Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [18 February 2025] [3rd Allotted Day]

"That Parliament approves the financial policy of the Government for the financial year 1 April 2025 to 31 March 2026." – [Prime Minister and Minister for Finance].

Question again proposed.

Mr Speaker: Ms Usha Chandradas.

11.33 am

Ms Usha Chandradas (Nominated Member): Thank you, Mr Speaker, for allowing me to join the Budget debate. I thank the Prime Minister and the Minister for Finance for his announcement of a very generous Budget. It is one that is inclusive and diverse and I support it fully.

My speech today will cover two key topics. First, the Culture Pass and second, a proposal to support Singapore's visual arts sector. This proposal takes inspiration from the strong financial backing that we have seen in this Budget for businesses that are seeking a listing on the Singapore Exchange (SGX). In this speech, I would like to suggest similar financial mechanisms to strengthen our local visual arts scene.

But first, the Culture Pass. It is a very commendable initiative that makes arts and cultural experiences more accessible to Singaporeans. Last year, I filed a Parliamentary Question after hearing from arts businesses about their challenges. I heard that even if they were located in the heartlands, not all arts businesses were eligible for the Community Development Council (CDC) Voucher redemption scheme. They would have to be considered on a case-by-case basis. This raised concerns that the arts were not being recognised as an essential part of everyday life. With the Culture Pass now being issued broadly to every Singaporean aged 18 and above, the Government has sent a clear signal: the arts are essential to our society, just like any other basic necessity.

This money could have been spent in many different ways, but it has come to the arts and this is a very important and powerful message. Since the initiative was announced, some questions have emerged from the arts community and I would like to take this opportunity to highlight them here.

First, will the Culture Pass be transferable, or can unused credits be donated to arts charities, in the same way that can be done for CDC Vouchers? Can credits be shared among family members and friends? If not, what provisions exist for those who are unable to use the Culture Pass due to severe health or mobility issues? While the push for inclusivity in the arts has been very strong, some individuals, for example, those who are bedridden or who are in advanced stages of dementia and, therefore, they are unable to control their moods and behaviour, people in these groups may find it nearly impossible to attend events in person. Caregivers may then struggle to find suitable options. I recognise that there is a risk of profiteering if credits are made transferable and I also see how transferability could dilute the scheme's intent, which is, actually, to encourage personal cultural participation. But it would, however, be good to know if there is any plan at the moment for what will happen to unused or unusable credits.

Secondly, will the Government track average ticket prices before and after the implementation of the Culture Pass and will it intervene if necessary, if arts groups distort ticket prices? The concern here is that arts groups could inflate ticket prices, knowing that a subsidy is now available. If this happens, it could have the effect of reducing the impact of Culture Pass credits which, really, have been issued to make arts and heritage events more affordable to the general public and not less affordable.

Some artists have also expressed concerns about whether the Culture Pass funds will directly benefit them. Particularly, there is a question as to the proportion of ticket sales that will be allocated as artist fees, as opposed to being retained by arts intermediaries. This is not an easy question to address because it is very much an issue of commercial practice and relative bargaining power between artists and event organisers. In a perfectly ideal scenario, the Government could set guidelines to ensure fair distribution of ticketing funds across all players in an arts or heritage event. But this could also take away the autonomy of arts groups to plan their own affairs. It might create additional administrative burdens and reporting obligations for the groups involved. I hope, therefore, that the Government will continue, as part of its larger mission through the Ministry of Culture, Community and Youth (MCCY), to educate artists about their legal rights. This way, artists will be empowered to negotiate for fair remuneration and to reject unethical practices, should they take place, in Culture Pass-funded events.

Another potential issue that has come up is that of ticket wastage. If credits are used to book tickets, but attendees fail to show up, valuable resources may be lost. Will the Government put in place a refundable deposit system, or will penalties be imposed for repeated no-shows, such that Culture Pass holders will be encouraged to use their credits responsibly?

I also hope the Government ensures that the benefits of the Culture Pass scheme are equitably distributed across diverse arts groups and not just dominated by the larger, more established institutions. The Government has announced that independent practitioners can also qualify for the Culture Pass scheme and I hope that they will be well-represented in the final selection of chosen entities. Smaller, independent arts organisations must have fair access to the scheme to promote a more vibrant and inclusive arts ecosystem.

