Cost of Living Crisis

Mr Speaker: Mr Pritam Singh.

2.21 pm

Mr Pritam Singh (Aljunied): Mr Speaker, I beg to move*, "That this House calls on the Government to review its policies so as to lower cost of living pressures on Singaporeans and their families".

*The Motion also stood in the name of Mr Chua Kheng Wee Louis.

Mr Speaker, on the occasion of the New Year in 2022, the Workers' Party (WP) identified cost of living as a major pressure point for low- to middle-income families, which strikes most acutely the families with both young children and aged parents to care for.

In the same message, the WP committed to tracking how the Government upgrades its legacy schemes for, and I quote: "the circumstances of today and tomorrow, not yesterday". The reality of the pressures faced by low- and middle-income Singaporeans was repeated in the WP May Day message that same year. On May Day this year, the WP warned that Singaporeans were living through one of the most rapid cost-of-living rises in history, eroding the purchasing power of their wages.

And, finally, in our National Day message this year, celebrations which also saw a remake of Dick Lee's 1988 hit, "Home", the WP noted that just as the remake of "Home" comes at a time when Singapore and the world are at a different juncture from a quarter century ago, our national policies also need to be re-examined to make them relevant to today's Singapore.

On cost of living, the WP acknowledges the one-time reliefs extended to eligible households. Most recently, on the back of the announcement by the Public Utilities Board (PUB) in late September of an increase in water prices.

For the purposes of this Motion, the WP will look into possibilities of further reducing cost-of-living pressures by way of policy change. This House must leave no stone unturned because, for some Singaporeans, this has become a cost-of-living crisis.

My speech is in three parts. First, I will cover the situation facing Singaporeans on the ground, particularly for workers, seniors and their families. Second, I will cover some policy areas where the Government can explore the prospect of lowering costs for Singaporeans in different ways. Finally, I will outline specific areas which will be expanded upon by the WP Members of Parliament (MPs), where policies can be changed, enhanced, revisited or even overhauled, so as to lower cost-of-living pressures for Singaporeans and their families.

First, the cost-of-living reality facing Singaporeans. The Monetary Authority of Singapore (MAS)'s inflation outlook tells us that inflation has slowed across a broad range of goods and services and core inflation is projected to come down to between 2.5% and 3% by December, lower than its 5.5% peak in January.

However, from our ground outreach and from feedback received by the WP, cost of living worries for Singaporeans are clearly moving in the opposite direction. This is understandable, as there is a chasm between, on the one hand, headlines that say that inflation is stabilising, while on the other hand, price rises continue to hit Singaporeans hard.

The Parliamentary reply by the Ministry of Manpower (MOM) this morning of a 4.5% fall in real median income in the first half of 2023 is consistent with this emotion.

The Consumer Price Index (CPI), which measures inflation, only covers household consumption expenditures and does not include non-consumption expenditures, such as loan repayments, the purchase of property, including Housing and Development (HDB) flats, monthly mortgage payments and credit card debt payments.

Interest rates are often accompanied by price increases and loan interest rates remain high. What was cash-in-hand not too long ago has, now and in the future, to be used for interest payments. This reality reinforces the view that prices are galloping away and that incomes are struggling to catch up.

It is important to also consider the compounding effect of price increases with costs passed down from enterprises to consumers. The breadth and depth of the rise in prices also vary considerably, since consumption patterns differ from each household. For example, a household with young children will be sensitive to rising tuition and enrichment class costs, in addition to other expenses that accompany raising a child.

Singaporeans who need a vehicle for their work are understandably more sensitive to Certificate of Entitlement (COE), diesel and petrol prices.

On the other hand, food prices account for a large proportion of income at the lowest strata of society. And so, when a plate of chicken rice or noodles goes up by $2 or $3 and coffee prices shoot up far more than increases in water prices, for example, the pinch for low- and even middle-income Singaporeans is real and painful.

When income growth cannot match this increase in prices, it is perfectly understandable why Singaporeans feel nervous and anxious. In some cases, this may even lead to the deterioration of their mental health.

Mr Speaker, a Forum Page letter in The Straits Times on 27 September 2023 was titled: "Cost of Living: More help needed for lower-income families affected by rising prices". The letter put into words the worries of many Singaporeans that the rising price of goods and services that began right after the COVID-19 crisis would trap Singapore in a vicious circle of unending price increases.

For example, and I quote: "The transport fare and Goods and Services Tax (GST) increases are likely to trickle down into higher operating costs for all businesses, including hawkers and coffee shop operators, who will then be compelled to pass on the incremental cost by raising their prices to remain profitable and to survive". It goes on: "Life can become challenging and stressful in an inflationary environment with reduced real income and purchasing power. Some low-income families are prone to becoming dysfunctional, resulting in domestic conflict and disharmony."

The Government rolled out a S$1.1 billion support package in late September, around the same time the PUB announced a hike in water prices. One oft-quoted economist expressed surprise at the timing of the announcement of the support package and suggested that the Government was confident of funding it from better-than-expected revenue collected. This would explain why it was able to announce the measure halfway through the fiscal year. He said, "From a political standpoint, it shows that the overall fiscal position of the Government is strong enough to be able to give some back before the Budget."

Sir, this off-Budget package and the Government's current fiscal position calls into question the necessity of a GST hike next year. The People's Action Party (PAP)'s argument is that a GST hike is necessary and that this is a political decision it has taken for reasons it has explained.

My co-sponsor for this Motion, Sengkang Group Representation Constituency (GRC) MP, Louis Chua will speak more about this. But given the inflationary environment and the substantial effects on the ground, the WP calls for a review of this decision, in light of the cost-of-living crisis.

Like the many other increases announced over the last month, there is a real concern that a 1% rise in GST will have yet another knock-on consequence on prices on the ground from January next year.

The contributions of the WP in this debate will move beyond one-time fiscal handouts and explore possible structural changes to existing policies to reduce cost-of-living expenses for ordinary Singaporeans who live in an elevated, inflationary and interest-rate environment and they will continue living in such a scenario for some time to come.

Individually, the WP MPs' suggestions will understandably be specific to a particular policy area. But taken as a whole, they point to the possibility of instituting significant structural adjustments to policies that account for the reality of today and tomorrow's cost of living environment, especially for low-income groups and those like the sandwich middle class.

I will now come on to the next part of my speech.

Mr Speaker, I believe we can better align domestic water tariff tiers to actual consumption by households with the view to reducing water bills for households that conserve water.

The last time domestic water tariff tiers were restructured, it took place over four years from 1997 to 2000. At the end of that exercise, water prices went up more than 120%. A major impetus for that price hike was the argument that Singapore would be short of water after the expiry of the 2011 Water Agreement with Malaysia.

A parallel objective of the exercise was to get Singaporeans to treat water as a precious and strategic resource and to make water conservation a way of life. Water borne fees were also raised to recover the cost of wastewater treatment.

Prior to the year 2000, the domestic water tariff had three tiers to correspond to different consumption levels. The three tiers of water prices for domestic use were as follows: households that used zero to 20 cubic metres of water a month followed by those that used 20 to 40 cubic metres and finally, those that used more than 40 cubic metres a month.

After the water pricing restructuring exercise from the year 2000, the Government did away with three tiers for domestic users and proceeded with only two tiers. A household today is charged differently only if it consumes more than 40 cubic metres a month. If you consume below 20 cubic metres of water a month, you will be charged at the rate between zero to 40 cubic metres since there is no specific tier between zero and 20 cubic metres of water anymore.

Arising from the changes in the year 2000, the Government decided that it was not going to continue charging households at the lowest rate tier because these households were not subject to a significant water conservation tax.

Based on publicly available information I have perused, there was no argument canvassed for specifically moving away from a three tier to a two-tiered water pricing regime for households beyond general statements of intent, and it was not explained why an increase in the water conservation tax could not be imposed for those consuming between zero and 20 cubic metres of water per month to cohere with treating each drop of water as a precious resource. However, arising from the low amount of water conservation tax paid, it was advanced that these households in the lowest domestic tier had little to no incentive to save water.

Prior to the changes of the water pricing structure in 2000, about 56% of Singaporean households used less than 20 cubic metres of water and paid no water conservation tax. Thirty-four percent if households paid for water at the next tier which was between 20 and 40 cubic metres of water with a low water conservation tax. The 10% of households that consumed more than 40 cubic metres of water paid a smaller water conservation tax at 15%, than non-domestic consumers at 20%.

The latter was deemed by the Government to be an unsatisfactory state of affairs as large non-domestic water users or businesses were assessed to often recycle a large proportion of the water they used and were not necessarily more wasteful than large domestic users.

The Government argued that the existing pricing structure would jack up business costs and affect Singapore's business costs and competitiveness and will also fail to have a significant effect on smaller households paying lower domestic rates.

Compared to 56% of households in the past who consumed between zero and 20 cubic metres of water, today 96% of households are consuming between zero and 40 cubic metres of water, with HDB dwellers consuming 16.2 cubic metres of water per month in 2020. Evidently, these HDB households in particular are paying for water at the lower of the two tiers, But this supposedly lowered tier captures users within a very wide pricing band of zero to 40 cubic metres.

I call on the Government to look into the prospect of restructuring water pricing tiers so as to more accurately reflect water usage, with a view to incentivise water conservation and lower costs for households.

The current two-tier compared to the legacy three-tier structure for domestic users does not fairly reflect water consumption patterns. In fact, a case can be made that it puts a heavier water conservation tax burden for the majority of users whose overall consumption patterns are already located in the lower half of the current zero to 40 cubic metres end.

To this end, Mr Speaker, I ask the Government to look into the introduction of a fairer and more acutely tiered tariff structure reflecting actual consumption of water from zero to 10, 10 to 20, 20 to 30, 30 to 40 and 40 and above cubic metres, with a view to encouraging greater efforts at water conservation. This should be coupled with a graduated water conservation tax regime starting at 30% for those consuming between zero and 10 cubic metres of water and hitting 60% for households that consume between 30 and 40 cubic metres of water per month so that households that consume more water cross subsidised those that consume less.

A graduated water conservation tax across the various tiers would incentivise water conservation and continue to serve the policy purpose of ensuring that water is continually treated as a scarce commodity. With this more acutely tiered water pricing regime, the quantum of fiscal support provided through GST Vouchers – U-Save can be right-sized proportionately.

Under such a fairer tariff structure, the 96% of households consuming less than 40 cubic metres of water today would be charged a water conservation tax that more progressively reflects how much they actually consumed and these households ought to see a reduction in water charges.

Mr Speaker, in contrast to households, non-domestic users are charged a flat rate with a lower water conservation tax than the current uppermost tier for households or domestic users.

The Government should look into the state of affairs from a fresh perspective and assess if tiers can be introduced for businesses for a fairer and better deployment of the water conservation tax with a view to better support small and medium enterprises (SMEs) that potentially can be incentivised to use less water where possible.

As public information for the use of water by different types of businesses is not readily available, this would have to be explored further to determine how to make the water conservation tax promote behavioural change for different types of non-domestic users,

Introducing tiers for non-domestic consumers would equalise the expectation of water conservation as a shared objective of households and businesses.

To this end, it would be useful to recap where we were and where we are in our water journey.

Under our Green Plan 2030, Singapore's blueprint for a more sustainable future that sets out our green targets, Singapore aims to reduce household water consumption to 130 litres per person per day. In 2021, it was at 158 litres. As recently as 2017, PUB sought to reduce consumption to 140 litres per person per day by 2030, but the reality of climate change has necessitated the drawing up of new targets.

I would advance that the lowering the water conservation tax for households that conserve more water under a more finely determined tariff structure would promote behavioural change that would also allow us to meet green targets while simultaneously lowering cost for end consumers.

Moving on to prices more generally, Mr Speaker, the cost of living crisis has not gone unnoticed by Singapore businesses. Some companies have announced inflation support payments as cost of living subsidies to junior staff. But there are companies that have done more than give one-time support.

For example, Prudential Singapore was reported by The Business Times to have improved medical and outpatient benefits such as dental consultations and outpatient specialist treatments, including alternative treatments. These enhancements to existing schemes were in addition to wage adjustments to match inflation and market competitiveness to support employee groups most affected by rising costs. DBS Bank, for example, has enhanced the POSB HDB home loan package with an all-in interest rate of 2.6% per annum for borrowers with a monthly income of $2,500 and below.

Sir, if businesses can adjust their policies beyond one-time support, the Government certainly can do more too.

In this light, as advanced by the WP, I reiterate the call in this Motion for the Government to review all its existing schemes, make them fit for purpose in this heightened inflationary environment so as to better support Singaporeans against the onslaught of prices, which is destined to continue unabated, particularly with the upcoming hike to the GST.

Take for example the Workforce Income Supplement (WIS) which was extended to workers aged between 30 and 34 last year, including a $200 increase for workers earning a gross income of 2,500 and below.

Sir, WIS is currently split into 40% cash in 60% CPF contribution. If one is self-employed, the cash component of WIS is only 10% with a 90% MediSave contribution.

Sir, it would be useful to consider a shift in the weightage of the WIS for our low-income workers in this period of heightened inflation in favour of a greater cash payout. As wages traditional do not move was fast and as significant in quantum for Singaporeans at the lower decils, additional cash in hand will provide much needed relief for our workers, sensitive to the needs of the hour. A few hundred dollars for seniors who continued to work and for whom WIS payments are pegged at the highest tiers can make a world of difference to their lives.

Finally, before the advent of COVID-19, I had asked the then Senior Minister of State of the Ministry of Health (MOH) to look into whether it was possible to raise the amount of MediSave monies older Singaporeans were able to utilise for outpatient treatments and possibly to peg the withdrawal limit to how much seniors have in their MediSave accounts.

Arising from a Parliamentary Question (PQ) filed by Ms Hazel Poa in late 2020, we know that individuals aged 85 and above have on average about $6,300 left in their MediSave accounts upon their demise.

A more acute set of data was presented by MOH arising from a PQ by Member Patrick Tay. This data revealed that for Singaporeans who passed away aged 85 or older, between 2017 and 2021, about 20% had $1,000 or less left in their MediSave accounts and 50% had between $1,000 and $10,000 left. Of greater interest is the fact that 10% had between $10,000 and $20,000 left and another 10% had between $20,000 and $30,000, and the last 10% had more than $30,000 left in their MediSave accounts.

Mr Speaker, these numbers indicate there is a scope to allow some seniors with healthy MediSave balances to deploy them for their own use beyond what is allowed today. In fact, the aforesaid approach is already taken for the use of MediSave monies with regard to long-term care. The challenge would be to find the optimum level that also takes into account the prospect of medical inflation and ensures that there is little to no premature emptying of MediSave accounts. This may be difficult for seniors who, for example, are between 60 and 70 years of age and have less than $10,000 in their MediSave accounts.

However, even the limited amount of MOH data I have quoted shows that further loosening of MediSave rules is conceivable. This would help some senior Singaporeans who have to cope with cost of living concerns that can be aggravated especially if they are no longer working.

Mr Speaker, I move to conclude: the WP MPs will expand on other changes that can be implemented to lower the cost of living for Singaporeans. Sengkang GRC MP Louis Chua, He Ting Ru and Jamus Lim will focus on housing, healthcare and transport. Aljunied GRC MP Gerald Giam will cover public transport, while Sylvia Lim will speak about electricity prices. MP for Hougang Single Member Constituency (SMC) Dennis Tan will review certain aspects of means testing in our public healthcare system and help for families with adults with special needs or disabilities. For his part, Aljunied GRC MP Faisal Manap will make a case to introduce social protection steps and in the name of a refreshed social compact to adopt a more systematic approach towards tracking the effectiveness of our social assistance programmes. Mr Speaker, I beg to move.

Question proposed.

Mr Speaker: Mr Liang Eng Hwa.

2.44 pm

Mr Liang Eng Hwa (Bukit Panjang): Mr Speaker, Sir, the rising cost of living across the globe has become a global concern. We have seen sharp price increases in Europe, the United States (US) and other continents; triggered of by a series of supply shocks that leads to sharp increases in energy, food and commodity prices as well as the demand arising from post-COVID recovery.

In the largest economy in the world, the US, its Federal Reserves or the Fed has raised its interest rates 11 times in just about one and a half years to tame the stubbornly high inflation, lifting rates from about 1% to near 5.5% today. So have the other central banks near and far, raising rates to manage and dampen demand.

Singapore is not spared from this global inflationary crisis. While inflation has come down from its peak, households are still having to cope with the impact of the various price increases. In addition, we are also faced with domestic cost pressures and, in particular, we are in this necessary transition to uplift the wages of fellow Singaporeans, especially the low-wage workers.

Sir, cost of the living is a topic that I have filed among the most PQs in recent years, so had many of the Members of Parliament from both sides of the aisles. We can feel firsthand the impact of the cost of living increases in our neighbourhood centres, at our workplaces and in our daily living experiences. Our low- to middle-income Singaporeans are particularly affected.

So, what is our counter to these series of rising costs?

In the case of Singapore, fortunately, we do have a suite of policy tools that help us mitigate the impact of rising cost pressures.

First, our strong Singapore dollar. Our strong Singapore dollar has been an effective broad-based tool to manage imported inflation as almost everything that we consume are imported. The Monetary Authority of Singapore (MAS) has tightened our monetary policy five times since October 2021, in essence, strengthening the Singapore dollar against the currencies of our major trading partners. Without the strong Singapore dollar, our inflation and hence, cost of living situation would have been even more severe.

Here, I just want caution that a strong Singapore dollar is not always a given. It is not a drop from sky for us. We cannot just demand a strong Singapore dollar or decree as such. It depends on the markets, which, in turn, depends on whether we have the strong economic fundamentals to deserve this value of the Singapore dollar. If our fundamentals are weakened, you can rest assured the markets will find a new value for the Singapore dollar almost instantly.

Fundamentals such as economic dynamism, competent economic management, financial reserves, political stability, social harmony and importantly, prudent fiscal management. These factors have a bearing on our international ratings and the confidence in the Singapore dollar and hence, preserve our purchasing power. So, let us jealously safeguard this very important asset that we have and not undermine it.

Secondly, competitive business and enterprise ecosystem. Having a competitive business landscape at both the macro and retail level are important to keep prices in check and to prevent profiteering. Essentially, we want consumers to have choices and have the option to compare prices, whether it is to choose a new mobile phone plan or to buy groceries from among the supermarkets that we have.

In Chinese, we call this "货比三家" or "货比或多家", or to be able to compare prices across three or more shops.

Years ago, I was among the strong proponents for the Government to resume building hawker centres and was glad that the Government eventually reversed its policy in 2011 to start building hawker centres again. Hawker centres, besides keeping our hawker culture going, help to create a competitive environment in the eating house space, directly competing with coffee shops and other eateries. More importantly, it offers consumers choices and more value-for-money options.

We need to keep the business ecosystem competitive, including having diverse sources of supply, just in case we are being outpriced by some of these traditional sources of supply.

Thirdly, jobs and income growth. Having job and income growth helps an individual and their family cope with the cost of living. Growing the economy to create good jobs and better pay is critical, which is why we continually invest in skills upgrade to improve employability.

We need a business-friendly ecosystem and to continually attract investments so as to keep the economy strong and vibrant to create good jobs. Having a strong economy also helps generate the tax revenues needed to pay for our growing expenditures. This is another important component – jobs and income growth.

Fourthly, direct Government assistance. Beyond the multi-pronged macro strategies, direct Government assistance is the key source of support to help Singaporeans cope with rising costs, both the subsidies and support packages.

The Government do subsidise substantially in a range of areas – healthcare, housing, education, transport, childcare and a range of social programmes, amongst others. To help Singaporeans better cope with the current cost of living concerns and the new GST rates, the Government has provided direct support assistance through the Budget and off-Budget measures since last year.

We have the permanent GST Voucher scheme and the Assurance Package. Both have been enhanced. In September this year, the Government announced an additional $1.1 billion Cost of Living Package to provide relief to lower- to middle-income families. This includes a further $800 million enhancements to the Assurance Package as well as an additional subsidy of about $300 million to moderate the fare increase of public transport.

Because of the various enhancements to these packages and the payouts that are spread throughout the year, the Ministry of Finance (MOF) now publishes the calendar view of the monthly disbursements so that it is easier for Singaporeans to anticipate the payouts each month.

I must say that when I distributed this handout to my residents during a Kopi Talk, all of them welcomed this and kept this so that they can track whether they are receiving all these payouts. It is something that is helping our residents directly.

Sir, I believe in today's debate on the Motion on cost of living, we are not looking at either extreme, that is, on one extreme, we pass on the full impact of all the cost increases to consumers and, on the other extreme, the Government fully shields people from all impacts of cost increases.

I believe no government in the world would adopt either extreme approach. For that matter, no Town Councils will do that as well.

Rather, we are here debating what that balance is. How could we continue to pursue polices which, together, lower cost of living pressures on Singaporeans and their families, but without undermining our fiscal sustainability and being responsible to future generations?

Sir, I want to add a couple of points before I sum up.

Firstly, this global inflationary situation, while we hope that it will go away soon, may actually last longer that we thought. The unending war in Ukraine, potentially the escalation of conflicts in Middle East, superpowers' geopolitical tensions, the rivalry that is being played in the global supply chain, the adverse weather that we now see more often – all these could fuel further shocks to the energy, food and commodity markets. So, we must be prepared that the high-cost situation around the world could worsen or continue for a prolonged period of time.

In other words, we must be prepared to sustain the long haul.

Secondly, these additional costs whether it is from having to pay for higher energy costs, higher food costs, higher imported material costs and so on, are real costs or outflows to us as a country entity. For example, in the production of clean water, the higher energy costs to treat and recycle water is an outlay that will flow out of the country to the energy producing country.

My point here is that we need to be able to always have the means to pay for these costs, which is rising in our current situation. Just because we freeze prices or put a cap to price increases, the outflow required to pay for these external costs does not just disappear magically.

The only way to do it on a sustainable basis is to be able to generate inflows to be able to pay for these additional costs.

Hence, the need to grow our economy to build capabilities to generate revenue, the need for a foreign exchange to create jobs, better wages so that individual and households can have the means to cope with the cost of living. This is more so for a small island state like Singapore with no natural resources. We must be able to get our inflows so that we can pay for our outflows.

Sir, we must get our fundamentals right. This is the only sustainable and sound way forward as we continue to tackle expected and unexpected challenges and crises ahead in this volatile and uncertain world.

Sir, in this context and with your consent, I would like to propose amendments to the Motion.

2.55 pm

Mr Speaker: Can I have a copy of your amendment? [A copy of the amendment was handed to Mr Speaker.] The amendment is in order. Are copies available for Members?

Mr Liang Eng Hwa: Yes, Sir. [Copies of the amendment were distributed to hon Members.]

Mr Speaker: I will allow some time for the copies to be distributed and then ask the Member to move his amendment. Mr Liang, you can please move your amendment now.

Mr Liang Eng Hwa: Mr Speaker, Sir, I beg to move the following amendments:

First, "In line 1, after the words 'That this House' to insert the words 'acknowledges that cost of living is a global concern, and'".

Second, "In line 1, to delete 'review its policies so as to' and insert 'continue pursuing policies that together'".

And third, "At the end of line 2, to add ', without undermining our fiscal sustainability and burdening future generations of Singaporeans'".

Sir, I beg to move.

Mr Speaker: There are three amendments proposed by Mr Liang Eng Hwa to the Motion. These are:

Amendment No 1, "In line 1, after the words 'That this House' to insert the words 'acknowledges that cost of living is a global concern, and'".

Amendment No 2, "In line 1, to delete 'review its policies so as to' and insert 'continue pursuing policies that together'".

Amendment No 3, "At the end of line 2, to add ', without undermining our fiscal sustainability and burdening future generations of Singaporeans'".

It may be convenient that the debate on the original Motion and on any other amendments moved by Members be proceeded with simultaneously as a debate on a single question. Do I have the hon Members' agreement to this?

Hon Members indicated agreement.

Mr Speaker: The question is the amendments as moved by Mr Liang — Yes, Mr Pritam Singh?

Mr Pritam Singh: Mr Speaker, can I request a ruling from you, please? Would the amendments not qualify as a very significant change to the original Motion?

Mr Speaker: I think it covers still. It is on the same topic. It elaborates on a few other things. So, I think it is still within the ambit of your original Motion.

Question put and agreed to.

Mr Speaker: Ms Sylvia Lim.

2.59 pm

Ms Sylvia Lim (Aljunied): Mr Speaker, electricity is a basic necessity of modern living. However, as a small nation with few natural resources, we are forced to rely on others for our energy needs.

According to the Energy Market Authority (EMA), 95% of our electricity is generated using imported natural gas. This leaves us vulnerable to global events, including rising gas prices, tensions in the Middle East and supply disruptions, which all may cause energy prices to spike unexpectedly. It is therefore in our national interest to conserve energy and diversify our energy sources.

While the electricity tariff has experienced some ups and downs in recent quarters, the SP Group recently announced that electricity tariffs for the fourth quarter of this year would go up by 3.7% per kilowatt-hour (kWh), due to higher fuel costs. This, in turn, will result in higher electricity bills for households and small businesses, adding to the high costs of living that Singaporeans are struggling to grapple with.

As far as electricity usage is concerned, our priorities should be encouraging energy conservation and managing costs for consumers.

To this end, I have noted recent Government announcements, such as the setting up of Gasco to centralise gas procurement by next year, which has the potential to bring down the cost of gas for power generation. There is also a pilot initiative next year to offer rebates to consumers who reduce usage during peak hours.

However, in my opinion, more can be done to one, encourage conservation of electricity; and two, lower costs for consumers.

First, on the pricing of household electricity. About 15 years ago, in 2008, this House debated public concerns about high electricity prices. At that time, I raised the possibility of adopting a tiered pricing model, which would enable households who consumed moderate amounts of electricity to pay for usage at a lower rate, if their consumption did not exceed a certain threshold. Households who consumed electricity in excess of the threshold would pay for the excess at a higher rate.

In rejecting my suggestion in 2008 and again in 2010, then Ministry of Trade and Industry (MTI) Senior Minister of State S Iswaran, argued that the Government intended to facilitate competition in household electricity pricing through opening the retail electricity market.

The Government touted more flexible choices and "competitive pricing" with the new open electricity market for consumers. Please allow me to quote what then Senior Minister of State Iswaran said: "…in the long term, EMA is working towards opening up the household electricity market for competition so that consumers will be able to purchase electricity direct from different suppliers through a range of retail packages that they offer. Ms Lim asked whether the Government will allow such retail electricity sellers to use a tiered system. Once such a market is established, then we should leave it to the market to work out what are the different ways they can meet customer needs... If we were to introduce a tiered system today, it means Government is deciding what is an acceptable level of electricity consumption and establish that as the threshold... This is quite a problematic process in terms of determining the key levels of thresholds. So, it would be far superior to allow the market to work, for us to give targeted subsidies to those who need it and when the market is fully liberalised, the players can then work out the schemes as we see in other sectors like telecoms."

Sir, it was thus a key plank of the Government's strategy to bank on the open electricity market to manage electricity prices for consumers.

Accordingly, the open electricity market for households was rolled out in 2018, to great fanfare. This did not last. As we are all acutely aware, six retailers have since exited the market. Many were under-hedged and were stuck with lower-priced fixed rate electricity contracts while energy prices rose unexpectedly. This drove them to a loss-making proposition, leaving them no choice but to exit the market.

Today, most of the remaining retailers are backed by power generation companies while two others offer plans with only "marginal price differences from the regulated tariff".

Sir, in the wake of the problems with the open electricity market, the EMA tightened its requirements for open electricity market retailers in July 2023. These tighter requirements include requiring a licensee to hedge at least 80% of their contracted retail demand, set up funds to pay for premature termination of contracts and so on. A CNA report from August this year observed that these additional requirements could result in higher prices for consumers.

The uptake of price plans from retailers has also been slow. As of 1 March 2023, only 40.6% of residential units have adopted the retail price plan.

According to a report by the Oxford Institute of Energy Studies, barriers to switching in the retail electricity market include complexity of the retail market and electricity tariffs, transaction costs, uncertainty of service quality and behavioural biases, among others. There is also the question of how viable it is to have many retailers competing for the relatively small domestic market in Singapore.

As matters stand now, much uncertainty remains over the revamped open electricity market model. It is unclear whether consumers will benefit from the liberalisation of the electricity market and if so, to what extent.

What, then, are the other options for managing household electricity bills? So far, a large part of the Government's answer has been to distribute U-Save vouchers, mainly to HDB households.

While U-Save vouchers are useful, they are effectively taxpayer subsidies for certain types of households. As a complement to these measures, the Government could review its electricity tariff structures. In particular, I would ask the Government again to consider implementing a tiered pricing structure for household consumers. Further or alternatively, the Government should consider a pricing structure that is based on time of use that discourages electricity consumption at peak hours. Both of these have the potential to lower electricity costs for consumers.

First, tiered pricing. Tiered pricing is known in some countries as increasing block tariffs (IBTs). Under such a system, households that consume electricity below a certain threshold would be charged at a lower rate, while those consuming higher amounts would pay higher rates for the excess consumption.

In Singapore's context, one could set the threshold amounts, looking at the consumption patterns tracked by the EMA. Thus, for example, in deciding where to set the threshold amounts, one could take reference from the average consumption per month for 3-room HDB households, which is around 22 kWh.

In 2010, then Senior Minister of State Iswaran responded that tiered pricing would amount to the Government essentially deciding what an "acceptable" level of electricity consumption is. I do not agree with this characterisation.

What we would be doing is to encourage energy conservation by charging a lower rate for what is deemed a basic necessity.

Tiered pricing of household electricity is used in many countries. To understand more about it, we could look to the benefits in several other countries where it has been implemented.

One such example is China. In 2012, China rolled out a tiered electricity pricing system across 29 provinces, with three tiers. The specific levels differed, depending on the province, but generally, the lowest pricing tier aimed to capture about 80% of residential households. The second tier had 15% of households while the third highest tier covered the remaining 5%.

A report by the China Economic Quarterly International showed that in the years following the implementation of tiered pricing, there was a 6.1% reduction in electricity consumption.

Sir, while each jurisdiction will decide how to set their tiers, this example shows that tiered pricing can have a positive effect in reducing overall consumption.

Another example is Hong Kong. Hong Kong has two major suppliers of household electricity, namely HK Electric and China Light and Power. Both of them offer tiered pricing, with as many as seven tiers. Small users pay preferential rates. According to the Hong Kong Environment and Ecology Bureau, tiered pricing is deployed for residential consumers to "promote energy efficiency and conservation".

Tiered tariffs can also be found in a host of other jurisdictions, including the United States (US), the United Kingdom (UK) and South Africa.

In fact, a World Bank study of 60 developed and developing countries showed that 60% of countries surveyed made use of tiered pricing or volumetric IBTs. The study noted that the rationale for a tiered pricing structure was to provide a "social safety net" whereby all consumers could assess a basic subsistence volume of consumption at a very affordable tariff, while ensuring that the revenue shortfall was covered by surcharges on the largest consumers. The study found that volumetric IBTs had "a material effect on affordability".

Mr Speaker, I note that in a more recent Parliamentary answer to a question raised by Mr Don Wee last year, the Minister for Trade and Industry again rejected a tiered pricing approach. MTI stated that electricity should be priced at its "full cost of production and delivery" and warned of "inadvertent implications". The Minister gave an example of a multi-generational household paying more if they lived in a single home, than in two smaller homes.

While this may be true, this phenomenon already exists in many Government policies. The larger, multi-generational household is already receiving less Service and Conservancy Charges (S&CC) and U-Save rebates, has less subsidies for long-term care, may be disqualified from the Silver Support Scheme and so on.

There is probably no policy with perfect outcomes. So, let us not let perfect be enemy of the good.

Sir, my second point is for the Government to look at helping households manage electricity consumption through discouraging use at peak hours. This could be done by charging lower rates at non-peak hours.

The EMA is already doing this for business consumers. Business consumers can make use of EMA's Demand Side Management (DSM) scheme to lower their electricity bills, by adjusting when and how much electricity they use. Businesses can participate in the Demand Response programme, where they can voluntarily reduce electricity usage when prices are high. Such behaviour also benefits the system, as it reduces the capacity required at peak periods.

It is well-known that a key driver of the costs of producing electricity is not the total load, but the peak hour load. Having a cheaper rate for off-peak consumption would benefit the system as a whole, as it will go towards ensuring that the peak demand can be more efficiently met by the existing transmission grid.

Can such differentiated peak and non-peak pricing be applied to households as well? Such time of use charging has been offered for decades around the world, in major cities including London, San Francisco and Sydney. What is its potential for Singapore households?

Just last month, the Government announced a pilot scheme called Residential Demand Response programme, to be launched by the second half of next year. Under this pilot programme, Singaporean households will be issued with smart meters and will receive alerts to actively reduce consumption during peak hours, in exchange for financial reward, such as rebates. This scheme is, in effect, a differential pricing scheme based on time of use.

The Government's planned financial incentives to reduce peak hour consumption could be further developed. We could work towards a system where the electricity tariff for off-peak consumption for households is lower than the tariff for peak hour consumption. This allows households to manage their electricity costs by adjusting their time of use.

Sir, in making these suggestions today, it is not my intention to over-simplify the issues associated with electricity pricing, which can be a rather technical matter. Nonetheless, with the concerns about global energy supply and costs looming in the horizon, this is an issue that deserves attention.

