Committee of Supply – Head M (Ministry of Finance)

Governance and Supporting Businesses

Mr Liang Eng Hwa (Bukit Panjang): Mr Chairman, I beg to move, "That the total sum to be allocated for Head M of the Estimates be reduced by $100".

Sir, the COVID-19 pandemic has led to the largest public spending intervention in the history of Singapore. Over a series of Budgets in FY2020 and FY2021, the Government had spent close to $100 billion, or almost 20% of GDP, in economic and social support as well as public health management measures.

Many of these support measures were implemented in a compressed timeline due to the urgency of the situation as well as to achieve timely impact.

Now that the pandemic has entered a more stabilised phase, can I ask if MOF would be reviewing whether the public spending has been effective in achieving its intended outcomes? Have the controls and governance procedures been adjusted or waived due to the exigency of the situation?

Are there valuable lessons to learn as to how the Public Service can better manage future crises? How can we be more agile and nimble and how can we achieve better outcomes with the same or less resources?

Sir, the Job Support Scheme (JSS) and the Rental Support Scheme (RSS) have been the lifeline for many companies and workers in the depth of the pandemic crisis. Without these two schemes, we could have lost capabilities in some sectors of our economy and suffered severe economic scarring.

While the economic outlook has improved this year, barring the situation in Eastern Europe, there are still businesses that are directly impacted by the pandemic, such as the tourism and hospitality sectors.

I understand that the construction sector is also facing challenges of labour crunch, high material and energy costs and snowballing delays among their subcontractors. Can I ask if the Government will continue to assist these businesses in 2022? Are there other targeted support and assistance that we can render these companies?

Cash flow is important, especially to small businesses. Whenever there are major event risks, especially, or uncertainties, cash liquidity and credit tend to tighten. If the interest rates are to rise, as some have forecasted, it could worsen the liquidity situation. Can I ask if the Government and its purchasing agencies have a policy of paying its vendors in a timely manner? In fact, in an economically stressed situation, would the Government be even more proactive in making payments to the vendors?

Sir, the Government is a major buyer of goods and services in the domestic market, some of which are of high operational importance. I would like to take this opportunity to ask if the Government’s suppliers have also been impacted by the global supply chain disruption, such as delays and cost increase challenges? And how can the Government help these suppliers during this difficult period?

Sir, Budget 2022 stepped up focuses to build a fairer tax structure, uplift our lower-wage workers and transit to a low-carbon society. These are major shifts for businesses and the public to manage, adjust and cope with. It is a whole-of-society effort and also a whole-of-economy undertaking. How and what can MOF agencies, as well as the whole-of-Government do more to help and support businesses and the public in this whole transition?

For example, in the area of procurement, will the Public Service now have new features in the tender specifications to require vendors or suppliers to achieve the Progressive Wage Mark or to adopt sustainable practices?

Question proposed.

Accountability and Governance

Ms Foo Mee Har (West Coast): Mr Chairman, to cope with the health and economic consequences of the COVID-19 pandemic, governments around the world had mobilised massive fiscal policy responses totalling US$14 trillion at end-2020. Singapore is no exception.

The pandemic’s impact on our people made disbursement of funds a top priority, so that citizens and businesses could receive urgent help when it was needed. But we cannot ignore the importance of accountability and governance of public expenditures, in order to ensure that resources are effectively allocated and properly accounted for.

Research carried out by the International Budget Partnership involving 120 countries, found that more than two-thirds of governments had limited or minimal levels of accountability in the introduction and implementation of their early fiscal policy responses.

Most recently, the UK government had come under scrutiny for fraud and error in the country’s COVID-19 support programmes, which are expected to cost the British taxpayers over £15 billion. Similarly, in the US, fraud or improper payments are likely to account for more than US$90 billion of the government’s emergency pandemic aid for the unemployed and small businesses. Here, in Singapore, we have had also to deal with 57 reports of fraud involving some $1.7 million of COVID-19 grants.

I would like to ask the Minister what controls and governance procedures were put in place by Government agencies, even as they responded quickly to evolving COVID-19 circumstances.

Given the significant COVID-19-related spending, I would like to call on the Government to subject key COVID-19 expenditures to ex-post analytics and audit checks.

In addition, a special audit by the Auditor-General may be warranted to assess procurement processes, including cost reasonableness, taking into consideration the unique market conditions at that time as well as the regularity of transactions.

Lastly, the Government drew lower amounts of past reserves for both FY2020 and FY2021 than originally planned. What lessons can be drawn on the effectiveness and impact of our response to this crisis that can be applied to our management of future ones?

Clarification on Expenditures

Mr Leong Mun Wai (Non-Constituency Member): Before we raise taxes, we should consider whether there are expenditures we can cut. However, it is not easy to understand the expenditure in the Budget. Hence, I have the following questions.

Can the Minister present the $100 billion COVID-19 spending in the same format as the Budget, with detailed breakdown by spending category and by Ministry and explain where is the $5 billion annual spending on R&D? Where is it reflected in the Budget and where and how is the allocation approved? Explain how the SINGA loans and investments are being treated in the Budget and the Government's statement of assets and liabilities. What does the $2.4 billion recorded as capitalisation of nationally significant infrastructure for FY2022 meet?