Lest it sound like the arts community is less than supportive of this programme, with all the various questions that have emerged, let me be clear that everyone whom I have spoken to in the community is enthusiastic about this initiative. The excitement is palpable, such that additional questions I have come across include whether the scheme can be expanded, before it has even formally kicked off. Artists want to know if it can include, not just local events, but also purchases of local art. I see from guidelines that were issued this week that the scheme will eventually include the purchase of local books. So, will there eventually be an expansion as well to local art? There are also questions about whether the scheme will be reviewed before 2029 or 2030 and whether there is scope for it to be enlarged or topped up with more even credits before its expiry.

The Culture Pass is a very clever initiative, because it goes towards creating demand for arts and heritage performances and events. In a similar vein, I would like to take the opportunity now to float some ideas for demand-side initiatives that could also boost the visual arts sector. Here, we can draw inspiration from the suite of tax and financial incentives that were announced in this Budget to support and encourage corporate listings in Singapore.

From speaking to collectors, business owners, artists and other stakeholders several ideas emerged. First, would the Government consider the creation of a Government-backed art investment fund, with local artworks as underlying assets? Let me explain where this idea comes from and why it might work and, here, I declare my interest as a very occasional, hobbyist purchaser of art in my personal capacity.

Art is a valuable alternative asset class, has a low correlation to traditional markets and can act as a hedge against volatility. A 2021 Nomura report suggests that contemporary art as an asset achieved an annualised return of 14% between 1995 and 2020. Singapore's own artists are seeing extraordinary sales results. Georgette Chen's "Still Life With Big Durian" sold for S$2.47 million in 2024. This was a 40-fold increase in price from its last auction in 1998.

In Singapore Art Week this year, the works of Singapore women artists Kim Lim and Melissa Tan saw promising record-breaking sales. Our local artists are also making a splash internationally, with a record number of them being represented at the recent 60th Venice Biennale. Our local gallerists have also shown remarkable business acumen and the members of the Art Galleries Association Singapore and many other galleries and dealers have done plenty to raise the commercial profile of local artists both in Singapore and overseas.

Public endorsement of local art investment has the potential to strengthen the secondary market. Currently, art acquisition is costly, with added expenses for storage, framing and preservation. The Art Basel and UBS Survey of Global Collecting found that Singapore collectors are highly financially motivated. From the report, while the highest-ranking motivation for buying art was that of "self-focus and pleasure" in almost all markets surveyed, Singapore was the only market where financial motivations ranked even higher. So, we even beat Hong Kong in this regard.

According to the report, between 2019 and 2023, Singapore had expanded its share by value of artworks from 1% to 5% of the global trade. Singapore also had the highest proportion of new collectors, at 42% and spent the most on new and emerging artists' works in 2023 and the first half of 2024.

So, what does these statistics show? They point to clear opportunities: the local art market is showing signs of growth, new collectors are entering, and buyers are financially driven. While art education and awareness remain crucial for long-term demand, we must also meet consumers where they are. And we could perhaps do this by recognising and leveraging their investment mindset to further develop Singapore's art market.

The lack of a vibrant resale market limits participation by buyers. The owners of the Teng Collection, a private art collection and authors of art investment guide Godalisation, as well as other collectors and business owners, have highlighted to me that the absence of a structured secondary market in Singapore is one reason why demand for local art has not yet reached its full potential. To this end, they would like to advocate for the establishment of a Government-backed art fund to support the sector.

There have been very interesting and dynamic recent entrants to the secondary art market, such as the startup Art Again, an online marketplace for pre-owned art, and We Are Art Collectors – the fractional art ownership platform of Artualize Gallery. Some galleries as well do engage in secondary sales. However, without greater liquidity, buyers hesitate to enter the market. After all, would we not be more motivated to buy art if we knew that it could be resold and that our capital could be recycled?

A useful analogy here is perhaps that of the second-hand designer handbag market. One reason why people do not hesitate to buy Louis Vuitton handbags is because they know that they can resell them easily. The same principle should apply to art. A strong secondary market would give buyers the confidence to invest more freely. If local art is seen as a good investment, buyers will be encouraged to acquire it and not just blue-chip pieces. There could be interest in spotting "the next big thing" as well, in terms of emerging artists. As more buyers see investment value in collecting Singapore art, resale activity would increase, making it easier for collectors to trade works. This cycle benefits not just artists and galleries, but also auction houses, dealers and visual art-related businesses, such as framing, conservation and art logistics entities.

The third point I would like to make is that sovereign wealth funds are already recognising art's value. In a similar but not fully identical point, Abu Dhabi's ADQ recently acquired a stake in Sotheby's, signalling institutional confidence in art-related assets. If other nations see strategic merit in high value art-related investment, why not Singapore?