Sir, let me conclude. Recent global conflicts and tensions have made Singapore even more vulnerable to rises in the prices of oil and gas, on which we rely for our energy needs. With 95% of our electricity generated from natural gas, Singaporean households are at risk of higher electricity bills. At the same time, as the Government has recently highlighted, imported supply uncertainties make it imperative for Singaporeans to conserve electricity.

I believe household electricity costs can be managed through adjusting the electricity tariff structure, such as through tiered pricing and differential charging to encourage off-peak consumption. Such reforms would recognise that electricity is a basic good and yet, incentivise energy conservation.

Mr Speaker: Mr Leong Mun Wai.

3.14 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, Sir, the Progress Singapore Party (PSP) supports the Motion moved by the hon Leader of the Opposition and Member Louis Chua, which calls on the Government to review its policies so as the lower cost of living pressures on Singaporeans and their families.

It is especially apt to describe the ongoing inflationary pressures faced by Singaporeans as a crisis.

Since the COVID-19 pandemic, when many Singaporeans are still struggling financially, the cost of almost everything in Singapore has gone up.

In contrast, the Government does not seem to be too concerned about this crisis and continues to add oil to the fire. The GST hike confirmed in Budget 2022 was one of the factors that accelerated the pace of inflation as businesses took the opportunity to raise prices far more than the GST and other cost increases. Food prices have surged because NTUC FairPrice stood by instead of doing more.

I still remember, in the early 1970s, I used to queue up at a community centre with my mother to buy heavily-discounted basic foodstuff and necessities supplied by NTUC. Today, NTUC FairPrice's prices are not even the lowest in the market. It is commonly known that lower prices can be found at the Sheng Siong supermarket instead. It appears that the role of NTUC and, by implication, that of the Government, has changed drastically over the last few decades. NTUC FairPrice no longer serves as the anchor of price stability. The Government, instead of being the independent referee and price stabiliser in the economy, has become a profit-seeker in direct competition with the private sector.

In many sectors, the Government is the market maker and has influenced the price levels in those sectors, the most obvious and problematic one being the property market.

Hence, the current cost of living crisis faced by Singaporeans is not entirely due to the global supply chain disruption arising from the COVID-19 pandemic and the war in Ukraine. The COVID-19 pandemic has exposed the fact that Singaporeans have little savings to weather financial emergencies. The events after the pandemic have only exacerbated the situation that Singaporeans have been subject to by the Government over the recent decades.

Singaporeans have been worried about the cost of living for many years because they feel that their wages have not kept up with the cost of goods and services that they need to lead a meaningful life in Singapore.

CDC vouchers, GST vouchers, Service and Conservancy Charges (S&CC) rebates and so on can be very helpful for Singaporeans in the short term, but these handouts do not solve the fundamental structural issues that are at the heart of the rising cost of living in Singapore today.

To help Singaporeans get out of this cost of living crisis, the PSP believes that we will need to nudge the Government to change its two favourite financial management approaches, namely, the "pay and pay" and "the chicken wing for a whole chicken" approaches.

The Government's approaches may have served us well in the early days of nation-building when public finances were tight and wages rising fast. However, they may not be appropriate in today's context when wages are not rising as fast as the cost of living. It is especially worrying if more and more middle-class Singaporeans cannot keep up with the current standard of living.

First, let us talk about "pay and pay". Many Singaporeans often jokingly refer to the People's Action Party (PAP) as a "pay and pay" party because it seems to run Singapore like a company and operates like a profit-seeker.

PSP has spoken many times in this House that this Government has ample fiscal resources and, yet, it has always tried to justify increasing taxes and fees for public services whenever possible. PSP has objected many times to the increase in the GST from 7% to 9%. It is unnecessary, untimely and uncompassionate.

While the working class will get GST vouchers, the middle class will have to pay an additional $1.2 billion in GST per year after the 2% GST hike and may have to pay even more taxes because of the GST vouchers.

The increase in GST is unnecessary because our fiscal position is strong as there is room to use more of the Net Investment Returns Contribution (NIRC) for current spending, instead of tucking the bulk of it in the long-term endowment and trust funds.

While we agree that public services like electricity, water, public transport and so on should be operated efficiently, the ultimate objective should be to maximise long-term social benefits and not short-term profits.

When Singaporeans are faced with intense inflationary pressures at the moment, the Government could have delayed the fee increases in the public services for three to five years, for example. This is especially so when the Government is expected to reap billions of windfall revenues from inflation, Additional Buyer's Stamp Duty (ABSD) and COEs in fiscal year (FY) 2023, apart from the fiscal buffer we have from NIRC.

The Government should price public services based on long-term considerations to provide stability to Singaporeans' livelihoods, which will increase long-term social benefits.

Our fiscal resources have been hoarded away in the Reserves, supposedly for the sake of the future generation. But this is to the detriment of the present generation who are facing the heavy and unnecessary burden of higher taxation and rising cost of living.

We urgently need to review how our fiscal resources, including our Reserves, are being used before we contemplate raising taxes on the people. The Reserves and Budget should serve Singaporeans and not the other way around.

More discerning Singaporeans have pointed out long ago that the PAP Government likes to give Singaporeans a chicken wing and then take back a whole chicken. Essentially, what it means is that the Government is a shrewd financial manager who gives out occasional short-term handouts but commits Singaporeans to long-term payment schemes that require them to pay out consistently over the long term. The total long-term payouts will be much larger than the short-term handouts.

Take public housing as an example. For every Build-To-Order (BTO) flat sold, the buyer will have to pay hundreds of thousands for the land cost and have to take up a housing loan to service it. If that loan is serviced for 25 years, the buyer's CPF balance could be reduced by as much as half a million dollars. In exchange, the Government will sweeten the deal by giving out CPF Housing Grants of $30,000 to $60,000 through HDB.

It begs the question why can the Government not waive the land cost so that Singaporeans can keep the half a million dollars in their CPF account for retirement instead? This is exactly what the PSP has proposed in the affordable home scheme, which waives land cost for owner occupiers of HDB flats.

It is obvious that, in this way, Singaporeans' financial position will be significantly improved and that will yield a lot of social benefits.

For MediShield and CareShield, the Government has also been accumulating large surpluses ahead of actual expenditures. If premiums can be reduced, Singaporeans will have more balances in their MediSave Accounts to earn more interest while they are young. PSP has proposed for the Government to pay for the MediShield and CareShield premiums all together and establish a universal health scheme for Singaporeans.

It is not an overstatement to say that "a chicken wing for a whole chicken" approach is the main cause of social anxiety for Singaporeans.

Mr Speaker, at the launch of the Forward Singapore Festival, Deputy Prime Minister Lawrence Wong said that Singaporeans today no longer talk so much about the 5Cs. He said that Singaporeans still want a good material life, but the Singapore dream is also about finding fulfilment, meaning and purpose. PSP wholeheartedly agrees that there is more to life than material success and consumption. I have also spoken about self-fulfillment and ikigai, which is "purpose" in Japanese, in the public.

But we believe that Singaporeans are no longer talking so much about the 5Cs because the structural issues in our economy and the cost of living crisis have now made the 5Cs completely unattainable for many middle-class Singaporeans even if they are frugal and work hard. Today, condominiums and cars are unaffordable on a middle-class salary. Fewer and fewer households are owning cars. Yesterday, the Acting Minister for Transport confirmed that car ownership has dropped to 33% today from 40% in 2013. Even motorcycles feel out of reach for many Singaporeans.

It is well-known that country club membership fees have soared because of the influx of wealthy foreigners. Cash is tight because of inflationary pressures. Of the 5Cs, the credit card is the most attainable, but the credit card has fallen into a necessity to facilitate "buy now, pay later" when cash is tight.

Singaporeans are talking less about the 5Cs not because they do not want it anymore but because for many Singaporeans today, it really can only be a dream.

An urgent reset of our policies is needed to address the structural issues that our economy faces. Singaporeans must have more to look forward to than the rising cost of living. Economic growth must lead to rising real incomes and better lives for everyone and not just a select few.

We must help Singaporeans to improve their long-term financial well-being so that they will have the savings to withstand emergencies like the COVID-19 pandemic. The financial leeway will also allow Singaporeans to have the freedom to develop their potential, which will be beneficial to our economy in the long term.

Over the last three years, my primary focus in this House is to speak on policies to improve the financial well-being of Singaporeans. Today, I will put all these into an integrated cost of living relief package with the following five measures.

One, first and foremost, reduce GST to 7% to clearly demonstrate the Government's determination to dampen the inflationary psychology.

Two, increase the immediate relief package from the current $1.1 billion to $5 billion to include financial help for the middle class and small and medium enterprises (SMEs). This will also be a much-needed spending boost for the nascent post-COVID-19 recovery;

Three, introduce the affordable home scheme and Millennial Apartments scheme to make HDB flats more affordable, strengthen retirement adequacy and offer more choices to young Singaporeans.

Four, introduce a universal health scheme for Singaporeans, essentially based on the Government-paid MediShield and CareShield premiums for Singaporeans.

Fifth, introduce a minimum living wage to give Singaporean workers a minimum take-home pay of $1,800 per month.

Mr Speaker, the objective of the integrated cost of living relief package is to provide a robust and substantive response to relieve the financial stress of Singaporeans, both immediate and in the long term.

PSP has also estimated that it is manageable with the fiscal resources we have currently. We hope the Government will make improving the financial well-being of Singaporeans the cornerstone of our new social compact. For country. For People.

Mr Speaker: Mr Sitoh Yih Pin.

3.31 pm

Mr Sitoh Yih Pin (Potong Pasir): Mr Speaker, Sir, I would like to state at the onset that I recognise that there is a cost of living issue. I recognise that Singaporeans are going through this, but we have to recognise that this is a global phenomenon and we have to tackle this together.

But, Sir, I have been listening carefully and intently to the speeches made by the three Opposition Members of Parliament and my impression is that they are basically asking for an ultimate reduction in tariffs, some reduction in taxes, more top-ups, more handouts.

This is not the first time. It did not surprise me that Mr Leong Mun Wai, again, talked about the GST.

Honestly, Mr Speaker, Sir, I think the Opposition Members of Parliament have been milking the GST cow for a very long time and we have explained time and again over the last several years why the GST increase is necessary and why there are offset packages. So, maybe I just want to say if you really must milk something, go and milk another cow.

Mr Speaker, Sir, as a PAP backbencher, it is very clear in my mind that I am here to support the PAP Government's vision. I am not here to steer it. But at the back of my mind, I would like to ask the Opposition Members of Parliament if one day you are to steer this ship – I hope not, but we cannot rule it out completely – if you are to steer this ship, what is your overall underlying strategy? What is your philosophy?

Because, so far, what I have heard is that you are basically dissecting the problem and you are talking about water, electricity, GST, so on and so forth. But at the end of the day, we need to balance the Budget and we need to balance the Budget for all Singaporeans.

Sir, as I listened to the speeches of the Opposition Members of Parliament, I cannot help but feel a sense of gloom and I am reminded of a Chinese war movie that I watched some time ago – I remember this very clearly because it struck me – it was a commander telling the troops in Mandarin, "你知道有什么比悲哀更悲哀吗? 那就是已经绝望了, 已经没有机会了". Do you know what is more sorrowful than feeling sorrowful and despair? It is when it becomes hopeless; it is when we no longer have a chance.

But, clearly, this is not the situation we are in. So, I think it is important that all of us in this Chamber – PAP Members of Parliament, Opposition Members of Parliament, WP Members of Parliament, PSP Members of Parliament, Nominated Members of Parliament (NMPs) and Non-Constituency Members of Parliament (NCMPs) – come together and let us tackle this problem collectively. We have enough resources. We have overcome bigger problems.

I noticed that the WP's Motion used the word "crisis", cost of living crisis. I shiver and shudder for a while when I saw the word "crisis" because crisis means, I think somebody is going to suggest a draw on Reserves. To me, this is a problem. It is a big problem. I would not classify it as a crisis.

So, my point is, 我们不悲哀, 我们没有绝望, 因为我们有的是非常多的机会. That is, we are not sorrowful. We have not lost hope because we have a lot of opportunities.

Discuss this issue of cost of living by asking three honest questions and, hopefully, by giving three honest answers also.

The first question: is there pain amongst Singaporeans due to the rising cost of living due to inflation? And the answer is yes, there is pain. We have to acknowledge it and we have to admit this is going to be a rough and bumpy ride for all of us. It feels like a never-ending uphill battle. But, sometimes, as we overcome difficulties, there are also learning points and I am completely certain in my mind that we will overcome this. The worst may not have come yet, the worst may well come later. But never mind, we recognise there is pain and we will get over this together.

Sir, the second question I will ask is: having recognised that there is pain, is there pain relief?

And the answer is, absolutely, and that is why the Government has rolled out so many packages: Cost of Living Package; Assurance Package; CDC Vouchers; U-Save rebates; Public Transport Vouchers and so on. We know them. The Government has done its best to cushion the rough and bumpy ride. But I think what we have done particularly well, maybe compared to some other countries, is that we are targeting assistance to those who need it more and I will urge the Government to continue doing that. Let us help those who need the most help and not only help them the most but maybe help them for the longest time possible. It is an unequal policy, but I think it is the right policy to adopt.

Sir, the next question I will ask, having acknowledged that there is pain, having said that there is pain relief, the last question I want to ask is: so, in the process, are any Singaporeans being left behind? Clearly, the answer is no.

As I have said, we will target assistance and help to those who need it more and hopefully for a longer period, and we will do the right thing. And doing the right thing is not about just policies or rules and regulations. We all know that doing the right thing is what is in your heart. And doing the right thing is – I hope the Opposition Members of Parliament will agree me – definitely not about straddling the middle ground to gain some votes. We will never do that and we do not want to start doing that.

So, I say, let us all behave like a herd. We are the Singapore Herd because, united we are strong and divided we become weak.

And, Sir, here I would like to admit and also acknowledge that most of us, it is human nature, we like consistency and continuity. Many of us do not like change, especially when change involves an increase in the cost of living, it involves inflation. But I think it is something we have to accept collectively. It is a global phenomenon and we will overcome this.

Sir, I would like to next move on to Mr Liang Eng Hwa's amendment because towards the last part, he mentioned "without undermining our fiscal sustainability and burdening future generations of Singaporeans." This is very important because every generation must solve its own problems. Every generation has to solve their own problems and down the road.

And just now, the hon Member Mr Leong Mun Wai talked about Reserves again. I just want to say this: actually, in reality, neither him nor me are qualified to talk about our Reserves. We are only the custodians, and you know what? The Reserves are not meant for you; and neither are they meant for me. They are meant for our children and our children's children and that is why it is so important that we safeguard them.

Like in COVID-19, if it was necessary to dip into our Reserves, we had. But I think if every time we come across a problem and a difficulty, we ask for the key to the safe and we start taking out, there is not going to be very much left in the safe, you know. I am always very marvelled by this mahjong table because on every mahjong table, there are four players and there is always a drawer there for each player. Every time I look at it – and some people put their chips on the table and some put theirs inside the drawer – my reading of it is that what is on the table are MAS and Temasek. What is in your drawer is GIC because I do not know how much you have inside the drawer.

And it is very important that we keep our Reserves as strong as possible and maybe as mysterious as possible because when people do not know how much you have, they hesitate to mess around with you.

My mind goes back to 1997 again. During the Asian Financial Crisis, we all know that the currencies around us were all hammered, beaten down. We got off relatively unscathed and do you really think that the hedge funds did not look at us? I am sure they did. But I think they probably say, "You know, this little island, I do not know how much is inside that drawer, I better not mess with them because it is like throwing a boomerang. You throw a boomerang, hoping to hit the other guy, it comes back and it slit your throat."

So, let us safeguard our Reserves and unless it is a real crisis like COVID-19, I think try not to touch it.

Mr Speaker, Sir, please allow me to quote a famous Cantonese saying. Mr Leong Mun Wai will understand this because he is Cantonese. It goes something like "牛不喝水，按不到牛头底 ". When the cow goes to the river and drinks, if it does not want to drink, you cannot press its head down.

Mr Speaker, do not worry, I am not going to talk about meat prices. I mentioned this in the context of our debate today because in a free-market economy, the price is set by willing-buyer willing-seller and it is set by basic demand and supply forces and, honestly, in Singapore, we import most of our products and we have little control. We are, basically, a price-taker although the hon Member Mr Leong Mun Wai just now said the Government is a price-setter. I intend to disagree. It is a price taker.

But, fortunately, for us, we have a strong Singapore dollar and the strong Singapore dollar makes it more economical for us to import our products.

So, Mr Speaker, Sir, my point is that as long as we stay united, cohesive, we will overcome this. We have enough experience and enough resources. There will be sunshine after the rain. We must have the guts, the gumption and the resolve to do this correctly. And rather than seek out the heat, we should look for the light and I am very confident that we will overcome this. My mind again goes back to a radio broadcast that Mr Lee Kuan Yew did, I think it was in 1961 and he said, "It is as inevitable as the rising and setting of the sun." So, it is as inevitable I think that we will overcome this if we stay cohesive, united and collected as a people.

Sir, I think the long-term solution to all these, after we have overcome this cost of living problem, is that we must keep growing our economy and not only keep it going but keep it growing. And we must also continuously bake a bigger a pie so that Singaporeans can all have a bigger slice. The more vulnerable, those who need help will get it more and get it longer.

Mr Speaker, Sir, in conclusion, as we commemorate the 100^th Anniversary of Mr Lee Kuan Yew's birth, I like to quote him. And basically, this quote shows how important it is that we stay united as one people. And I quote Mr Lee Kuan Yew, "For the next thousand years, we will still be here, recognisable, identifiable." [Applause.]

Mr Speaker: Ms Sylvia Lim.

3.46 pm

Ms Sylvia Lim: Thank you, Speaker, I feel compelled to clarify what Member Sitoh Yih Pin has attributed to me and I will clarify my own.

My proposal actually for tiered electricity pricing is a revenue-neutral proposal. Most IBT systems are designed that way. So, it will be wrong of him to say that I am asking for more subsidies from the Government or raiding whatever fund to do that.

The second proposal which I suggested was about time of use pricing. And I also mentioned that MTI is already in the process of giving financial incentives to households who consume electricity at off-peak hours and they are also doing that with business consumers already. So, unless the Member is saying that conserving energy is not important for Singapore and MTI is wrong, then I think he better make himself clear.

Mr Sitoh Yih Pin: Thank you for the clarification, Ms Sylvia Lim. The Member said something about tiered pricing. Yes, I heard her. But I think when the Government issues the U-Save rebates, they would have achieved the same objective.

As to the Member's second point about pricing relating to time of use, honestly, even though I did not say it just now, I think it is a good idea to consider.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Mr Speaker. Can I, through you, confirm with Member Sitoh Yih Pin that I did not recommend a drawdown of the reserves?

Mr Speaker: Mr Sitoh Yih Pin.

Mr Sitoh Yih Pin: Mr Speaker, Sir, if I misheard the hon Member Mr Leong Mun Wai, then I apologise to him. The Member did not specifically talk about a drawdown, but I think he did allude that our reserves are quite strong. And when I hear you say that, I began to shiver and shudder.

Mr Speaker: Mr Dennis Tan.

3.48 pm

Mr Dennis Tan Lip Fong (Hougang): Mr Speaker, as Members of Parliament, feedback from residents about rising costs of living is not uncommon. However, in the last half a year, the frequency of such feedback has really increased tremendously.

I receive such feedback not merely from residents who are in the lower-income brackets. I also receive feedback from across the different income tiers. Recently, I attended a feedback session with some condominium residents in Hougang and concerns arising on rising costs of living were raised by many with whom I spoke to.

Mr Speaker, I believe I am not alone in receiving such concerns and feedback in the House. I therefore support the WP's Motion today calling on the Government to review its policy with a view to lower cost of living pressures on Singaporeans and their families.

There are different issues of rising costs of living which affects Singaporeans. My colleagues in the WP will be focusing on different aspects on the rising cost pressures. I will be speaking on the need to relook some aspects of our means testing criteria in public healthcare and for more help for adults with special needs or disabilities and their caregiving families.

Mr Speaker, with a growing ageing population, healthcare costs are the main concerns of many, including especially many of our seniors and those with no income and yet facing health issues, and find themselves struggling to afford essential healthcare.

The current means testing method based on a per capita household income (PCHI) presents some challenges to certain Singaporeans. The current economic indicators applied to the healthcare means testing criteria may have their limitations. They look at household income broadly. It overlooks or deprioritises two important issues.

One, the formula looks at the rigid household incomes and does not look at deferring or specific needs of specific members of each household when evaluating help which should be given. While it is true that both the young, such as children and the elderly, may not have earning power or contribute directly to the PCHI, the elderly are more likely to require nursing care due to the onset of various chronic illnesses associated with ageing.

According to the National Population Health Survey conducted in 2020, over 20% are respondents, aged 60 to 74 years, had diabetes. Approximately 75% of those aged 70 to 74 years had hypertension and 60% in the same age group had high cholesterol. These chronic illnesses often result in increased healthcare spending, including expenses related to complications. For example, diabetes and high cholesterol are commonly associated with cardiovascular diseases, like coronary heart diseases. In fact, in 2019, approximately 75% of heart attack patients were aged 60 and above.

Furthermore, most corporate medical insurance plans typically allow employees to include two family dependents, usually a spouse and offspring but do not permit the inclusion of elderly dependents. This exclusion is often reflected in corporate insurance plans, such as those by Raffles Medical Group, a major corporate insurance provider in Singapore. These plans specify that eligible dependents must be either a spouse or unmarried or unemployed children.

As a result, some households with elderly dependents may experience higher out-of-pocket medical expenses compared to households with children, even when their PCHI is the same. It is crucial that we consider such disparities in means testing.

One may argue that the seniors in Singapore already have access to a wide range of subsidy schemes aimed at addressing their needs, such as the Merdeka Generation Package (MGP) and the Pioneer Generation Package (PGP).

However, a closer examination of these subsidies offered by these packages reveals room for improvement. For instance, the subsidies entitlement for MG and PG cardholders cover chronic conditions and dental services, but not as extensive in coverage when compared with the coverage of critical illnesses in commonly available medical insurance policies and subsidies for chronic conditions are kept annually.

Two, it does not look at whether a family member actually do receive help from family members for their medical fees and expenses of a family member. The choice of residence for retired elderly individuals, whether they decide to stay with their working adult children or live independently, has little impact on the family's financial dynamics. Financial support from working adult children is a personal decision arrived independently of the elderly person's choice of living arrangement. As a result, a retired elderly may appear to have a high PCHI on paper, but they may not receive financial assistance from their children or adequate financial assistance from their children.

While the Government expects family members to pay for the living and medical expenses of family members, in reality, this may be easier said than done.

Many residents have told me that they do not wish to impose on their children and they try to make do with what they have. Many have tried unsuccessfully to get public financial assistance when they do not receive sufficient money from their children, as their children have told them they do not have enough to contribute to their parents, including those who live with their children in the same households. How can such people receive further subsidy or assistance if help is not forthcoming from family members, without having to request from family members?

I see the same problem with some of my residents seeking financial assistance but were not eligible because of a household income. An elderly male resident saw me a few times, crying with frustration, due to the lack of financial support as he is not eligible for more support, due to his son's and daughter-in-law's incomes and his son said that he is unable to provide more support.

Furthermore, for healthcare means testing, beyond cases of elderly parents living with working children, there may also be other categories of core occupiers in the same household who may not be currently sharing or co-funding medical expenses of other occupiers of the property.

By way of an example, Mr A is in his early 60s and working part-time due to his health condition. He lives with two other higher-earning siblings. They share common household expenses, but not individual medical expenses. The household income will be a key consideration for the amount of subsidy he is entitled under the current PCHI formula. In a case like this, does the Government expect Mr A to reach out to his siblings to ask them to share his medical expenses? Will Mr A get help, maybe applies to the authorities for further subsidy?

Mr Speaker, currently, when the per capita household income of a particular household's PCHI is zero, the Government will look at the annual value (AV) of the property that the household is living in. In July this year, the hon Member for Aljunied GRC Mr Gerald Giam, urged MOH to consider removing the AV component for household so with no income.

Senior Parliamentary Secretary Ms Rahayu Mahzam said in response and I quote, "On the Member's point of considering to remove this, this is a broader point we are looking at." I hope the Government will consider removing this.

Mr Speaker, households with zero PCHI but higher AVs often comprised of retirees who are in their twilight years and may have a family member who is seriously unwell and seeking medical treatment. The Minister for Health himself has acknowledged in a written answer to a PQ in February this year that AV is an imperfect proxy for determining financial need, especially for those who are asset-rich but cash-poor.

There may be a variety of reasons why such individual owners are unable to monetise their property. As we age, we may grow more attached to our homes, the neighbourhoods we are familiar with and the communities we have built over the years and that this may not even be the reasons for some, amongst us, for not being able to move out to a lower priced property. For whatever reasons, monetising, right-sizing or downsizing may not always be feasible or desirable. In addition, we have been encouraged to age-in-place.

But owners living in their own properties are not the only people who are affected by the AV issue. There are also family members who are caught by the rule. Besides non-owner spouses, there are siblings, children, aunts, uncles and cousins who may be living in the same property who may be caught by this rule. Such family members may not be able to get their relatives in the same household to pay for their medical expenses. They may not be able to afford a place of their own just to qualify or more state subsidies.

There are also cases of family members being co-owners of a family property or co-inheriting such property after a parent has passed on. I know a few of such cases where residents inherited a family property together with fellow family members. They continue to live in their own property. Family properties is kept for use by other family members and this could be a residential or even commercial property. And there is no near-term prospect of the property being sold and proceeds to be distributed. These non-occupier owners are caught by the AV issue when it comes to medical subsidies and also for other packages and schemes from other Ministries.

Such people have to appeal every time against their non-access for subsidies or benefits and an outcome may not always be consistent.

Before I leave this point, I would also say that whether a person is an owner or non-owner, it would not be right to expect a person living in a property with higher AV battling a serious disease to have to make arrangements to move out of his or her home or to sell his or her home to raise funds for the very medical treatment he or she needs.

Next, Mr Speaker, I would like to discuss the needs of families who have family members with special needs or with mental health issues and requiring care for family members. The burden placed upon these families is immense and I hope that the state can extend more help.

While the numbers of such families may not be large, their plight is significant and warrants our attention. According to SG Enable, 3.5% of people aged between 18 and 49 in our country are disabled. These numbers are not negligible and we must recognise the challenges faced by these families.

Moreover, data from the Ministry of Social and Family Development (MSF) estimated that in 2022, there were approximately 32,000 persons with disabilities aged between 15 and 64, with about 1,000 of them unemployed and 22,000 outside the labour force. These figures underscore the urgency of addressing their needs.

Moreover, for families where such adults with special needs or mental issues require their ageing parents to continue to care for them, the burden of caregiving, both physically and financially, can be tremendous.

I have some suggestions to provide for better assistance to these families.

One, we should create a list of non-critical illnesses that necessitate long-term care and force individuals out of employment. This list would include conditions, such as early onset dementia, severe autism, Down Syndrome, schizophrenia and Parkinson's disease.

Such conditions can be financially burdensome for families and access to social support for these individuals and their families is currently limited. For example, eligibility for claims on the CareShield Life remains limited to individuals who are unable to perform at least three activities of daily living (ADLs).

However, the abovementioned ailments, while detrimental enough to put one out of employment, do not always impact one's ability to perform the ADLs. Many insurance plans cover critical illnesses and the insurance products available on the market that cover non-critical illnesses remain limited. Besides, some of these non-critical illnesses are congenital, making afflicted individuals excluded from medical insurance scheme, which require that one must be free of pre-existing medical conditions before they are onboarded.

The eligibility criteria of CareShield Life can be expanded to include consideration of those who can still perform ADLs but are unable to earn a stable income due to non-critical illnesses. This aligns with the original intentions of CareShield Life, which is targeted at individuals with long-term care needs.

Two, for such individuals with non-critical illnesses, we should offer more subsidies with medical supplies, consultations, treatment, rehabilitation and daycare services. Medical expenses of such injuries are not limited to specialist outpatient care or inpatient care, but also included other essential areas like medical supplies and rehabilitation.

Three, increase subsidies for inpatient and outpatient specialist treatment for both individuals with non-critical illnesses and their caregivers should be made available. While there are existing subsidies for long-term residential care, daycare and rehabilitation, many families do not meet the eligibility criteria due to the ceiling limit set by the PCHI or even the annual value of their property. For example, the PCHI upper limit to qualify for daycare subsidies set at $2,800. This can make it challenging for working adults taking care of their disabled children as their income may exceed this limit.

Should a working adult take care of his or her disabled child because the child is not capable of independent living and let us say he or she earns about $7,000 per month, taking the median salary of someone in the 40 to 44 years old age group, and the spouse is a full-time caregiver without any income, this works out to a PCHI of about $2,333 per month. The family only marginally qualifies for 30% subsidies and entitlement for daycare services.

Furthermore, the Senior Mobility Fund is targeted as seniors aged 60 and above, leaving out younger persons with disabilities (PwDs) who also require nursing and rehabilitation support. The younger PwDs in spite of their nursing and rehabilitation needs will not be able to access the fund. And even if the age criteria is extended to include younger PwDs, they do not qualify if the PCHI is more than $2,000 and the annual value of their property is more than $13,000.

In short, I am concerned that those affected are not getting enough support. There are PwDs in the working age group with rehabilitation needs and I hope the Senior Mobility Fund is extended to include these. I also hope that PwDs in the working adult age groups qualify for subtleties in daycare and residential care. Beside the opportunity cost of loss income, they should not be penalised just because they live with a working family member out of necessity.

Four, more support should be given to caregivers of adults with special needs or disabilities. While we do have existing grants and concessions, such as the Caregivers Training Grant, Home Caregiving Grant and Migrant Domestic Levy Concession, some of these are limited to households where the care recipient is elderly and exclude families where elderly parents are caregivers to disabled children. This disparity can be addressed.

Can caregiving grants such as the Home Caregiving Grant and the Migrant Domestic Levy Concession for aged persons with disabilities be extended the household where the care recipients are not seniors and may have no ADL issues but are involuntarily unemployed because of their medical condition. After all, the conditions that threaten employment, for example, early onset dementia, severe autism, Down Syndrome, schizophrenia and so on, are neurological or psychiatric conditions that affect soft skills, like cognitive and communication skills, and may not always affect one's ability to perform ADLs. And so, to use ADLs as an indicator and an eligibility determination for the grant is not comprehensive.

Mr Speaker, more help can be given to support caregivers, especially caregivers where to give up their full-time jobs to care for their family members and do not have an income or may need more financial support. For a start, I hope the Home Caregiving Grant can be increased beyond the current $400 for deserving cases.

In closing, Mr Speaker, I hope the current means testing formula can be further improved upon to take into account the specifics of an individual's financial situation, particularly his or her cash flow and health condition, and make healthcare more affordable and accessible for all. More help should be extended to adults with special needs or other forms of disabilities who are in the working adult age group but are unable to work and requires part or full-time care from family members, especially families where the parents are getting on in age. Mr Speaker, I support the original Motion.

4.05 pm

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.25 pm.

Sitting accordingly suspended

at 4.05 pm until 4.25 pm.

Sitting resumed at 4.25 pm.

[Deputy Speaker (Ms Jessica Tan Soon Neo) in the Chair]

Cost of Living Crisis

Debate resumed.

Mdm Deputy Speaker: Ms Hazel Poa.

4.25 pm

Ms Hazel Poa (Non-Constituency Member): Mdm Deputy Speaker, post-pandemic inflation in Singapore has been much higher than it used to be. Announcements of price increases in transport fares, water and utilities came one after another. COE prices rose to record highs and GST is going to be increased by another 1% next year. Property prices and rental continued climbing. All these are adding on to the anxieties of Singaporeans over the ever-rising cost of living that seems endless.

These anxieties cannot be alleviated by the various aid packages that the Government has rolled out, because while the packages are for a limited time, the cost increases are here to stay. The growing sense of insecurity, or even depression for some, over their declining ability to meet expenses or maintain previous lifestyles on their own income, can never be addressed with Government handouts.

The rising cost in Singapore is not only affecting the people, but businesses too. Whilst our low corporate tax was able to compensate for our high-cost space and attracting foreign investments, this tool would no longer be available with the implementation of Base Erosion and Profit Shifting (BEPS) 2.0, which sets a minimum corporate tax rate. This adds on to the urgency to find ways of containing costs in Singapore.

One of our major cost component is cost of property. For most of us, buying a home is the single largest expenditure of our lifetime. Hence, high residential property price has a huge impact on our cost of living. Yet, this cost is not captured in the Consumer Price Index, or CPI, because the CPI does not cover property purchases.

This is why the PSP has proposed a scheme to exclude land cost from the price of HDB flats to make them more affordable. In the retail sector, rental accounts for about 30% of the business cost. So, for each item that we buy from a shop, about 30% of their costs goes towards paying for the rental of the shop.

Prices has been rising in food outlets, like coffee shops and food courts. Hawkers spoke of alarming increases in rents imposed by the landlords. Record prices in the transaction of such properties are caused for concern. In 2022, following the announcement of the GST hike, the Committee Against Profiteering (CAP) was reconvened to investigate feedback on unjustified price increases of products and services.

I was invited by the Leader of the Opposition to be the representative of the Opposition on the Committee and having attended two meetings, I have learnt how limited the scope is for this Committee to act against profiteering.

The Committee acts on complaints received from members of the public. Such complaints are mostly against retailers, especially hawkers. At the retail level, there is much competition. So, I am not surprised that investigation usually reviewed that there are other reasons for the price increase.

For example, the increase in price might be due to higher rents. So, the hawker is not profiteering. But is the landlord profiteering? I raise this point at our last meeting and suggested the secretariat look further up the supply chain. I look forward to hearing from MTI on the progress at our next meeting.

Price Kaki, an app that compares retail prices from different sellers and seeks to prevent profiteering is also only able to check on vendors at the retail level. Places like Ireland, California, Canada, Scotland, Spain and China impose a cap on the rent increase each year. Austria and Germany are planning to do so as well.

Can I suggest the Fair Tenancy Industry Committee issue guidelines on the annual rent increase, similar to the way the National Wage Council issues guidelines on wage increase? The intention is not to depress prices to low levels, but to curb excesses. This can serve to stabilise the property market and pre-empt excessive rent increase.

In addition, real estate agents are commonly paid a commission based on the rent and, hence, higher rents work to their benefit. It would, therefore, benefit tenants to have an alternative source of information on what constitutes a reasonable rent increase.

Another important cost component is transport cost. Record COE prices for private and commercial vehicles, and even motorcycles, are causing pain for both families and businesses.

We understand the need to control the vehicle population in Singapore, because we are a small nation and road space is limited, but we must also recognise that mobility and the benefits that it provides are essential for all and should not be the sole province of the rich.

Skyrocketing COE prices contribute to the cost of living crisis in many ways. If the cost of a motorcycle doubles because the price of the COE has tripled, the Grab delivery rider is going to have to be paid more for his work. The cost of shipping and delivering goods, or a ride in a private-hire vehicle, will naturally also increase.

We urge the Government to consider the following suggestions: one, currently, passenger car and motorcycle COEs are under the zero growth policy, while COEs for commercial vehicles are allowed to grow at a rate of 0.25%. As motorcycles are increasingly used for delivery, we suggest that motorcycle COEs are also be allowed to grow at a rate of 0.25%, similar to commercial vehicles; two, adopt a points-based system, where apart from the bidding price, we also consider other factors, like nationality, and needs-based factors, like families with young children or persons with disability (PwDs); three, impose additional levies on multiple vehicle purchases, similar to the implementation of additional buyer stamp duties (ABSD) on those who buy multiple residential properties.

The Senior Minister of State for Transport said yesterday that this would not change things much as there are not many households with multiple cars. Can the Senior Minister of State show us the comparison of the number of households with multiple cars versus those with multiple properties, to explain the difference in approach?

In any case, imposing levies on second and subsequent cars would either dampen demand for multiple cars and tilt the balance in favour of those buying their first cars, or else raise additional revenue for Government. The most likely outcome is a combination of both. As both outcomes are desirable, I see no reason to reject this suggestion.

Another way to cope with rising cost of living is to have higher wages. Today, I will focus on the training and education for higher-paying jobs. The wage gap between graduates and non-graduates has been widening significantly, suggesting that there is demand for more graduates and we should provide more university places for our students.

Take the Medical Faculty, for example. The annual intake of the local medical schools is about 500. However, every year, on average, about 800 Singaporean applicants were rejected by the medical schools at the National University of Singapore and Nanyang Technological University, even though they meet the admissions criteria. Why do we not increase medical intake more aggressively? Instead, our students end up going to overseas medical schools, incurring huge expenses and we risk unnecessary brain drain when they do not return.

The traditional argument about ensuring fair share of talents in various sectors is outdated when we import foreign talents so readily. The same applies to other faculties as well, where Singaporean students are keen to study and that would lead to good paying jobs.

Mdm Deputy Speaker, the issue of cost of living is a complex one but one of great importance to many Singaporeans. Many suggestions have been, and will be, made today to address this pressing issue and improve the lives of Singaporeans. I hope the Government can keep an open mind to all suggestions and consider them seriously.

Earlier, the hon Member Mr Sitoh Yih Pin commented that the Reserves is for our children and our children's children. I think that it is important for us now to recall that our total fertility rate (TFR) has fallen to 1.05, which is half the replacement rate of 2.1. The number of our children and our children's children is halving with every generation. I think this offers a good reason to review our approach towards our Reserves and how much more do we need to accumulate. If our TFR falls further from cost pressures, who are we accumulating the Reserves for?

Mdm Deputy Speaker: Mr Mark Lee.

4.36 pm

Mr Mark Lee (Nominated Member): Mdm Deputy Speaker, our nation is undoubtedly feeling the ripples of global economic turbulence, and for many Singaporeans, the pressure on their household budgets is a source of concern. We must, and we should, take these concerns seriously, and it is our solemn duty to approach these concerns with the seriousness it deserves. It affects the daily lives of our people, the vitality of our markets and the health of our national economy.

As I hear the debates from some of the Members on the floor, like Mr Sitoh, it invokes in me images of insurmountable challenges and despair. The term "crisis" is a powerful one. We must, therefore, use this term judiciously, especially when the resolve of a nation like ours is called into question.

I stand today, not to minimise the concerns of our citizens regarding the cost of living, but to contextualise the narrative we choose to represent it. It is our collective responsibility to analyse and approach this issue with a clear-eyed perspective, and not through the lens of panic that the word "crisis" might imply.

Mdm Deputy Speaker, I do agree in addressing serious concerns on our cost of living, but to declare a crisis is to imply that our existing policies have faltered significantly. That our systems are in disarray and that our societal frameworks are on the brink of failure. This, I do not agree.

Singapore stands today as a global hub of commerce, a testament to sound economic principles and a beacon of stability. This did not happen by chance, but through the meticulous crafting of policies that are both robust and responsive.

Today, we stand united in our commitment to tackle a concern that lies at the core of every Singaporean's daily life – the escalating cost of living. But these are not just random fluctuations; they are the result of complex global economic trends, including widespread inflation that many countries are dealing with.

According to data published by the International Monetary Fund (IMF), global inflation currently stands at 6.9%, having eased slightly from last year's high of 8.7%. MAS' core inflation measures stands as a testament to these challenges, with projections indicating a rate of around 4% for 2023. While we see a moderate level of inflation as a hallmark of a thriving economy, the excess erodes the economic well-being of both companies and consumers.

The businesses that drive our economy are feeling the effects of today's unpredictable economic climate first-hand. We have seen the cost of running a business go up due to higher prices for materials and goods, a consequence of the pandemic's lingering disruption to how we get products from one place to another.

As a council member of both Singapore Business Federation (SBF) and Singapore Chinese Chamber of Commerce and Industry (SCCCI), data from our recent SBF Manpower and Wages Survey conducted in July 2023, 45% of SMEs and large enterprises expect their revenues to fall in the next 12 months, and an overwhelming 85% of companies expect business costs to increase, between 10% and 50% in the next 12 months, with SMEs projecting a deeper rise in costs.

Even more unsettling is SCCCI's Annual Business Survey conducted between July to October this year, where 68% of SMEs expect to have lesser profits or losses this year, compared to last year.

Additionally, recent international tensions have caused prices for fuel and food to soar – expenses that not only affected companies, but also the daily budgets of every household. The price of rice, for example, a staple in every Singaporean home, has been subjected to fluctuations due to trade restrictions and weather-related production issues in exporting countries. These challenges are complex, but they have very real impacts on our community, from the corner store to the dinner table.

It is imperative to acknowledge that the weight of these escalating costs cannot be shouldered by the business community alone. With each incremental rise in operating expenses, there is a cascade of effects, impacting on employment, wages and the price of goods and services.

Mr Liang Eng Hwa has already mentioned that our Government has not been a passive observer to these trends. Through monetary policy, they have taken decisive steps, countering the cost of imports by allowing the Singapore dollar to appreciate in a controlled manner. This is a strategic move, managing the immediate needs with medium-term outcomes, and is but one prong of their approach.

On the fiscal front, the Government have been responsive. Consider the Assurance Package enhancements announced in Budget 2023, which introduced or expanded upon several initiatives; the Cost of Living Special Payment provides a direct relief to families, helping to mitigate the immediate impact of rising prices; U-Save rebates have been a buffer for households against the increasing utility bills as energy prices soared globally. These measures are carefully designed to ensure that the additional costs are not borne by those least able to shoulder them.

The Government efforts extend beyond immediate relief. The Enterprise Innovation Scheme (EIS) and the enhancements to the SME Co-Investment Fund exemplify the commitment to fostering a fertile environment for businesses to innovate and grow. A concrete manifestation of this commitment is seen in our investment in the tech industry, supporting the creation of high-value jobs and the development of cutting-edge products that not only serve local needs but have the potential to meet demands internationally.

As we continue to bolster our economic resilience, we must also fortify the social fabric that holds us together. This involves maintaining fiscal responsibility and optimising social support measures to effectively reach those hardest hit by cost of living adjustments. A clear example is the enhancements made to the Child Development Account (CDA), providing additional support to young families investing in their children's future.

Alongside these measures, the Government has been monitoring the business sector to safeguard against any instances of profiteering, which many consumers are concerned about. The Committee Against Profiteering (CAP) was reconvened on 16 March 2022, under the leadership of Minister of State Ms Low Yen Ling, and includes MPs, industry stakeholders and grassroots organisation representatives, actively investigating any feedback on unjustified price hikes of essential products and services.

Even as global inflationary measures are set to moderate going forward, Singapore must continue to navigate cost of living issues in a way that is responsible, effective and forward-looking. The business community urges all stakeholders in society – individuals, families, community leaders, businesses, investors and the Government, to work together in trusted partnership towards a sustainable and viable growth that all of us, as a national collective, will benefit meaningfully from.

As we look ahead, the business community call for four key shared commitments. Our first shared commitment is to understand the root causes of our cost of living challenges with clarity and precision.

We are not just facing local issues, nor can it be solely attributed to ineffective policy-making. We are dealing with the ripple effects of global market trends and geopolitical events that have affected many countries, including Singapore.

We therefore need to dissect these complex dynamics thoroughly. By doing so, we can craft solutions that are right for our unique situation in Singapore while also fitting into the larger global puzzle.

A common pitfall for many nations has been the reliance on policy-making grounded in evidence or statistics that unfortunately are reflective of past conditions rather than the present reality. Such a lag can lead to suboptimal outcomes. Take, for instance, the Federal Reserve, which, having underestimated inflationary trends, found itself compelled to implement rapid interest rate hikes.

To refine our policy-making, a more dynamic approach is called for. This could be achieved through enhanced collaboration with trade associations, ensuring a continuous dialogue and close listening ear between their diverse membership and Government policy-makers.

Such a two-way exchange promises to bring real-time ground-level insights to the forefront, allowing for the crafting of more responsive and agile solutions to the economic challenges we face and allow policy-makers at times to consider slowing down the pace of implementation of certain policies that could unintentionally aggravate inflation woes.

Our second commitment is to uphold strict fiscal discipline to protect our economic future. It is essential that we sharpen the focus of our social support programmes, ensuring they deliver tangible outcomes to those most affected by rising costs.

We must continue to reward innovation and productivity across all sectors. By doing so, we are not just spending money more wisely but also strengthening the foundation of our economic system.

The third cornerstone of our approach is a commitment to thoughtful policy-making, avoiding quick fixes that cause more problems than they solve. Policies must be carefully calibrated to encourage growth and increase earnings without inadvertently sacrificing the future of our children, increasing the national debt or taxes in a way that could worsen living costs, driving talents and investments away. Our aim is to create a cycle of prosperity, spurring growth that leads to better wages and smoothing out inefficiencies that inflate costs.

Our fourth commitment is fortifying the bonds of our community. In a landscape where the cost of living is escalating, it is not only households that feel the strain. The repercussions extend deeply into the business community as well. Workers naturally seek higher wages from their employers to cope with their increasing expenses.

Acknowledging this dynamic, the National Wages Council has recently called for a built-in wage increase of 5.5% to 7.5% for low-income workers, raising also the minimum quantum in its 2023/24 wage guidelines. The Government has also proactively introduced the Progressive Wage Model, specifically designed to elevate the income of low-wage workers. These initiatives demonstrate a clear national resolve to uplift the standards of living for this vulnerable group.

From a business perspective, these measures might initially seem like an added strain on operational costs. Yet, the broader business community understands that these are the tenets of a new social compact that Singapore is striving to create.

In our journey to overcome and adjust to the evolving challenges of cost of living, it calls for unity and collective resolve, not division. We must resist the inclination to frame our challenges as conflicts between different segments of our society, be it local versus foreigner, business versus worker, or Government versus citizen. Instead, we must recognise that these economic hurdles are shared challenges that will be best overcome when we, as a united nation, pull together in the same direction.

Fostering this unity requires a commitment from all sectors of society to engage in open, constructive dialogue. We must break down the barriers that hinder collaboration and build bridges that allow us to share insights and develop holistic solutions. By standing in solidarity – citizens and Government, businesses and workers, locals and internationals – we can harness the full strength of our national character to address the cost of living issues in a manner that is not only effective but also equitable.

In conclusion, I thank the hon Leader of the Opposition, Mr Pritam Singh, for raising this critical and important issue that affects all Singaporeans. While we acknowledge the language of "crisis" may capture the immediacy of the issue, we must frame our dialogue in a manner that reflects not panic but preparedness, not reaction but readiness.

The business community is convinced that the key to managing living costs effectively lies in bolstering our economic base. We must channel our efforts into enhancing our competitiveness, encouraging innovation and sustainability in businesses and elevating workforce skills. Expanding our economy's capacity in this way is crucial for our ongoing success and for our ability to provide social support.

It is through these enduring strategies that we will build an economy robust enough to support its people through every challenge, ensuring that we are always ready to lend a hand to those who need it most.

Mdm Deputy Speaker, our unity is our strength and it is together that we will craft a sustainable future where economic vitality is matched by social harmony and inclusiveness.

Mdm Deputy Speaker: Ms He Ting Ru.

4.52 pm

Ms He Ting Ru (Sengkang): Mdm Deputy Speaker, over the last few years, one can barely open the headlines without catching a glimpse about various crises facing our planet, ranging from the cost of living crisis that is the subject of this motion and also the climate crisis, mental health crisis and crises relating to war and conflict.

But even when we may be faced with "crisis fatigue", what affects us viscerally is the surging prices of things that we need on a daily basis. Madam, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] In recent years, many things have troubled Singaporeans, especially the pressure of rising living costs. This also includes rising medical and nursing costs. Among these, mental health is also an aspect that may be easy to neglect in Singapore's medical and insurance systems as it is less visible. However, mental health can have a very direct impact on the lives of individuals and their families. We must remember that if we neglect our physical and mental health for a while, we may need more complex or even expensive treatment later on and the stress we need to endure in life will also increase.

For this reason, the Workers' Party calls for the relaxing of restrictions on using CPF savings and also to increase state subsidies for medium- and long-term care and also mental care. Some may point out that this is a waste of resources, that it will reduce personal savings that can be used for medical care in the future, and also creates dependence on the country and weakens the country's financial resources in the long run. The Workers' Party believes health cannot be understood through a cost lens alone. Health is a long-term investment in our people and the country. Preventive care or regular care today can effectively avoid future health and financial burdens. I will use my speech on the motion today to explore these issues in more depth, with the hope of improving medical services and reducing the challenges faced by Singaporeans.

(In English): The adverse impact of the cost of living crisis is seen on both mental and physical health. While humans have an immense capacity for resilience to get through difficult times, there are measurable, long-term effects on health and overall wellbeing that result from long-term stress. The imbalance in the body's physiology due to long-term stress, such as the constant worries associated with increasing costs, can lead to increased rates of chronic illnesses such as cardiovascular disease, lowered immunity, leading to greater susceptibility to infectious diseases, and also has an adverse impact on mental health.

I would therefore like to focus on the health and care related elements of the cost of living crisis facing us.

There is attention given to the direct link between worries over costs and the impact that it is having our ability to stay healthy and to be able to afford care, be it physical or mental health, long-term intermediate care or even preventive care.

A report released by Cigna in January 2023 about a global survey of 9,000 respondents also warned that cost of living pressures could trigger a global health crisis. The survey found that rising costs of living are top of mind for most people around the globe, with nearly half of respondents in Singapore saying that it was their biggest worry. Almost two thirds of the 1,100 respondents in Singapore also agreed that inflation is making it too expensive to stay healthy, whether it is through paying for care or taking measures to stay healthy.

A study at King's College London's Centre for Society and Mental Health also found that worries about increasing costs pose a major risk to mental health and those with pre-existing mental health issues are more at risk. The study also found that those who are using savings to meet everyday costs and borrowing money to cope were correlated to psychological distress.

In view of this, I believe the cost of health and other forms of care is one of the areas that warrants closer attention as we tackle the broader cost of living issues.

While Singapore, as a nation, has increased healthcare spending as a proportion of GDP in recent years, our current spending at 4% of GDP is still less than half of the OECD average. The health outcomes we have achieved at this cost are rightly a point of pride for policy-makers. However, our country is a densely populated urban city where the cost of healthcare delivery is more easily managed compared with countries with larger and sparser geographies. Singapore's health system also benefits from a generally lower crime and drug abuse rate and road traffic fatality rate than other countries – achievements that are not to be diminished and these should definitely be maintained.

But I believe that our health outcomes could be improved, with Singaporeans living healthier, longer and safer lives.

As an example, my WP colleagues have pointed out that for many years now, even before and without COVID-19, our approach to hospital bed occupancy rates are a cause for concern, with Ng Teng Fong, Khoo Teck Puat and Tan Tock Seng Hospitals operating at near 100% occupancy just in the last week of October 2023, even though the Government has acknowledged that 85% is the academic consensus safe operating rate.

In terms of waiting times, medical manpower per capita, intensive care unit (ICU) bed capacity in the public health system, there remains concerns about what the tensions in these areas mean for our health outcomes.

These areas should bear continuous scrutiny to maintain confidence in our public healthcare system.

Out of pocket costs and waiting times are the most direct interaction that most of us would have with the healthcare system. Around 70% of Singaporeans and PRs have Integrated Shield Plans (IPs) that cover private medical care and two in three have riders to pay at least a proportion of medical bills. This is indicative of residents being extremely cognisant about the potential costs associated with ill health and wanting to take action to guard against these costs.

A Straits Times article published in April 2022 titled "Having an Integrated Shield Plan and rider may not always guarantee peace of mind" warned that even buying IPs and riders may not always guarantee peace of mind and that residents might still face substantial bills should they require expensive treatment for preexisting conditions.

Recent commentary has also focused on private insurance coverage for those with mental health conditions and there is acknowledgement that current coverage is inadequate.

In a reply to a question that I filed in September this year, MOH also stated that insurers cannot indiscriminately reject an application solely on, amongst others, the basis of medical conditions, including mental health conditions. I was also happy to see an article in end October 2023 where private insurers stated that they are looking to include better coverage for those with mental healthcare and treatment needs.

However, the Government should ensure that this does not cause a surge in private sector insurance bills and regulators have to be ready to step in should private insurance discriminate on various medical grounds. This is especially as inflation in medical benefits is already expected to exceed inflation in healthcare post-subsidies.

Insurance broker, WTW, currently projects medical benefits inflation to be 9.8% this year, outpacing the broader inflation after subsidies in healthcare, which has generally risen in line with broader inflation over the last one-and-a-half decades.

Next, healthcare schemes and financing are currently extremely complex and are challenging for the person in the street to negotiate. This complexity imposes a bandwidth tax. For example, an individual in the sandwiched generation will have to understand the differences in schemes for both older and younger dependents. And if they buy IP riders, they will also need to understand the interaction between public and private healthcare for each dependent. In such situations, I hope that we can try and avoid situations where one ends up over-insuring their family in order to avoid the stress of being caught out unawares.

Apart from continuing to work on ensuring individuals feel secure about their ability to cope with the financial aspects associated with future healthcare costs, existing financial education efforts should target this specific point and address what families can do to avoid over-insuring, including demystifying complex insurance schemes which inevitably change from time to time due to developments in the macro environment.

I now turn to MediSave. For those with low MediSave balances, the Government should offer more MediSave top-ups to address healthcare inflation while continuing to leverage its design which reduces wastage while cutting out-of-pocket costs for consumers.

In this vein, we have to ensure that yearly MediSave withdrawal limits are updated yearly to reflect inflation, as medical costs can surge rapidly in a short period of time. The headline limit was increased to $500 from $400 in 2018 and was updated in 2020 to allow patients with specified complex chronic conditions to withdraw up to $700 yearly.

At the time of the 2018 update, the $500 limit was enough to cover the average annual bill of a patient with three or more chronic conditions. However, we have to look to increase withdrawal limits to match healthcare inflation rates and consider allowing greater flexibility to use our MediSave savings.

One way to do this would be to repeat the WP’s proposal to remove the MediSave withdrawal limit for chronic disease management for those over 60, which is contained in our 2020 manifesto. And this was also raised by Aljunied MP Gerald Giam in October last year.

A third MediSave-related point is that our savings earmarked for healthcare expenditure could be used to better support mental health treatment.

Anecdotally, it appears that the wait times for access to counselling, therapy and other mental health care have driven some recipients to private services. Alongside ongoing moves to grow public mental health services, can the Government consider allowing users to tap their own MediSave account for a range of private mental health treatments which would include psychotherapy, counselling and other forms of therapy like speech and occupational therapy? This would mean bringing in practices run by therapists and other professionals to allow their treatment costs to also be covered by MediSave.

Mental health is no less important than physical health and poor mental health can lead to issues with physical health as well.

Since MediSave is already being approved for use for mental health services at places like Institute of Mental Health and polyclinics, I hope that we can consider expanding this to include the use of MediSave to access mental health services in other practice settings aside from purely psychiatric settings. This would be important to assist families from across the board, some of whom need to put in place early intervention strategies for their children's developmental issues, to support a multi-modal approach beyond psychiatric treatment to address neurodevelopmental, mental health conditions and symptoms.

Moving to intermediate and long-term care (ILTC) costs, while the issue deserves a longer intervention on its own, the move earlier this year to provide subsidies of at least 50% to all Singaporeans for palliative care earlier this year is welcome. Likewise, positive are plans to extend drug and vaccine subsidies of at least 50% to all patients of MOH-funded providers of long-term care services.

However, I note that nursing home care costs remain a significant area of concern, with those with per capita household income of over $2,800 a month not being able to get subsidies for nursing home care. These families would instead have to turn to private nursing homes, which can cost $5,000 or more a month.

The WP, in our 2020 manifesto, called for there to be more subsidies for ILTC costs to relieve the out-of-pocket financial burden of social care for families who need it.

With immediate cost of living pressures upon us, can the Ministry share details about the quantitative and qualitative impact the current cost of living crisis has had on the ability of households to pay for ILTC needs and what are the plans to ensure that they do not fall through the cracks and have to dial down on ILTC arrangements?

A next step in this revamp for subsidies would be to look again at related subsidies, for example, the Home Caregiving Grant that was brought up by Member for Hougang SMC Dennis Tan. While the grant was increased recently to now pay between $250 to $400 a month for those who satisfy the means testing criteria, the amount is hardly enough to cover care-related needs.

[Mr Speaker in the Chair]

The means testing criteria is also strict and excludes many middle-income households. Additionally, it does not account for the loss of income or non-financial costs, such as the invisible workload associated with providing care at home for a family member.

Finally, I would like to touch on concerns about the cost of healthy eating in Singapore. After all, what we put in our bodies will form a strong foundation for good physical and mental health. And by eating well, I do not mean swapping our national diet for the most expensive proteins or organic foods.

Eating well is eating in a way that at least meets what nutritionists recommend as a bare minimum. This is already contained in the Health Promotion Board (HPB)'s My Healthy Plate guide: a quarter whole grains, a quarter good sources of proteins, half fruit and vegetables. This, as many of us know, can be challenging to do, given our carbohydrate-dominant everyday cuisine. This is made even harder for those who work or live further away from supermarkets or places where there is a range of food options to facilitate a healthy diet and can be tough on those of us who work shifts. It is also harder to address rising food costs when many do not have access to a microwave or fridge at work, which makes it more difficult to bring healthier meals from home.

The HPB has a Healthier Dining Programme encouraging availability and accessibility of healthier food and drink options across the island, but we can go further. For example, we can give more consideration and priority to stalls and restaurants that offer quantitatively healthier food under HDB's Price-Quality Method Tenders framework.

Sir, the continued cost of living crisis facing us has had an impact on our mental and physical health in the near-term and also has long-term impacts on our health and development as we grow and age.

We need to take steps now to help hard-working families already struggling to juggle their household balance sheets confidently deal with increases in the cost of care – health, preventative and social care – so that it does not become an insurmountable burden. With these in mind, I support the original Motion filed by the Leader of the Opposition.

Mr Speaker: Mr Desmond Choo.

5.08 pm

Mr Desmond Choo (Tampines): Mr Speaker, Sir, I stand in support of the amended Motion by the hon Member Mr Liang Eng Hwa.

Inflation and consequently elevated cost of living are very important issues. In the Labour Movement, this is a core concern that we have monitored closely over the years. The effects are felt by all – workers, consumers and businesses. Our older and lower wage workers would understandably be even more affected.

During our "every worker matters" conversation concluded recently, more than half the workers aged 50 and above and workers at 20^th percentile of income, felt that they were most impacted by the price of cooked food, groceries and utilities.

This was exactly the items most susceptible to fall out from COVID, the Ukrainian-Russian war and other geopolitical events.

With so much of our inflation being imported and affected by major global events, workers and residents often wonder what can be done. Many of our workers and residents have already made lifestyle changes where possible by switching from eating out to cooking at home or by switching from private transport to public transport.

With our workers taking action to manage cost, national policies have also helped our workers.

The Singapore dollar, as Mr Liang Eng Hwa has pointed out, is much stronger than many other currencies now. It is a fact not lost amongst our workers and residents who travelled in the region and beyond.

The Government is providing targeted support to cushion the impact of inflation, particularly for middle- to lower-income and retiree households. Our workers welcome the $10 billion enhanced Assurance Package (AP), the Cost of Living (COL) support package and the new Majulah package. The latter itself will cover 1.4 million older residents.

Our workers' common feedback is that there is just too many packages to remember, not that there are too many, but too many to remember. But these packages will ultimately be judged by its outcomes.

MOF's 2022 studies suggested that the COL support measures fully covered the effects of rising prices for the bottom 40% of households and retiree households and half of the average expenditure increase for the middle 20% of households.

The Deputy Prime Minister also assured Parliament that the support measures combined will fully covered the increases in spending by the lower-income households this year, due to inflation and the GST rate increases and substantially cover the increases in spending by middle-income households.

For our lower-wage and senior workers, the Prime Minister has announced at this year's National Day Rally that there will be further enhancement to the Workfare Incentive Scheme (WIS), Silver Support and matched retirement savings schemes, with details to be announced in 2024.

These schemes, taken together, provide a good balance between cash and CPF MediSave savings, immediate and future needs.

We need to deal with this current period of high inflation, but not forget the long-term structure challenges, such as the healthcare needs of an older population.

The Labour Movement stands ready to support our workers.

Cost of living issues should not be tackled by the Government alone. Enterprises have their roles to play too. In NTUC, the FairPirce Group plays its time-honoured role to source and stockpile essential supplies for the nation. We can all remember how Singapore still had some goods on the shelves even in the deepest of COVID. It protects of people against price shocks experienced is so many other countries. FairPrice Group releases supplies on regular prices even if there are external global factors like logistics issues experienced during COVID that can cause huge upswings in prices. This can help to moderate domestic prices, especially during crisis.

The question is: what about the non-crisis time? NTUC is committed to helping Singaporeans meet this difficult inflation challenge. FairPrice, for example, has an extensive range of household brands too. In fact, 2000 items across 54 categories. They are priced at a minimum of 10% to 15% below comparable brands and quality.

FairPrice Group's Pioneer Generation, Merdeka Generation and CHAS blue discount schemes have brought about $65.5 million worth of savings since 2015.

I know the aunties and uncles in my constituency, Tampines-Changkat, are very discriminating when it comes to prices and quality. They know exactly which days to shop for the best deals and we will welcome more of them to do that.

But we will not rest on our laurels. In 2022, FairPrice started the "stretch a dollar" programme, giving a 5% discount on 100 essential items every Friday. At Kopitiam and FoodFare, prices of coffee and tea and the breakfast set were reduced or held constant throughout last year despite significant business cost increases. FairPrice and other social enterprises face the same cost pressures as any other commercial entities. So, those who use the FairPrice mobile app can also enjoy 10% off their meals at Kopitiam outlets island-wide.

We note keenly that lower-income workers require the most help. The Labour Movement charity and corporate philanthropy arms also provide support for low-income families and individuals. Our special assistance care fund launched in August 2022 has dispersed more than $2 million to 8,000 members to alleviate the cost of living. Across areas, such as eldercare, education, community service, our social enterprises collectively dispersed about $12 million in 2022.

NTUC certainly does not sit idly by but leans in to care for our workers and residents.

On another front, just over the recent two months, the five Community Development Councils (CDCs) have launched a total of $40 million worth of funds to help residents cope with rising costs of living. This is in addition to the $600 million CDC vouchers that were issued island-wide over the past three years to support residents and small businesses. The CDCs have put in place a wide range of assistance schemes to help low-income families with food, utilities education, transport, diapers, spectacles, mobility aides and more, with the new funds, for example.

I will go through all the five CDCs. There are some examples.

Residents living Central Singapore can look forward to school bus fare subsidies, a neighbourhood job scheme, assistance for families with children living in rental flats.

Southwest residents will get more help for education, food, transportation and daily expenses.

Southeast residents will have a new EduCare fund to give additional help to low-income families, to students in primary and secondary schools.

Northwest residents will have a new support grant. We will focus on uplifting the least privileged, providing upscaling skills, connecting partners live in community.

Residents in the Northeast CDC would all have new internship mentoring opportunities, comprehensive financial support for school-going children.

Many thanks to the donors, partners and volunteers working with us on these initiatives. And there will be more to come for our residents.

By coming together to work on programmes to uplift the less privilege and provide opportunities to the next generation, we not only help our families to combat inflation but also strengthen our social compact.

The examples of NTUC FairPrice Group and the CDC partnerships show that everyone can play a part in supporting one another to tide through difficult times. We can mitigate the impact of price increases and in doing so, strengthen our community.

Our overall Government policies will help to keep the increase in Singapore's food prices much lower than the increase in global food and commodity prices – below 4%, compared to 25% globally between March 2020 and May 2022.

There is still more work to be done, but we can do so together.

Beyond the broad and many-stakeholders approach in solving our cost of living issues, the most important work is to keep wages ahead of inflation – real wage increase.

No country can shield their citizens from cost issues in the longer term and do it sustainably. There are no quick workarounds with rising costs. Many countries have resorted to things like price caps but only to abandon them when the bill size gets too monstrous.

The crux is to make sure that our workers can have real wage growth. This is where we must invest our resources, time and effort. So, what can we do?

The key is a tight labour market and a productive workforce.

A tight labour market gives workers bargaining power to command pay increases. We can keep it tight by continuing to bring in good quality investments that create jobs for Singaporeans. Our policies have resulted in record levels of direct foreign investment commitments for the last three years – even more jobs for Singaporeans.

Today, we have nearly 88,000 job vacancies, or two vacancies for every unemployed person; more than one in five vacancies in growth sectors with higher-paying jobs. We must continue to help our workers to secure good jobs. With no jobs, it can be worse than any inflation or inflation issues. Jobs provide dignity. Together with Workforce Singapore and NTUC's e2i, we have strengthened our job placement. We have a Job Security Council to help our people get jobs, even in the deepest of COVID-19.

Recently, I visited a job fair organised by the Northeast CDC and e2i. There were 1,000 vacancies on offer, not as many jobseekers. I was secretly glad to hear from the employers that they found it difficult to hire locals and that they were improving their wages and workplace conditions to out-compete rivals. These are good signs for our local workers.

Our workforce must also be productive. A highly skilled workforce has been a cornerstone of Singapore's success and even more important in today's world, where skills are valued more than ever.

This is not easy work because it takes years to get the policies right and see results. The Industry Transformation Maps can provide that longer-term solution.

At NTUC, we are glad that the Government is providing us with support to form Company Training Committees (CTCs). These CTCs are now the backbone of many companies who are tranforming their businesses, with better wage outcomes for workers.

As shared by the Senior Minister of State for Manpower yesterday, over the last five years, between June 2017 and June 2022, real median income rose by 1.8% per annum. Real income growth at the 20th percentile saw even stronger growth at 2.9% per annum, narrowing the gap with the middle-income earner.

We acknowledge that sustaining such real wage growth is immensely difficult, year on year. While we might not succeed every year, we must keep our focus on longer-term growth, for longer-term well-being.

In providing real wage increases for our workers, we cannot do this alone. We work with our tripartite partners on the NWC to promote fair and sustainable wage increases. This year's NWC again demonstrates the resolve of tripartite partners to help workers cope with the cost-of-living increases. Amidst increases in business costs, the NWC recommended a one-off payment, a lumpsum payment for all workers to cope with cost of living, with higher amounts for lower- to middle-income workers.

What about our lower-wage workers – the ones who need more help? We have expanded the coverage of the Progressive Wage Model. The Government co-shares the cost of wage increases with employers through the Progressive Wage Credit Scheme. Today, up to nine out of 10 lower-wage workers are covered by the Progressive Wage measures.

This year, NWC recommended increasing the salaries of lower-wage workers by 5.5% to 7.5%, or at least $85 to $155 per month. This is higher than inflation. NWC has also recommended increases in the Progressive Wage requirements for administrators and drivers. The new requirements that will come into effect in 2024 will uplift 43,500 administrators and 8,400 drivers. So, more help is on the way.

Mr Speaker, Sir, the world is faced with inflation in nearly every country. Some societies have been worse than others. We are glad that our policies as a whole are working. There is already light at the end of the tunnel. Based on MAS' latest projections, inflation is coming down. We are continuing to extend our different packages of support and by keeping our workflow productive, we can sustain real wages and our quality of life. With this, I support the amended Motion.

Mr Speaker: Mr Mark Lee.

Mr Mark Lee: Sorry, Mr Speaker, Sir, I realised that I did not state in my speech. I want to state for the record that I support the amended Motion.

Mr Speaker: Noted. Mr Gerald Giam.

5.21 pm

Mr Gerald Giam Yean Song (Aljunied): Mr Speaker, Singapore faces an undeniable upward trend in cost of living, driven by factors such as global inflation, supply chain disruptions, escalating energy prices and labour shortages.

However, contrary to what the Member for Bukit Panjang seems to imply in his amendments to the Motion, domestic policy decisions like the hike in the GST, increases in water and electricity tariffs and rises in public transport fares, coupled with the skyrocketing cost of COEs, also contribute to the increase in the cost of living that Singaporeans are experiencing.

Blackbox Research's recent SensingSG survey found that 59% of Singapore residents highlighted cost of living among the two most important national and community issues.

Public transport costs are also a contributor to the cost of living in Singapore, making up 2.5% of MAS' core inflation basket. Over the last 10 years, the rate of increase in bus and train fares has been faster than that of core inflation. In the 2023 Fare Review Exercise, the Public Transport Council (PTC)'s fare adjustment formula produced a whopping 22.6% fare increase, although the PTC chose to cap it at 7%.

This decision, though, led to the Government providing an additional subsidy to public transport operators, to the tune of about $300 million in 2023 – up from $200 million a year before. This subsidy still does not eliminate the remaining 15.6% of fare increase, which the PTC has deferred to future reviews.

In the meantime, public transport operators (PTOs) have continued to post eye watering profits. Between 2011 and 2022, SMRT and SBS Transit have together posted profits averaging $55 million a year, reaching $110 million in the last financial year. This is particularly jarring against the backdrop of increasing fares and Government subsidies.

The PTOs and our current public transport model face little competition with each other because they operate different transport routes across the island. Even duplications of the same routes for different transport modes are slowly being eliminated as bus services running parallel to new MRT lines are removed.

These prompt questions about the efficacy of the current fare adjustment formula and a broader discussion around the sustainability of Singapore's public transport model.

The current model consists of a mix of Government ownership of transport assets and operating contracts carved out among multiple profit-oriented PTOs. The model is inching more towards nationalisation than the Government would like to admit.

Starting in 2010, all real assets were transferred to the Government. The year 2012 saw the introduction of the $1.1 billion Bus Service Enhancement Plan. In 2013, the Bus Contracting Model saw bus services in certain areas tendered out to PTOs. This was completed in 2016.

The Land Transport Authority (LTA) now owns bus assets and pays the PTOs an operating fee while collecting all fare revenue and setting the service levels. The Government is now subsidising public transport services to the tune of $2 billion a year – or $1 for every journey.

This mesh of responsibilities involving the operators, the regulator and the Government potentially introduces inefficiencies and additional costs. These will eventually trickle down to commuters and taxpayers, manifesting in either increased fares, higher Government subsidies, lower service coverage or all of the above.

Some service coverage is already being reduced. In the past three years, about 30 bus services have been shortened or removed. Such changes have affected my residents in Bedok Reservoir who continue to voice their concerns to me about long wait times and crowded feeder bus rides to the Bedok Mass Rapid Transit (MRT) station. Elderly commuters who favour direct trunk services, which facilitate shorter walking distances for the commute, are also affected by these changes.

As the Leader of the Opposition said when moving his Motion, we need to move beyond one-time fiscal handouts and explore possible structural changes to existing policies to reduce cost of living expenses for Singaporeans.

It is therefore timely to revisit the proposal to establish a National Transport Corporation (NTC). This was first proposed by the WP in 2006. We envisaged the NTC as a publicly owned, nonprofit, multimodal land transport entity which will oversee the planning and operation of all MRT, Light Rapid Transit (LRT) and truck bus services in Singapore.

The NTC offers many benefits over the current public transport model.

First, under the NTC, the substantial profits which go to PTOs and their shareholders could instead be redirected to benefit commuters. Such revenue could mitigate fare increases and subsidise transport for the elderly, people with disabilities and low-income households, directly addressing concerns about the cost of living.

Second, with full access to the NTC's financial records, the Government could set fares just high enough to ensure the NTC's fiscal sustainability, without overly burdening commuters. The complex fare adjustment formula can be done away with. Fare adjustments could be introduced progressively, avoiding abrupt changes during times of economic hardship.

Third, the NTC could manage bus interchanges, MRT and LRT stations and their associated linkways, leveraging the rent from these prime retail and commercial areas to support its operations. This will help moderate fare increases and the need for ever growing Government subsidies.

Fourth, the NTC could hire top transport engineers and managers, both locally and globally, based on their expertise, track records and commitment to public service.

Companies are fuelled by their people. Profit motives are not the sole drivers of efficiency and productivity improvements. By setting stringent key performance indicators (KPIs) and empowering these professionals, the NTC can continually improve service standards.

In contrast, the current penalties for PTOs' service disruptions are trivial compared to their profits and do not directly affect executive pay. The NTC's approach will see a marked improvement in performance management.

Fifth, for transparency and accountability, the NTC should disclose its executive salaries, primary profit sources and major cost drivers, enabling the Parliament and the public to examine its financial health and hold relevant parties accountable.

Sixth, a unified transport entity like the NTC would ensure more uniform service standards, enhanced service integration and comprehensive access to data for service improvement.

Utilising a vast array of commuter data, the NTC can employ artificial intelligence (AI) to forecast travel trends, dynamically directing buses and trains where they are most required. Improvement suggested by commuters in one region of Singapore could be applied island-wide.

Seventh, the NTC would yield economies of scale in procurement, staff allocation and technological infrastructure, leading to further savings that benefit commuters.

Eighth, the NTC would assume operational responsibilities currently held by the LTA, allowing the LTA to focus solely on its regulatory role, eliminating potential conflicts of interest from being both a regulator and an operator.

Lastly, the NTC would be given the freedom to experiment with and spearhead land transport solutions and position Singapore at the vanguard of global transport innovations. This could pave the way for Singapore to be an earlier adopter of advancements like autonomous buses or eco-friendly hydrogen-powered vehicles.

Sir, the NTC is a rethink of Singapore's public transport model. It shifts us away from public transport companies that profit from Government subsidies to a non-profit, unified provider that will be more efficient and affordable for both commuters and taxpayers.

This new model will place the needs and well-being of our commuters at the heart of our transport policy. It will not only address the immediate cost concerns of Singaporeans, but also steer Singapore's public transport into the future.

Sir, I support the Motion standing in the name of my hon friends, the Leader of the Opposition and Member for Aljunied, Mr Pritam Singh and the Member for Sengkang, Mr Louis Chua.

Mr Speaker: Assoc Prof Jamus Lim.

5.31 pm

Assoc Prof Jamus Jerome Lim (Sengkang): Speaker, Singapore has one of the lowest car ownership rates among advanced economies worldwide. In 2022, there were only 149 cars per 1,000 inhabitants here, a rate less than half that of the United Arab Emirates (UAE) or Taiwan, a quarter that of the UK and Switzerland, and six times less than New Zealand or the US.

The upshot of this, is that our streets are amongst the least congested in the world compared to global cities such as London, Chicago or Paris, where drivers spend more than 130 hours in their cars, sitting in traffic in 2022. Local commuters only lost 26 hours to jams and correspondingly less in terms of economic costs from lost time and petrol. This is admirable for a global city and one that we should not take for granted. This is evident for anyone who has had to endure rush hour in the major metropolitans of our neighbours, whether it be Bangkok, Kuala Lumpur, Jakarta or Manila. The major reason for this favourable anomaly is, undoubtedly, the system of Electronic Road Pricing (ERP) and the Vehicle Quota System (VQS), of which, COEs are the much-reviled offshoot.

COE prices hit a new high in October 2023, following repeated new records set in prior months. The Open category, now changes hands at $158,000, more than five times the recommended retail price of a brand new Honda Civic or Toyota Corolla sold elsewhere in the world. This is one of the major drivers of ever-rising pressures on our nation's cost of living. And COEs were implicated in the most recent increase in headline inflation.

Some may argue that cars in Singapore are a luxury and a car-lite society is both better for the environment and more than made up for, by an excellent transportation system. Surely, the price of COEs is only the concern of an elite few.

But for middle-income families with younger children, as so many of my Sengkang residents are, a car is almost a necessity for getting kids to and from child care and school, co-curricular activities, enrichment class and weekend shopping trips. Similarly, those who are elderly or less mobile may well feel that a car in the family is less of a luxury, and more of a need.

And car ownership is more widespread than we may think; two in five households own one. And even for those who do not own a vehicle, the price of cars and COEs bleeds into our costs every time we hop into a taxi or book a private hire car.

The high prices of COEs for cars had even spilled over into that of motorcycles, at least until recently, where the relatively low costs of ownership used to be a refuge for those with more modest means wishing to have their own private mode of transport.

The VQS and COEs were introduced in 1990. The objective, along with ERP, was to restrain ownership so that road traffic remains smooth. Inherent in the policy is a decision to exchange certainty in congestion management, for uncertainty in prices faced by aspiring car owners, along with the possibility of inequity in access and usage. Put another way, the Government consciously chose a quota system, knowing that it could lead to rising costs. If so, it follows then, that policy-makers should step in to manage prices when they get too far out of whack.

Since its introduction, the system has been repeatedly tweaked. These included minor adjustments, such as tenders became monthly instead of quarterly; but others have been more consequential, such as a decision to go from closed to open bidding, to make COEs non-transferable, or the collapsing of private-car categories into the present two.

But the Government chose to lock in vehicle quotas – with some initial allowance for growth – at the levels associated with the new car registrations established in the years following the roll-out of the VQS. This has led to significant variations in the total quota in different years; the difference in the highest and lowest supply years has been, on average, as high as 4,300 every month.

In 2018, the rate of growth of cars was frozen. This means that the stock of available COEs is now indefinitely fixed, and hence, the allocation of COEs is effectively zero-sum. If you are an aspiring car owner, but are priced out of the market, then too bad for you. If a well-off family can afford to buy multiple cars for each of their children, it will come at the expense of others who are less able to do so. This could be a delivery person who may need a vehicle for work, a household with a sick or disabled member that needs a car for routine hospital appointments, or a family of five who would benefit from one ride to shuttle their kids to and from school. But the Government has emphasised that – while it aims to keep COEs affordable – they were decidedly not a tool for enhancing progressivity.

This capsule history lesson is instructive, because it helps us understand not only the motivations behind why a COE system was rolled out, but also, why this history has unwittingly introduced shackles that inhibits the successful and equitable functioning of the system today.

Perhaps the best way to think about COEs and the VQS is that it is a two-step system for controlling the vehicle population. The VQS first sets the total number of cars that ply our roads. After this is established, bidding via COE efficiently allocates the available quotas to potential car owners.

COE bidding requires each bidder to make offers, but only pay the price of the lowest successful offer. It was inspired by auction theory, and in particular, Nobel Prize winning insights into how best to ensure that each bidder bids as much as their own private valuations would carry them. At the same time, no bidder has any incentive to deviate from the bids that they put forward. The outcome will, in theory, not only raise the same revenue as an auction awarded to the top bidder, but also allocate these COEs efficiently.

This is all here and good, but herein lies the wrinkle between theory and practice. While the COE system was modeled after this so-called second-price, sealed-bid auction, real-world considerations have meant a departure from this theoretical ideal. Bidding is now open, rather than sealed. There are multiple certificates to be issued, not just one. And perhaps, most importantly, to make things easier for car purchasers, we now allow dealers to bid on the buyers' behalf, for multiple COEs.

Sir, the Government has made some efforts to address the recent spike in COE prices. They have tweaked supply, mainly by bringing forward confirmed five-year COE de-registrations and have increased bid deposits for motorcycles, while shortening the temporary validity period. But these have had limited effect, which is unsurprising since the moves are one-off.

Measures that appeared to contain prices in the motorcycle COE markets are unlikely to work for car COEs, since dealer strategies for selling cars and motorbikes differ.

Perhaps most importantly, the freed COEs still constitute only a drop in the bucket of the overall quota shortfall relative to high-quota years. Even with the cut-and-paste measures announced in November, as shared by Senior Minister of State Chee Hong Tat yesterday, my calculations suggest that these adjustments inject about 10% more COEs into supply, on average within each category per month. Whereas a more decisive cut-and-paste is required to genuinely move the needle.

To be clear, the Government is well aware of how relative quota differences are unequal across the years, and has been aware of this for a long time. In response to then-WP MP Mr Low Thia Khiang's query in 1998, about whether COE prices were due to such quota imbalances, then-Minister for Communications Mah Bow Tan simply explained that they were fixed at the beginning of each quota year, conveniently side-stepping the issue of whether a more balanced distribution of quotas were called for.

Members of the public also recognise this. A letter to The Straits Times on 14 October 2023 called for managing COE demand and supply, not alternative, newfangled systems. Another online commenter to CNA claimed that we, and I quote, "are being penalised unnecessarily by a good system gone rogue". Transportation experts also expressed their displeasure that the COE system has not gone through a more fundamental review to deal with changes since being introduced 33 years ago.

And unlike Vegas, what happens in the car COE market does not stay in the COE market. Rising COE premiums affect the prices of used cars, of course. But they also affect the cost of motorcycles, which are frequently used not only for transport, but also to make a living. High COEs also add fuel to other expenses already on fire, ranging from private hire fees to motor repair.

Yet, in response to a PQs filed by the hon Member Mr Yip Hong Weng in 2022, the Ministry of Transport (MOT) stated that they would not be exercising any controls on the private hire car (PHC) market. The response to another PQ filed by my hon friend Mr Louis Chua, likewise shunned the idea of restricting PHCs from the COE bidding process. Indeed, the Ministry has gone as far as to say that "LTA has no plans to review the COE rules".

Now what can we do? One approach, is to further segment the COE market in some way. This decision is not as radical as it seems. Since the scheme was first introduced, there have been changes to the number of categories, before being continually refined to the present five as I mentioned earlier.

Today, there are routine calls to cater to separate, specialised categories of COEs. One way would be to drop the Open category altogether, or further tweak the criteria for the other categories. One could also create a category specifically for vehicles driven primarily for commercial purposes or, as I had suggested in my speech on the Electric Vehicles (EVs) Charging Bill late last year, for EVs.

However, one potential implication of introducing additional categories is that, depending on the distribution of demand among the potential buyers, there could well be greater upward pressure on COE prices. Overall, the evidence suggests that categorisation is often gamed, and as a result, would likely do little more to improve equity considerations. so, for me, it does not offer a substantive way forward, in terms of arresting price increases, even if it could be used to fulfil other objectives.

The increased pervasiveness of private-hire cars, and their number has grown almost fivefold over the past decade, has also been blamed for rising COE prices. One aggressive solution is to ban PHCs from the COE market entirely, managing their quotas separately. MOT has suggested that there is no evidence to support this argument and has even gone as far as to suggest that doing so, could even drive up costs for consumers.

Even so, it makes sense to remove PHCs from regular Category A (Cat A) and Cat B bidding. Instead of banning such vehicles from the bidding process altogether, bidders for high-usage PHCs should be allowed to do so in the Open category, but be allowed to pay the respective Cat A or B prices. This is actually the current practice for taxi and cabs and given how PHCs essentially replicate many functions of the taxi – insofar as road usage is concerned – standardising the COE treatment for vehicles effectively used for commercial vehicles still makes eminent sense.

Of course, the practical question is how PHCs may be properly classified, if this were to be the case. I do not think that with rideshare data easily obtainable, that a data-savvy Government such as this cannot successfully make a determination between low-use PHCs – that is, cars that are only occasionally being operated as PHCs, when they do not exceeding a certain threshold of rides a month for instance – versus high-use PHCs, which are primarily operated as rideshare fleet cars. PHC drivers will be required to comply with their usage group, much like how weekend cars were restricted. And they will be monitored, by asking ride-hailing application companies to furnish these data. Only high-use PHCs would then be required to bid in the Open category.

Another strategy is to alter the bid structure. One such suggestion – which has previously been rejected by the Government – is to pay for exactly what one bids, instead of the lowest successful bid. Alternatively, bids could be set in terms of percentages of the open-market value of the vehicle. This system, the so-called ad valorem system, has been championed by some academics. Relatedly, categorisations could be altered and pegged not to the, say, cubic capacity or engine horsepower, but market value. Proposals of this nature are reasonable and have the added advantage of making the system more progressive. But, in my view, such proposals will make only a small dent on COE prices.

What would make the most impact is to smooth the vehicle quota supply by transferring excess quotas from the high-supply years to the low-supply ones, such that quotas are broadly equal across future years. Importantly, this involves more than just the marginal transfers from expected de-registrations that are largely the focal point today.

As mentioned earlier, the feast-and-famine nature of the COE market has long been recognised as a problem. What has made this approach even more problematic is that, in low-supply years, high COE prices discourage de-registrations since car buyers need to purchase new COEs at the high prevailing prices, whereas in high-supply years, those who have secured COEs at the high prices have incentives to sell their COEs, pocket the prorated reimbursement value while eating some depreciation, and re-enter the COE market. Both practices exacerbate the supply imbalances.

Hence, the existing practice of reimbursing early de-registered COEs at their the book value should end. We may even wish to reconsider transferability, since there is very little evidence that this practice actually increases speculation. But importantly, transferability should be allowed not to other car owners, but to other cars in the same category, for a given COE holder. This preserves the flexibility for car owners to sell early should their circumstances change, without introducing perverse incentives to game the system.

Thus far, I had focused mainly on supply-side proposals. What about demand? Hopefully, it should be clear that the enormous variation in COE prices has more to do with known and alterable supply factors, rather than demand, which the data suggests are secondary. But perhaps more importantly, demand effects should be expected to moderate even further in the future, since increases in per capita incomes – which alter structural demand growth – should already be expected to moderate, given how we have already attained the status as a high-income country.

Still, two demand-side proposals merit further consideration. First, dealers should no longer be allowed to bid. There is substantial evidence that speculators bid up COE prices. Because dealers have a greater willingness to pass on costs – or occasionally absorb loss – they could contribute to upward price pressure, as some have suggested. Others, to be fair, have argued that dealers have an incentive to keep COE bids low, since they sell cars and COEs in a bundle, and can pocket the difference if COE prices are low.

Regardless, the evidence suggests that dealer intermediation has likely resulted in greater concentration in the distributor industry, and such market power is seldom good for competitive prices. After all, price discovery has already improved substantially with open bidding, thereby diminishing some of the benefits of dealer hand-holding. In my view, the presence of distributors – despite the benefits of convenience of having a one-stop shop for purchasing a car – interferes enough with auction prices as to render their exclusion the lesser evil. Better for such distributors to offer advisory and guidance, perhaps, for a fee, than be in a market-making position of collecting and making multiple bids.

Second, require second car purchases to be in the open category. The inequity of second or third car purchases has bothered many, and one proposal has been to apply some form of additional buyer duty on such purchases, as the Member Hazel Poa has mentioned, under the premise that these purchases – however small – could still fuel demand and push up COE prices, as my hon friend Gerald Giam has suggested. While the Ministry has declined to pursue such restrictions, one alternative – which admittedly would require some policing – would be to require households seeking a second or third car to do so in a distinct category, thereby limiting their price pressure on Cat A and B.

Sir, I have focused on solutions in the COE market for cars. Even so, I will reiterate what my hon friend Faisal Manap had previously shared about our position on motorcycle COEs. The issues in this category are somewhat distinct, not least because many riders are lower-income and require access not just for private transportation but to make a living. Progressivity should, therefore, be an even greater concern in this market. To this end, one is left to wonder why motorcycle growth is constrained in much the same manner as cars, given their much smaller vehicular footprint.

I will close, Mr Speaker. I believe that the recent cyclical high in COE prices has come at an inopportune time and has contributed to already rising costs of living. The existing VQS-COE system is broken and, while the Government has made tweaks to the system, these do not address the true underlying problem that has led to boom-bust cycles in COE prices. Let us not ignore the most important driver of supply – the imbalanced monthly quota – and some of the most prominent sources of demand, from PHCs and wealthier multiple-car buyers. Let us better manage the COE system, an important driver of rising costs of living, which is consistent with the goals of the original Motion, which I support.

Mr Speaker: Ms Tin Pei Ling.

5.51 pm

Ms Tin Pei Ling (MacPherson): Mr Speaker, Sir, I stand in support of hon Member Liang Eng Hwa's amended Motion because, firstly, the amended Motion recognises the challenges that Singaporeans and Singapore face and, secondly, it is a fairer and more accurate reflection of our reality.

Sir, cost of living is a growing concern that has affected Singaporeans and, most definitely, my residents in MacPherson. Over the past months, a recurring feedback that I received from my conversations with residents, be it during my weekly block visits or Meet-the-People Sessions, centred on the rising cost of living and the consequential pressures they face.

More residents express anxiety and worry about affording daily living needs. Anecdotally, I have received feedback, especially from seniors, on higher cooked food prices at hawker centres and more residents have approached me to seek Public Transport Vouchers and grocery vouchers, which address their basic living needs and which will free up their cash for other important expenditures.

As residents feel the pinch trying to cope with basic living expenditures, they start to worry about whether they can still support the broader needs of their loved ones and whether life aspirations, which have been spurring them on, are still within reach.

These are valid concerns and we can all empathise very much.

Singapore is not alone in grappling with this issue of persistent rising cost of living. Around the world, countries are witnessing similar trends. Inflation rates are rising and the costs of essentials, such as food, energy and education, are soaring. The factors contributing to this trend are complex and multi-faceted. The COVID-19 pandemic has only exacerbated these challenges, with supply chain disruptions and increased public spending amplifying price pressures.

As a small country with an open economy, we import most goods and, thus, have little influence over the prices set by others. In other words, we are price-takers.

While we have little influence over prices, our Government has the capability and duty to cushion the impact on our people and support Singaporeans through difficult times. Ranging from sound fiscal policies, generous but targeted subsidies, purposeful support packages, quality education and skills training aligned to market needs, quality job creation, enabling competition to keep prices reasonable, to timely intervention to curb opportunistic profiteering, these are just some of the actions that our Government can and has taken over the years to help Singaporeans cope with cost of living.

I will not list the specific measures here, as fellow MPs have already highlighted them before, whether today or in past sessions, but I can share an example of how my resident, Mdm Ho, who is in her 40s, and her family have received Government support.

Mdm Ho, her husband and four children live in a 3-room flat. The couple are working but do not earn much and, of the four children, one is in National Service, whilst three are still in school. Mdm Ho has eczema that affects her daily life, whilst her daughter and son have medical conditions that require regular treatments at the hospital. Hence, they struggle with cost of living, like any ordinary family in Singapore. In helping them to cope, the children receive various Government support, including MOE Financial Assistance that offered the youngest child, who is in Primary school, free textbooks, uniforms, meal vouchers and transport. The older schooling children receive meal vouchers and school bursaries, on top of the Edusave and CDA monies that they already have. The family also hold blue CHAS cards and receive full Medifund coverage, so, Mdm Ho and her two children are receiving regular medical treatments at no cost at Government restructured hospitals. In addition, up until Mdm Ho found a job earlier this year, the family also received public financial assistance from the Social Services Office. These public assistances are notwithstanding other Government support, such as the GST vouchers and Assurance packages.

Though Mdm Ho and her family have been receiving various types of Government support covering different needs, there are still moments when they needed a bit more help to make ends meet. So, we mobilised our own local help schemes in MacPherson to help them tide over. These include MacPherson’s utilities support scheme, S&CC support scheme, ComCare vouchers and local bursaries. These are fund-raised by our grassroots to give extra support to our residents and their families.

I wanted to share this example because, in my opinion, the Government has been providing support to Singaporeans and families and actively responding to the evolving environment with targeted policies and programmes and that communities and individuals, too, can step in to cover last miles and close gaps.

That being said, the recent intensity of escalating cost of living does necessitate our attention and actions.

Coming back to my earlier feedback about the increase in cooked food prices, I hope more support can be given to address it, given how fundamental and intrinsically intertwined hawker centres are with our daily lives. I should clarify that the price increase was despite the National Environment Agency (NEA) not increasing rent in most cases. In fact, for one of the hawker centres highlighted to me, there was rental reduction for some of the stalls. In MacPherson, most of the hawkers have been operating there for decades and share a strong bond with our residents, especially our seniors. Hence, they make great efforts to absorb cost increments and avoid raising prices if they can help it. Yet, I have been told that some of them could not help but raise prices by up to 10% this year. If I may warrant a guess, costs must have increased at every layer of their supply chain and the pile up was too much for our hawkers to bear. Still, for a constituency with a mature population and of largely middle- and lower-income profile like MacPherson, a double-digit percentage increase in cooked food prices is highly significant. Hence, there is scope for the Government to evaluate the impact further upstream and see how best to intervene, so that micro businesses like our hawkers can better manage their costs without being compelled to pass it on to the ordinary consumers.

The Singapore Government's ability to finance increasing social spending to support Singaporeans and families is a testament to its sound fiscal policies, disciplined governance and robust Reserves. Over the years, Singapore has maintained a prudent approach to fiscal planning, with a strong emphasis on balancing the Budget and ensuring sustainable economic growth. Our Reserves also proved to be our most precious asset which saw us through the COVID-19 pandemic – the crisis of our generation.

Whilst there are obvious challenges that we still face, we have benefited from this Government’s policies in various ways. That being said, we must not undermine the stresses and hardships that ordinary Singaporeans face on a day-to-day basis. So, this Government must continue to pursue policies that will alleviate cost of living pressures on Singaporeans and families.

Looking ahead, against a challenging macro environment fraught with geopolitical instabilities and economic uncertainties, our Government must also continue pursuing policies that will build a future-ready Singapore and cultivate a resilient, versatile and capable Singaporean workforce, whilst ensuring future generations are free of burden so that they can soar high and live fully. In Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, I support the Motion as amended by Member of Parliament Liang Eng Hwa. The amended Motion clearly reflects the challenges faced by Singapore and its citizens today, and more objectively reflects the reality of the global environment and the Government’s actual actions and intentions in the past, present and future.

As the saying goes, clothing, food, housing and transportation are the basis of people’s survival and the people are the basis of survival of the country. Clothing, food, housing and transportation are the most basic needs of the people. Against the backdrop of fast-rising prices in recent years, it is understandable that our people are worried about the cost of living.

Macpherson is a mature estate with a majority of elderly and middle- to low-income residents. Naturally, issues such as food, clothing and shelter have a greater impact on our residents. In the past year or so, in my conversations with residents, I have inevitably felt their pressure in terms of living expenses. We empathise with them.

Although this is a common challenge faced by the world, for ordinary people, it is a matter of life and death that urgently needs to be resolved.

In this regard, I believe that the Government will continue to pay attention to people's livelihoods, allocate funds and introduce targeted policies that are beneficial to the people to help them cope with various expenses.

In addition to the Government's policies and various assistance programmes, the community, private enterprises and individuals can also show kindness and help those in need.

For example, there is a 73-year-old Mdm Lim in our consistency. She is a cancer patient and is also the caregiver of her 90-year-old mother. Under normal circumstances, the pressure in terms of living expenses is not small. Fortunately, they live in a rental flat with a monthly rental of $66 , and also receive monthly subsidies from welfare organisations. Therefore, the burden of the living expenses is lighter and the medical expenses are borne by the Government. In addition, we also provide them with assistance programmes and subsidise their other daily needs, and invite them to participate in welfare activities organised by our community partners.

I do not know how many people have noticed, but I have an observation. In 2011, when I first became a Member of Parliament, I often heard elderly residents saying, in Singapore you can die, but you cannot get sick. I remember during a home visit, I met an old lady who said her husband was sick and bedridden, but because she was afraid of not being able to afford the medical expenses, she would rather let him suffer like that. I was shocked at that time. So, we launched the Macpherson Care Fund to help elderly residents cope with medical expenses and encourage them to receive treatment.

Shortly after, the Ministry of Health (MOH) introduced many policies to help Singaporeans, especially the elderly, to cope with medical and care expenses. The Government also launched the Pioneer Generation Package, the Merdeka Generation Package and now, a package for the young seniors. Every package focuses on healthcare.

In recent years, although I occasionally meet residents who are worried about medical expenses, I no longer hear the words "you can afford to die but cannot get sick".

Of course, we cannot underestimate the pressures faced by Singaporeans. After all, the world is not peaceful and the global economic outlook is uncertain. We cannot predict how Singapore will be affected and what impacts it will have on Singaporeans. Therefore, the Government must continue to monitor the situation and introduce policies that benefit the people.

I would like to highlight another point. As an open economy with little natural resources, Singapore needs to import almost everything from abroad. In this situation, we are not price-setters and cannot control prices. Some people may think that the Government should forcefully lower prices to benefit everyone, or that the present is more important and the Government can afford it, so it does not matter if we give more now, even if we borrow from future generations or we can use more Reserves. These ideas are dangerous.

First, the idea of forcefully lowering prices is a one-size-fits-all approach. Those who are economically able will consume more, which may lead to further price increases. Then it is tantamount to drinking poison to quench thirst. On the contrary, the Government's approach is to provide subsidies and assistance based on individuals’ needs and situations. This approach is more fair.

Second, the idea that it does not matter how much Reserves are used. As the saying goes, there is no perpetual good fortune and no hundred-day blooming flowers. If we recklessly use our Reserves now, who can tell for sure that we will have enough Reserves to cope with difficulties if the world encounters another economic crisis, serious pandemic or natural disaster?

Do not forget that during the COVID-19 pandemic, we used our Reserves several times and we still have not paid the money back. The savings left by our predecessors helped us through the most difficult times. Similarly, we must also consider the future of our descendants. In short, the Government must strike a balance between the present and the future when formulating policies, and must not kill the goose that lays the golden eggs.

Our people do face many pressures and the Government must uphold the concept of people first and implement policies that are beneficial to the people and Singapore's long-term interests. I believe that the PAP Government will continue to care for the people and govern with the long-term welfare of the country and the people in mind.

I support the amended Motion.

Mr Speaker: Mr Faisal Manap.

6.06 pm

Mr Muhamad Faisal Bin Abdul Manap (Aljunied): Mr Speaker, Sir, my esteemed Workers' Party (WP) colleagues have filed the original Motion regarding the cost of living in Singapore at a time when many Singaporeans continue to feel the resulting pressures. The impact has been especially severe on lower-income households, which I believe the Government is aware of.

I welcome the support measures that have been announced to date towards alleviating some of these pressures, such as the top-ups to the payouts under the Assurance Package, the CDC Vouchers, the Public Transport Vouchers and so on. These measures are meant to bolster the existing social safety net.

The social safety net which exists in Singapore is multi-layered, which the Government referred to previously as a "kueh lapis", with each layer meant to tackle a specific area of need. It is an approach meant to prevent dependency, free-riding and abuse of the various measures in place. I also note that Deputy Prime Minister Lawrence Wong had recently said that ComLink would be enhanced towards helping families in non-financial ways, such as coaching. This is meant to aid social mobility and prevent further social stratification.

Having all these systems in place is well and good. However, I believe it is also important that we establish a means of assessing the effectiveness of our social safety net. To this end, I would like to reiterate a call I first made back in 2014 calling for Singapore to adopt the International Labour Organization (ILO)'s Social Protection Framework.

ILO's social protection approach calls for a "fair and inclusive globalisation" involving an "integrated set of social policies designed to guarantee income security and access to essential social services for all, paying particular attention to vulnerable groups and protecting and empowering people across the life cycle". There are four essential guarantees, namely, "access to essential healthcare for all, income security for children, assistance to vulnerable groups, and income security for the elderly and disabled."

If the Government would prefer a more localised framework, then it is notable that a group of academics led by Assoc Prof Teo You Yenn and Dr Ng Kok Hoe have published two reports on the "Minimum Income Standard" for households in Singapore. The latest version was released in September 2023 and provoked discussions in the media and online forums.

The report has a comprehensive definition for what is considered a basic standard of living in Singapore. It is about having opportunities in education, employment and work-life balance, and access to healthcare. A basic standard of living "enables a sense of belonging, respect, security and independence, and includes choices to participate in social activities and the freedom to engage in one's cultural and religious practices."

In responding to the report, three Ministries, namely, MOF, MOM and MSF, released a joint statement. In that statement, they noted that what the report described was, I quote, "what individuals would like to have". The Government also recapped the various measures that had been taken to address the needs of lower-income households, such as the payout increases for ComCare, the Progressive Wage Model and the Majulah Package. According to the statement, the Government, I quote, "regularly reviews the scope, coverage and the payout quanta of our schemes."

I believe that the process of reviewing the various layers of social assistance can be further improved. To this end, I would also like to reiterate my previous call for the establishment of three Social Protection steps, corresponding to 30%, 50% and 80% of the median income per household member. Based on the median income per household member of $3,247 released in February 2023, the three steps would correspond to approximately $1,000, $1,700 and $2,600. Broadly, these levels do correspond to the existing thresholds for the Community Health Assist Scheme (CHAS).

Using the resulting statistics, I would like to propose again that MSF publish an annual Social Protection Report. The report could include information on the number of recipient households and track movements of households from one step to another, amongst other statistics.

There are several good reasons for establishing a more systematic approach towards tracking the effectiveness of our social assistance programmes via the Social Protection Report. It would create accountability for the use of public funds in our social assistance programmes. Rather than report on spot figures on the numbers of recipient households, the report would present a more holistic picture on the state of social protection and assistance in Singapore.

The Government could also set objective KPIs based around the Social Protection Report. A vital KPI could be reducing the percentage of households in Steps 1 and 2 within a reasonable timeframe, perhaps within five years.

If the percentages stagnate or if the report indicates a lack of progress, it could indicate a need to re-examine current approaches and identify gaps in the existing social protection system. For example, some recipient households may be in need of assistance in securing a place in a childcare centre or a student care centre for their primary school-aged children so that the parent can pursue employment without worrying about caregiving.

The Social Protection Report could also be useful in raising awareness among Singaporeans of the nature of the issues faced by our lower-income groups. This, in turn, could foster better coordination between Voluntary Welfare Organisations (VWOs), non-governmental organisations (NGOs) and the Government agencies as they rely on a unified set of statistics and tracking tools. It may also encourage more individuals who are better off economically to step up and help their fellow Singaporeans in need by volunteering their time, energy or just making donations to aid the work of VWOs and NGOs. Sir, in Malay please.

(In Malay): [Please refer to Vernacular Speech.] The Workers' Party (WP) Members of Parliament have tabled a motion suggesting that the Government review its policies with the aim of lowering the cost of living for Singaporeans and their families, especially the lower income group who are more affected.

In 2014, I suggested that the Government adopt the social protection framework of the International Labour Organization. I would like to repeat the same recommendation to the Government. Through the framework, the Government is able to establish policies that guarantee income security and access to essential social services for everyone, giving special attention to the vulnerable group, and protecting and empowering our people throughout their life journey.

There is also another framework in the report on Minimum Income Standard published by academics, Assoc Prof Teo You Yenn and Dr Ng Kok Hoe. I am confident that with the appropriate framework in place, we will be able to monitor and review the effectiveness of the social assistance policies for lower-income Singaporeans. I would also like to once again suggest that the Government establish three levels of social protection, where each level matches the 30%, 50% and 80% level of median income.

I further recommend that the Ministry of Social and Family Development (MSF) publish an annual report on social protection, using information that includes the number of families receiving social assistance, the number of families who have successfully progressed to a higher level, and more. With this information, we can better understand the effectiveness of the social assistance policies that exist in Singapore and also consider the need to change policies so that appropriate assistance can be provided for those in need.

(In English): Sir, the Forward Singapore report that was recently released spoke of the risk of our society becoming more stratified and less mobile as our society develops. The Government pledged to do more to ensure equal opportunities to temper unequal outcomes and prevent the creation of a permanent underclass. These are objectives I support as well.

The Social Protection Framework I have proposed would complement the Government's effort to achieve this objective and track the progress of efforts undertaken towards achieving them. Sir, I support the original Motion moved by the Leader of the Opposition.

Mr Speaker: Deputy Leader.

Debate resumed.

Mr Speaker: Senior Minister of State.

6.17 pm

The Senior Minister of State for Finance and Transport (Mr Chee Hong Tat): Mr Speaker, cost of living is a major concern around the world. Food and energy prices have risen significantly, caused by disruptions following Russia's invasion of Ukraine and extreme weather patterns.

Many countries were affected. For instance, Germany saw natural gas prices peak in 2022, at nearly tenfold of the 2021 average. While prices have since moderated, they remain significantly above the pre-war prices. India continues to see prices spike across various food items, including essentials like rice and vegetables. From June to August this year, tomato prices surged by 1,400% at some wholesale markets.

We have experienced price increases in Singapore, too. But, thankfully, not at such magnitudes.

But we have to acknowledge that inflation has affected all Singaporeans. Families need to spend more when they go to the market to buy groceries or when they have their meals in hawker centres and coffee shops.

My residents in Bishan-Toa Payoh are affected, too, including lower-income families, retirees and couples with young children and elderly parents to support. As MPs and Grassroots Advisers, we understand the pain that our residents are going through, and we feel for them and their families.

On top of imported inflation, we also face rising domestic cost pressures.

We have a tight labour market and low levels of unemployment. Real wages have been rising for workers across the board. We are committed to raising the income and skills of our lower-wage workers – something I trust Members from both sides of the House will support. Through the Progressive Wage Model and other measures, the earnings of our lower-wage workers have increased faster than median wages.

But wage growth means higher business costs, especially in more manpower-intensive sectors from healthcare to food services. This has contributed to overall inflation.

Right now, inflation has peaked and is on a broad moderating path. Core inflation fell from the peak of 5.5% in January this year to 3% in September 2023. It is expected to edge down further to between 2.5% and 3% in December.

MAS expects the moderation to continue for 2024, with core inflation forecast at 1.5% to 2.5%. If we include the impact of the GST rate increase in January, core inflation for 2024 is projected at between 2.5% and 3.5%.

Fortunately, the impact of the GST increase is one-off. It should not cause an ongoing increase in the Consumer Price Index (CPI) in future years.

These are positive signs, but the Government remains cautious because the global situation is uncertain and there are dark clouds on the horizon. Further shocks to global energy and food prices could bring additional inflationary pressures and economic slowdown. There are many uncertainties in our external environment. But what is clear is this: the Government understands the concerns of Singaporeans and we stand ready to support Singaporeans where needed.

Sir, the Government has cushioned the impact of global inflation on households by adopting an effective multi-pronged approach.

First, MAS moved early to tighten monetary policy significantly, substantially strengthening the Singapore dollar. This has helped to contain imported inflation and preserve our international purchasing power. Had we not done this, core inflation this year in 2023 would have been about 2.5 percentage points higher.

Second, we keep our economy competitive to create good jobs and sustain real income growth for Singaporeans. Between 2017 and 2022, real median income grew by 1.8% per year. Real income at the 20th percentile, that is, lower-income households, rose even faster, at 2.9% per year over the same period.

Unfortunately, in the first half of this year, median real income declined, even though nominal income rose slightly, as the Senior Minister of State for Manpower updated the House earlier today. This is due to the weaker economic outlook and elevated inflation.

It is understandable for median real income to have ups and downs, depending on the overall economic performance. But our experience in Singapore is that so long as our economy grows and remains competitive, real income can continue increasing for a broad segment of our workers.

In the long run, the key to sustaining real wage growth is to raise productivity and upgrade the skills of our workforce, to take on better jobs with higher pay. The Government has invested in many initiatives to support businesses and workers in this transformation and we will continue to do so.

Third, we ensure that basic needs like education, healthcare, housing and public transport remain accessible and affordable for all.

Everyone receives some help in these areas, but those with less receive more support. It is a fair and progressive system.

Even as inflation is moderating at the macro level, we recognise that many Singaporeans feel the pressures from higher costs of living. MPs from both sides of the House have raised this topic in Parliament, reflecting the concerns of our residents.

To our fellow Singaporeans, the Government hears you and understands your worries. That is why we have been doing more to support Singaporeans, to cushion the impact of rising prices. We review our support regularly and step in to enhance it when necessary to provide additional support, especially for lower- and middle-income families.

The Government enhanced the Assurance Package in Budget 2023.

As Members will recall, 2022 saw the fastest rate of increase in prices since 2008, with consumer prices going up by 6.1%, compared to 2021. To help households cope with this increase, the Government enhanced our support from the $6.6 billion announced at Budget 2022 to $9.6 billion.

This way, we fulfilled our commitment to offset additional GST expenses for at least five years for the majority of Singaporean households and for about 10 years for the lower-income households.

Recently, in September 2023, the Government announced a $1.1 billion Cost-of-Living Support Package. This includes a $800 million enhancement to the Assurance Package, bringing it to over $10 billion.

Singaporeans will receive the additional support from these packages soon. Every adult Singaporeans will get at least $200 in cash next month. Amongst them, about 2.5 million eligible Singaporeans will get $500 or $800 in cash. And every Singaporean household will receive $500 in CDC vouchers in January 2024. HDB households will also get more help in U-Save and S&CC rebates.

Many of my residents, including retirees who are staying in private properties, said they appreciate the additional support provided and look forward to receiving the $800 special payment in December and the $500 CDC vouchers in January next year.

Through all of these packages, the Government will fully cover the increase in spending by lower-income households this year due to inflation and the GST and substantially cover the increase in spending by middle-income households.

The Government provided this assurance at Budget 2023 and we will honour it.

Sir, different families have different circumstances and challenges. The broad-based support that we provide will help every family, but we recognise that there may still be gaps for some households. For families who need more help, we have other supporting measures, such as ComCare and the Silver Support Scheme.

We will continue to monitor the trends closely. As we have often said, we are prepared to do more to support Singaporeans should it become necessary and we will do so in a manner which is fair, effective and sustainable for both current and future generations.

The Government will continue to do our best to operate key services efficiently and keep costs of providing services as low as possible.

In the case of water, PUB incorporates successful R&D efforts into its operations to reduce costs. For instance, the upcoming Tuas Water Reclamation Plant (Tuas WRP) will generate 80% of the energy it requires for used water treatment, compared to only 25% for the conventional WRPs. This will reduce energy costs and is made possible through enhanced primary treatment of used water and co-locating with the Integrated Waste Management Facility.

Tuas WRP will also adopt membrane bioreactor technology to produce higher-quality effluent, which can be directly discharged to the sea. This avoids the need to construct a long and deep discharge pipe, which could have cost an additional $650 million.

But despite our best efforts, the cost of providing key services will be affected by rising inflation, including higher energy and manpower costs. So, the unavoidable question for us is how we want to pay for the cost increases.

It is fair for these cost increases to be borne by the users and beneficiaries of these services – if not in full, at least partially, so that they are prudent in their usage. For example, when the cost of providing electricity or water goes up, we do want users to find ways to improve energy or water efficiency and to reduce their consumption.

Even as some of these cost increases are passed on to users, the Government is mindful that we must keep basic services affordable. For essential services like public healthcare, users only bear part of the cost. When costs go up, a large part of it is paid for by the Government through increased subsidies so that the bills facing users remain affordable.

When fee increases cannot be avoided, we also provide targeted and direct support for more vulnerable groups in society, such as lower-income and retiree households. Examples would include U-Save rebates and public transport vouchers.

Sir, it is always tempting to ask: why not have Government simply subsidise the services themselves?

But we need to remember that the cost increases do not magically disappear as a result. They still need to be paid for, whether by taxpayers today, or by our children and grandchildren in the future.

We know from the experiences of other countries that subsidising petrol, electricity or water directly causes problems.

First, it blunts the price signals and results in over-consumption because there is less incentive to improve efficiency and reduce wastage.

Second, households will get the subsidies whether they need them or not. Furthermore, the wealthier segments of society are likely to end up getting the larger share of the subsidies, because they consume more. That is what happens when governments give out more subsidies for water and fuel. I am referring to direct price subsidies.

Who benefits more? It is inevitably the higher-income groups with bigger homes and bigger cars, swimming pools and jacuzzis.

So, the way we design our subsidies is important. Instead of subsidising the services themselves or designing tiered pricing schemes, we price the services fully, but give direct help to households that need financial assistance, in cash or vouchers.

This way, we can target more help to lower- and middle-income Singaporeans. It is more cost effective and we can achieve better outcomes for society as a whole.

Sir, let me now respond to some of the issues that Members have raised on water prices. I think Mr Pritam Singh would agree with me that water security is a matter of national survival. Today, Singaporeans enjoy an uninterrupted supply of high-quality water. This did not come by accident, but is made possible by long-term planning, innovation and gumption. Our founding Prime Minister Lee Kuan Yew famously said once: "every other policy has to bend at the knee for our water survival".

And that is precisely what happened – one of the most remarkable achievements in modern Singapore. We now have a sustainable and robust water supply system based on four National Taps. These are imported water from Johor, local catchments, NEWater and desalination. Each of these taps plays a vital role in ensuring a safe and resilient water supply. But each of these taps also faces rising costs.

To safeguard water security, we need to continue making investments to upgrade and maintain the system, while stewarding our limited resources. Otherwise, the miracle that Mr Lee achieved will be short-lived.

Therefore, we must first right-price water to reflect its scarcity and to encourage its sustainable and prudent use.

I was listening carefully to Mr Pritam Singh's speech earlier I do not think Mr Singh will disagree with me on this point.

Water is priced to recover the cost of its supply and production and to reflect the cost of producing the next drop of water from NEWater and desalination. Even with active cost mitigation measures by Public Utilities Board (PUB), the total cost of supplying and producing water has increased significantly.

Singapore cannot compromise on having a high-quality and reliable water supply. It is for our national survival. It is necessary to revise the water price now to catch up with these cost increases. Deferring the price increase now will only result in a widening cost gap, that has to be made up by larger, more significant price increases in future.

To cushion the impact of higher water price in 2024 and 2025, the Government will provide eligible Singaporean HDB households an additional $20 per quarter of U-Save from January 2024 to December 2025, or a total of $80 per year for two years.

The additional U-Save rebates will, on average, fully offset the increase in utility bills for 1- to 2- room flats and about 80% for 3- to 4- room HDB flats and about 65% for larger flats. On average, this translates to 3- to 4- room HDB flats paying about $2 more per month and 5-room HDB and larger households paying about $4 more per month.

Sir, the WP also suggested having additional tiers for water price. As I mentioned earlier, we price water to reflect its scarcity value. This means the same rate is paid by everyone, from the very first drop used by the household, so that all users take into account the scarcity value of water. To discourage excessive use and to send a message to households on water conservation, we set a higher price for water consumption that far exceeds the average household consumption level. And as Mr Pritam Singh pointed out, this threshold is set at 40 cubic metres a month to accommodate most household needs. Over 96% of households consume less than this threshold.

Having additional tiers below 40 cubic metres would mean that all households, rich or poor, pay a water price lower than its scarcity value for the first block of consumption. Or, if you have even more tiers, then, across the different tiers, the water that is being consumed at the lower tiers will also include a subsidy to the wealthier families that consume more water.

This would distort the households' incentive to conserve water from the very first drop. It also means that the Government will have to subsidise everyone for water, not just the lower- and middle- income, which is more costly and inefficient.

Instead, the Government's approach is to price water fully. Then, we provide targeted and tiered support though our U-Save rebates to those who need it most. Lower-income families staying in smaller flats get a larger rebate, as I shared earlier, which effectively translates into a lower price for them.

Businesses do not receive U-Save rebates. We do not subsidise their water or electricity consumption. Instead, we work with them, including helping our SMEs to be more energy and water efficient.

Sir, we also cannot have our cake and eat it. If the Government provides broad-based subsidies for all households through a multiple-tier water price, we cannot then also give out U-Save rebates for the same purpose.

The experiences of other countries have shown clearly that broad-based subsidies can lead to wasteful and ineffective outcomes. The Government is unable, after spending on these subsidies, to have sufficient resources left to provide more targeted help to those who really need it.

Mr Speaker, the same rationale applies to electricity. We have taken steps over the years to strengthen our energy resilience to ensure supply stability and continuity, and this is an important task that MTI, EMA and the power sector has taken on.

The tariff, as Ms Sylvia Lim mentioned, should reflect the cost of producing electricity from the first electron. Just as water, we want to price it correctly from the first drop. And then, what we do, similar to water, is we then provide means tested U-Save rebates to help families, especially lower- and middle-income families, give them more help, give them more support.

Sir, Ms Sylvia Lim's idea of time-of-use pricing is something which we do agree with. And that is why MTI and EMA have also announced an initiative as Ms Lim had mentioned in her speech. This is an accurate reflection of the actual cost of producing electricity during different periods of the day.

Sir, I would now turn to GST. Overall, we have provided high quality public services to Singaporeans and we have achieved good outcomes for our programmes, and we were able to do so, despite having an annual Budget that is less than 20% of Gross Domestic Product, which is much lower than most advanced economies.

Nevertheless, the Government's spending needs are rising steadily, especially healthcare costs as our society ages. There is therefore a need to raise revenues to pay for these higher expenditures. We have explained this in the House and also elsewhere many times.

The Opposition has once again asked if we can defer the GST increase, especially given our higher-than-expected revenues. This too has been debated thoroughly in this House. I think it is important to set out once more the Government's philosophy behind the GST system.

First, the GST is a critical component of our tax system and we are raising the GST not for immediate funding needs, but for our medium-term needs. This includes rising social spending in areas such as increased healthcare for our ageing population and more support for vulnerable segments of society.

Second, we design our GST system to take care of the lower-income. In 2012, we made the GST voucher (GSTV) scheme permanent. The GSTV provides bigger offsets to lower-income households. Coupled with the absorption of GST on publicly subsidised healthcare and education, we achieve an outcome where lower-income Singaporean households face a lower effective GST rate than higher-income ones.

As we had shared in this House previously, the bulk of the GST revenues are paid by higher-income groups, as well as foreigners and tourists.

Third, we are able to defer the impact of the GST raises because of the comprehensive Assurance Package which benefits all Singaporean households. The Assurance Package will defer the GST increase for the majority of Singaporean households by at least five years. For lower-income households, we will defer the GST increase for them by about 10 years. Since launching the Assurance Package in 2022, we have enhanced it twice to uphold this Government's commitment.

Sir, we have gone through these points in this House before many times. And while the WP has consistently objected to the GST in previous years, we are glad that at the debate on the President's Address in April this year, the WP has acknowledged the need for a 7% GST. And earlier, I heard Mr Leong Mun Wai saying he also agrees with the 7% GST.

But the WP and the PSP should be upfront and consistent. It cannot have it both ways, objecting each time the GST rate needs to go up, but wanting to keep and spend the revenues from previous GST increases. The only disagreement, based on my understanding that the Opposition now has, is to ask if we could defer the GST increase, because we have higher-than-expected revenues.

Sir, I ask the Opposition to please look at the broader and longer-term fiscal trends. We may have had a good year this FY, but we do not have a structural surplus.

Our fiscal expenditures have been rising steadily and will continue to increase and we are almost certain to face a funding gap in the coming years if we do nothing about it. MOF had published an Occasional Paper earlier this year to highlight this trend.

We are expecting more social spending, in healthcare for our ageing population and to better support vulnerable groups in Singapore. Without the GST increase and tax measures announced in the last two Budgets, we would not be able to close the projected fiscal gap.

We have been fortunate to have higher-than-expected revenues in FY22. The Government did not plan its Budget on the basis that we will have these unexpected upsides in revenue collections. These were either sentiment-based revenues which are volatile from year-to-year, or due to higher-than-expected economic growth.

And when we have these surpluses, the Government has made good use of them by flowing back these upsides to support businesses and households. We have done this during Budget and through off-Budget support packages.

We also allocated some of these surpluses into Funds for specific needs, such as the ComCare Endowment Fund to provide support to our lower-income families, or the Coastal and Flood Protection Fund to protect ourselves against sea level rises.

But we should follow through, to raise the GST to 9% on 1 January 2024. We can be confident that households will be amply cushioned by the Assurance Package, while we will have the higher GST rate in place, and can start to collect additional tax from non-citizens and visitors.

Mr Speaker, I will now turn to transport-related issues, and I will start first with public transport and then I will cover some of the points raised regarding COE.

Sir, on public transport, we had a session in October, during the Sitting, I think I answered a series of PQs, and I remember having supplementary questions from Mr Gerald Giam as well.

Sir, Mr Giam spoke about the profits earned by the public transport operators. I had mentioned this previously when we were discussing this issue, and I explained to Mr Giam and the House that we have to look at the different types of public transport service.

For buses, for example, the revenue that is being collected from commuters does not go to the operators. The revenue comes to the Government, and the Government then pays the operators. We pay them a rate that was agreed through the bus contracting tenders. And I also shared with Mr Giam and the House that over time, as we gain experience in doing bus contracting, we had been able to squeeze out more productivity improvements and reduce the payments and the rate of return for the bus operators.

For trains, the operators do collect fares to cover their operating costs, so the fares do affect their overall financials. And I shared, during October's Sitting, that in the latest financial year, after accounting for Government grants, SBS Transit reported a loss of several million dollars for their rail operations, while SMRT Trains reported an operating profit of $6 million dollars, which represents a profit margin of less than 1%.

So, just to be very clear, these are the kind of returns for the rail operations. And I also shared what we are doing, an ongoing process to try and improve the way we do bus contracting, to be able to squeeze out more savings for commuters and taxpayers.

Sir, Mr Giam had a second point where he mentioned about whether we can nationalise our public transport system. Sir, I think, first, we take a look at where we are today.

Do we have a well-functioning public transport system overall? I think so. Public transport fares, if you look at the lower-income households in 2013, public transport expenditure was about 3.1% of their household income, it has fallen to 2.4% in 2022.

So, from accessibility, affordability and also network improvements, system improvements, I think over time, our current system has achieved good outcomes for commuters, and this is also reflected in the overall survey results and ratings that commuters have given us.

Of course, I am not saying that there are no areas for improvement; there are, and we will continue to look at what we can do to improve. But overall, compared to many other cities, I think, to be fair to our public transport operators and to our public transport workers, who have been working very hard to achieve this outcomes, they have, overall, done a good job.

So, what Mr Giam mentioned about nationalising, and I think he calls it the NTC, is actually not a silver bullet. I hope Mr Giam can agree with me that nationalising is not an assurance or guarantee that outcomes would be better. Yes, you can take away the profit element if you nationalise and turn it into a Government department, but just because a nationalised entity does not make profits, does not make money, does not necessarily mean commuters will get better outcomes. I think we have to be quite clear about that. What we want, at the end, is to have better outcomes for commuters, to have a better transport system for Singapore.

Mr Giam also spoke about setting KPIs. Sir, we have seen from the experiences in other countries, how this approach sometimes may not work. I mean, if you look at history. The then-Soviet Union, under the previous central planning system, uses KPIs to try and track performance, and I think that I do not have the elaborate further. I think Mr Giam will agree with me that it is not a good outcome.

So, KPI is not a substitute for the profit motive that we need and the competition that we need, to spur the players to continuously improve. And we are adding additional pressure on them to improve their productivity. The new fare formula has a productivity component. We will exert pressure on them through this fare formula productivity component, to look at ways to continuously improve their productivity.

Sir, Mr Giam also mentioned about the coverage of service. I understand, and I think I did explain this to him previously, that when we do some of the changes with the bus services, some of the commuters will be affected, and I do recognise that – my residents, too, have been affected by such changes.

But the reason why we make these changes is because we have limited resources available to serve different needs, different groups of commuters. In different towns including, I am sure, Mr Giam's constituency, there will be new developments, new BTO flats, and the residents there will need new bus services to connect them to the bus interchange or to the MRT stations. So, where do we get the resources to serve these new demands? We have to look at how can we re-allocate some of the existing services.

It is not a simple exercise. We do not do it in a very drastic way because we do recognise the impact. We do it in a very calibrated manner, we look at which are the bus routes that run parallel to MRT lines, and where there is an option for people to take the bus, go to MRT station and then complete the longer part of their journey, the trunk service on the MRT. So, the bus then can provide better connectivity within the town as a feeder service.

But having said that, I have mentioned this to Mr Giam before and I still make the offer to him today, if there are some specific areas of concern faced by his residents, please do let me know, please do let LTA colleagues know. And we will discuss with you to see what we can do to improve the situation on the ground.

Sir, allow me to now turn to COE. I want to start by saying that we just had a session on this yesterday. I answered a collection of PQs. I think we took quite some time. And I think Ms Hazel Poa and Assoc Prof Jamus Lim were both present in the Chamber. I do not know whether they heard my reply yesterday, because some of the points that they raised seem to have reflected that they heard me. But again, some of the points that they raised, they may have missed out or maybe they have forgotten what I have said. So, it is okay. Let me please have this chance to address some of the points that they raised.

Sir, I will start by actually thanking Assoc Prof Lim for acknowledging that — well, he raised many different ideas. They are all the different fancy ideas for improving the COE system, that in the end, actually only make a small difference, or in his words "small dent". And what he feels, if I had heard him correctly, is that the more effective way is to do the smoothening of the supply of the COE.

Sir, that is exactly what I said yesterday in my reply. We are going to use the "cut and fill" method, not "cut and paste". "Cut and paste" is what you do on Microsoft Word. We are going to do the "cut and fill" method, where we "cut" the supply from the peak years, and then we fill the troughs, the short-term trough years.

So, by doing this, we are able to reduce the peak-to-trough ratio and achieve the outcome that I believe Assoc Prof Lim is also advocating for.

But I also, in response to Mr Saktiandi, gave a qualifier that we cannot overdo this, because you are effectively borrowing supply from the future. These cars that we are now borrowing the COEs from, are still on the roads. They have not yet been de-registered. So, if you overdo the "cut and fill", it means that in the short term, in the short run, you do have many more cars and it could lead to congestion.

So, therefore, yes, we are looking at ways to do more "cut and fill" and we have announced increases in the quota for this coming quarter – 35% more than the last quarter for Cat A, 35% more for Cat B, 65% more for Cat C. We are doing that, but we also need to be mindful of the impact if we overdo it.

But I do thank Assoc Prof Lim for actually agreeing with us, that this is the most effective way to be able to deal with these concerns that we see in the COE market.

Sir, Assoc Prof Lim also spoke about whether we could, if I heard him correctly, ban PHCs from COE bidding, and I think what he meant was then to have a separate category, because you cannot simply just ban them. I mean, there is genuine demand for these cars, so you cannot just ban them. I think what he meant was to have a separate category that they do not have to participate in the COE bidding with the Cat A and B. There is a separate category for PHCs.

Sir, I explained this yesterday that, of course, conceptually it is not unthinkable to do something like this, but the trade-off is this: when you create a new category for PHCs, the supply for the COE does not magically appear. We still have to look for where to re-allocate the supply of COEs to put into this new category.

We are not talking about a magical solution, where I suddenly have new supply coming in. So, if we accept that point, Sir, then we are looking at a re-allocation from Cat A and B when we create this new category. And when we do that, as I explained yesterday, it is difficult to ascertain at what level of the supply should you shift into this new category, because the PHC market is still evolving and there are fluctuations from quarter to quarter, as we can see from the data.

If you allocate too much, you shift too much, it will actually affect the supply of COEs in Cat A and Cat B, and that will cause prices to spike even further. I think Assoc Prof Lim understands this point. But if you do not allocate enough, you do not shift enough, then there could be a problem for the PHCs, and which will, in turn, affect the drivers and commuters.

So, this is something that, I think, we have to be quite careful. But, Sir, I did mention in my reply yesterday that we are studying whether there are other ways to address this concern, maybe not through the COE system, but whether there are other ways, taking into account the reality that PHCs do travel more on the roads, a point that Assoc Prof Lim also mentioned. But they also serve a useful role in society, for commuters to meet their point-to-point journeys.

Sir, Assoc Prof Lim also mentioned about pay-as-you-bid. Sir, this is not going to give a different outcome from the current system. Let me explain.

Our current system is open bidding. This is not a closed bidding, where I do not know what people are bidding and I just go into the bid without knowing what other people are bidding. The COE system is online, you go in, you can see very clearly what other people are bidding, and you decide then how much you want to bid, based on your willingness to pay and you look at where that bid price is right now, and whether you are willing to pay more than that, to be able to secure the COE.

So, whether we do pay-as-you-bid, or we do the current system, I think that the outcome will be the same. The second point that Assoc Prof Lim mentioned is, can we use open market value (OMV) instead of other criteria to determine the COE bidding?

Sir, we already have Cat A and Cat B to sort of proxy measure the kind of cars that people are buying. It is not a perfect correlation, of course, but many of the cars in Cat A do have a lower OMV compared to the cars in Cat B, so I think to some extent, this already achieves that purpose of being progressive.

But more importantly, Sir, we have the Additional Registration Fee (ARF). So, car ownership is progressive, the COE system has some elements of progressivity, but beyond that, if you look at the car ownership policy as a whole, the ARF is the other tool and perhaps the more effective and more direct way of having a progressive car ownership policy.

We, only very recently in Budget 2023, raised the ARF for luxury cars. And yesterday, I answered a question that after doing that, the number of luxury cars responding to the policy signals have actually come down.

I go back to my earlier point that Assoc Prof Lim mentioned as well, that he recognises that all these fanciful ideas are just going to have a small dent – in fact, I would say a very small dent – and this is not going to solve the fundamental issues. He agrees with us that the more fundamental approach, the better approach, is to look at how we can do more smoothening of the supply using the cut-and-fill method – which we are already doing.

Sir, let me now turn to some of the points that Ms Hazel Poa raised. Unfortunately, she is not in the Chamber right now. Ms Poa asked whether we can have a 0.25% growth rate for Cat D. I think this is similar to the question that the Leader of the Opposition asked yesterday and Mr Murali Pillai also raised in November last year.

As I had explained yesterday in the House, we have to look at the usage of motorcycles. It is similar to how PHCs are being used – because it can be dual use. People do use it for their personal use and also to do business, unlike, say, Cat C, where it is predominantly used for business needs.

But I do acknowledge the concerns that Mr Pritam Singh, Mr Murali Pillai and Ms Hazel Poa have raised – which is that the buyers of motorcycles tend to come from more lower-income households compared to car buyers. I had mentioned this in my reply yesterday. That is why we have lower ERP charges, we have lower ARF for motorcycles.

We will look at whether there are other ways to address this concern, to reflect the intent of what Mr Pritam Singh, Mr Murali Pillai and Ms Hazel Poa would like to achieve. But I do not think we should go down the path of having a growth rate because they are quite different from Cat C in that regard.

Ms Poa also asked about the point-based system. By this, I think what she meant is whether we can do the allocation by giving certain weightage to certain categories of families and buyers.

Sir, I understand where Ms Poa is coming from, but I think if you think about it in practice, if you are going to implement this idea, it is not so simple in practice. There are many Singapore families who would have a dependent, whether a young child or elderly parent. It would be very challenging to determine who is more deserving of a car. How would the person sitting at LTA be able to decide who is more deserving when all families would have different circumstances and needs?

Instead, our approach is to make mass public transport affordable, accessible and convenient, and also to complement this with shared point-to-point transport services, including taxis, private hire vehicles and car sharing and through this multi-pronged approach, be able to better meet the needs of our Singaporean families, who may not need to own a car all the time and use it all the time but they may need it during certain times of the week to bring the family out for an outing or to send their parents for medical appointments. If we can create more options for them to be able to use the car without necessarily having to own the car, I think that is one way in which we can help more families.

For certain categories of families and individuals, for example, persons with disabilities who need a car for their livelihood, we do have a Government scheme called the Disabled Persons Scheme where we waive the ARF, we waive the COE. This is something which we do on a very targeted basis to help these individuals.

Sir, on the point about foreigners or families who own multiple cars, I have addressed it yesterday, but since Ms Poa brought it up, allow me to explain this point again.

I shared yesterday that foreigners win about 1% of the bids for Cat A, 4% of the bids for Cat B. If you combine this with what I said earlier about the bidding system, they are not going to be the ones who are going to influence the bid price. Likewise, families who own multiple cars – they make up 5% of the total number of resident households.

So, again, the numbers are not so significant. We do not think that these two categories of buyers – foreigners and families that own multiple cars – will be the ones who actually end up driving the COE prices.

Because of that, introducing something like the ABSD may sound good, may make us feel "shiok" for short while, but it is not really going to solve the problem if our concern is about cost of living and high COE prices. It is not going to solve the problem. What Assoc Prof Lim mentioned earlier and what we are doing, the cut-and-fill, that is a more direct way of solving the problem.

Sir, I just want to end off on one final point on COE before I move on to my next topic, which is what Mr Leong Mun Wai mentioned. I think he may have misunderstood my data. Yesterday, I shared that the percentage of households that own cars has fallen gradually over time, from 40% to about one third now.

Maybe just allow me to clarify, Sir, that this trend has been happening not just in recent times when COE prices are high but even during the time when we have plentiful supply and COE prices were much lower. So, even then, we see the shift. It could be a generational shift. Maybe more people now may not feel that driving is necessary. Or like what I mentioned earlier, they may not need to own a car, they can just use the services of car from time to time when they need it. It could be that maybe they find that the public transport system has been improving over time and they would prefer to use public transport, which is also more sustainable for the environment.

Whichever the case may be, Sir, this trend has actually been consistent, whether COE prices are high or low. So, I thought I just clarify that point that Mr Leong mentioned.

Mr Speaker, we have been able to keep our public services and finances sound through this combination of not delaying necessary adjustments while providing needed support to households.

Even in years when inflation is high, we still have to raise some charges and taxes because it is necessary to do so. It is not prudent or sustainable for the Government to avoid or subsidise every cost increase. Doing so will entail either a high burden on current and future generations of taxpayers or a deterioration of service standards.

It is not the responsible thing to keep kicking the can down the road or to avoid introducing painful but necessary increases. We may make some people happy by pursuing such policies but when the financing gap starts to accumulate over time, we will make everyone worse off because it will be even more painful to fix the problem later.

Importantly, the Government's policies should be seen together and not in isolation or piecemeal. The different policies and measures work together as a whole to collectively help ease the cost pressures on Singaporeans without undermining our fiscal sustainability. This is why I support the proposed amendment from Mr Liang Eng Hwa because he is right that the Government should continue pursuing policies that together lower cost of living pressures on Singaporeans and their families.

Our policies need to be sustainable because we care for Singaporeans now and also for our children and grandchildren.

I also applaud and encourage the community and kind-hearted sponsors to continue stepping forward with philanthropic donations to help support vulnerable groups in society. There are many ground-up initiatives, including from the NTUC and community groups, which provide local-level assistance to vulnerable residents, on top of Government subsidies. You heard from some of our MPs earlier.

The CDC Mayors and many of our grassroots advisers do this regularly with community partners and donors. Community and corporations do their part alongside the Government in a whole-of-society effort to support the vulnerable.

This is our Singapore way – not just enabling ourselves and our family to do well, but also helping to support others in society so that we can progress together and leave no one behind.

Mr Speaker, the reality is that global inflation will remain elevated for some time to come. We cannot fully insulate ourselves from these global forces. Prices of goods and services will rise to reflect higher costs.

If we do what is politically convenient and prevent prices from rising, I am afraid we will create more problems. Giving more price subsidies will benefit certain groups at the expense of others. In particular, we end up helping the rich more than the poor. We will lose fiscal discipline and erode self-responsibility.

The fiscal deficit that gets created cannot be wished away and the burden will fall on future generations of Singaporeans. In the long run, it will hurt Singapore and Singaporeans.

Overall, the Government has moderated considerably the impact of inflation on Singaporeans, especially for lower- and middle-income segments, and we have done so on a sustainable basis, spending within our means and helping as many people as possible.

We will continue to monitor the need for more targeted support if inflation or economic outlook worsens. We will do so while maintaining discipline in ensuring that our interventions are fair, sustainable and effective.

Sir, we welcome the Leader of the Opposition's call for a review to make sure that our policies are fit for purpose in a new era of higher prices. The Government has been reviewing our policies, including as part of Forward Singapore. Some changes have already been announced, for example, the Majulah Package for young seniors and the new housing model. Existing schemes such as Workfare are being enhanced and new initiatives such as re-employment support have been proposed.

We welcome further inputs into these policy reviews as we chart our way forward, but not all ideas will be feasible or will achieve our shared goals of a fairer and fiscally sustainable system.

To Members of this House and to all Singaporeans, I want to assure you that this Government will be responsive to the concerns of our people. We will continue to do our best to mitigate cost pressures for businesses and families. Importantly, we will do this in a way that is responsible and right for Singaporeans, today and tomorrow. [Applause.]

Mr Speaker: Mr Pritam Singh.

7.13 pm

Mr Pritam Singh: Thank you, Mr Speaker, and thank you to the Acting Minister for responding to my intervention on relooking water pricing tiers.

As I heard him, when he spoke about broad-based subsidies, I was concerned that he may have misunderstood my proposal. As we know, the price of water has three components. That is how it is priced in Singapore. There is the tariff, waterborne fee and the conservation tax. I had not been talking about the tariff and the waterborne fee. I understand they have specific purposes. For example, the waterborne fee is a charge to offset the cost of treating used water and to maintain the public sewage system.

When I spoke of tiers for water conservation tax, I was not suggesting that, for example, a user at 35 cubic metres per month is going to be charged zero to 10 at one rate, then 10 to 20 – once you hit 35, if you pay the water conservation tax, that would be tiered for users who consume between 30 and 40 cubic metres of water. That progressivity, in my view, would serve the purpose of the water conservation tax, which is to reinforce the water conservation message. That was the suggestion.

The Acting Minister was talking about broad-based subsidies and the rich also getting subsidised. That was not the focus of what I was driving at. I hope I made myself clear. I will be happy to clarify if the Acting Minister has his queries on this.

Mr Chee Hong Tat: Mr Speaker, I thank the Leader of the Opposition for his clarification. I understand where he is coming from. I think we are all on the same page when we want to look at how we mitigate the impact on lower-income families. We share the same objective.

The way that we are doing it now, all three components – the tariff, the water conservation tax and the water-borne fee – all three components actually add together to reflect the true cost of producing water, the next drop of water. And because of that, we feel that it is better to let this true cost be reflected from the first drop. But then, we help the lower-income with means-tested U-Save rebates.

So, I think our objectives are similar. But it is just the way in which we achieve it, we may differ somewhat. But I think, with Mr Pritam Singh's clarification, the gap has narrowed.

Mr Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song: Sir, I thank Senior Minister of State for responding to my proposals.

I wish to, first, make a correction to one of the figures I cited in my speech earlier. I said between 2011 and 2022, SMRT and SBS Transit together posted profits averaging $55 million a year and reaching $110 million in the last financial year. The $55 million figure is incorrect. For that date range, it should actually be $74.6 million. So, the sentence, should read, "Between 2011 and 2022, SMRT and SBS Transit have together posted profits averaging $74.6 million a year, reaching $110 million in the last financial year." These numbers are from two companies' financial statements.

Sir, just some clarifications on Senior Minister of State's response just now.

I am surprised that the Senior Minister of State is saying that setting KPIs does not work and he cited the Soviets. Surely, he is aware that setting individual and team KPIs is an established practice in many organisations. Even the Ministerial salary framework includes KPIs.

But my point was that tying an executive's salary to their achievement of performance targets is a better motivator of that executive's performance than a company's profitability. It is also more aligned with commuters' interests.

Next, the Senior Minister of State said that with our NTC, there is no guarantee that it will get better outcomes. But what we are seeing now is a public transport model that is sucking up Government subsidies while still posting million-dollar profits which benefit shareholders, not the commuters. Can the Senior Minister of State then assure us that the current model is fiscally sustainable and will produce better outcomes in the long run?

Finally, just one last point. I was not criticising the public transport workers in any way. In fact, I think they are doing a fantastic job in terms of keeping our public transport system working. What I was talking about was the public transport model, not the workers.

Mr Chee Hong Tat: Mr Speaker, first, let me thank Mr Gerald Giam for his clarification and showing appreciation to our workers; 4 November is Public Transport Workers' Appreciation Day. So, thank you to Mr Gerald Giam for acknowledging their hard work.

Sir, the profit numbers that Mr Gerald Giam cited represent the profit numbers for the group as a whole. So, if we look at SBST, for example, they have both local and overseas operations. Locally, they have bus, they have MRT. They also have taxis. They also have other operations. I am sorry, SMRT. I was referring to SMRT, not SBST. SBST does not have taxis. SBST has MRT, bus and also overseas operations.

So, if we take a look at the total package of the scope of what they do overall, I think those numbers would have to be looked at more specifically when it concerns the component that has to do with fares, because we are talking about fares here. Right? So, there is no point we have an argument about how much money they make with their advertising or their overseas investments. Those are separate. It is part of the numbers that you see as a group. But for the purposes of our debate here, we should be looking at the numbers that are linked to fares.

And as I explained earlier, Sir, for buses, yes, the profit numbers today that you see reflect some of the older contracts that we did previously. But if we look at the newer contracts, we have, with experience, actually tightened the terms and conditions. And there is now also more competition. We now have four bus operators. So, as a process, achieving savings for commuters and for taxpayers, that will take time to achieve, but we are making steps in the right direction. We are seeing a reduction in the returns for the newer contracts.

For MRT, I need to highlight that what we are talking about here again —

I am sorry, Sir, just to reiterate one more point on the bus is that the fares do not go to the bus operators directly. I mentioned this a few times. The fares come to LTA. LTA then pays the operators. So, if we collect less than what we have to pay them, that is actually Government subsidy.

The trains, I mentioned that the train operators do collect the fares and that is part of their revenue. But if we look at the train operations for both SBST and SMRT trains, the numbers, as I shared earlier, SBST making losses of several millions; SMRT trains making a profit of 1% return, $6 million.

So, I think we have to look at it in the right perspective rather than look at the macro numbers, which may not be relevant to the discussion that we are currently having with public transport fares.

On the second point about KPIs, Sir, I did not say that KPIs are not relevant at all. I did not say that. What I said was that KPIs should not be a substitute, because if you only rely on KPIs and nothing else, then you will have a problem. But I do not think that is what Mr Gerald Giam is saying as well. So, we may not differ that much. I think we can both agree that KPIs can form part of the overall performance management tracking, but they should not be the only way of improving performance.

And in the case of the public transport operations, if we look at buses, for example, one of the reasons why we are able to have better outcomes, partly, I want to give credit to our LTA colleagues. It is because, over time, we do learn how to do the contracting better. But it is also because there is more competition.

So, if you nationalise, you take away this competition element, you may not actually achieve the same outcomes as what you are able to achieve now. It is an assumption that nationalising, taking away the profit element, means better outcomes for commuters. Need not be.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Speaker, two clarifications from me.

The first has to do what Senior Minister of State Chee mentioned. He said he wondered if I heard him yesterday. Indeed, I did. And that is why I referred to the cut-and-fill method. But I also wonder if he heard me just now when I also pointed out that the Government action in the cut-and-fill method did not strike me as decisive enough. And by my calculations, it would not move the needle.

So, if the difference is one of degree, I wonder if the Government will commit to an eventual target of a more or less equal vehicle quota for every year sometime into the future. And if they are willing to do so, how will they actually avoid the existing incentives for individuals to sell COEs in shortage years and to buy them in abundant years. That is my first question.

The second one has to do with what the Senior Minister of State mentioned about PHC participation in Cat E. Just to be clear, my suggestion was that PHCs should – it is not that they should not be allowed to bid, but they should be treated the same as taxis rather than being banned altogether. So, on that, I wonder if Senior Minister of State Chee will agree that the common treatment of PHCs as well as taxi cabs makes much more sense than the current approach.

Mr Chee Hong Tat: Mr Speaker, I did explain earlier in my response that, to do cut-and-fill, we have to also be mindful of the trade-offs because we are effectively borrowing from the future.

So, I did hear the suggestion from Assoc Prof Jamus Lim. Same concept but the Member wants us to do more. And I clarified that it is not that we do not want to do more but there are trade-offs and we need to be careful because, if you borrow too much, you actually may introduce more volatility. Please do not forget that the cars that are being deregistered in future, some of them may want to buy another car. And we are also borrowing from the future. So, you are effectively shifting some of the supply to now before the cars are deregistered. So, you are adding to the short-term congestion.

So, yes, we accept those trade-offs and we are willing to do some, but to what extent? There is a balance.

But the more important point is that we do not disagree on the method. We both agree that cut-and-fill to reduce the peak and trough is the more effective way.

If I may add, Sir, on PHCs, because that is the second question from Assoc Prof Jamus Lim. The injection that we have done, 35% increase for Cat A, 35% increase for Cat B, compared to third quarter, which is injected some already. So, this is in addition to that, we are injecting 35%, compared to third quarter. That number is actually more than for the previous few quarters the percentage of car-leasing companies that were bidding.

So, if you look at the companies that are bidding PHCs, I shared yesterday that, for Cat A, it is about 21% or thereabouts, it dropped to 16% in the last quarter. Cat B, I shared also that it is about 23% or thereabouts.

So, what we have injected, 35% for Cat A and Cat B, it is actually more than the bidding, the bids that were won by the car-leasing companies for the past few quarters.

Of course, I did qualify that I cannot predict how prices will move because that depends on demand, and demand is not within the Government's control. But in terms of planning and injecting, we are doing our best to try and inject as much as we can without affecting the future supply volatility and without affecting short-term congestion on the roads.

Sir, I think the point about having a separate category, I also explained this yesterday and also earlier. Allow me to just quickly recap.

It is not that it is undoable. But whether you treat it like taxis or you put it as a separate category, that means, different from taxis, the reality is that you still need supply to come from somewhere, right? You cannot just suddenly have new supply magically appear. It has to come from somewhere. And where would that be? It will be Cat A and Cat B.

So, if you create a new category, whether you put it together with taxis or you put it separately, you have to move some of the existing supply from Cat A and Cat B to this new category.

It is not that it is undoable or unthinkable but it introduces complexities because we run the risk of either over re-allocating or under re-allocating and that would have unintended consequences.

Mr Speaker: Ms Sylvia Lim.

Ms Sylvia Lim: Thank you, Speaker. I have one clarification for the Acting Minister. Does he not agree that when we talk about utilities in the current climate, conservation is a key aspect of it. I think the Government has recognised this. We have seen recent statements about the need to conserve energy and water.

In this respect, U-Save vouchers, no doubt they are appreciated by the residents who receive them, but it actually does not really encourage conservation of the utilities. So, I am just wondering whether the Acting Minister would agree that we may have to keep an open mind as to whether we need further tools to encourage residents to conserve on the use of utilities.

Mr Chee Hong Tat: Mr Speaker, I am not sure why Ms Sylvia Lim felt that U-Save rebates are not encouraging people to conserve electricity and water. If we look at it from the recipient's point of view, this is a fixed amount, means-tested. But what they receive is a fixed amount. If they consume a lot, actually, the amount of subsidies they receive is still the same. If they consume less, then actually, the amount of subsidies can help them to sometimes even fully offset the electricity bill or to reduce it substantially.

So, the incentive to want to save is still there because it is a fixed amount. It is not embedded in the price, unlike a price subsidy, whereby if I consume more, actually, I do end up getting a higher quantum of subsidies because it is embedded in the price. In our case, we reflect fully the price so as we incentivise the right behaviour to conserve electricity and water, a point that we both agree. That is important. But the way in which we then provide the help is through the U-Save rebates. It does not distort the behaviour. It does not change the incentive to want to conserve, but it provides the help in a means-tested manner to our lower- and middle-income families.

Mr Speaker: Ms Hazel Poa.

7.30 pm

Ms Hazel Poa (Non-Constituency Member): I would like to seek two clarifications from the Senior Minister of State.

First, the Senior Minister of State mentioned that the bus fare goes to LTA, not to the bus operators. Can I clarify then who proposes the revision in bus fares? Is it LTA?

Second, I thank the Senior Minister of State for responding to my suggestions about the points-based system. He mentioned that it would be difficult because there are many families with children and, therefore, a bit difficult to decide. Would he consider a system whereby, say, the bidding price is given a certain number of points, say, every $1,000 is one point, and then every child that the family has is allocated a certain number of points, so that those with more children get more points and those families with people with disabilities (PwDs) also get additional points? And then COEs are allocated based on the total number of points. Would he consider a system like that?

The Senior Minister of State mentioned the Disabled Persons Scheme (DPS), which I understand is only for livelihood purposes, not for families with disabled people, and for them to move around.

Mr Chee Hong Tat: Mr Speaker, the public transport fares are set by the Public Transport Council. In October, I shared the fare formula and that was also previously announced, and the different components that made up this fare formula. So, it is a very transparent process. There are some indicators that we look at – what is the national benchmark for wage increases, what is the CPI, what is the energy cost. And, of course, as I mentioned earlier, there is that productivity component to incentivise the operators to want to improve productivity over time.

Sir, the second point that Ms Poa raised, I think it goes back to the earlier reply that I gave. You cannot run away from some judgement call if you go down a points system because who would be more deserving? It is really going to be very, very difficult to differentiate. If you use the number of children, for example, I have four children, but I think Ms Poa will agree I should not get additional subsidies or priority just because I have four children. So, there are many, many situations that you look at; it is very difficult to then say how many children as the only yardstick or as the only criterion. So, the way that we think about it is this: how do we help the families through different avenues – not just COE alone, because COE is really more for allocation of a scarce resource – but how do we help different families who may need the car not all the time, but at certain times of the day or certain times of the week.

So, one way is to use point-to-point service, and we are doing a review on that; a point-to-point review. I mentioned this yesterday as well. How do we enhance the services for commuters to meet evolving commuter needs? And it will include families that Ms Poa and others have highlighted, where there is a genuine need for point-to-point service and instead of just relying on car ownership alone. Some of them can own a car but some of them may not be able to own a car. Can we help them in other ways? Point-to-point service, car sharing, and I think it takes a whole-of-society approach, not just the Government because for many of these families that need help, sometimes they also receive some help from the community and from voluntary welfare organisations (VWOs). So, it is a whole-of-society effort; that we do our best to support these families.

Mr Speaker: Ms Lim, do you have a further clarification? Okay, Mr Leong Mun Wai.

7.34 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, I think we have gone through a lot; we covered a lot of ground. But as I hear the debate go on, I just felt that probably it is about balance. Policymaking is about balance. So, I would like to ask the Acting Minister two questions with regard to that.

I think the way the Government conducts policies today, a lot is profit-seeking and using the market model. So, I think, as the alternative parties, what we are bringing to the House is that we hear a lot of feedback about problems. So, the angle must be, besides using the market model completely, there must be more consideration for the social aspects of a lot of the policies. So, let me ask the Acting Minister two questions in relation to that.

One is, for example, the water price. We know from the statistics provided by the Government that most of the increase in the water demand comes from the big users – the water-intensive industries and all that. So, maybe the Government wants to make ourselves more competitive —

Mr Speaker: Mr Leong, you should just ask your clarification and not make another speech.

Mr Leong Mun Wai: — make ourselves more competitive. So, we want to know whether if we alter the way the water is priced, the Leader of Opposition talked about having another category under 40 cubic metres. Is it possible to have another category, between 40 cubic metres and 80 cubic metres, so that we differentiate and we push the cost more to the big users? Because right now, you look at the water prices we are doing and whenever we need to increase our water supply, we need investments. And so, as a result, the burden of the investments comes back to the average Singaporeans. Do you agree with that? That is one point.

Second point about the COE, it is the same thing. Cars are a scarce resource. So, we have to allocate that. But if we use the market system, the Singaporeans will be squeezed out of the market very soon, the average Singaporean. So, as a result, do you agree that we ought to see how we allocate this scarce supply of cars, not just by the market price but by the Government coming in? Maybe one of the solutions, do you agree, is to adjust the allocation to, like what I said in my speech, those that go to Cat B, shrink it; increase the supply for Cat A and C drastically.

Currently, I think it is about 50/50, right? Maybe 70/30? Will that solve the problem? "Solve the problem" meaning, will that allow average Singaporeans a better chance of having a car, even going into the future?

Mr Speaker: Senior Minister of State Chee.

7.37 pm

Mr Chee Hong Tat: Mr Speaker, I first need to say that I reject the way that Mr Leong has characterised the way the Government operates. I think that is quite uncalled for. I just spent a good 40 to 45 minutes explaining our approach to helping Singaporeans cope with the rising cost of living and what we are doing through different ways in a fair, effective and sustainable manner. We can debate about different ideas. We can discuss different possibilities, like what the Leader of Opposition and I have done just now on water. That is okay, Sir. But I reject what Mr Leong has said, that the Government is profit-seeking.

Sir, if we look at public transport, just now Mr Giam mentioned, if we are indeed profit-seeking, the way to do it is to pass through all 22.6%, as recommended by the formula. Did we do that? No, we did not. We passed through less than one third and we absorbed the rest, because we understand that in this current environment, we do not want to add further stresses on Singaporean families. And this cost the Government $300 million to plug the delta, the 15.6%. And on top of that, every year we give $2 billion for public transport, $1 billion thereabouts for bus, $1 billion for MRT. Again, this is profit-seeking?

So, Sir, I respectfully ask Mr Leong to withdraw that comment as I think it is not fair and it is not the right way to describe the way the Government operates or to conduct this debate. Can I pause here to ask if the Member agrees to withdraw that comment first before I answer the rest of his questions.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Mr Speaker, Sir, I think one of the basic approaches adopted by the Government is still to make sure that public services are profitable. I will stand by that. So, if they want to ensure that the public services are profitable, then it is profit-seeking.

So, if there are certain industries like the bus services that you cannot make a profit yet, then it might be because that you are still trying out the model. Because this contracting is a new model, when compared to other things. But whereas in the established areas, like water and COE, you definitely have —

Mr Speaker: Mr Leong, actually all Senior Minister of State Chee is asking is: are you withdrawing? If you are not, then the short answer is no.

Mr Leong Mun Wai: No, I am not withdrawing.

Mr Speaker: Yes, thank you.

Mr Chee Hong Tat: Sir, since Mr Leong has refused to withdraw, I would have to put on record that we reject the way he has characterised the way the Government operates and then I can give many more examples. But in the interest of time, maybe just allow me to comment on one thing.

Sir, the bus contracting model that Mr Leong mentioned, I do not know if Mr Leong is aware that, at the moment, for bus services, LTA, as I mentioned earlier, provides $1 billion every year because it is loss-making. Almost all the bus services that are running on our roads today are not making profit. They are all losing money.

Why do we continue to run them? Because they meet the needs of our residents. Because they meet the connectivity, commuting needs of Singaporeans. So, even when the bus service is not making money, we know this is a public good. This is a public service. It is an essential service. We continue to run that service even though it is not making money. And then to make sure that we are able to run this on a sustained basis, the Government then provides the subsidies to the tune of $1 billion for bus and $1 billion for MRT. So, Sir, we are looking for financially and fiscally sustainable outcomes. It is different from profit-seeking.

Sir, the social aspect in policy formulation, I think it is very much top-of-mind for the Government. If you listen to different generations of Finance Ministers during Budget, there will always be one segment on the economy because we do need to grow the economy to earn a living, to create jobs. But there is always an important segment also on social policies. National Day Rally – the Prime Minister has always focused as well on different ways of improving our social policies – housing, education, healthcare.

So, again, Sir, I reject the way that Mr Leong has characterised the Government's way of working to say that we only care about profits and there is no social aspect in our policymaking. It is absolutely untrue.

Sir, I now turn to the point that Mr Leong mentioned about water, and I am not sure whether I heard him correctly. He said that we should have a different category from 40 cubic metres to 80 cubic metres. Sir, I explained earlier, and I think Mr Singh also mentioned in his speech, that, today, 96% of households consume below 40 cubic metres. So, I am a bit puzzled why Mr Leong is proposing that we should have a different category between 40 cubic metres to 80 cubic metres, catering to some of this 4% and then to provide subsidies for them.

I find it quite strange why he is proposing something like this. I thought the right thing to do, Sir, is to price the water correctly from the first drop, starting from the first drop. But we understand that there are different families with different needs, different financial circumstances and we want to then provide more help and support to the lower- and middle-income families. And the way to do this, the most effective way, in our view, is to then provide means-tested U-Save rebates that are fixed in a the quantity, so that if you consume more, actually beyond that, you pay. So, there is a strong element, strong incentive to encourage people to save water. I think that is the better way to do it and not to create a new category between 40 cubic metres to 80 cubic metres.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Mr Speaker, Sir, I hope the Prime Minister does not think that this is developing into a brawl. But we are just trying to clarify further. So, can I reply to the Acting Minister through you, that one, I did not say that the Government did not consider social factors at all. What I am saying is that, when we are debating here, maybe we are trying to push and say that, let us consider the social factors a bit more? So, as a result, I think the Acting Minister has also misunderstood me.

What I mean to say is that for water, for example, the water demand is increasing very fast but it is because of the big user. So, recently, when we announced the 18% increase in water price, if we have another category for the bigger user, then maybe the lowest 40 cubic metres do not need to have price increases. Push the price increase to the next category. So, is that possible or not?

Of course, it will affect the competitiveness of the water-intensive businesses in Singapore but it is unfair for Singaporeans, right? When the big users are the ones who are increasing the demand and we have to put a lot of investment into water supply and then the costs are borne by the smaller user because of the price increase.

Mr Chee Hong Tat: Mr Speaker, I think first, we have to get our facts correct. The demand for water in Singapore is predominantly actually from households. The majority is actually not from businesses.

So, when we look at businesses, we charge them the full price of water from the first drop and we do not give them any U-Save rebates unlike households. So, that is the difference. Contrary to what Mr Leong seems to have understood, it is actually the other way round. We charge everyone the full price of water from the first drop and then we give means-tested subsidies through U-Save rebates to households, lower-income households getting more but for businesses, they do not get any U-Save rebates. What we do with them is to help them to improve their energy and water efficiency.

Mr Speaker: Mr Leong, if it is a clarification, I will allow it. Is it a further clarification? [Interruption.] Ms Hazel Poa.

Ms Hazel Poa: Thank you, Mr Speaker. I like to seek a clarification from Senior Minister of State when he said that the bus services are making losses, can I clarify whether that takes into account advertising revenue from advertising on the bus surface, the panels behind the bus, in the bus, panels at the bus stop, at the bus interchanges, rent from kiosks at the bus stops, at the bus interchanges and so on?

Mr Chee Hong Tat: Sir, the buses are running because they provide an essential service, they are not making money and we are providing subsidies to the tune of $1 billion every year. I do not know which advertising firm Ms Poa has in mind but if you think you can make $1 billion dollars in advertising revenue, please let me know.

Mr Speaker: Mr Leong, if it is a clarification, yes.

Mr Leong Mun Wai: One more clarification for the Senior Minister of State. As far as I know from the statistics, currently the big users account for 55% of the demand, right? The households 45%, right? Is that statistic correct?

Mr Chee Hong Tat: Sir, I am sorry if I mis-spoke and I got my facts wrong. I need to go back and double check this. But if the data is the other way round, I apologise for the factual error. But it does not change the point I was making and I hope Mr Leong can agree with me on that, that we charge businesses and households the true cost of water from the first drop and we do not provide U-Save rebates to the businesses. That part I can confirm and double confirm.

Mr Speaker: Mr Saktiandi Supaat.

7.49 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, Sir, I rise in support of the amendments proposed by Member Mr Liang Eng Hwa, as they reflect the existing global drivers and efforts so far as well as trade-offs. Mr Speaker, Sir, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] I am concerned about the rising cost of living that our people are experiencing. Therefore, the issue of cost of living has been a core priority in this House this year, and I, as well as other Members, have previously raised it, together with the impact of high interest rates.

It is evidently front-and-centre in the Government's policy making efforts with the announcement of the $1.1 billion Cost-of-Living Support Package last month, building on the Assurance Package, and other measures announced at Budget 2023. Singaporeans will be receiving at least $400 in cash and CDC vouchers, with lower income Singaporeans receiving up to $800 cash in December 2023. There will also be rebates to manage Service & Conservancy Charges (S&CC) and U-Save rebates.

Some of the inflationary pressures that Singaporeans are facing are also happening worldwide, due to the Russia-Ukraine war and bad harvests related to climate change, for example, driving up energy and food prices. Not to mention the risks of supply chain disruptions, higher interest rates in a longer environment and the possibility of an escalation of the situation in the Middle East.

Aside from specific government support through fiscal assistance, which have been very helpful to our people, many Singaporeans may not know that our government and financial agencies actually play a big part in shielding their wallets from some of these economic spillovers. The effectiveness of a strong SGD currency policy, for instance, as result of MAS tightening monetary policy five times in a row, including in two off-cycle moves last year, has enabled MAS to contain imported cost pressures, and some economists such as OCBC’s chief economist is of the view that this will be sustained for several quarters ahead. While inflation is still elevated, MAS' five successive monetary policy tightening moves since October 2021 have tempered the momentum of price increases. The effects of MAS' monetary policy tightening are still working through the economy and should dampen inflation even further.

I am also concerned and have asked many questions alongside other Members in the House about the increase in transport costs including high COE for motorcycles and cars. The Government recognises that some Singaporeans and the Malay-Muslim community rely on motorcycles for their livelihood, and there is a higher proportion of lower-income individuals among motorcycle owners than car owners. This is one of the reasons why the ARS Additional Registration Charges, road tax and Electronic Road Pricing (ERP) for motorcycles are lower than other types of vehicles. To protect against speculative bidding behaviour for Category D COEs, MOT introduced several measures in the last two years. These are very much welcomed. It includes raising the bid deposit for Category D Temporary COEs, or TCOEs, to $1,500; and reducing the validity period of COEs to one month.

The price of Category D COEs has dropped from over $13,000 in November 2022 and remains at around $11,000 in the recent bidding exercise. The Government has said it will continue to study ways to improve the COE system for Category D, including new ideas. Hence, I am waiting whether they will look at ways to improve this system.

(In English): Sir, some of the inflationary pressures that Singaporeans are facing are worldwide – I mentioned this in my Malay segment – due to the Russia-Ukraine war and bad harvests related to climate change, for example, driving up energy and food prices. I think many are not aware – I mentioned in my Malay segment about how MAS policy has helped to mitigate imported inflation.

According to a study by NUS, Singapore’s food prices are also much less volatile than global food prices. This in part is due again to our exchange rate policy accordingly and is helping us in terms of purchasing power in the world market, thereby, providing a greater buffer towards global food price shocks.

As cited by the NUS study, our various policies such as increased local production, diversification of food sources and stockpiling are all working to help insulate Singaporeans from externally driven cost of living pressures, albeit the cost of living pressures continued to be there because of global factors.

Mr Speaker, the Government has also rolled out a suite of policies to keep day-to-day costs down, such as HDB’s requirement for all coffee shops leased from HDB to offer budget meal options to diners by 2026. The issuance of CDC Vouchers to households is of special mention – I mentioned it in my Malay segment as well – these are complemented at the local level by individual constituencies’ grassroots efforts. I think Acting Minister Chee highlighted that in his speech as well as other Members as well.

I just want to share the experience at Toa Payoh East, at the local level, for example, I launched the Cost of Living Assistance Programme, called CLAP, sometime in the third quarter of 2022, a ground-up initiative working together with hawkers and donors and grassroots to assist lower- to lower-middle income households – we wanted to capture the lower-middle income households – in Toa Payoh East with their daily expenses.

Ground-up initiatives with the merchants and grassroots supported initiatives to assist residents who are affected by high cost of living especially groceries and essentials. I just want to highlight, it is a tripartite involvement – merchants, residents and Toa Payoh East Citizens’ Consultative Committees (CCC) – to help residents as much as possible and also to make sure that the hawkers actually do have business. This initiative also hopes to bring back some business opportunities to the heartland shops and convenience for residents. So, they get about $100 worth of CLAP vouchers, which can be used to offset their purchase for meals and essentials items at the participating hawkers and heartland merchants.

The aim is to target low- to middle- income residents, as I mentioned. I think we expect to help up to about 500 families from last September in 2022 when we first launched up to end of this year. So far, we have given out close to about 200 and has benefited merchants and hawkers at Lorong 7 and Lorong 8 Toa Payoh.

The purpose I am sharing this is to highlight that there are discretionary measures that advisers and MPs can do on top of the ComCare and welfare assistance that are available that the Government has provided to alleviate cost pressures which includes CDC Vouchers, GST rebates and transport vouchers.

I am wanting to highlight that the CDC Vouchers are not means-tested. It is the Government spending about $600 million, I think, if I am not mistaken – up to about $600 million so far and is not means-tested.

So, on top of that, we have these discretionary measures that, I think, all the advisers and MPs can undertake in their respective constituencies.

Against this global backdrop, Mr Speaker, the Government is also implementing tough decisions for longer-term economic policies and fiscal measures. Acting Minister Chee has highlighted extensively the impact of the increases in the GST and how they matter for Singapore – carbon tax and water prices, COE quotas, for example, with specific objectives. The main thing is it helps to ensure long-term fiscal sustainability and reduces burdening future generations of Singaporeans.

These are necessary to achieve other policy objectives beyond just keeping inflationary pressures for Singaporeans' day-to-day lives in check. It is essential that Singapore continues to address our medium- to long-term challenges head on even as we face inflationary challenges now. That is the Singaporean way, and I think Acting Minister Chee mentioned it, that has ensured Singapore’s survival, gelling a very long-term strategic perspective even as we face short-term challenges but with the welfare of Singaporeans taken care of and negative impact mitigated, especially for the more vulnerable groups.

These policies will invariably lead to price increases in the short term, but ensure fiscal sustainability and environmental sustainability measures are needed now and I think we need to address them now before things get worse in the medium to long term.

Sir, the current approach to ensure affordability for Singaporeans amid these price increases is more prudent as they also minimise the cost pressures on Singaporeans who are most feeling the pinch in terms of cost of living through measures, such as providing targeted assistance to lower-income groups, providing offsets and subsidies to help ease the burden on households and staggering the implementation of policy initiatives as well as increasing wages progressively for low-wage workers. All these are already mentioned by Members as well as Acting Minister Chee earlier.

One example I just want to highlight again, as what the Acting Minister has mentioned, is the recent announcement by the Public Transport Council to allow a 7% fare increase in 2023. This is one example reiterating again what the Acting Minister mentioned, one instance where the Government has calibrated the impact of cost of living pressures.

The Acting Minister for Transport has also explained the recent decisions and the Government's core consideration that fares remain affordable while the public transport system remains financially sustainable. That is quite important and he has shared this with the House last month as well.

I will not belabour these points. But what is key are actually the 10% reduction in the cost of monthly concession passes, implementation of a new discounted monthly pass for Workfare Transport Concession cardholders and the $50 Public Transport Vouchers for lower-income households. These further measures accompanying the fare increases demonstrate the Government's approach to targeted help in ameliorating cost of living pressures for the lower-income group.

In general, I am reassured in terms of public transport, that the Government has kept public transport fares affordable. Public transport is already heavily subsidised. The Government is actually spending quite extensively with the additional subsidies to lower the proportion of household income spent on public transport, which has fallen as well.

Before I go into my last segment and conclude, I just want to reiterate some feedback from residents, highlighting thanks in terms of efforts from MOT and LTA in providing those transport vouchers to residents. Many of the residents have come forward to seek help in terms of transport vouchers. I think that sort of additional help on that front has helped, especially with the recent changes in the monthly passes as well.

Another example I want to highlight before I end is the additional U-Save rebates announced last month that will serve to cushion the impact of increases in carbon tax and water price.

Mr Speaker, Sir, the carbon tax itself is something that the WP has also agreed on in this House, that there is a need for Singapore to implement for the sake of our planet and also for our country.

Over the next two years, the additional U-Save rebates will, on average, fully offset the increase in utility bills for 1- to 2-room HDB flats, about 80% for 3- to 4-room HDB flats, and about 65% for larger flats. This is another way that the Government is making sure that the cost of living pressures on the lower-income households are moderated even when we need to make the hard decisions of implementing such policies at this juncture.

Mr Speaker, the Government has taken active wide-ranging steps to cushion the impacts of inflationary pressures on ordinary Singaporeans and has helped reduce their vulnerability to price increases through various measures, through monetary policies, fiscal assistance and also at the grassroots and through discretionary measures that can be undertaken on top of ComCare and welfare assistance.

Ultimately, the global inflationary environment and pressing needs from Singapore society, such as an ageing population, mean that there are multiple fiscal demands that the Singapore Government needs to meet. As a society, we will all need to take on a fair share of these cost pressures where the Government will ensure that it is affordable for the average Singaporean while taking special targeted measures to provide more assistance for the lower-income groups who have heavier financial burdens.

Mr Speaker, Sir, it is my view that this approach is more prudent than deferring these real demands to future years, which would simply be kicking the can down the road where we do not know if the same or new inflationary pressures would be around. There is no guarantee that we may already have shifted into a new normal of higher prices. In this vein, there may not come a better time to implement some of these policies. Mr Speaker, I support the amended Motion.

Mr Speaker: Senior Minister of State Chee.

Mr Chee Hong Tat: Thank you, Mr Speaker. Mr Speaker, I have checked and would like to confirm that if we look at the total water consumption in Singapore, 45% comes from the domestic sector and 55% is from the non-domestic sector. I apologise for my error earlier. Sir, for potable water, the split is 60% domestic and 40% non-domestic.

Mr Speaker: Mr Xie Yao Quan.

8.04 pm

Mr Xie Yao Quan (Jurong): Mr Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Official data shows that since July 2021, which is in the past 20 months, the price of eggs has gone up by almost 40%. Price of chilled chicken saw similar increases. Food and food ingredient prices have gone up by 11%. For F&B establishments, including hawker centres, coffee shops and restaurants, prices have gone up by 12.5%.

Many residents have told me that the extent and speed of cost-of-living price increases have become unbearable. Previously, you can buy a lot of things with $50 at the wet market, but now it does not buy you much.

As Members of Parliament, we feel keenly the impact of cost of living on Singaporeans in the past two years. Thus, today's debate is of great significance and precisely because of this, our debate should stick to the facts and analyse the factors behind the rise in cost of living objectively and accurately, and take a realistic approach to alleviate concerns of Singaporeans. This includes various considerations, trade-offs and compromise so as to avoid politicising this issue.

This is the responsibility that Members of Parliament and political leaders should take upon themselves. The first point I want to make is that GST should not be made the scapegoat of the increase in prices.

In the last two years, prices have gone up by more than 10% overall, but during this period, GST have gone up by one percentage point. A crucial point is that the Government has increased the subsidies for the lowest-income Singaporeans under the permanent GST Voucher scheme. This will fully offset the impact of GST increase on the 30% lowest-income Singaporeans. This means that the actual impact of GST increase on these Singaporeans is not two percentage points, but zero.

Even for middle-income Singaporeans, the actual impact of the GST increase is also much lower than one percentage point. Because the Government boldly launched the Assurance Package, the impact will only be felt five to 10 years later.

This means that the cost-of-living pressure that Singaporeans are experiencing now is due to other reasons, not GST. One key reason is the global market volatility and the rise in global prices. Singapore is a small country and we import many of our raw materials and goods, so we will be inevitably affected by fluctuations in global prices.

For example, global chicken feed price has increased in the past two years. So, we have experienced an increase in egg and chicken prices. Global oil and gas prices have also increased and directly affected our electricity price, MRT fare and prices of public services. As a small country, what can we do?

The Government has one major weapon, which is the Singapore dollar. Through strengthening the Singapore dollar exchange rate, we have managed to offset 2.5% of inflation.

I believe Singaporeans know that the strength of the Singapore dollar did not occur by chance. It is due to the Government's prudent management of the economy and finance. Individually, we can also take steps to cope. In fact, a lot of residents know that domestic prices are affected by the global market. Singaporeans can also take a prudent approach in spending.

When we talk about inflation, it is actually an aggregate of the price increases of all goods, but in this basket of goods, there are still cheaper choices available. For example, seafood. According to official data, average prices of red snapper and batang have indeed increased by 20% and we have seen this at the markets. But according to official data, the price of sea bass has remained stable during the same period. So, we can eat sea bass instead of red snapper and batang. Savvy saver are still able to save money.

Another important aspect is the increase in the prices of public services. The cost of public services is also affected by the global market and prices. For the increase in cost, the Government has chosen to increase prices to maintain high quality public services. This is the responsible way.

For Town Councils, although they are not Government departments, they also provide public services. Thus, the recent increase in Town Council S&CC charges also reflects these increases in cost. This is a responsible way to deal with cost increases. Besides the global market, another factor for the increase in the cost of living is our domestic wages. In particular, I would like to point out the increase in the wages of low-income Singaporeans.

Increasing the wages of low-income Singaporeans is the aim of the Government's Progressive Wage Model (PWM). This is an important policy. Because of PWM, between 2017 and 2022, the wages of low-income Singaporeans have increased by 2.9% annually. This is higher than the 1.8% annual wage increase of middle-income workers.

In the next five years, the Government will go one step further and aim to increase the wages of low-wage Singaporeans by up to 80%. This will benefit hundreds of thousands low-wage Singaporeans.

Sustaining this wage increase of low-income workers at a faster pace than middle-income workers so as to close the gap between the two is something that the Government has put a lot of effort into.

As a Jurong GRC Member of Parliament, many of my residents have benefited from the PWM. So, I strongly support this policy, but this policy also implies that the overall domestic wage will increase and ultimately businesses will have to increase prices. A crucial consideration is whether Singaporeans support the PWM and whether they are willing to pay a little more so that low-income workers can earn more.

This also applies to hawker food prices. Hawkers are self-employed persons, so they are not included in the PWM, but they also work hard to make a living. They also want to earn more. After all, other Singaporeans are enjoying wage increases.

I believe that in the past two years, hawker food prices have increased by 13% on average. This reflects the reality. Hawker food prices have increased not just because food and electricity prices have increased. I have a resident who runs a noodle stall. He recently increased his prices by $0.50. I asked him, "So, you have increased your prices." He said, "I have no choice." What I was hesitant to ask was, actually, "Others have increased prices and you are only increasing prices now?"

So, Singaporeans have to face the same question. Are we willing to pay a little more at hawker centres so that hawkers can earn a little more? Regardless whether they are low-income workers or self-employed persons, Government has another major initiative - Workfare. This provides direct payout to those Singaporeans who earn low income and it helps to supplement their income.

Through Workfare and PWM, on one hand, the Government directly supplements part of the wage increase of low-income Singaporeans; on the other hand, it guides businesses and consumers to take on part of the increase in cost through market.

This reflects the fundamental policy of the Government, that is, a small country will always face big challenges. When we are faced with challenges, the Government faces the problem squarely and launches responsible and sustainable policies as there is no free lunch in the world.

The Government will directly bear part of the cost, while the rest is shared with the people. In the past, we have faced similar challenges and the current issue of cost of living is no exception. In fact, many Singaporeans are aware of this. Many residents have asked me, "The Government is providing so much assistance. How can it be sustained?"

As long as the Government, people and business community continue to work closely together and contribute their part, I believe we can overcome the current challenge of cost of living.

I support the amended Motion by Mr Liang Eng Hwa.

Mr Speaker: Mr Louis Chua.

8.17 pm

Mr Chua Kheng Wee Louis (Sengkang): Mr Speaker, I second the Motion as filed by the Leader of the Opposition, Mr Pritam Singh. The discussion on the cost of living crisis which we are facing today, is not complete without a review on the state of inflation in the country.

In its October Monetary Policy Statement, the MAS shared its expectations for Consumer Price Index (CPI)-All Items inflation to average around 5% in 2023, down from 6.1% the year before, and for the inflation rate to average between 3.0% to 4.0% in 2024. In recent months, we have seen inflation rates gradually slowing down over the course of the year.

The decline in overall inflation rates is perhaps cold comfort for many Singaporeans, as prices are ultimately continuing to rise even amid the high prices we are seeing today. And that this is still significantly higher than what we have been used to in Singapore, double that of the 1% to 2% average inflation rates in the last four decades.

Even if inflation rates return to lower levels, prices are now permanently higher. With crude prices rising meaningfully since the third quarter, potentially even hitting $150 as the World Bank has warned, food commodities prices threatening to climb even higher if we witness a strong El Niño, and the second order effects on inflation potentially coming through, inflationary pressures could well pick up.

Interestingly, the MAS expects core inflation to be lower than headline inflation at 2.5% to 3.5% for the year as a whole. Unlike many countries where core inflation is defined as that excluding food and energy costs, Singapore excludes accommodation and private road transport costs, which according to the MAS, and I quote, “are excluded as they tend to be significantly influenced by supply-side administrative policies and are volatile.”

While I accept that the MAS Core Inflation measure is used for monetary policy decisions, a person without knowledge of the technicalities will nonetheless find reports of a return to price stability as being different compared to their lived experience. After all, the CPI is meant to be a fixed basket of goods and services commonly consumed by resident households. And looking at the relative weight of accommodation cost as part of Singapore's CPI basket, it comes in at 21.97% – the highest single component.

Moreover, to say that accommodation costs have no direct impact on the monthly cash expenditure of most households in Singapore as they already own their homes, does not take away the fact that especially in a country like ours, which prioritises home ownership. The cost of purchasing a home is a big concern, as it is going to be the single largest expenditure item for the vast majority of households. It is not just any expenditure item, but one that relates to our basic need of providing for shelter and our livelihoods.

As such, my speech today will primarily touch on housing, and as rightly pointed out by the MAS, is significantly influenced by supply-side administrative policies. Hence, we need to take a closer look at our supply-side policies to ensure prices are well managed.

Before I touch on housing, back to the October Monetary Policy Statement. The MAS took pains to reiterate that excluding the impact of the increase in GST rates both in 2023 and 2024, inflation rates would be lower. The question then is, why add fuel to fire?

Layering on a higher GST rate on top of the inflationary environment we see today with the rising prices of many essential goods and services, is only going to make it even more difficult for Singaporeans to cope with the mounting cost of living pressures. Should we not be insulating our people instead of hitting them with more? Even the MAS Chief Mr Ravi Menon has acknowledged the 1% dish point increase in GST, has an immediate impact on inflation.

This is especially the case where I shared in my speech in Parliament just last month: the Government's fiscal position is shaping out to be much better than projected, with operating revenues now $8.2 billion higher in the first half of the financial year.

To reiterate, in Budget 2022, Deputy Prime Minister Lawrence Wong shared that the GST hike will bring in about 0.7% of GDP in revenues annually, or about $3.5 billion when the full hike is in place in 2024. Even with a one-percentage point increase in the GST thus far, the Government expects GST revenues in FY2023 to be $2.9 billion higher than FY2022.

In response to my speech, Senior Minister of State Chee Hong Tat repeated the same response as that shared by Deputy Prime Minister Lawrence Wong in the Budget 2023 round-up speech, where according to them both, “Deferring the GST increase will only store up more problems for the future, leaving us with less resources to take care of our growing fiscal needs and we cannot count on short-term upsides to fund structural needs.” Again, I listen very carefully to what Senior Minister of State Chee has said earlier, but the question here remains relevant. And that is, is deferring the GST hike in 2024, even for one year, when we have already achieved the revenue increase which the GST hike was meant to bring, going to store up more problems for the future?

Returning to the subject of my speech today, which is on housing costs. Based on the latest third quarter 2023 data, HDB resale prices continued its ascent, up about 1.3% from the last quarter, with the increase higher than the 1.2% quarter-on-quarter increase initially estimated for the quarter. This is despite additional cooling measures introduced more than a year ago in September 2022 involving tighter housing loan criteria and a new wait-out period of 15 months for current and former owners of private residential property to buy a non-subsidised HDB resale flat.

Compared to a year ago, public housing prices are now 6% higher versus private housing prices at about 4% higher. In each year since 2020, public housing price increases have outpaced that of the private residential market. And cumulatively, we have seen resale HDB prices up by 36%, compared to private residential at 28% since the start of 2020.

Moreover, it is not like what a Business Times columnist puts it, where he calls on Singaporeans to simply "stay cool and do not go overboard chasing after million-dollar HDB flats". While one may argue that the HDB resale market does not reflect the affordability of new BTO flats, ultimately, this will feed directly into the formula for pricing new BTO flats, as Minister Desmond Lee shared that, and I quote, "When pricing new flats, HDB first establishes their market value by considering the prices of comparable resale flats nearby as well as the individual attributes of the flats, and prevailing market conditions."

Looking at the residential rental market, Minister Desmond Lee is hopeful that in the coming quarters, rental pressures are expected to further ease, as a significant number of residential units are completed, as shared in response to a PQ in September where Member Mr Henry Kwek asked, what more can the Ministry do to moderate or reverse escalating rental cost to help tenants manage their cost of living.

I agree with the Member's call and have, in March this year, also called on the Government to support Singaporeans intending to rent a house in the open market and to consider mechanisms to moderate rents in the housing market.

But while rental growth rates have moderated, compared to a year ago, private residential rents are up by 19%, well above overall inflation rates and up by close to 59% over the last three years. While the HDB does not publish a rental index, a comparison of median rentals across HDB towns paints a similar uncomfortable picture. Over the last three years, median rents for a 4-room HDB flat have risen by roughly 35% to 78%. Median rentals for a 4-room HDB flat in Sengkang, for example, is now at $3,200 a month compared to less than $2,000 three years ago.

While we may say that as a country with close to 90% home ownership rate, those who need to rent form a minority. Soaring rents impact young Singaporeans who have not been able to purchase a flat but need their own space and households who may be particularly vulnerable given their tight financial circumstances and yet do not qualify for a public rental flat as they may be earning a household income of more than $1,500 a month, for example.

I am cognisant that the HDB website has recently been updated to remove references to any income figure and that HDB takes a needs-based approach and reviews all requests for public rental holistically. The ability to afford other housing options, such as renting from the open market or purchasing a flat remains debatable, in my view. This is especially if households are currently renting in the open market, and cannot afford the high resale prices today. Even if some can eventually secure a BTO flat, they would need a place to call home in the interim.

Just last month, there were two separate residents who lamented to me that their landlord is raising their rent to beyond their gross household income. In one case, his rent is going up from $1,500 to $2,500 a month, beyond his gross income of $2,200 a month; while in another case, his rent is going up from $3,200 to $4,200 a month and he cannot simply downgrade to a smaller flat due to his household size of eight. I have in January and March 2023, called for support measures for households in need and these cases are just a small subset of many Singaporeans who face similar predicaments.

Having described the challenges we are facing in the public housing market, I recognise that the Government agrees that there are issues relating to availability and affordability today. Where I believe our views differ however, is on the sufficiency of the current measures that have been taken.

On housing availability, the Government has reiterated its position that it has significantly increased the supply of BTO flats and will launch up to 100,000 new flats in total from 2021 to 2025. Similarly, I have over the course of a number of speeches, shared that this may not be sufficient.

Even if the HDB launches 100,000 flats in total from 2021 to 2025, this implies that BTO supply falls 20% from current levels to about 18,400 flats in 2024 and 2025. Moreover, while the average of 20,000 BTO flats between 2021 to 2025 is an increase compared to average of 17,000 flats between 2016 and 2020, this is still 13% below the average of 23,000 flats in 2011 to 2015, during the time when Mr Khaw Boon Wan was the Ministry of National Development (MND) Minister and sought to address the backlog in HDB flats.

Moreover, while BTO application rates have in 2023 declined to about three times thus far, it remains unclear if the 1.6 times application rate seen in the October BTO exercise is sustainable, or just a result of the first-time introduction of certain specific rules.

On housing affordability in Budget 2023, the Government has increased the CPF Housing Grant for first-time families to enhance housing affordability in the resale market. As what a head of research at one of the real estate agencies pointed out then, such beneficial effects could be short-lived as it could result in further price inflation, as these could be priced in by the market.

In addition, with the new BTO classification system from second half 2024, Plus flats will be priced with more subsidies, on top of the subsidies already provided for standard flats today. Again, while the intention is to improve affordability, with the new classification applying only to new BTO launches and not to the existing stock of more than a million HDB units already in the market, the measures could potentially add further upside pressure to resale HDB prices in some of these locations. As reported by CNA last month, prices for flats located near MRT stations or town centres are now higher by up to $10,000 compared to before, according to industry insiders.

Moreover, there has not been any concrete policy proposals on addressing the needs of those needing to rent in the open market.

In response to my Parliamentary Question (PQ) in January 2023, Minister Desmond Lee shared that, "Providing subsidies or grants for renting flats in the open market is likely to induce demand and drive up market rents, which would compound rather than help solve matters. As such, we have no plans to provide such rental subsidies". Is this not the exact approach that the Government is taking, when providing targeted subsidies to enhance affordability in the resale market? Why the double standards? Especially when it comes to vulnerable families who have not been able to obtain a public rental flat?

What then should be done to address the issues of availability and affordability today? To put simply, if the fundamental demand-supply imbalance we are seeing today is not sufficiently addressed, the market is simply doing what it is supposed to do. With prices and rents continuing to appreciate, while many Singaporeans are not able to address their housing needs. If the idea is not to crimp the real demand side of the equation since access to appropriate housing and shelter is a basic need for all, addressing these problems would then necessarily require adjustments to the supply side of the equation, for the market to find a more appropriate equilibrium point.

In other words, we need to increase the supply of HDB flats across both the for-purchase market and also the neglected for-rent market.

Rather than reduce the supply of BTO flats by close to 20% from 2024 onwards, we ought to ensure that we keep up with the current pace of launches, and this is only just about in line with the average of 23,000 flats from 2011 to 2015.

As I have shared in my MND Committee of Supply speech, a local academic put it very succinctly, and I quote, “Having excess flats is actually a feature and not a bug. It just means that if some Singaporean want to get married and wants a new house straight away, there is a house available!” And he goes on further to say, “To me, BTO is the real culprit behind our uncontrolled fire”.

Moreover, a lot of the demand from first time home buyers in the resale market today is also a function of the long wait times for a new BTO flat. To take it one step further from ensuring adequate supply, we ought to also ensure that we strive to continue reducing the long waiting times for a BTO flat and build a larger percentage of flats ahead of demand, as I have shared in my MND Committee of Supply speeches over the years.

After all, if we can build industrial facilities ahead of demand, can we not also build residential homes ahead of demand and have a fundamental re-think of the BTO system? I do appreciate Minister Desmond Lee's assurance that the HDB is planning to launch more Shorter Waiting Time flats, of around 2,000 to 3,000 flats per year by 2025. However, this is essentially at similar levels to the number of such flats launched in the last five years, ranging from about 1,096 in 2018 to 2,850 in 2020.

In the rental market, it is alarming that while there continues to be a very limited stock of rental flats today, the pace of construction appears to be slowing drastically compared to before. As at FY2022, there were 63,681 rental flats under management, a net increase of about 541 flats in the five years since FY2018. That appears to be a noticeable slowdown compared to the average net increase of 1,640 units per year between 2011 and 2020.

The pace of development of rental flats is expected to slow down even further, where there are only 900 public rental flats currently under construction and will be completed in the next five years. In other words, just about 180 flats per year. Why are we constructing new rental flats at a pace which is a mere 10% of that in the past decade?

To minimise the agonising wait for an allocation of a rental flat and to alleviate the worries of many Singaporeans who have not been able to access a rental flat, it is imperative that we do not neglect the housing needs of vulnerable Singaporeans in our pursuit of home ownership as the only acceptable housing model for Singapore. And it is important for us to resume the pace of rental flat construction, to be at least on par with the net increase between 2011 and 2020.

While the supply side solutions I have proposed to address the current predicament are not new per se, and various WP MPs, including myself, have called for this during the Housing Motion debate and MND Committee of Supply debates in recent years, what is worth highlighting is that demand appears to be much higher than what was previously expected; or at least what I had previously expected.

It appears that Singapore's population grew at 5% to 5.92 million as of June 2023, the fastest growth rate since 2008. This could partly explain the tightness we are seeing in the housing market today. And while I am not privy to the Government's desired population growth rate, if such growth rates persist, then we could have an even bigger problem down the line with housing supply set to taper off from next year.

Coupled with the steady decline in average household sizes, it now appears that elevated levels of housing demand are likely to be more permanent than transient, and we need to better prepare our housing market for this reality.

Finally, as an adjacent point, even if we have successfully adjusted our policies to address the current cost of living crisis, addressing the issue of soaring public housing prices today does bring us to the next logical question – what will happen when we reset prices downwards?

The lease decay issue continues to be the elephant in the room, and more than five years since the term "VERS" entered our lexicon in Prime Minister Lee's National Day Rally speech in 2018, many unanswered questions remain.

Even as we debate the issue of soaring housing prices today, we cannot be silent on the eventuality of the value of HDB flats reaching zero at the end of the 99-year lease, as this will simply mean that the higher the rise in prices today, the harder the fall eventually. In Mandarin please, Mr Speaker.

(In Mandarin): [Please refer to Vernacular Speech.] Although the inflation rate has eased in the recent months, prices remain high and continued to be on the rise for many Singaporeans, and the current inflation rate is still much higher than what we were used to.

I would like to reiterate that the Government's fiscal situation is currently much better than expected. In this cost-of-living crisis, when we have already achieved the revenue growth expected from the GST hike, will delaying the GST hike until 2024, even only for a year, bring more problems for the future as the Government has said?

Regarding public housing, the latest data shows that as of June 2023, Singapore's population has grown by 5% to reach 5.92 million. This is the fastest growth rate since 2008. Last year, the number of registered marriages also reached an all-time high in our country's history. If the population growth rate continues, we may face even bigger problems as public housing supply will decrease by nearly 20% from 2024.

To effectively address the housing problem, we need to adjust the housing supply, so that the market can find a more suitable equilibrium. In other words, we need to increase the supply in the BTO market, as well as the rental market which has been overlooked.

Mr Speaker, I hope the Government will seriously consider the points that we have raised to alleviate the cost-of-living pressure for Singaporeans.

Mr Speaker: Ms Yeo Wan Ling.

8.36 pm

Ms Yeo Wan Ling (Pasir Ris-Punggol): Mr Speaker, we have just come out of a three-year global pandemic and it was not too long ago, that many parts of the world were still completely shut in, logistics lines cut off, and our roads, malls, offices empty. We are now rebuilding our communities, our businesses and our trade links. This is a mammoth task made even more complicated with the ongoing wars.

As we traverse the new world in the new normal, and as we pick up pieces – broken families, familiar places now gone, groups dispersed – we find ourselves in the middle of a hurricane of cost increases and resource shortages. From petrol, electricity and water, to bus rides, cai png and kopi – indeed, the global cost increases are felt at very local, very personal and very real everyday ways.

In Punggol, a town of young families, many with upwardly aspirations, my residents have shared with me their concerns over food prices, healthcare costs, utilities and tuition enrichment classes for their children and, of course, the cost of owning a car and property in Singapore. They have expressed their appreciation for GST Vouchers, CDC Vouchers, U-Save Vouchers, Transport Vouchers, bursaries and top-ups that they have received over the years to help with cost pressures.

For some residents who have fallen on tough times post-COVID-19, perhaps from being retrenched, a business gone south or having fallen gravely ill, help is never too far away with SSO, CDCs, Medical Social Workers.

For those who have somehow fallen through the cracks – a single parent, a caregiver wishing to return to work, an undiagnosed special needs adult, our local community welfare teams provide weekly ration packs, monthly essential items, care vouchers and pro-bono services, like legal clinics, respite care and counselling sessions.

Our Town Council, too, has also formalised a welfare committee assisting residents who have fallen behind on their S&CC fees or needing simple repairs around their homes. Support, of all shapes and sizes, are readily available and always at hand. And yet, in Punggol, I have observed that there are more who are stepping up to support the community instead.

Indeed, when the going gets tough, the tough gets going! Complementing national level policies, micro-spheres of influence make long-term, impactful differences on the ground. Our micro-spheres of merchants, small businesses, religious organisations, volunteer groups and charities have created a sustainable and wide web of safety nets for our residents.

I am touched that our temples, themselves reeling from low temple donations during COVID-19, now provide weekly rations to my welfare team, packed full of nutritious goodies to be distributed to our residents. Our temples, churches and mosques give free Maths and Language tuition for our residents, and they doubled their classes post-COVID-19 when demand surged.

A moral welfare society is now building a free traditional chinese medicine (TCM) clinic to complement primary care in Punggol. All residents across all households and age groups are welcome. Many volunteers at the tuition and TCM centres are retired educators and healthcare professionals, and I appreciate how Singaporeans stepping up to support their communities.

Our Punggol Merchants' Association sprung into action and introduced, with the help of our residents, $3 budget meals at all Punggol Shore food court stalls. One food court operator took it further and partnered with the National Taxi Association with the introduction of a free kopi programme card to address the livelihood crunch that our drivers face. They have since extended this programme islandewide. Such budget meals and kopi programmes are popular and welcomed, and I understand that the MND has introduced budget meals at all HDB-owned coffeeshops. Can we also consider getting privately-owned coffeeshops to also offer budget meals, perhaps through their Merchant Associations?

With all these examples, I do believe in our businesses and community ecosystems – to do right for themselves and for our community – in the face of challenges and pressures, finding the right balance between costs of living and costs of business. Perhaps, instead of looking at this as a tug of war, let us support and help our businesses, our SMEs, our towkays do something that they do best in, and that is selling their goods and services well, and creating good jobs, future-ready good jobs.

The Labour Movement supports our companies with the upskilling of their workers and the redesign of jobs, so that more pockets of workers – such as caregivers, women returners – can partake in the workforce, and alleviate income pressures at home.

An example of such a programme is the C U Back at Work, or CUB, Programme that the NTUC Woman and Family Unit has piloted to help mothers and family caregivers to return to the workplace confidently. Flexible Work Arrangements (FWAs) is key to the program, and companies redesign work hours or locations around the time availability of workers.

Instead of price cuts and the passing on of costs to just another stakeholder upstream or downstream, FWAs can solve financial stresses for Singaporean families by adding an extra channel of income and help companies with resources and productivity.

Hence, Mr Speaker, let us help our Singapore businesses do better in what they have set out to do. I call on our Government to reduce business costs by simplifying work and Government compliance processes for our businesses, and to support our companies in job redesign and the upskilling of workers.

Mr Speaker, true character is shown in times of adversity. And indeed, in the face of global price surges and its impact on everyday life of Singaporeans, I have seen the mettle in our Singaporean businesses, I have felt the kindness in our communities and I have heard the steely timbre in our people's voices.

As the dust settles, let us continue to be united stakeholders in building our Singapore community, economy and lives with kindness and resolve, even when we have global challenges looms ahead. Mr Speaker, I support the amended Motion proposed by hon Member Mr Liang Eng Hwa.

Mr Speaker: Senior Minister of State Sim Ann.

8.43 pm

The Senior Minister of State for National Development (Ms Sim Ann): Mr Speaker, thank you for letting me join the debate. Acting Minister Chee had earlier shared in detail on how we tackle rising costs – managing the Singapore dollar to contain imported inflation, ensuring our economy remains competitive to create good jobs and sustain real income growth, and providing support packages targeted especially for vulnerable groups.

I wish to respond to some specific points raised by Members on topics including housing affordability, cooked food prices and profiteering.

First, on housing affordability. Members would recall we have had an extensive debate in this Chamber in February on housing affordability and even more recently, there was a major announcement on upcoming changes to the BTO classification framework.

Before I respond to points made by Members, including Mr Louis Chua and Mr Leong Mun Wai, please allow me to set out the Government's overall approach towards maintaining stability in the housing market.

As economic conditions improve and wages rise in Singapore over the long term, we expect to see this reflected in a gradual rise in housing values and prices. Sudden shocks in either the public or private housing markets will cause serious problems and even hardship for Singaporeans, and this is why the Government actively uses policy levers to moderate price increases.

What do these levers comprise?

First, careful land use planning, coupled with a land recycling strategy, to ensure a steady supply of both public and private housing, to meet Singaporeans' needs.

Second, pricing BTOs, which by the way, in response to the point made about the five "C"s, these BTOs have become more and more similar to condominiums, in terms of build quality and aesthetics. Pricing these BTOs with a view to affordability, not cost recovery.

Third, demand-side levers for public housing such as grants and priority schemes for various categories of buyers.

Fourth, maintaining controls on home loan financing, whether through CPF or cash to encourage prudence on the part of home buyers and moderate price increases in the HDB resale and private property markets.

And fifth, additional measures such as ABSD to cool the overall housing market where necessary.

Recent housing price movements have been due to specific imbalances which the Government has identified. The first imbalance: our building programme fell behind in the last three years due to COVID and we are catching up.

To date, HDB has completed close to 75% of the projects delayed by the pandemic and should complete the rest of the delayed flats by early 2025. And we are committed to launch up to 100,000 new flats between 2021 and 2025.

The resumption of delivery of private housing will also, over time, ease the crunch in private housing and moderate rentals and home prices.

The second imbalance. HDB resale prices have risen significantly in recent years. This is due to buyers turning to resale when BTO construction was affected by COVID-related delays and shifts in social norms prompted by the experience of the pandemic, contributing to overall increase in housing demand. The catch-up in BTO supply will help moderate demand for resale units as people move into the homes they have booked.

We have implemented two rounds of cooling measures in December 2021 and September 2022. Coupled with the broader economic climate and mortgage interest rate increases, these have moderated property prices.

The prices of private residential properties increased by 0.8% in 3Q2023, lower than the quarterly average of 2.1% in 2022. Similarly, prices of HDB resale flats increased by 1.3% in 3Q2023, a figure that I believe Mr Louis Chua also quoted just now. And this is lower than the quarterly average of 2.5% in 2022.

The third imbalance. This is the fact that mature estate BTOs had presented a specific set of concerns. The price of mature estate BTOs drove much of the ground concern about BTO prices. So, when people talked about BTO prices being a concern, they were mostly talking about the BTO prices that they saw in the mature estates.

The issue we faced was how to price mature estate BTOs because these are very sought after so that they do not rise out of reach of most buyers and also not in a way that induces its own demand, which is why we announced the introduction of a new housing framework, comprising a new classification of "Standard", "Plus" and "Prime" flats, to take effect from the second half of 2024 onwards.

The new framework seeks to ensure homeownership remains affordable, including in choice areas, by providing additional subsidies to these flats, but also tighter restrictions, so that they are affordable even upon resale.

This also helps to keep our system of subsidies fair, while keeping to market principles. This means that we can also maintain a good social mix, even in good locations, because housing will be accessible to a wider range of Singaporeans.

Based on our ground engagements, Singaporeans are generally aware of and support the new housing framework and its objectives. This will help implementation go more smoothly next year.

So, measures are in place for each of the specific imbalances causing price increases in BTO, resale and the private housing markets.

Despite having to tackle these imbalances, we have broadly maintained measures of public housing affordability. In 2022, eight in 10 first time home buyers of BTO and resale flats had a Mortgage Servicing Ratio (MSR) of 25% or less upon key collection. This meant that they could finance their monthly instalment with CPF, with little to no cash outlay.

The Government will continue to monitor closely and adjust policies whenever necessary. And I am glad that Mr Louis Chua acknowledges our housing moves. However, he seems to think that we have not done enough. I noticed that Mr Louis Chua had co-authored a piece in January this year, saying housing in Singapore is affordable. Perhaps, he no longer thinks so. But I am glad that he agrees that the fundamental issue with housing affordability is one of supply, not policy.

Supply was indeed disrupted due to COVID. But we are catching up with the backlog.

Mr Louis Chua seems to think we should build more. In fact, HDB is already doing all it can on the supply side. We have also activated more levers on the demand side, for instance, by prioritising BTO flats for young married couples.

Through catching up on supply and managing demand, we are stabilising the housing market and there are signs that this is happening.

Launching 100,000 flats from 2021 to 2025 which I mentioned previously means a commitment of 20,000 flats per year. And prior to 2019, HDB launched about 16,000 to 17,000 new flats per year, a figure that Mr Louis Chua had also noted.

But at that time, the WP thought that was too many and said so. Now, we have 20,000 flats per year and it seems the WP thinks it is too few. So, I have to ask what figure does the WP propose? And should your higher number be adopted and if the market comes down due to over-supply, then, what will your party be saying then?

I notice that Mr Louis Chua appeared to express some puzzlement about where all this demand for housing is coming from and he seems to want to link this to population increase. In fact, Mr Louis Chua should know because we have brought this up, we have mentioned this during the debate on the housing Motion in February this year. We have been building HDB flats faster than the HDB population growth.

And, in fact, the average number of persons constituting each HDB household has been going down. This is the decrease in household size that Mr Louis Chua has also noted.

And what is the cause of this reduction in household size? One factor, and I think this is a long-term one, has to do with the fact that we have heard the housing aspirations of singles and we have, over the years, progressively provided more housing options for the singles so that there are more housing types that they can buy, be it on the resale or the BTO market. And, in fact, we have further open this up with the new BTO classification framework that was announced.

Given rising rates of singlehood, even if the population were to remain completely static, demand for housing is going to increase over time because the reduction of household sizes is set to continue. This is the reason why I seek Mr Louis Chua and the WP support for all our levers on both the demand as well as on the supply side. Please support us in having a robust recycling strategy for our land in addition to having careful land planning.

Let me now turn to some points that Mr Leong Mun Wai has repeated. These are familiar points because he has also raised them during the debate in February.

He talked about the PSP's proposal of an "Affordable Housing Scheme". And as far as I can make out, the affordable housing scheme tries to do a few things. It seeks to achieve dramatically lower BTO prices by leaving out land cost at the point of first purchase, while seeking to assure existing homeowners that their home values will not be destroyed via a crash in the resale market and avoiding being seen as raiding the Reserves. These are the three aims.

However, the first aim is simply incompatible with the second and the third aims, which is why the proposal was met with considerable scepticism, from Members of this House as well as the public.

More importantly, the affordable housing scheme does not address the specific imbalances in the housing market that the Government has already responded to and identified. For example, dramatically lowering BTO prices is likely to trigger even more demand, especially in the very popular prime areas, instead of moderating demand. On the other hand, the Plus/Prime model which we have announced will address this concern.

I now turn to Mr Leong Mun Wai's mention of his Millennial Apartments scheme and I would also like to address some points that Mr Louis Chua has made about addressing the rental market in flats.

I say this to Mr Leong Mun Wai and Mr Louis Chua. Let us listen to what younger Singaporeans want. MND and HDB have been engaging Singaporeans at large but also younger home buyers or prospective home buyers. And most of the younger Singaporeans we have engaged indicated a preference to own their own homes; own rather than rent.

So, we are not closed to new ideas. We have, indeed, been hearing inputs from Singaporeans about alternative typologies of housing but we also have to recognise that the very strong desire for home ownership is present within Singaporeans and we will have to prioritise building for home ownership, not so much building for rent, especially if we are talking about people of middle-income. But we will, first, make sure that there are still public rental options for those who are unable to attain the goal of home ownership.

Also, we are ramping up supply for the Parenthood Provisional Housing Scheme (PPHS). We will have close to 2,000 PPHS flats at the end of this year and we seek to double this to 4,000 by 2025.

In terms of how the rents are moving in response to the various measures that have been undertaken, I would like to share that private and public housing rents are showing signs of stabilising.

In the second quarter of 2023, the increase in private and public housing rents moderated to 2.8% and 3.0% respectively, as compared to 7.2% and 4.4% in the previous quarter and we expect this to further ease as more homes are completed and become ready for their owners to move into.

Allow me to move onto concerns raised by several Members, including Mr Leong Mun Wai, Ms He Ting Ru, Ms Tin Pei Ling, Ms Yeo Wan Ling and Mr Xie Yao Quan on food, especially cooked food.

We had proactively launched the Budget Meal initiative in 2023 to increase the availability of affordable food options in HDB estates, especially for residents who need them.

These budget meal options are typically lunch or dinner meal options that are priced affordably and are comparable to meals sold at lower price points at nearby eateries, including HDB coffee shops or hawker centres.

We have observed that rental coffeeshops leased under the Price-Quality Method (PQM) tenders typically provide budget food options with prices at around $3 to $3.50, across different estates. I should add at this point that operator proposals for PQM tenders that include healthier food options are already given more points and more favourably considered under the quality criteria. So, I want to thank Ms He Ting Ru for supporting this idea. We are already doing it.

Currently, some 114 HDB rental eating houses offer budget meals and drinks. And by 2026, budget meals will be offered at all 374 HDB rental coffeeshops. Members of public can use the BudgetMealGoWhere site to find out what budget meals are offered at HDB coffeeshops near them. HDB also puts up decals at participating coffeeshops to help residents identify the participating stalls more easily.

However, while we help residents with their cost of food, we are also mindful that rising costs affect everyone, including coffeeshop operators and stallholders.

To ease the transition for them, HDB has also offered a rental discount of 5% off the market valuation-based renewal rents for a period of one year from the time of the tenancy being renewed, subject to verification that the new budget meals and drinks have been implemented.

In the spirit of partnering Singaporeans under Forward Singapore, we soft-launched an effort last month to crowdsource the public's recommendations and verification of budget meals in coffee shops across the island.

Using the CrowdTaskSG portal, the public can be part of this nation-wide pilot campaign called the Great Budget Meal Hunt by submitting information on affordable meals they would recommend to others or by verifying the details of a budget meal listed on the BudgetMealGoWhere site. Over the past week and a half, we have received 245 recommendations of affordable meals and 319 verifications across 91 coffee shops. We welcome Singaporeans to contribute actively to this initiative.

While the current budget meal initiative only applies to coffee shops rented out by HDB, there are also sold eating houses that are privately owned. HDB is studying regulatory options to require budget meals to be provided in these sold eating houses. This includes making the provision of budget meals a condition for the renewal of use of the outdoor refreshment areas – an idea that Mr Murali Pillai had raised previously.

We will continue to work with coffee shop operators to find sustainable ways to offer affordable food options to residents.

Some Members have also raised their concerns that businesses may take advantage of the inflationary environment to raise prices exorbitantly.

The Government takes a strong stance against profiteering and will not hesitate to take action if there is a case to be made. To date, the Committee Against Profiteering (CAP), which I note Ms Hazel Poa also sits in, has received over 350 feedback submissions, of which 32 cases have been found to involve GST misrepresentation and which have been resolved.

If Mr Leong has concerns about GST misrepresentation, in other words, a business unjustifiably raising prices by attributing it to GST increase, he can make a submission too to the CAP.

However, there is also broad recognition also that many businesses are facing rising costs, as Mr Mark Lee has pointed out, including the cost of utilities, manpower, rental and raw materials, and some may need to raise prices in order to remain viable. These could include our hawkers and SMEs.

The best safeguard against profiteering is healthy competition. We have a robust system in place to remove impediments to competition and encourage a diversified supply chain, which help to ensure that businesses compete fairly and that consumers have sufficient choices.

The Government keeps a close watch on the prices of essential goods and services, especially during this challenging period, and will not hesitate to investigate anti-competitive behaviour. Should a member of the public come across such egregious cases, they can report this to the Competition and Consumer Commission of Singapore (CCCS) and the Consumers Association of Singapore (CASE).

If Ms Hazel Poa, as she said in her speech, felt that the scope of the CAP that she sits on is not sufficient for possible upstream cases of price rises to be investigated, I think CCCS would be glad to hear from her with regards to specific details and investigate them.

To further help Singaporeans make better purchase decisions on essentials, CASE has developed an app Price Kaki to compare the prices of items sold at supermarkets. To address potential concerns about shrinkflation, CASE has introduced a unit pricing feature this year on Price Kaki to help consumers more easily compare the prices of products with different package sizes and across different brands.

Specifically, on business rentals, Ms Hazel Poa had suggested releasing guidelines on fair rental prices.

The Parliament has passed a Bill mandating that tenants and landlords of qualifying retail premises comply with the leasing principles set out in the Code of Conduct for Leasing of Retail Premises in Singapore. This is to ensure industry-wide consistency in leasing principles and practices to provide certainty to landlords and tenants and set out a dispute resolution process that is affordable and expedient.

The Act will take effect in early February 2024 as sufficient time has to be given for the industry to transition to mandatory compliance. The code will be reviewed and updated as necessary, based on feedback from industry players.

Let me now turn to some points on supporting persons with disabilities and caregiving that Mr Gerald Giam had raised.

We empathise with the challenges of those who need additional support, such as caregivers and persons with disabilities. I beg your pardon, I think it was Mr Dennis Tan who raised these points.

To Mr Dennis Tan's points, I would like to clarify that financial support schemes for caregivers such as the Home Caregiving Grant or the Migrant Domestic Worker Levy Concession do not just apply to caregivers of disabled seniors but persons with disabilities too, including care recipients with autism spectrum disorder or intellectual disability.

Similarly, all Singapore residents have basic health insurance coverage for life, regardless of pre-existing health conditions. MSF has also recently increased funding to adult disability homes and day activity centres in 2021. Mr Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, cost of living is an issue that touches the lives of all. We have experienced high inflation for the last few years due to the dislocations in the global economy caused by the pandemic, conflict and geopolitical tensions.

Right now, inflation is moderating, but we recognise that many households still feel the pressure from cost of living. That is why the Government has enhanced the Assurance Package to help everyone cope better. We try our best to operate public services efficiently and to keep costs low. However, cost is inevitable as things still cost money. When costs go up, despite our best efforts, they still have to be covered.

For essentials, some of it will be covered by Government subsidies, for example, healthcare and public transport costs, but not all. Some part needs to be paid by consumers. Some consumers will need help with this. We will provide them targeted direct help if need be, for example, U-Save rebates and public transport vouchers. And those who need more help will get more support. This is much better than subsidising the product directly or having tiered pricing schemes because that is more expensive and less effective.

Overall, we have provided high quality Government and public services to Singaporeans. The Government Budget is less than 20% of the GDP, which is much lower than most developed countries.

Nevertheless, the Government's spending needs are rising steadily, especially in healthcare.

The GST increase is essential for this. There is no good time to do it. But through the Assurance Package, the Government has effectively delayed the impact on most citizen households while getting the new rate implemented and the additional revenues flowing. For example, the bulk of the GST revenues are paid by higher-income groups as well as foreigners and tourists. While the Government is helping most Singaporean households, the higher-income groups as well as foreigners will contribute more to Government revenue.

Through this combination of not delaying necessary adjustments while providing needed support to households, we can keep our public services and finances sound while helping Singaporeans going through a difficult time

(In English): I would like to take this opportunity to highlight the point that was just raised – I believe it was by Mr Louis Chua – on delaying GST increase for one or two years on the basis that finances have been better than expected.

We are actually doing much better than that. With the Assurance Package, we have delayed the impact of the GST increase for the majority of Singaporean households by at least five years and by about 10 years for lower-income households.

In conclusion, we recognise the impact of inflationary pressures on Singaporeans. Many are cutting back on spending while we ride out the economic uncertainties. We empathise with these challenges and we will do more, if necessary.

But, we have to do it right. This means: one. preserving market principles and not over-regulating – to allow the market to allocate resources and determine price so that we can have an efficient, productive economy while intervening decisively where market failures exist; and two, fiscal sustainability – to intervene prudently so as to remain responsible to future generations.

In the longer term, the only bulwark against inflation is to remain competitive, to grow the economy and to achieve wage growth for all. This is the sustainable and sensible way ahead and this Government is committed to this mission.

Mr Speaker, Sir, I support the amendments to the Motion raised by Mr Liang Eng Hwa.

Mr Speaker: Mr Louis Chua.

9.11 pm

Mr Chua Kheng Wee Louis: Thank you, Mr Speaker, and I thank the Senior Minister of State for the response to my speech. I just have a couple of clarifications.

But before that, I do need to highlight that I think all of us agree here that policy-making needs to be dynamic. As what the Leader of the Opposition, Mr Pritam Singh, has said in his opening speech, we need to ensure that our policies are reflective of the circumstances today and tomorrow versus the past.

In this regard, I also acknowledge and agree with the Senior Minister of State when she shared that the reduction in household sizes is a key factor in driving housing demand. I also note that just in the last five years, you see that the average household size has come down very rapidly from about 3.5 to close to about three.

I agree that even if the population remains static, that is going to be a significant source of demand, but the population is not static.

At the same time, the uncertainty I was expressing is that if you look at the population growth rate today, that appears to be a step up, not just in percentage. If you look at it in absolute terms, I think the number is close to about 280,000 or 290,000 persons' increase in the last one year versus the increase of about 28,000 to 29,000 in the last five years' average. prior to COVID-19.

I think this is also a big question mark – as to what then is the forward looking policy when it comes to the incoming net migration, because as far as I understand, our total fertility rate (TFR) is at an all-time low. I think a lot of the new housing demand is also driven by the population policies.

At the same time, as I shared in my speech, we are looking at a record high number of marriages. I think that was recently reported in the last one to two months. That appears, again, to be a step up in the housing demand versus what we have seen in the past decade or so.

All these factors, put together, would suggest that perhaps, if we look at housing demand, that appears to have stepped up versus what it was previously. I agree with what the Senior Minister of State has shared earlier. So, the clarification – two clarifications here —

Mr Speaker: It is a rather long preamble.

Mr Chua Kheng Wee Louis: Sorry, the two clarifications here is that I understand that the Government has ramped up the supply of BTO flats, but I am still not sure as to why when it comes to rental flats, there is a significant reduction in the pace of increase.

Secondly, can I check with the Senior Minister of State to confirm if she believes that we have already cleared the backlog of demand from prior years?

Ms Sim Ann: In response to Mr Louis Chua's questions, first of all, in terms of backlog, I have shared that we are in the process of clearing the backlog and that HDB has delivered close to 75% of the COVID-19 delayed projects. This will continue and we seek to get back on track.

Not only do we seek to get back on track, we do recognise the need to have a buffer. This is also something that Members have talked about. It is something that we do agree with. We see the need for a buffer. This is also the reason why we are seeking to ramp up supply of Parenthood Provisional Housing Scheme (PPHS) flats. We know that this is very important to Singaporeans who are waiting for key collection.

In terms of population growth, we have discussed population growth in this House over the years. I do not propose to go over it in detail. Suffice to say, we have seen that in the last few years, due to COVID-19, that has caused very sharp fluctuations in population. I believe that the sharpest growth post-COVID-19 and the reopening of our economy in terms of non-citizens actually would be the category would not be living in our HDB flats, particularly, the migrant workers.

But overall the Government is planning to ensure that through our land use planning as well as making sure that we have got all the supply side and demand side factors in place to ensure a steady supply, both of private as well as public housing.

And I thank Mr Louis Chua for also agreeing on the observations that I have made.

9.16 pm

Mr Speaker: I made these remarks yesterday, but I notice that today there are more Members who are in this House. I am going to repeat my remarks that I made yesterday. Which is that in the past, Members have taken this opportunity for raising points of clarification to make mini speeches before asking their clarification. As I highlighted yesterday, there have been occasions where one such mini speech exceeded five minutes.

So, I want to remind Members that under Standing Order 48(3), no Member other than the mover – and in this case, it is Mr Pritam Singh – is allowed to speak more than once on a Motion.

Making a point of clarification or asking supplementary questions are not the occasions for a second speech. I will certainly allow some leeway for Members to explain their point of clarification or make your question intelligible, but I ask Members please, for your cooperation and understanding, to observe the Standing Orders and to keep your points of clarification and questions concise and to the point. Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Speaker. I have two clarifications for the Senior Minister of State. One, the HDB recently reported a $5.38 billion dollars deficit. A lot of this is probably due to the subsidies given to the BTO buyers because HDB paid $5.9 billion to the Singapore Land Authority (SLA) at the same time in the same year.

Sir, I have two questions: will this deficit $5.38 billion ultimately be paid by the Singaporean taxpayer? And two, when the Plus and Prime flats come into operations, will this deficit actually go up higher?

Ms Sim Ann: Actually, I am very glad that Mr Leong seems to have come round to the idea that there is a deficit in our building programme and the deficit is made up by the subsidies that are given to Singaporeans; so, the answer is yes, these deficits are taxpayer-funded. That is why much as we would like to be as generous as we can, we also need to be responsible. We need to be good stewards of public resources and we have to run the public housing building programme with sustainability in mind.

As to whether or not with the Prime and Plus going forward whether there will be more subsidies, I think that is not something that we can determine just simply by the introduction of the framework alone. But the intention of the framework is to streamline demand, streamline demands so that people would make quite prudent choices and it will emphasise the principle of owner occupation and what I can say to Mr Leong is that the subsidies will be very well used.

Mr Speaker: Ms He Ting Ru. You did raise your hand, right? Yes.

Ms He Ting Ru: Thank you, Mr Speaker. Just a really quick clarification. I thank Senior of State for mentioning under the HDB PQM framework. I just wanted to make a quick clarification that in my speech, I was asking for more consideration and weightage to be given to outlets and restaurants that actually offer healthier options. I was not saying that it was not already being done. but I think the point is well taken.

Ms Sim Ann: I think on the principle we are not disagreeing and I happened to share Ms He Ting Ru's passion for healthy food so this is certainly something that we will look into. But we also have to balance against the other relevant considerations for quality because after all, coffee shops do serve a wider range of consumers and residents. And people have different preferences for what they want to see in the coffee shop.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Mr Speaker, I have one more clarification for the Senior Minister of State. So, comparing with our Affordable Home Scheme — of course, there will be issues that we still need to discuss about the Affordable Home Scheme. But the current Government home scheme, do you agree that it has led to high HDB prices? At the same time, every BTO flat, not only the buyers pay for the land cost but all Singaporeans have to pay for the deficit?

Ms Sim Ann: I am afraid the nature of Mr Leong's question is not very clear. Could Mr Leong rephrase his question, Mr Speaker?

Mr Leong Mun Wai: Mr Speaker, sorry about that. What I mean is that I am trying to compare our Affordable Home Scheme with the current BTO scheme of the Government. Of course, there will be some disadvantages, some problems, some issues that we need to overcome, but I think the Affordable Home Scheme's problems can be overcome too.

So, we are making a policy decision here. The current BTO scheme has led to increasing prices of the BTO, because you have to incorporate the rising land cost. As a result, it has led to rising HDB prices. Secondly, every BTO flats need to be financed by HDB and it creates a deficit which, ultimately, is paid by all the Singaporeans. So, there are two disadvantages of the current BTO scheme. Do you agree to that?

Ms Sim Ann: I am afraid I will have to answer Mr Leong's question with a question of my own. He has not made clear how his Affordable Housing Scheme does not result in the outcome that he claims the BTO scheme has created?

Mr Leong Mun Wai: Mr Speaker, Sir, I think it is only fair that Senior Minister of State answers my question first and then I will answer her question.

Ms Sim Ann: As with every Government scheme, when circumstances evolve and change, it does prompt a review. However, I think that the comparison that Mr Leong is asking me to make is a spurious one because the Affordable Housing Scheme, as I have said before, is one which I do not think has convinced Members of this House or even many members of the public because it seeks to reconcile three quite incompatible aims.

It seeks to dramatically lower BTO prices by leaving out land costs at the point of first purchase. But perhaps his party is worried that the scheme will be rejected outright by homeowners who are worried about a crash in the resale price so it tries to assure people that it does not do. And then also, the scheme seeks to avoid being seen as a raid on the Reserves. But as I have said these three aims are not compatible because by taking land cost out at the point of first purchase actually that already has an impact on the Reserves.

This topic has been covered quite extensively over more than a day of debate in this House, so I do not propose to go through it again. But I do not see how I can make any meaningful comparison from between a scheme that has worked, and which requires adjustments from time to time to meet changing circumstances and evolving demand, with a scheme which, as far as we can tell, is actually not able to be internally consistent and is not one that has been convincing to both Members of this House and the public.

Mr Speaker: If I may, actually this topic was subject to a debate in a previous Sitting for which we came to a conclusion. Let us come back to the Motion at hand and let us confine our clarifications to the speeches relating to the Motion proposed by Mr Pritam Singh. Mr Leong.

Mr Leong Mun Wai: Mr Speaker, Sir, it is exactly because of that, I am not asking for a revisit on the pros and cons of the Affordable Home Scheme. I am just saying that based on what the Senior Minister of State has said, does she agree that the current schemes has got these two disadvantages: one, HDB prices will continue to go up as long as land cost goes up; two, and when the Government or HDB sells the BTO flat, there will be a subsidy and this translate into HDB deficit and this deficit goes to the budget and all Singaporeans have to pay for it?

Mr Lim Biow Chuan: A point of order, Mr Speaker. We have debated this time and again. We should not be wasting time on revisiting this debate over and over again. It is a waste of everyone's time. So, can I ask Mr Speaker to make a —

Mr Leong Mun Wai: Point of order, Sir. A point of order, Sir.

Mr Speaker: Mr Leong, sit down first. Let Mr Lim make his point.

Mr Lim Biow Chuan: So, can I invite Mr Speaker to make a decision on this so that we can move out of this debate. Otherwise, we will be going back to issues which we have debated over and over again, and now resurfacing yet again.

Mr Speaker: Actually, I did say this. I thought Mr Leong was going to make a different point of clarification. I will allow one last response if Minister of State Sim Ann wants to make it; and then I am going to move on.

Senior Minister of State Sim, would you like to respond to that last clarification by Mr Leong?

Ms Sim Ann: I think Mr Leong is tying himself up in knots because if he considers the increase in housing prices over the years as a disadvantage of the scheme, is Mr Leong saying that prices must remain static in order for the housing market to be considered favourable and in order for our housing policy to be considered a success? In which case, I think Mr Leong did not pay attention when I explained that with favourable economic conditions and growing wages over time, we do expect to see a gradual increase in home values and prices.

So, it seems to me that Mr Leong is tying himself up in knots and I am not convinced that members of the public will agree that static prices over the long term is what the housing policy should be aiming for.

The second way in which he is tying himself up in knots is that by posing this question about deficit, the deficit incurred by HDB, to me, it seems to me that Mr Leong is denying that housing should be subsidised at all. If you want to subsidise any product, be it housing, be it education for that matter, defence, street lighting, these are public goods that are provided.

In the case of housing, it is not 100% subsidised by Government; there is some payment from home owners. But the subsidy from Government and by extension taxpayers is very substantial; and therefore, it seems to me that Mr Leong's line of questioning will inevitably lead him to conclude that there should not be any subsidy.

So, I really think that for both Mr Leong's good and for the House's good, I think we should pasue this because Mr Leong, you are leading yourself down a path of no return.

Mr Speaker: Let me remind all Members of Standing Order 50, which relates to the point I made earlier. Can I invite Mr Pritam Singh to make your closing?

9.29 pm

Mr Pritam Singh: Mr Speaker, thank you to all in the House who have spoken on this Motion.

Mr Speaker, I will get straight into it. The Workers' Party (WP) rejects the amendment proposed by Member Mr Liang Eng Hua Hwa. We have no substantive quarrel with Amendment No 3, which does not substantially change the thrust of our Motion.

A careful examination of our proposals today would show that they would neither undermine Singapore's fiscal sustainability nor would they unduly burden future generations.

However, we disagree with Amendment Nos 1 and 2.

Amendment No 1 which states that "cost of living is a global concern" reads as an attempt to minify the role Government can and should play to reduce cost of living burdens on Singaporeans.

While global factors are important, these should instead prompt a review of existing policies with the view to relieve cost of living pressures.

We also disagree with Amendment No 2 and its use of the words "continue pursuing policies". The use of the word "continue" suggests to us, at least, that the status quo is fine. We disagree. Indeed, we have proposed specific structural changes to the system that we believe will work better than current policies.

The WP Members of Parliament have made concrete proposals in several areas. We urge the Government to conduct a comprehensive review of its policies to better support Singaporeans and their families during this cost of living crisis.

On the electricity front, Member of Parliament for Aljunied GRC, Ms Sylvia Lim observed that the need for Singaporeans to conserve energy is more urgent than ever, given the risks of high prices and supply shortages caused by conflicts around the world. She recounted the Government's answer to managing household electricity bills, was the open electricity market. But the dramatic failures of retailers in 2021 has cast doubt on the viability of the open energy market to bring down household electricity bills. She asked the Government to look again at her earlier suggestion of tiered electricity pricing and to also consider lowering charges for consumption during off-peak hours.

Staying on utilities and specifically water prices, my contribution to this debate was my calling on the Government to review the price structure of water for both domestic and non-domestic consumers. Such a review would have the objective of creating a more fairly tiered structure that promotes water conservation and potentially lowest cost for business and many households.

Aljunied GRC Member of Parliament, Mr Faisal Manap, reiterated the call he made in 2014 to the Government to establish a means of assessing the effectiveness of our social safety net. Back then, he proposed that Singapore adopt the International Labour Organization (ILO)'s social protection framework. He suggested that if the Government prefers a more localised framework, the Government should then look at the minimum income standard published for households in Singapore, reports that have been published by local academics led by Assoc Prof Teo You Yenn and Dr Ng Kok Hoe. The Government is not precluded from publishing its own list of basic needs and those extras required for thriving in Singapore as a way of tracking outcomes for Singaporeans.

Sengkang GRC Member of Parliament, Ms He Ting Ru's speech covered several keynotes in health and the health and care ecosystem where the Government can and should be working harder to control the cost of healthy living in Singapore. Her speech reflects the WP's concern about the effect by increasing cost of care is having on the physical and mental well-being of families and calls for more support in areas like mental healthcare and intermediate and long-term care. For instance, she called for MediSave annual limits to be increased in line with medical inflation.

Hougang SMC Member of Parliament, Mr Dennis Tan asked for the current means testing in healthcare to be improved upon to better account for an individual's financial situation and health conditions so that healthcare can be more affordable and accessible. He called for help to be given to more Singaporeans who may need more assistance, even though they may be adjudged not to be eligible based on present household income or annual value of their home, especially when they are not able to receive financial assistance from members of the same household.

He called for more help to be extended to adults with special needs or other forms of disability who are in the working adult age group, but who are unable to work and require part-time or full-time care from family members, especially in families where the parents are getting on in age. More help should also be extended to family members responsible for their caregiving.

Sengkang GRC Member of Parliament, Mr Louis Chua reiterated his call for the Government to defer the GST hike in 2024, with even one year being a helpful deferment, especially when the Government has already achieved the revenue increase which the GST hike was meant to bring.

On housing, he called for the Government to increase the supply of HDB flats across the for purchase market and also the neglected for rent market, especially as our population growth and housing demand appears to have stepped up. To ensure all Singaporeans can access appropriate housing and shelter, addressing the fundamental demand-supply problem would necessitate adjustments to the supply side of the equation so that the market can find the appropriate equilibrium.

On private transport, Sengkang GRC Member of Parliament, Assoc Prof Jamus Lim called for changes to the COE system that would rationalise high prices. He explained why expensive COE affect not just households that may have very legitimate need for cars, such as families with children or the disabled, but also everyone that books a taxi or PHC.

He stressed the importance of smoothing out the vehicle quota supply across the years and seizing the practice of reimbursing early deregistered COEs at their book value. He also suggested prohibiting dealers from bidding directly for COEs and treating private hire cars in the same manner as taxis are, which is to have them bid in the open category albeit paying Cat A or Cat B prices.

On public transport, Aljunied GRC Member, Mr Gerald Giam called for a National Transport Corporation to be established as a publicly owned non-profit land transport planner and operator of all MRT, LRT and trunk bus services. This will allow the early profits of the current public transport operators to be redirected to benefit commuters by mitigating fair increases and providing free transport for the elderly and people with disabilities. He explained how the NTC could bring about significant productivity gains and economies of scale when compared to the current public transport model.

Mr Speaker, some of these proposals by the WP will be revenue-neutral. Others will result in increased expenditures.

Sir, at the National Day Rally this year, the Prime Minister shared with the public that the new classification system for HDB flats into Prime, Plus and Standard from the existing mature and non-mature classification, would see the sticker price of an $877,000 5-room BTO flat in Ang Mo Kio, for example, come down.

The question is how would this reduction in price come about? Would it be from the Chief Valuer relooking at how land is priced for public housing, or as should be assumed, from an increase in taxpayer subsidies from HDB flats, drawn from the yearly Budget?

The reality, Mr Speaker, is that the Government will look to lower HDB prices through the deployment of taxpayer dollars. Inevitably, it is a taxpayer that is going to foot the bill for a larger HDB subsidy to make HDB flats cheaper. And this is an amount that the Government believes it can absorb without an increase in taxes. Otherwise, it would not have pursued the new HDB BTO classification system.

In the same spirit, Mr Speaker, the WP believes that we should continue to look beyond short-term relief in addressing this cost of living crisis and to relook at prevailing orthodoxies on other schemes so as to lower cost for Singaporeans and their families.

A few other proposals will put cash in the hands of vulnerable workers and seniors to help them navigate their way out of this difficult period, for example, by reviewing with a fresh perspective, both MediSave, as well as the Workfare Income Supplement.

A few other proposals may prompt behavioural shifts towards greater efforts to reduce wastage and more sensitivity to sustainable usage of utilities, such as water and electricity.

At their core, all the proposals prompt the Government to relook at its legacy policy with an eye on battling the cost of living crisis that Singaporeans find themselves deeply mired in.

Mr Speaker, it has been a long day. But I would like to thank all Members, including the office holders, PAP Members of Parliament, PSP, Non-Constituency Members and the Single Nominated Member of Parliament (NMP) for participating in this important Motion. I may not have referred to all of you in my roundup speech but I thank you for your participation.

The Workers' Party will vote in favour of the original Motion and reject the amended Motion for the reasons I have provided earlier in my round-up speech.

9.39 pm

Mr Speaker: Are there any clarifications for Mr Pritam Singh? I do not see any.

We have now come to the conclusion of the debate and I shall put the questions to the House for a decision. We have three amendments proposed by Mr Liang Eng Hwa. We will deal with the amendments first.

Amendment No 1 is, "In line 1, after the words 'That this House' to insert the words 'acknowledges that cost of living is a global concern, and'".

The question, "That Amendment No 1 be made", put.

Mr Speaker: As many as are of that opinion say "Aye".

Hon Members say "Aye".

Mr Speaker: To the contrary say "No".

Some hon Members say "No".

Mr Speaker: I think the Ayes have it. Any Member — Yes, Ms Sylvia Lim, I was going to ask whether any Member wishes his dissent or abstention to be recorded, or to claim a division before I declare the results. So, for those wish for their dissent to be recorded, please rise.

Hon Members Mr Chua Kheng Wee Louis, Mr Gerald Giam Yean Song, Ms He Ting Ru, Mr Leong Mun Wai, Assoc Prof Jamus Jerome Lim, Ms Sylvia Lim, Mr Muhamad Faisal Bin Abdul Manap, Ms Hazel Poa, Mr Pritam Singh and Mr Dennis Tan Lip Fong stood at their seats for their dissent to be recorded.

Mr Speaker: Okay. We will record those dissent. The Ayes have it.

Question, "That Amendment No 1 be made", agreed to.

Mr Speaker: Amendment No 2 is, "In line 1, to delete 'review its policies so as to' and insert 'continue pursuing policies that together'".

The question, "That Amendment No 2 be made", put.

Mr Speaker: As many as are of that opinion say "Aye".

Hon Members say "Aye".

Mr Speaker: To the contrary say "No".

Some hon Members say "No".

Mr Speaker: I think the Ayes have it. For Members who wish for their dissent to be recorded, kindly rise.

Hon Members Mr Chua Kheng Wee Louis, Mr Gerald Giam Yean Song, Ms He Ting Ru, Mr Leong Mun Wai, Assoc Prof Jamus Jerome Lim, Ms Sylvia Lim, Mr Muhamad Faisal Bin Abdul Manap, Ms Hazel Poa, Mr Pritam Singh and Mr Dennis Tan Lip Fong stood at their seats for their dissent to be recorded.

Mr Speaker: Thank you. The Ayes have it.

Question, "That Amendment No 2 be made", agreed to.

Mr Speaker: Amendment No 3 is, "At the end of line 2, to add ', without undermining our fiscal sustainability and burdening future generations of Singaporeans'''.

Question, "That Amendment No 3 be made", put and agreed to.

Mr Speaker: The amendments have been agreed to. The Original Motion as amended is now before the House.

The question is, "That this House acknowledges that cost of living is a global concern, and calls on the Government to continue pursuing policies that together lower cost of living pressures on Singaporeans and their families, without undermining our fiscal sustainability and burdening future generations of Singaporeans".

As many as are of that opinion say "Aye".

Hon Members say "Aye".

Mr Speaker: To the contrary say "No".

Some hon Members say "No".

Mr Speaker: I think the Ayes have it. For those Members who wish their dissent to be recorded, kindly rise where you are. We will record it.

Hon Members Mr Chua Kheng Wee Louis, Mr Gerald Giam Yean Song, Ms He Ting Ru, Mr Leong Mun Wai, Assoc Prof Jamus Jerome Lim, Ms Sylvia Lim, Mr Muhamad Faisal Bin Abdul Manap, Ms Hazel Poa, Mr Pritam Singh and Mr Dennis Tan Lip Fong stood at their seats for their dissent to be recorded.

Mr Speaker: The Ayes have it.

Original Motion, as amended, agreed to.

Resolved, "That this House acknowledges that cost of living is a global concern, and calls on the Government to continue pursuing policies that together lower cost of living pressures on Singaporeans and their families, without undermining our fiscal sustainability and burdening future generations of Singaporeans."

9.42 pm

Mr Speaker: Deputy Leader.