Finally, on revenues. Can the Minister confirm that the Government has reported total financial assets of $1.4 trillion as at 31 March 2021 and that MAS has accumulated close to $200 billion of new reserves in the last two years and all these financial assets are now producing more than $40 billion in net investment returns per year?

5.45 pm

GST and Alternative Revenue Sources

Ms Hazel Poa (Non-Constituency Member): Mr Chairman, I echo the call by the Workers' Party to exempt basic essentials from GST. To prevent the rich from also benefiting from such exemptions, we can set the price threshold. NTUC FairPrice house-brand rice sells for $1.40 per kilogram. We can, therefore, exempt rice that sells for, say, under $2 per kilogram from GST. This way, we prevent luxury goods from being included in the exemption.

The Finance Minister said that additional cost would be incurred for having multi-tiered GST. Can the Finance Minister let us know how much cost is involved here? If we believe that, in principle, basic necessities should be exempted to help the lower-income households, then, as Minister Vivian Balakrishnan said two days ago when talking about the Ukraine war, we must be prepared to pay the cost for what we believe in.

Also, what does the Finance Minister expect the GST rate to be in 2030? Can the Finance Minister also share with us how much the effective corporate tax rate would have to be raised by to generate the same revenue as a 2% hike in GST? The Finance Minister said earlier in his round-up speech that my example on land sales is simplistic because land sales will not stay stagnant every year. I wish to clarify that this is only an assumption made for the purpose of simplifying the illustration of the revenue stream. Varying land sales each year would result in a varying revenue stream but would, in no way, invalidate the model. I am sure the Finance Minister is able to extrapolate from that illustration what are the variations that would result from a varying land sale.

Singapore will not be pressured to sell more land in order to generate more revenue in bad times. This is because the revenue for each year is the accumulation of land sales over many years in the past and the latest year's land sale would have a small impact on the revenue. For example, suppose Year 10 is a recessionary year and land sale is only $50 instead of $100, then revenue generated from the land sale in Year 10 is $2.50 instead of $5. However, revenue from previous years' land sales remains unchanged so that the total revenue for the year is $47.5 instead of $50. A 50% drop in land sale proceeds results in only a 5% drop in revenue because it is cushioned by the land sales in earlier years. Conversely, any attempt to sell more land in any particular year would also have limited impact on the revenue for the year since it is spread out over many years. It is, therefore, a rather stable revenue stream.

Lastly, can I seek confirmation from the Finance Minister that under the current arrangement of HDB buying land from SLA, that the same piece of land acquired at low cost by the Government in the past will be sold repeatedly to HDB at the prevailing land price? By "repeatedly", I mean when the lease ends. And does the same apply to JTC with respect to industrial land?

Other Tax Alternatives

Mr Sharael Taha (Pasir Ris-Punggol): (In Malay): [Please refer to Vernacular Speech.] Our social and healthcare needs will increase while the resources required to support it will be increasingly limited. What are the alternative options being considered other than GST that can generate the same revenue to finance the recurrent costs of healthcare and social services?

GST on Water Conservation Tax

Mr Muhamad Faisal Bin Abdul Manap (Aljunied): I am dismayed that the Government will be going ahead with the rise in GST.

My main concern is with the impact on the lower-income households. I note the Government’s explanation that assistance will be provided to this segment of society via various schemes. Nonetheless, I believe any additional cost-cutting measures will be much appreciated by our low-income families.

Sir, if I may cite one example, the application of GST on water tariffs, which already incorporates a Water Conservation Tax (WCT). I recall that when Mr Low Thia Khiang raised this issue, the Government had explained that the GST and WCT served different purposes and that applying a value-added tax on water tariffs was standard practice elsewhere.

Sir, we should consider if standard practices are helpful before adopting them. We are already taxing our citizens on their water usage via WCT. Is there really a need to perform a double taxation on them with the GST as well?

I believe Members can agree that there is still a substantial number of low-income Singaporeans, especially those living in HDB’s public rental flats, who are struggling with their utility bills even though they are being assisted with U-Save rebates. WCT’s amount may seem negligible to many but, to low-income families, every cent and dollar counts.

Sir, if the Government disagrees with the call to abolish GST on WCT, can the Government seriously, at least, consider exempting GST on WCT for Singaporeans who are residing in HDB’s public rental flats?

Assistance for Point-to-Point Sector

Ms Yeo Wan Ling (Pasir Ris-Punggol): Despite sluggish demand brought on by the pandemic, our taxi and ride hail ground have told us that their business costs have risen considerably over the past 24 months. While all eyes are fixed on the recent escalating fuel prices caused by the war in Ukraine, our drivers have been standing stoic in facing fuel price revisions of at least 18 times in the past 14 months. In the words of our National Taxi Association President, Brother Raymond Ong, “It is really frightening”. Other cost items that have gone up significantly, some as much as 20%, include the cost of car washes, parking, ERP, signalling a permanent change in their business cost structures.

While our drivers appreciate the need for GST increases, our ground has also brought up concerns that they are not GST agents and, undoubtedly, the impending rise will impact their business costs and livelihoods. As such, I would like to call for the Ministry to reassess the current expense ratio in calculating our drivers’ taxable incomes and to ask the Ministry for support to be specifically given to our taxi and ride hail drivers in the upcoming GST increase.

Infrastructure Spending

Ms Foo Mee Har: Mr Chairman, Singapore’s infrastructure development and public administration have been pivotal to Singapore’s economic transformation from a Third-World to a First-World country in the last half a century.

Yet, as the Prime Minister said, “We will never be done building Singapore.” Members will remember that we passed a Bill in Parliament last year that allows the Government to undertake up to $90 billion of infrastructure developments through borrowing. This is to fund new rail lines, water and sewerage infrastructure as well as coastal protection measures against rising sea levels.

Experts have highlighted that some of the most significant risks in infrastructure projects lie in scoping, design and cost management as well as project management. A report by the Project Management Institute estimates that poor project management costs an average of 12.7% of total budgets. If applied to the $90 billion of infrastructure projects in the pipeline, we could potentially waste $11.4 billion.

Just last year, the Auditor-General's Office reported lapses in the People’s Association’s development projects. Their checks revealed lapses in adjustments for price fluctuations, a lack of assurance in quantities used for projects, and weaknesses in management of contract variations.

So, I would like to ask the Minister what governance framework is in place to manage the risks associated with the upcoming infrastructure projects, including supply chain disruptions, in the post-COVID-19 era? How does the Government ensure that spending on infrastructure projects consistently offers Singapore value-for-money and is optimised on a lifecycle basis?

Accountability and Governance – Infrastructure

Mr Shawn Huang Wei Zhong (Jurong): Infrastructure and construction technology has made substantial progress over the last decade and continues to do so. Construction methods, aided by better technology and materials, can improve built costs as well as increase their useable lifespan. In certain circumstances, a higher initial capital outlay may result in lowering operating costs, which, in turn, contribute to a lower lifecycle cost.

As such, how does the Government ensure that our expenditure will deliver us the best value over its entire lifecycle?

Market Financing and Faster Payments

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Chairman, Sir, I will speak on three areas.

Firstly, with regard to the procurement strategy for infrastructure, how does the Ministry plan to continue to ensure spending on infrastructure projects is value for money and optimised on a life-cycle basis? For example, one aspect that could be looked at is spending on better materials which will ensure better quality and longer lasting infrastructure; and technologies which will ensure better maintenance productivity, allowing workers to focus on higher value works. These workers can be retrained in new skillsets that lead to higher productivity and wages. The initial capital outlay may be higher, but the lower operating cost can compensate for that.

Secondly, are there specific capital expenditure items that can be converted to operating expenditure items? For example, an ACMV system can be a contract for service to the Government instead of capital purchase of the full system. Such changes in procurement strategy can, potentially, create more opportunities for market-based green project financing.

Thirdly, it is heartening that the Government continues to support companies that are impacted by the pandemic. One question I have is how the Ministry ensures that businesses continue to receive timely and targeted support? For instance, as disruptions in the global supply chain persist, businesses continue to face stresses, such as delays and cash flow challenges in their operations. Hence, to this question, I have a few further clarifications to make.

How has the Government, as a major buyer of goods and services, supported its suppliers and service contractors during this challenging period? Are there any means the Government can ensure it assesses main contractors’ swiftness of payment to its subcontractors and such assessment of its quality as a paymaster be a key consideration in the procurement contract assessment? What is the mechanism in place to make such an assessment?

Ultimately, we want to ensure that companies receive timely payments to aid their cash flow.

Supporting Businesses amidst COVID-19

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Chairman, businesses have suffered reduced earnings, increased business costs and cash flow difficulties as revenue became unpredictable due to COVID-19.

Added to this are the global supply chain disruptions which COVID-19 has brought about. In various countries like China, COVID-19 lockdowns and labour disruptions meant that goods which could be shipped in about two weeks’ time could now take three times longer. COVID-19 outbreaks on container vessels increased freight times as these vessels were either turned away from ports or subjected to quarantine and other measures. We recently had our own episode around the Chinese New Year period where COVID-19 cases amongst SATS staff led to severe delays in cargo processing at Changi Airport.

As a major buyer of goods and services itself, how has the Government supported its suppliers during this challenging period? Beyond attempting to settle the supplier’s invoice earlier than what payment terms provide for, how has the Government exercised flexibility and demonstrated solidarity with its suppliers, especially local SMEs?

The Chairman: Ms Mariam Jaafar; not here. Ms Jessica Tan.

Business Ecosystem for the Future

Ms Jessica Tan Soon Neo (East Coast): Mr Chairman, as Singapore emerges from the COVID-19 pandemic, Singapore must become stronger economically and socially. Singapore is well-positioned to become a key carbon service hub. This can generate new opportunities to create new businesses and jobs in Singapore. To do this, Singapore will need a coordinated approach and effort to support the transition of businesses to become more sustainable and to take advantage of the opportunities presented. Policy, infrastructure, connections, know-how, innovations and support are needed for businesses to participate and make the transition to a more sustainable future. What initiatives are MOF and its agencies driving to enhance Singapore's business ecosystem to help our businesses, especially SMEs, innovate, access and build the capabilities to participate in these new green opportunities and skills?

A business ecosystem to support environmental sustainability and inclusive growth will not only help grow our businesses and create good jobs but will improve the environment. This benefits the health and quality of life for Singaporeans and protects our environment for future generations.

6.00 pm

Positioning Our Future Business Ecosystem

Mr Shawn Huang Wei Zhong: To establish a conducive business ecosystem, it is important to ensure that the regulatory and compliance costs are not prohibitive and are adequate to ensure a reliable and robust system. Above all, these processes must be streamlined and avoid duplicative steps; it must be agile. As such, what are some of the measures or programmes initiated by MOF to ensure that we continuously improve the efficiency of our business processes?

Mr Chairman: Minister Indranee Rajah.

The Second Minister for Finance (Ms Indranee Rajah): Mr Chairman, I thank the Members for their questions and comments for MOF. Members' cuts cover four broad topics: first, accountability and governance in our expenditure; second, goods and services tax and other revenue sources; third, support for businesses to overcome COVID-19 disruptions; and last, how we will position our business ecosystem for the future. I will address these topics in turn.

Mr Liang Eng Hwa and Ms Foo Mee Har asked how we strengthen accountability and governance for our spending. We have established governance and monitoring structures to ensure proper accountability for the use of public resources and strengthen performance for programmes. The independent, regular and thorough audits by the Auditor-General's Office (AGO) are reported publicly and complemented by Ministries' internal audits as well as their programme evaluation efforts, to ensure that spending translates into good outcomes.

Ministries are also putting in place enterprise risk management frameworks, which will be reviewed at regular intervals by MOF. Dedicated function officers have also been set up in MOF to strengthen whole-of-Government processes and capabilities in finance, procurement and grant management.

These offices also coordinate across agencies to achieve greater efficiencies and savings in respective functions. Members of the public have also provided feedback directly to Government agencies on how we can obtain better value from public expenditure. Key Government priorities are monitored regularly and reported in the Annual Budget Book and the biennial Singapore Public Sector Outcomes Review (SPOR) report. The SPOR report was revamped in 2020 to go fully digital and improve accessibility for readers. The content is presented in a more citizen- and business-centric manner, with greater emphasis on outcomes. It highlights the impact on citizens and businesses, such as the fact that one can now start a business within 1.5 days.

Two weeks ago, we published an updated assessment on the impact of key COVID-19 measures, such as the Jobs Support Scheme (JSS) and the SGUnited Jobs and Skills Package. The findings show how the Singapore economy has largely avoided medium-term scarring from COVID-19 and is poised to continue its recovery.

Ms Foo Mee Har asked about the controls and governance for COVID-19-related schemes. Indeed, as we rolled out COVID-19 schemes quickly, we struck a balance between keeping processes simple and putting in place controls to prevent abuse or errors.

For the JSS, a risk assessment is done and, for cases with higher fraud risk, the Inland Revenue Authority of Singapore (IRAS) requires firms to authenticate their CPF contributions before releasing payouts. IRAS has denied payments to employers who attempt to abuse the scheme and referred cases to the Police for investigation. As of last week, 14 cases have been referred to the Police.

Despite these efforts, given the unprecedented complexity and the need for urgent disbursement across the board through JSS, there were some mistakes, which are deeply regretted. When such an instance was discovered, we took immediate efforts to rectify them. Out of the $370 million JSS overpayment discovered earlier, we have recovered over 99% and are working on recovering the rest.

Ms Foo Mee Har, Mr Shawn Huang and Mr Edward Chia asked how we ensure value-for-money in major infrastructure projects. Before the Government embarks on a project, MOF reviews the project objectives and business case. For example, at the initial stage, we examine the cost-benefit analysis and consider synergies across projects or other opportunities to optimise resources. As the plans develop, MOF works with the development agencies to determine the development approach, design and risk, and use evaluation tools, such as life cycle costing, to optimise costs across the infrastructure lifespan.

Mr Edward Chia suggested that we consider buying certain infrastructure or systems as a service. Indeed, we are open to such options, which is why life-cycle costing is an important tool to assess different options holistically. For the evaluation of larger and more complex projects, we have benefited from the advice of the Development Projects Advisory Panel, which comprises technical experts from the private sector and academia.

Of the projects submitted for approval last year, MOF managed to achieve cost savings of about $600 million or 4% of a capital cost of $14.4 billion. But as I have said, we do not just focus on reducing upfront construction costs. By working with agencies on design optimisation and system choices, we seek to reduce total life-cycle costs, which include downstream operating costs. As an example, for the Cross Island Line (CRL), LTA is using a different traction power supply system that enables more efficient power transmission. This reduces total energy usage and the number of substations required. This is expected to result in life-cycle cost savings of about $280 million.

MOF also works with development agencies to maintain strong accountability and controls for the management of major infrastructure projects. For instance, to better manage infrastructure project risks, we are consolidating the management of such projects under agencies with stronger expertise. JTC Corporation, with its deep experience in construction, has helped 28 agencies manage 50 construction projects, worth $9 billion.

Mr Sharael Taha's cut asked how much revenue the two-percentage point increase in GST would raise and how much goes towards the offset packages. At a GST rate of 9%, we expect to collect an additional 0.7% of GDP per year, currently estimated to be about $3.5 billion. This is less than the projected increase in healthcare spending, which could amount to over one-percentage point of GDP by 2030.

At the same time, the enhanced permanent GST Voucher scheme will cost about $500 million more per year in FY 2023, compared to today. There is a clear social purpose in this way of doing things. The additional $3.5 billion is collected from all, including the rich, foreigners and tourists. The GST Voucher scheme benefits the lower- to middle-income Singaporean households, including most retiree households. This is one of the ways we make our system of taxes and transfers a fair and progressive one.

Members would remember the chart shown by the Minister for Finance, when we take into account the GSTV and the GST absorbed by the Government. We, indeed, have tiered GST rates. But we achieve this not by exempting certain goods or services for all customers, but by our uniquely Singaporean way of implementing GST with GSTV.

Ms Yeo Wan Ling asked how we can help private hire car drivers pass on the cost of GST to their commuters. The taxi operators and private hire car platform owners decide on fares. They may choose to raise fares from time to time, to cover the increase in operating costs and all taxi operators have recently done so. The 60% Fixed Expense Deduction Ratio (FEDR) is set at a level to cover most of the common deductible expenses incurred by drivers in earning their income.

In setting the FEDR, we need to strike a balance between simplifying tax compliance and ensuring that it is realistic. The current 60% ratio remains sufficient for the vast majority of drivers. For those whose actual deductible expenses exceed the 60% ratio, they continue to have the option to file their tax returns based on the actual expenses incurred. We will continue to monitor the situation.

Let me now address questions from Mr Liang Eng Hwa, Mr Edward Chia and Mr Saktiandi Supaat, on how the Government can continue to support companies impacted by the pandemic and provide timely and targeted support.

The pandemic continues to disrupt global supply chains and business activities. Ports and airports around the world today remain affected by pandemic-related restrictions and manpower constraints, resulting in delays and higher transport costs for our businesses. We are aware of the pressures on our businesses and the challenges they face. The Government has, therefore, continued to provide support to alleviate the impact of the pandemic and made adjustments to changing circumstances.

We will continue to monitor the situation going into 2022 and adjust our measures as necessary.

For example, JSS was first designed as a broad-based wage support scheme to help employers retain their local employees when we first began our fight against COVID-19 in 2020. Payouts were tiered to broadly reflect the different levels of impact on different sectors. As we went into 2021, some sectors recovered ahead of others. Some of our safe management measures had a greater impact on certain sectors, such as construction, F&B, retail, gyms and fitness studios. So, we targeted the JSS to help the sectors most impacted by COVID-19 measures.

Similarly, we acted fast to change the disbursement mode of rental relief from requiring landlords to grant rental waivers, to giving direct payouts to tenants under the Rental Support Scheme (RSS). Beyond providing targeted support, we have invested efforts to enhance the JSS and RSS disbursement process, to make timely payments to employers and eligible tenants and owners. We have disbursed more than $28 billion of JSS to about 180,000 employers expeditiously, with the most recent tranche being disbursed within two months from the announcement of the extended support for businesses most adversely affected by COVID-19 restrictions.

This was possible as 90% of these businesses were registered under PayNow Corporate or had existing GIRO arrangements with IRAS. IRAS combined the data it had across various tax types to auto disburse the RSS payouts directly to more than 80% of eligible tenants and owner-occupants. More than 110,000 payouts, worth almost $1 billion, were disbursed automatically within two months from the announcement of the scheme. This was the first time the Government gave direct disbursements to tenants and we received positive feedback that the disbursements were fast and effortless.

We will continue to invest in capabilities for business grant disbursements, so that our assistance can reach businesses promptly.

As Mr Liang Eng Hwa and Mr Edward Chia have observed, our businesses appreciate prompt payment. MOF has worked on providing faster payments to our suppliers. To ease our suppliers' cash flows, we pay our vendors faster by streamlining the procure-to-pay process from procurement, to goods receipt and payment.

As at end January 2020, about 97% of e-invoices below $5,000 were paid within 12 days, ahead of the usual credit term of 30 days. This benefited nearly 9,000 suppliers, mostly SMEs.

To further ease suppliers' cash flows, we are working with MTI to allow auto-approval for factoring of certain Government contracts later this year, so that our suppliers can have more financing options.

We are also aware of the challenges faced by Government construction contractors. The pandemic continues to impact the productivity on-site, supply chain and manpower availability, leading to delays and cost increases. The Government has taken a proactive stance to shoulder part of the cost increases. This aims to soften the impact of productivity loss from requirements, such as safe management measures on-site and shortage of foreign manpower due to border controls.

When the pandemic first broke out in 2020, we made advanced payments, worth $665 million, for over 450 public sector construction contracts, to help contractors tide over work stoppages. We also provided support of more than $230 million by co-sharing costs. These include the costs of prolongation, increased manpower costs and consultancy services. These measures, including support for manpower costs through JSS and foreign worker levy waivers and rebates, have helped our construction suppliers through the crisis.

On Mr Edward Chia's suggestion to assess main contractors payment promptness to subcontractors in our tender evaluation, it is not easy for a service buyer to verify or monitor the private business practices of its contractors. In general, if a contractor does not treat its subcontractor well, we expect few subcontractors would be keen to work with it.

Where such market forces have not worked so well, the Building and Construction Industry Security of Payment Act provides legal recourse for subcontractors affected by late or no payment.

Ms Foo Mee Har asked whether a select group of companies enjoyed outsized windfalls from the COVID-19 support schemes and how these companies can contribute back for the common good. The initial impetus for schemes like JSS was to provide timely cash flow support to businesses to protect our local workers. We then adjusted our approach to exclude those sectors, such as supermarkets, which were doing very well. But to finely target by the fortunes of individual businesses would not be possible.

6.15 pm

When businesses flourish or do exceptionally well, they pay more Corporate Income Tax. Their workers who receive bonuses also pay taxes, including GST. Such additional revenue can then be channelled to fund Government programmes. Some businesses have also taken the initiative to contribute to the community in various ways through their corporate social responsibility activities, which is commendable.

For example, DFI Retail Group ramped up efforts to donate food and healthcare essentials to the needy through a food donation drive through the group’s grocery stores Cold Storage and Giant, while FairPrice pledged in January 2022 to donate $1.2 million to 600 families over three years to help low-income families cope with higher costs of living.

Moving from businesses to families, let me address Ms Mariam Jaafar’s question of how we reach out to vulnerable individuals and families without their own homes when many support measures are tied to the household or housing type. Government assistance is prioritised for families with less means and in greater need of social support. In means-testing for our social schemes, housing type is one of the proxies we use to estimate an individual’s means. We also look at other factors, such as income and number of members in the household. A person living in a higher value property or larger housing type is, in general, more likely to have access to resources or support through the family. Where there are exceptional circumstances, I encourage our Members of Parliament and community leaders to bring these cases to the attention of the relevant agencies so that their circumstances can be holistically assessed. I would like to assure Ms Mariam Jaafar that we will do our best to extend help to the vulnerable and needy who lack other forms of support.

Let me now address the questions from Mr Liang Eng Hwa, Ms Jessica Tan and Mr Shawn Huang on how MOF is strengthening the business ecosystem, to position it for future shifts. I will elaborate on how we are stepping up our efforts in two areas.

First, we will strengthen Singapore as a trusted, open and effective business hub. We will continue to enhance our corporate governance regime to combat money laundering, terrorism financing and other threats to the integrity of the international financial system. This includes aligning ourselves with international standards, such as those under the intergovernmental Financial Action Task Force.

For example, in January this year, Parliament passed the Corporate Registers (Miscellaneous Amendments) Bill to strengthen Singapore’s regime on the transparency and beneficial ownership of companies and Limited Liability Partnerships. ACRA is pivoting towards more risk-targeted supervision for the Registered Filing Agents sector by using data analytics to identify higher-risk agents. It is also studying proposals to further enhance our anti-money laundering regime. We will consult the public on these proposals later in the year.

Apart from our work to combat money laundering, we are also strengthening Singapore’s position as a global Intellectual Property (IP) hub, as well as a fund management hub by ensuring that the regulatory framework keeps pace with business needs.

Second, we will work with businesses to improve the efficiency of processes, such as tax filing, payments and trade.

For tax filing, IRAS collaborates with software developers and other Government agencies to develop solutions to help businesses to meet their tax and other regulatory requirements. Businesses which adopt software listed on IRAS’ new Accounting Software Register Plus can now seamlessly submit their tax returns and transact with their business partners on the InvoiceNow network. Since its launch in October 2021, about 30 software developers have onboarded or expressed interest to onboard the register.

For payments, IRAS introduced PayNow for corporate income tax (CIT) refunds last year, so that businesses can enjoy fast, secure and seamless e-refunds. Taxpayers would be updated by their banks when the refunds have been credited into their bank accounts. Today, all businesses that are due to receive CIT refunds from IRAS can choose between GIRO and PayNow to receive their refunds.

For trade processes, Singapore Customs has digitalised banker’s guarantees for traders through the Networked Trade Platform (NTP). Traders do not need to physically collect and submit paper guarantees, as participating banks can send e-guarantees data to Customs securely through the NTP. Close to 200 traders lodged e-guarantees with Customs last year, saving three hours and $30 for each e-guarantee. Almost 90% of all guarantees issued by the six participating banks last year were e-guarantees.

I am heartened that Mr Liang Eng Hwa and Ms Jessica Tan have asked about our initiatives to enhance our business ecosystem to support environmental sustainability and inclusive growth. The Government has been playing its part as a socially-responsible and environmentally-conscious buyer and encourages businesses to do the same.

The Government will require eligible suppliers to be accredited with the Progressive Wage Mark from March 2023, to support our lower-wage workers. Today, our suppliers for security, cleaning, lift maintenance and landscaping are already required to pay progressive wages. Along with the expansion of the Progressive Wage Model, the requirement for suppliers to attain the Progressive Wage Mark will be extended to the retail, food services and waste management sectors, and suppliers with in-house cleaners, security officers, landscape workers, administrators and drivers. MOM will share more on progressive wages in their COS.

We have been incorporating sustainability requirements in our tenders. For example, all new Government buildings and premises undergoing major renovations are required to meet stringent Green Mark standards under the GreenGov.SG initiative. We have also been buying green products, such as printing paper, that are accredited with the Singapore Green Label. The latest demand aggregation tender for vehicle hiring services includes hybrid vehicles as part of the requirements and incorporates clauses to provide for electric vehicles when they become more prevalent in future. We will continue to expand the list of buys where green requirements are incorporated.

We also consider the sustainability credentials of suppliers during the evaluation for Government tenders. In construction, the Building and Construction Authority (BCA) requires contractors to adopt environmental management practices before they can be registered to undertake building or civil engineering works. In addition, agencies like LTA and JTC have included environmental sustainability criteria in their construction tenders that give extra points to suppliers that have adopted green practices or obtained green awards. The consideration of sustainability credentials will be extended to the procurement of more categories of goods and services and was recently piloted in tenders for public waste collection and accommodation and event venues.

To enable the transition towards sustainability, the Government has been supporting businesses in going green and welcomes businesses to make use of the support available. This includes schemes, such as Enterprise Singapore’s Enterprise Sustainability Programme, the Economic Development Board’s Resource Efficiency Grant for Energy and the National Environment Agency’s Energy Efficiency Fund.

Under the Enterprise Sustainability Programme, the Government shares the risk with banks in lending to businesses to develop innovative green technologies and solutions, such as in clean energy and the circular economy.

BCA has also introduced various Green Mark Incentive Schemes to encourage the adoption of environmentally-friendly building technologies and building design practices.

Let me turn now to Mr Faisal Manap's cut. He asked if we could abolish GST on the Water Conservation Tax (WCT). This is not a new suggestion. The Workers' Party had asked this before and the Government had explained it previously.

The WCT is how we have been able to make our water supply more resilient. With the threat of climate change, water resilience is more important than ever. The WCT reflects the fact that water is precious and encourages every individual and business to play a role in conserving our water resources. The water tariff and WCT together form the final price of water, reflecting the economic cost of producing water from our desalination and NEWater plants. GST is then levied on this final price, inclusive of taxes and duties that are related to the supply of goods or services. This approach is consistent with the practice in other jurisdictions, such as the UK, Australia and New Zealand.

At the future 9% GST, the amount of GST payable on the water conservation tax each month is around 90 cents for 3-room and 4-room HDB households, on average, and less than 60 cents for one-room and two-room households.

If I may understand Mr Faisal Manap's concern, it is really for the lower-income households and the fact that they would have to pay GST on the water conservation tax. The first point I would make is that the amount is low. But, more importantly, with the U-Save rebates and vouchers that have been given, these households will, actually, be able to cover their utilities bills. So, they need not worry and Mr Faisal Manap should reassure his residents that, with the U-Save rebates that are given from the Government, they will be well taken care of by this Government. In fact, when you add the U-Save rebates from the Household Support Package together with the Assurance Package, it will come up to about eight to 10 months' worth of utilities bills, and this is not taking into account the permanent GST Voucher scheme, which also has a U-Save component.

So, please, I would encourage Mr Faisal Manap to visit the MOF website. The infographics are there, setting out the various archetypes. Please print them and please distribute them freely to your residents, especially to the lower-income households, and reassure them that this Government will take care of them as far as that is concerned and they need not be worried about the water conservation tax, or the GST thereon.

Ms Hazel Poa had a couple of questions. She asked about essential goods. Her question was about the additional costs that would be incurred. Her question was premised on, if we believe that basic necessities should be exempt, what should be done about this. I just would like to point out to Ms Hazel Poa that the underlying premise of her question was, if we believe that basic necessities should be exempt. And there is a philosophical difference between what PSP believes and what this Government believes.

The Government does not believe that basic essentials should be exempt. What we do is we apply GST across the board for everybody, but we ensure that the lower-income are buffered against this and the middle-income also receive a certain amount of benefits, so they get some buffer as well.

The Minister for Finance had earlier shown that for every dollar of tax paid, the lower-income get back $4 to the dollar, and the middle-income get back $2 to the dollar. So, I do not think that it would be very helpful to go into the details of the question because it is premised on assuming an approach to basic necessities that we have a fundamental difference on.

The same would apply to her question on land sales. I think she had an elaborate example, but going into the details or discussing the minutiae or the technical details of that is not really going to take us much further. Fundamentally, our approach is this: land is a national asset, think of it as an endowment. In its physical form, it is an asset, it has a value. If you sell it, it gets converted into cash, but we put it back into the reserves. Some of it comes back in the form of the NIRC. Selling it and stretching it out over 10 years, 30 years, 99 years, fundamentally, is still a departure from the principle that we adhere to.

So, all I would say here is that it was comprehensively answered by the Finance Minister earlier and I do not think it is necessary for me to elaborate further on this.

Mr Leong Mun Wai had a question on how we account for large expenditures. In the Budget Book, the Government's expenditure is classified by Ministries and broken down into object classes based on the nature of the spending.

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This is to allow the public to understand the major categories of Government spending, such as Expenditure on Manpower, Other Operating Expenditure, Grants and Transfers.

So, if he looks into the Budget Book for examples of COVID-19 spending, at page 55, under MSF's operating expenditure, there will be a reference to the extension of the COVID-19 Recovery Grant. If he looks at a different Ministry, let us, say, MOF, page 95, he will see that, under the fifth paragraph, there is a reference there to COVID-19.

What I am trying to illustrate is that, for accountability purposes, it is set out according to Heads of Expenditure, that is the various Ministries. Within the various Heads, if you are looking for a particular large expenditure like COVID-19, there will be a reference to COVID-19. That said, we are always open to seeing how things can be presented better or in a way that is more intuitive and we will take that into account.

I think he had some other questions on SINGA, but that was extensively debated earlier in the year. Some questions in relation to MAS, that would be publicly available as well. The thing is this, if Mr Leong Mun Wai would like very specific figures or specific data, the better way to do that would be to file a Parliamentary Question (PQ) and then we would have the appropriate time to look for the specific answer that he needs and to address this concern. I think I have covered most of the questions, Mr Chairman.

The Chairman: Thank you, Minister. Clarifications? Mr Leong Mun Wai.

Mr Leong Mun Wai: Chairman, thank you. I thank the Minister for the clarification on some of my questions, especially the one on COVID-19. Yes, I think we will refer to the Budget Book again. But I think if the Government can help us by singling out all the COVID-19 expenditures, that will help our understanding better. That is one clarification if that can be done.

The second question is, I have specifically asked for confirmation about the financial assets, S$1.4 trillion, which is already a reported number, and also some other figures, S$200 billion new reserves accumulated by MAS. Can the Minister just confirm that? I do not think this needs to be another PQ.

Ms Indranee Rajah: Mr Chairman, if it is something that is already publicly available, then I do not need to confirm it. But if it is something that he wishes confirmation on, then I will have to check it, because if I were to give confirmation on anything, I would like to be sure that it is actually correct. So, if the Member would just let me have that, drop me a note or he could file a Parliamentary Question (PQ), we will see how best to address it.

On the other point about the expenditures, we will look and see how we can present this in a manner that is useful. I say this because I do not want to leave the Member with an impression that MOF will always be collating and organising information at individual Member's request because that is very difficult to do. But we do understand that the public wants to understand how certain figures and expenditures are dealt with and we will see how we can do that in a meaningful way.

The Chairman: Ms Hazel Poa.

Ms Hazel Poa: Apart from the two questions that the Minister feels is not necessary to answer, I have a few other questions mentioned earlier. One of which is: what would be the corporate tax rate increase that would be necessary to raise the same amount of revenue as a 2% hike in GST? And also, what is the expected rate of GST in 2030?

Finally, can I seek confirmation whether or not land will be repeatedly sold to HDB at prevailing land prices and also does the same apply to industrial land with respect to JTC?

Ms Indranee Rajah: Sorry, the last question was whether land will be repeatedly sold to whom?

Ms Hazel Poa: HDB and also JTC.

Ms Indranee Rajah: Do you mean the land for HDB development?

Ms Hazel Poa: Yes. At the end of the lease, when it returns to the Government, will it again, you know, repeat?

Ms Indranee Rajah: Right. Well, that would happen once every 99 years. So, we have not quite reached that stage yet and it might be a little premature to address that question.

The expected rate of GST in 2030. Well, we really do not know at this point of time. Right now, we have just gone through one exercise of raising the GST by two percentage points in 2023 and 2024. Obviously, we will try to make that last as long as we possibly can with the revenues that we have.

And I think the last question was, what would be the tax rate increase? I do not have that figure with me at the moment. Perhaps if the Member just files a PQ on that, I will get back to her.

The Chairman: Yes, Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Chairman. I would like to confirm with the Minister again, since the $1.4 trillion financial assets are reported in the Government Financial Statements, the Minister would know it. And I am asking her to confirm that number. Is it a number that cannot be confirmed? Or I do not know what is the reason why it cannot be spoken in Parliament?

Ms Indranee Rajah: Mr Chairman, I thank Mr Leong Mun Wai's faith in my abilities. But I do not usually carry all the figures of all published Government data in my head. So, if Mr Leong Mun Wai is saying that there is a figure which is out there and it is published, and it is published by a Government agency, then I would have to assume that it is correct.

It is just that if I do not have the figure with me at the moment and if it is MAS – because he must remember that I am with MOF – I would like to check before I give any confirmations. If he has an issue with the figure, he should let us know what the problem is as well.

So, in short, he is asking about a figure. If it is published and it is a published figure from the Government, he can take it that that is the figure.

The Chairman: Mr Liang Eng Hwa, would you like to withdraw your amendment?

Mr Leong Mun Wai: Chairman, I still have a question.

The Chairman: We need to progress.

Mr Leong Mun Wai: No, Chairman, if there is a question, I have to ask the question.

The Chairman: There is a time limit.

Mr Leong Mun Wai: So, if there is a time limit, we cannot ask any more questions, even though those are relevant questions?

The Chairman: There are guillotine time limits.

Mr Leong Mun Wai: Okay, thank you, Chairman.

Mr Liang Eng Hwa: Mr Chairman, allow me to, firstly, congratulate the Finance Minister for his maiden Budget, which is very well-structured and far-reaching; and also to thank the Second Minister for Finance for answering our questions as well as the MOF team for the tremendous work.

Sir, we have seen multiple Budgets in the last two FYs due to the crisis situation. I hope that FY 2022/2023 will be a one-Budget FY, which will mean that we are back to a normalised or stable environment. Nevertheless, I am sure Members in this House would be ready to consider any additional fiscal measures should the situation deteriorate and the need arises to support Singaporean families, households and businesses as well. With that, Chairman, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $974,778,400 for Head M ordered to stand part of the Main Estimates.

The sum of $141,671,700 for Head M ordered to stand part of the Development Estimates.