If good returns are achievable, perhaps the Government of Singapore Investment Corporation (GIC) or Temasek could consider creating a dedicated local art investment portfolio, perhaps parked in a fund structure and focusing on blue-chip works alongside some experimental pieces. Investment returns could then be derived from things like capital appreciation, leasing and financing models. Such a Government-backed art investment fund could catalyse institutional and private participation and send a strong market signal. It could be advised by expert advisory panels, comprising investment professionals, financial institutions, art and culture leaders and economists, to ensure that financial sustainability is coupled with proper corporate governance.

Just as the Monetary Authority of Singapore's (MAS') $5 billion Equity Market Development Programme seeks to attract capital from institutional investors, family offices and private entities, an art investment fund could potentially do the same. It could position local art as a credible alternative asset class while ensuring that artists, collectors and galleries benefit from greater financial participation. If the art investments are successful, a percentage of profits can also then be channelled back into arts charities, adding a useful social mission as well to the investment concerned.

Beyond liquidity, MAS' focus on tax incentives, regulatory streamlining and research development grants to encourage local listings, mirrors the structural support that Singapore's art market could also stand to benefit from. We should take a closer look at our artwork appraisal and valuation capabilities as well as the incentives and reliefs that we can offer in terms of direct and indirect taxes. I have cited examples of what other countries have done in both of these areas in previous speeches, and there is no shortage of reference points to start a comprehensive review of the various financial possibilities for our visual art market.

There are, of course, existing measures that are and continue to be useful. The Global Investor Programme (GIP), for example, requires foreign investors to deploy a portion of their wealth into qualifying investments in order to be eligible for Singapore Permanent Residency. This ensures that investors' capital will directly benefit the local economy. GIP will be refined this year with the specific aim of strengthening the competitiveness of Singapore's equities market. The scheme actually already includes arts businesses within its scope of qualifying industries, which is an important inclusion, but more can be done to connect arts businesses, especially promising startups, with these potential investors. I do not think that many arts businesses are even aware of this option for fundraising. As I have previously raised in an Adjournment Motion, the Government could look to Creative UK as a case study. This network supports the United Kingdom's (UK's) creative industries by providing scale-up financing, connecting investors with arts entities and educating arts groups on securing funding through equity, debt and grants. A similar centralised networking portal in Singapore would help local arts entities to access investment opportunities and financial support more effectively.

I hope the Government will, at the very least, consider engaging with financial and arts institutions, gallerists, dealers, collectors, arts business owners and artists. Together, they could create a working group or a task force to embark on a more comprehensive study on how structured financial mechanisms can be put in place to better support Singapore's visual arts creative economy.

I will not deny that there are different views on this point, the idea of mixing art with commerce can always be a little bit controversial. But if viable, these measures can ensure that Singapore's art ecosystem is not just vibrant but economically robust. If it succeeds, it can provide arts workers with stability, opportunities and a strong foundation for long-term careers, one that is driven by genuine consumer interest and demand. Sir, I hope the Government can consider taking these suggestions on board and, with that, I support the Budget.

Mr Speaker: Ms Carrie Tan.

11.48 am

Ms Carrie Tan (Nee Soon): Mr Speaker, there is a colloquial saying in Mandarin: 钱能解决的问题，不是大问题。有钱都不能解决的问题，才是大问题。In English, it means that the problems that can be solved by money are not major problems; the problems that cannot be solved even with money are the real major problems.

I want to thank Prime Minister Lawrence Wong and his team for a generous, inclusive and empathetic Budget this year. It reaffirms that we have a leadership and Government that is committed to enable Singaporeans and to ease our burdens whenever required to do so, at the extent that is prudent and fair for all.

I rise today to address two pressing concerns that lie at the heart of our nation's future, which cannot really be solved by money: (a) the opportunity cost of our academic-centric education system on personal fulfilment; and (b) the concerning trend of declining fertility rates in our hyper-competitive society. These two issues, although seemingly distinct, are deeply interconnected, requiring not just fiscally generous grants but a fundamental shift in our policy mindset.

Let us take stock on what we have now: a tuition industry that is fueled by $1.8 billion a year from anxious parents, combined with a budget of $14.75 billion last year from the Ministry of Education.

Yes, Singapore has long prided itself on being a global leader in education. Our students consistently rank at the top of international assessments, which is a testament to our system's rigour and discipline. Yet, we must ask ourselves: is this really still the best way forward? Nearly a third of our young people aged 15 to 35 reported symptoms that included feeling empty, tense or upset most of the time, according to the National Youth Mental Health Study. These are signs of a generation that feel a lack of meaning in their lives, are high-strung and easily triggered.

Our total fertility rate is at an all-time low. Parenthood is daunting for most young couples, especially financially daunting. