Singaporeans, for all Singaporeans. So, let us write the next chapter of our Singapore story and move onward together for a better tomorrow. [Applause.]”
“There is no fiscal system in the world that can deliver perfect precision and equity. But I think we have found an approach in Singapore that works for us. It is not perfect, but we continue to make it better. Here, everyone contributes to taxes. The lower and middle-income will receive more support, while the higher-income and wealthier segments of the population will contribute more. It is a fair and progressive tax and redistribution system, anchored on our values of a fair and just society. And the strength of our fiscal system is internationally recognised. A recent Organisation for Economic Co-operation and Development (OECD) report commended Singapore on our robust fiscal system. This is hard-earned credibility that we have built up over many, many decades. It is not something we should take for granted, because that same credibility can be quickly destroyed in the wrong hands. And so, at the end of the day, on something as fundamental as this, Singaporeans will decide. Will they prefer a government that underestimates our needs, spends more from our hard-earned reserves, and leaves us weaker? Or will Singaporeans prefer a government that steadfastly upholds fiscal responsibility and discipline, and ensures we have enough resources for current and future generations to handle unexpected challenges? Sir, the PAP's approach is clear. We take our duty as stewards of the country seriously. We remain true to our mission and manage our finances carefully for the benefit of all Singaporeans, now and in the future. We will continue to do our best to convince Singaporeans that ours is the right approach. It has served us well these last 60 years and it will continue to keep Singapore on the right track in the years ahead.”
“And as Mr Pritam Singh himself noted, we have put out occasional papers wherever relevant, for example, MOF's occasional paper on our COVID-19 measures, our occasional paper on medium-term projections, which I said we will be updating, as well as MTI's report card on the Industry Transformation Maps (ITMs). So, we will continue to do so wherever useful. On the whole, we have achieved outcomes that reflect our values as a society, one that is fair and equitable, prudent yet progressive, where those who have more contribute more to uplift those with less. In this Budget, we did extend some measures to private property residents, arising from feedback from the residents themselves as well as from many Members. Mr Pritam Singh says it is "ironic" that they should receive climate vouchers. But why is that so? This is not the cost-of-living support. It is an effort to encourage everyone to do their part to be more energy-efficient. But more importantly, let us look at the overall picture. [A slide was shown to hon Members. Please refer to Annex 3.] We continue to have a highly progressive tax and transfer system. Members are familiar with the benefits and tax ratios which we highlight every Budget, and it is worth going through them again. The bottom quintile of households receives $4 in benefits for every dollar of tax paid. Middle-income households also get more benefits than tax paid, as we go through the income thresholds and levels. In fact, it is only the top quintile of income earners who receive less in benefits, or 30 cents, for every dollar of tax paid. So, this is what our system has achieved, and these outcomes are a culmination of years of deliberate moves to enhance the progressivity of our overall taxes and transfers system.”
“We receive a boost to our revenues from our investment returns. Just think about it. Countries that have this luxury of investment returns are the ones that are endowed with oil and gas, or some other natural resource. They have been blessed by the heavens with these endowments. We have nothing, and yet, we are in this position. It is truly unique, and it is a Singapore miracle. [Applause.] Our fiscal strength is a vital source of competitive advantage in these turbulent times. It is going to get worse. The ride ahead will be bumpier. There are dark clouds over the horizon. No one can predict what the next few years will bring. But the risks have risen sharply. We have already seen wars in Europe and the Middle East. We may yet see conflict in Asia. We have to be prepared for a whole spectrum of possible global disruptions and threats. And in today's environment, sadly, global responses to these threats may not be as well-coordinated and effective as before. But in Singapore, we know that if such shocks were to arise, we have the ability to respond swiftly to them, like we did during COVID-19. Our reserves and our fiscal strength will enable us to protect Singaporeans when it matters and to turn adversity into opportunity, to turn our vulnerabilities into strength. Sir, our system has also enabled us to achieve good and equitable outcomes. The Government will continue to focus on accountability in spending, to ensure value for money in everything we spend. There are existing mechanisms in place to scrutinise our spending plans. I will not go through all of them, but we have well-established mechanisms to do so. The Government continues to put out regular reporting of outcomes in the Singapore Public Sector Outcomes Review as well as KPIs in the Budget Book.”
“But if we want Changi Airport to remain competitive as a global air hub, CAG cannot rely on borrowing alone to cover the full costs of the project and that is why the Government is providing significant support and funding through grants. Even as our spending goes up, we will continue to keep within our means and maintain a balanced Budget over the medium term. That is why I do not see us being able to put back the amount we had drawn from Past Reserves during COVID-19, something which Ms Tin Pei Ling asked about. But we will continue to be responsible and prudent with our finances. And if we maintain this approach, our reserves should be able to keep pace with our economy and we can continue to benefit from a steady stream of Net Investment Returns Contribution (NIRC) in our revenue stream. Compare this with the fiscal situation in so many other advanced economies around the world, especially in the West. They are running record levels of fiscal deficits, and their national debts are growing faster than their economy. So, the fiscal space they have to sustain their higher levels of welfare, while continuing to invest in defence and the economy, is shrinking. And at some point, the reckoning will come. You do not even have to go far afield to look at western countries. Look nearer to home at what is happening in Hong Kong, which several Members also talked about. It used to have a healthy fiscal position. But look how quickly the situation can turn and how they are grappling with deficits now and have to take such drastic steps to consolidate their position. So, really, we should appreciate all that we have here in Singapore. In contrast to so many other countries which are using their revenues to service interest payments, we have the opposite.”
“We always ensure that we have enough, rather than risk falling behind and falling short. And should we have surpluses, that is good news. The money is not squandered, because it helps to fund future needs and allows us to provide more support for Singaporeans. And the fruits of Singapore's progress will be shared with everyone – as we are doing in Budget, to recognise the collective efforts of all Singaporeans. Sir, that is the responsible way to steward and manage our nation's finances. We have 60 years of history to show that Singapore has abided by the right values and principles and Singaporeans can continue to count on this Government to continue doing the same. [Applause.] We are in a fortunate position to have surpluses in FY2024 and FY2025. But on the expenditure side, I fully expect our spending to increase in the coming years. Mr Leong Mun Wai commented that the monies are going into more and more endowment and trust funds. But, in fact, the majority of these funds are drawdown funds. In other words, the monies within these funds are going to be withdrawn and spent for upcoming needs. Take, for example, Changi Airport. The monies that we set aside will be spent very soon, as construction on Terminal 5 (T5) begins this year. Changi Airport is owned by the Changi Airport Group (CAG). It is not owned directly by the Government. So, the T5 project is not eligible for SINGA borrowing. Instead, CAG will borrow for the project and the Government will be providing a guarantee to help lower borrowing costs, as I explained in my Budget Statement.”
“So, when you have higher growth, it means higher incomes, which drives consumption and that shows up in higher collections – for GST, for example, and the Certificates of Entitlement (COEs). Ms Sylvia Lim suggested that the COE collections were driven by Government policy which kept prices high. But, in fact, it was the opposite effect. The higher collections were a result of Government action by injecting additional COE quota. This helped to bring prices down by 10% to 30% from the peaks in October 2023. But it also meant more motor vehicle sales; and then, with more sales and more quantity purchased, that is why you have more revenues. So, it is not a price effect, it is a quantity effect. In most other countries, poor budget marksmanship is when a government severely overestimates the revenue it will collect and underestimates its expenditure. That is what poor marksmanship is about. Then, the government makes unfunded promises that it cannot see through because there is no money or it borrows funds from somewhere else and kicks the can down the road, and leaves behind a growing burden for the next generation. But this is not the case in Singapore, where we practise responsible and prudent budgeting. Ultimately, it is not just the matter of good marksmanship or poor marksmanship. It is a question of the right values and the wrong values, the correct fiscal principles and the wrong principles. And the WP and PSP may think we are being overly cautious in our projections. But this Government will never take risks with Singaporeans' lives and future. [Applause.] We keep our public finances healthy year after year. We spend within our means. And if there are new or additional areas of need, we raise revenues to meet these new demands.”
“We have to make assumptions and we have to decide how we deal with uncertainties. In a crisis, when there is greater volatility in the economy, it is inherently more difficult to predict the turning points. But if you set aside unexpected crises like COVID-19, our operating revenue projections have generally not been far off the mark. The average deviation over the 10-year period from FY2010 to FY2019 was within a reasonable range of 5%. In the latest two financial years, FY2023 and FY2024, the deviation has been larger, but still around 7%, which is comparable still to other jurisdictions like the UK and the Netherlands. Let us dive deeper into the FY2024 projections because there were some questions raised about that. Mr Louis Chua had filed a written Parliamentary Question in September asking about the overall fiscal position. Our reply referred to the figure reported in the Budget Book, which was also the figure provided in the Budget Statement. In fact, MOF only starts to put together the revised fiscal estimates around the December and January period, when we start to get more data to update our estimates. And as I have explained in the Budget Statement, one key reason for the revenue upside was the unexpected increase in corporate income tax collections. Another reason, more generally, is that our economy performed better than expected, the Singapore economy. Remember, in early 2024, MTI started the year projecting that the economy would grow at 1% to 3%. We ended 2024 with gross domestic product (GDP) growth of 4.4%, well exceeding our expectations. But it is not just us. It is also the forecasts of many, in fact, I would say, virtually all private sector professional economists.”
“And this ensures that the GST and the GST Voucher Scheme, combined together, will support the lower-income groups and will protect them, not just over the next five or 10 years, but on a permanent and ongoing basis. So, with that in place, together with the other revenue moves we made, we are in a better position now. And now, the additional GST revenues have started to come in. And the revenues are mostly from those who are better-off, foreigners as well as tourists. And it will give us the resources we need to improve our healthcare infrastructure and take better care of our seniors. What would have happened if we chose to avoid the GST increase because it is unpopular? Or if we did not enjoy the unexpected upsides in corporate income tax collections, which emerged only in the last two years? We would have ended FY2024 in a deficit. The projected balance in FY2025 would also have been a deficit. And that would have meant less funding for essential services, less support for our seniors and fewer resources to invest in our future. Basically, Singapore and Singaporeans would have ended up in a much weaker position. Several Members, I know, criticised MOF's fiscal marksmanship. Look, when I started work in MOF decades ago, one of my main tasks was to provide fiscal projections, as an economist. That was what I did. I was one of those who would run the models and churn out the figures. So, I know exactly what this work entails and how difficult it is. I will not defend the figures if they are off the mark. But I will speak up for our MOF officers who do this work with dedication and professionalism against any unfair criticisms. [Applause.] Ultimately, a Budget is a projection. It is based on the best available information at that point in time. We have to plan ahead.”
“It was coming, year after year. We could see it happening. Healthcare spending was rising, especially with our rapidly ageing population. We looked at different ways to raise revenues, including through property and income taxes. But these moves were still not enough to cover the expected increase in expenditure, which was sure to happen. So, what should we do then to plug the funding gap? That is why we had to consider the GST increase. It was a difficult decision. It was a difficult choice. It is never easy to raise taxes and certainly not a tax like the GST. But governance is about making responsible choices, not just popular ones. We must ask ourselves: do we want short-term populism or long-term stability? Do we want to kick the can down the road or take the hard but necessary decisions? So, once there were signs that the economy had stabilised, we decided to proceed with the GST increase. But we also rolled out a comprehensive Assurance Package, which effectively delayed the GST increase for the vast majority of Singaporean households. Essentially, once we decided to move, the GST rates were locked in. But with the Assurance Package, we could be more responsive to changing circumstances and we could push back effectively the impact of the GST increase. And that is exactly what we did. We had multiple rounds of enhancements to the Assurance Package to tackle cost of living concerns and to ensure that the majority of households will not feel the impact of the additional GST for at least five years. At the same time, we also have a permanent GST Voucher scheme, which we also enhanced.”
“The spending for such projects is capitalised, which allows us to spread the expenses across the useful life of the asset. This, as we have explained, is more equitable as the asset will benefit both current and future generations. This accounting treatment has been in place since FY2021. Dr Lim Wee Kiak asked about the assets linked to the $3 billion money laundering case, which have been surrendered to the state. These assets are progressively being liquidated and, when they are liquidated, monies will be added to the Consolidated Fund. These funds are not earmarked for specific purposes but will be part of our overall revenues to fund the Government's Budget. Several Members, including Mr Singh, the Leader of the Opposition, Ms Hazel Poa and Mr Leong Mun Wai, questioned the need to increase the GST, given our strong fiscal position. I should remind Members that we are in this strong, fiscal position precisely because the Government took the necessary steps early in this term to raise revenues. But if we were to rewind the clock and consider our situation, imagine what our situation was at the beginning of this decade? We were in the thick of battle, fighting COVID-19. I know it feels like a bad dream and a distant memory to all of us, but those were truly tough times. In 2020 alone, we had five Budgets. In 2021, we had three Budgets. We sought the President's approval five times to draw from Past Reserves. And this was in 2020 and 2021. We had no way of knowing when the pandemic would end, how the virus would mutate, how many more new waves of infection we would face, how many more restrictions we have to impose and how much deeper a fiscal hole we would end up with. But we already knew for sure that spending needs would rise over the horizon.”
“Ultimately, a strong social support system should not be reliant on the Government alone – even though the Government will do more, but it cannot be reliant on the Government alone. We will do more but our actions must also be complemented by individual and community responsibility. And we very are fortunate to have charities and social service agencies doing excellent work on the ground. We appreciate and thank all of them. [Applause.] In this Budget, we are supporting them further with more matching grants for their fundraising efforts, something which Mr Melvin Yong and Mr Keith Chua welcomed. And we will continue to work with all of them as partners to uplift our fellow Singaporeans. I should also add that many of the issues we are dealing with requires changes, not just in policies, but also in our attitudes and mindsets. The Government will spend more on healthcare, but Singaporeans also have to do their part to stay active and maintain a healthy lifestyle. The Government has and will continue to invest in SkillsFuture, but Singaporeans must want to improve their skills, and businesses must give their workers the time and space to go for training. And that is why Forward SG is about strengthening our social compact. It is about our shared responsibility – how we support one another, care for those in need and lift each other up. That is how we build a more inclusive, and a stronger and more united Singapore. Finally, on the third issue, are we overly conservative in our fiscal projections and plans, especially in light of our surplus position? Mr Liang Eng Hwa asked about the treatment of the Significant Infrastructure Government Loan Act (SINGA) and how it contributed to the surplus. Under SINGA, we borrow for major and long-term infrastructure projects.”
“Ms Usha Chandradas earlier championed for the arts. Mr Ong Hua Han reminded us to ensure our arts and sports scene remains inclusive. Dr Wan Rizal and Miss Rachel Ong advocated for mental health issues. These are some of the key points that Members have raised. We keep an open mind and we study all your suggestions carefully. Beyond ideas shared in this House, we continue to engage widely and hear views from all Singaporeans. We do so through various participatory platforms – something which Ms He Ting Ru talked about, like citizen panels, youth panels and Alliances for Action (AfAs). These platforms are resource intensive. They take a lot of time, but we find them useful and we will plan to do more. We may not be able to do implement every idea, there will be differences of views. And if we cannot implement, for whatever reason, we will explain why. Our commitment, the Government's commitment, is that we will do whatever is necessary to ensure that every Singaporean feels supported at every life stage. And the numbers, what we spend on, reflects this commitment. [A slide was shown to hon Members. Please refer to Annex 2.] In fact, we spend more on social development than on the economy and security. Actually, social spending is already greater than what we spend on both the economy and security combined. So, we are not just saying we will do. We have done so in concrete terms and we expect social spending to continue to grow in the coming years. It is partly driven by our ageing population and rising healthcare costs. It is also because of our efforts under Forward SG to strengthen our social compact. We have fleshed out many programmes in this Budget and the previous one. But as I said, there will be more to come, as this is a multi-year effort.”
“We recognise the crucial role that caregivers play and the sacrifices they make, such as leaving employment to care for family arrangements or forgoing their careers in order to spend more time to take care of their family members. We want to provide support for those who have to take up this role as it is not easy for them. It is difficult to put a monetary value on caregiving. Furthermore, there is no one-size-fits-all approach to support caregivers. So, our approach has been to provide support for the family as a whole. In this Budget, we have significantly enhanced the Home Caregiving Grant and increased subsidies for care services in nursing homes and in the community. But this is not the end of our moves. In fact, we will study more to see how we can further strengthen our support for caregivers. Members also had suggestions covering different areas. Mr Dennis Tan, Ms Jessica Tan and Mr Xie Yao Quan had suggestions on means testing. This is something we grapple with all the time because there is no perfect means testing criteria. Even on incomes, we can decide on per capita household income, family income, but we do not have the data, lifelong earnings income, a whole range of criteria to use. And we know that, increasingly, it is not just about income as a means test but also wealth. Several Members of Parliament spoke about wealth inequality. Then, you have to look at wealth measures and how do you look at that? What measures do you use? That is why we have Annual Value (AV) as a proxy. So, these are issues we will continue to finetune in terms of the means testing criteria. Ms Jean See, Ms Yeo Wan Ling and Mr Gan Thiam Poh highlighted other groups that may need more support, like freelance and agency workers as well as working mothers.”
“This same approach applies to other areas too, which many Members spoke about. For example, many MPs, Mr Vikram Nair, Assoc Prof Razwana Begum, Ms Hany Soh, Mr Alex Yam, Ms Nadia Samdin, Mr Louis Ng, Ms Carrie Tan, amongst others, spoke about more support for families. And support not just in terms of financial support, but leave arrangements was a popular refrain in the speeches. We will have to look at all of these suggestions. Others like Ms Denise Phua, Mr Don Wee, Mr Ang Wei Neng and Mr Sharael Taha have highlighted the need for more inclusive hiring practices and employment support for persons with disabilities. I agree. We must do more for people with disabilities. In my Budget Statement, I said we are embarking on a comprehensive study to look at post-18 pathways for people with disabilities. We will want to do more for them. Many Members, such as Senior Parliamentary Secretary Eric Chua, Mr Henry Kwek, Mr Xie Yao Quan and Mr Dennis Tan, also spoke about the need to help our seniors age well and ensure they are not left behind in their silver years. In fact, we have made significant moves over the past one to two years to support these groups, including in this Budget. But our attitude is we are never satisfied with the status quo and we will continue to review and study how we can make things better. Likewise on the subject of caregivers, which many Members spoke about too, including Mr Yip Hon Weng, Mr Ang Wei Neng, Mr Sharael Taha, Ms Ng Ling Ling, Ms Joan Pereira and Dr Tan Wu Meng. Caregiving arrangements vary from family to family. Some have sole caregivers while others will share the responsibility over several family members.”
“We also introduced the substantial Majulah Package for young seniors, which included the one-time Retirement Savings Bonus, the MediSave Bonus as well as an ongoing Earn and Save Bonus. Several Members of Parliament, in particular, Mr Louis Chua and Mr Saktiandi Supaat, spoke at length about retirement adequacy. I have listened to them carefully and we will consider all your views and suggestions. On the recommendations of the CPF Advisory Panel, many have, in fact, already been taken up. There are now various low-cost funds included under the CPF Investment Scheme, which members can choose to invest in. The question is whether there is scope for a low-cost life cycle fund done in a more comprehensive and structured way, beyond just leaving CPF members to choose for themselves. Because these options exist. They can choose but whether there is scope to do it in a more structured way. If we were to do that, that fund must be able to earn better returns than the prevailing Special Account rate, not the Ordinary Account rate. That is 4% on a risk-free basis and up to 6% based on the extra interest. Actually, that is not easy to beat on a consistent basis. Sure, you can opt to take more risks for higher returns. Mr Louis Chua mentioned an 80:20 portfolio promising above 7% returns. But that is, I think he qualified, potential returns. If you are lucky, you may get 7% or more. What happens if you are not so lucky? What happens if you retire at a time of market downturn? How do we provide assurance to Singaporeans? So, these are issues we will have to consider carefully. But we will certainly continue to review, finetune and improve the CPF system to better meet the needs of our seniors and to prepare for a future with increased longevity and life expectancy.”
“We have progressively enhanced these pillars. We have got Workfare Income Supplement for lower-wage workers, Silver Support for the more vulnerable seniors and SkillsFuture to support all our workers. Take retirement as one example. Our CPF system will be 70 years old this year. In a time where many pension systems are struggling with sustainability, we continue to provide assurance for Singaporeans' retirement adequacy in a sustainable manner. At its core, the CPF enables Singaporeans to save for their own retirement, with support from their employers. But we do not just leave this to individuals alone. Families are encouraged to help their loved ones save more and we provide avenues for them to do so, with matching grants from the Government. The Government provides risk-free interest rates, with extra interest for lower balances to boost savings. We support lower-wage workers to earn more and save more through Workfare and progressive wages. And for seniors who had lower incomes during their working years and so less in retirement, we have Silver Support to cover them. These improvements have been made to CPF over the years, and more recently, when we looked at the data, we saw the need to do more for two groups. First, the Institute of Technical Education (ITE) graduates whose wage trajectories were not rising fast enough compared to their peers in polytechnics and universities; and second, young seniors in their fifties and early sixties who could use more support for their retirement. That is why we introduced the ITE Progression Award last year, which will support ITE graduates to pursue a diploma and provide a top-up to their CPF accounts when they complete their diploma studies.”
“For now, we have focused on ensuring that the new flats are available for first-timers, especially young married couples and parents with young children. We are already seeing concrete improvements. The application rate for first-timer families across all flat types has stabilised. In fact, it has come down from 3.7 times in 2019 to 2.1 times in 2024. This is the application rate. So, application rates are now below pre-COVID-19 levels. With a sustained and robust supply of new flats and as the overall market stabilises, we will have scope to consider how to adjust our policies to meet the needs of other groups, including second-timers and singles. There have also been calls for us, for the Government, to make bolder moves on social policies. You can look around the world. There are many examples of social support arrangements that started with the best of intentions, but only ended up with more problems. For example, some promise sizeable pension payments funded by younger generations, but now have problems paying for them. Others offer free universal healthcare, but now face rising costs and an overburdened healthcare system. To be clear. This is not about Government spending. We are prepared to spend more, where necessary. But it is equally if not more important to get the policies right and to ensure the overall system is fiscally sound and sustainable. On that basis, we have been taking steps to progressively strengthen the key pillars of our social system and our social compact. We started in Singapore with the basics: universal access to primary school for education, Central Provident Fund (CPF) for retirement, Government subsidies and the 3Ms – MediSave, MediShield Life and MediFund – for healthcare and HDB for housing.”
“So, resale prices have gone up a lot. BTO, yes, but not as much and in line with median incomes. The difference is a subsidy that is borne by the Government. That, together with the higher cost of construction, is one of the key reasons why HDB's deficit has increased sharply. If you look at its annual statements in FY2018, the deficit was $2 billion. In FY2023, it was $6.8 billion. The Government's funding to HDB to cover its deficit has correspondingly increased over the years to cover the deficit. Some of you may ask and this is the right question to ask: is this sustainable? It will not be sustainable if overall property prices keep rising faster than incomes and the financing gap keeps growing year after year. But this will not happen, because we keep a close watch over the property market and we ensure it does not happen. That is why we have introduced cooling measures where necessary, by increasing the Additional Buyer's Stamp Duty (ABSD) for multiple property and foreigner purchases and we have significantly increased BTO supply as well as Government Land Sales to make up for the disruption that occurred during COVID-19. These measures have helped and will eventually stabilise the market. More specifically, when you look at the HDB market, in the short term, resale prices can be up, they can be down. In localised popular areas, they will generally be higher than the less-popular areas. That is why we introduced a new classification system with the Plus and Prime flats. But overall, in the longer term, we are confident that HDB prices will remain affordable. Why? Because only Singaporeans can buy HDB flats. We can and we will build enough housing for every Singaporean household.”
“And if anyone faces setbacks, we have a system in place to help them recover and bounce back stronger. These are desired outcomes which I am sure we can all agree to. The question is how do we achieve them? Members have offered many suggestions. Ms Hazel Poa said we need to put more emphasis on social rather than economic considerations and that we are overly reliant on the price mechanism, citing land as an example. But pricing all resources properly is not about giving more weight to economic over social considerations. It is simply about getting our policies right and doing things the right way. If we do not price properly, then we are giving a hidden subsidy. A subsidy means someone has to pay. If it is not paid by consumers, it is paid by taxpayers. If it is not paid today, it will have to be paid tomorrow. Because at the end of the day, there is no free lunch. So, our approach must be to get the price right, then, we decide how much to subsidise. Take public housing as an example. The Housing and Development Board (HDB) has to pay the market price for the land when it develops a new flat. But when it prices the new flat for sale, it does not recover fully the cost of the flat. Instead, it prices it on the basis of affordability, as we have said time and again. I will give you a concrete example: a 4-room Build-To-Order (BTO) flat in Sengkang. This was in the October 2024 BTO exercise. After accounting for grants, a resale flat nearby in that area, is around $545,000. Five years ago, it was about $360,000. So, resale prices have gone up nearly $200,000. What about the sale price by HBD for the new flat? The BTO price has not gone up by that much. Instead, it has increased in line with median income over that period and was sold at about $370,000.”
“All these will ensure Singaporeans do not just receive help but are able to stand on their own feet and seize better opportunities for themselves and thrive in a rapidly changing world. As we have repeatedly emphasised, the more durable and sustainable way to tackle cost of living is to ensure that Singaporeans enjoy higher real incomes, and that must be supported by a strong economy and productivity gains. That remains the key thrust of our approach. And objectively speaking, we have done relatively well. Singaporean households, across different income levels, have experienced sustained real income growth over the past decade. And what we have achieved has outperformed many other advanced economies, as we can see from this chart. [A slide was shown to hon Members. Please refer to Annex 1.] I show these statistics not to blow our own trumpet, but so we know what the facts are and how we compare with other economies. But I fully recognise that even with a strong and growing economy, the day-to-day lived realities for Singaporeans may be different. Life in a compact city like Singapore, with no hinterland, can be competitive and it can be stressful – something which Members on both sides of the House were quick to bring up in their speeches over the last two days. And that is exactly why as part of Forward SG, we have been taking steps to strengthen our social support system. We want to provide greater assurance to Singaporeans across every life stage on their basic needs, like education, retirement, healthcare and housing. We want to provide more support for the disadvantaged and vulnerable groups. We want to ensure that no one is left to fend for themselves in Singapore.”
“It is felt across many other advanced economies, where the headline economic indicators are positive, but sentiments are poor. In the US, they even coined a name for it. They called it "vibecession". But there is a reason for the negative vibes. It is not just about feelings and sentiment. It is because price levels remain high even though inflation has eased and these create real pressures, and it takes time for people to adjust to these new price realities. We understand these concerns. That is why we are continuing to provide temporary help measures through the CDC Vouchers and other measures. And for the one-off SG60 surplus sharing package, we decided that a key plank would also be in the form of vouchers, so that they can also provide some relief on the cost front. As I said in my Budget Statement, we will continue to provide cost of living support for as long as needed and within our means. The Workers' Party (WP) and the Progress Singapore Party (PSP) appear to be unhappy and displeased that the Government is providing vouchers to help Singaporeans with the cost of living. They suggest that the Government is relying solely on vouchers to help with the cost of living. But we have never said that. These are temporary help measures. They are not long-term solutions. In fact, they only make up a small part of our overall Budget. The cost-of-living measures and the SG60 Package account for about 5% of our Budget. A much larger part of our spending is in structural programmes, especially to equip and empower Singaporeans through education, skills training, skills upgrading, job training and the significant moves we are making on SkillsFuture which I highlighted just now.”
“But we are fully committed to this endeavour and I expect to put in additional resources in the coming years to further strengthen SkillsFuture. Sir, we cannot save every job, but we will support every worker in Singapore. We will create even more opportunities and better jobs for all Singaporeans. [Applause.] This leads to the second issue, which is, how is the Government providing enough support to help Singaporeans cope with other stressors and strains in life? Mr Pritam Singh, the Leader of the Opposition and Mr Leong Mun Wai said Goods and Services Tax (GST) increase has made it worse by adding to inflation. In fact, Mr Singh said that the GST increase "turbocharged" inflation. But let us be clear. As a small and open economy, our inflation was driven primarily by global factors – wars, supply chain disruptions, and rising energy costs. As Mr Saktiandi Supaat noted, even before the GST increase, prices were already going up globally and in Singapore. And here in Singapore, the central bank, MAS, had assessed that the effect of the GST increase on inflation would be "transitory". Indeed, this was the case. In 2022, Consumer Price Index (CPI) inflation was 6.1%. Then, the GST went up by one percentage point on 1 January 2023 and another one percentage point on 1 January 2024. What happened to CPI inflation? It moderated to 4.8% in 2023 and came down further to 2.4% in 2024. Where is the turbocharging? Look, I know elections are approaching, but this Chamber is not an election rally. Let us not get carried away by the hyperbole, but have a debate based on facts. The fact is inflation has eased, both globally and in Singapore. But people are still concerned about cost pressures. It is not unique to us.”
“We have introduced the SkillsFuture Level-Up Programme for mid-career workers and the SkillsFuture Jobseeker Support scheme to support those who are involuntarily unemployed and need help to get back to work. In this Budget, we are making further moves, including to nurture more promising Singaporean corporate leaders and we will do more. Several Members also spoke about this, including Miss Cheryl Chan about a talent development strategy. We want to develop Singaporean talent and we want to see more Singaporeans take on leadership positions in the corporate sector. We are also supporting in this Budget senior worker employment. That is something close to the heart of many labour Members of Parliament (MPs) and many of them spoke about this passionately – Senior Minister of State Heng Chee How, Mr Patrick Tay and Mr Mohd Fahmi Bin Aliman. We are convening the Tripartite Workgroup to dive deeper. There will be many issues to work through and I look forward to making progress with all of them with our tripartite partners. So, while we have made progress on SkillsFuture, we know that there is still much more to be done. Because you can compare our adult education and training system with all the investments and established infrastructure we have in the formal schooling years. That is still so much to do to fully build up our SkillsFuture system. This is not just in Singapore. If you look around the world, in countries everywhere, generally, governments have invested more in pre-employment training than in adult education and training. But compared to other countries, in fact, Singapore is already at the forefront in many respects. So, there are no ready models for us to look to. We have to experiment, innovate and find our own way forward.”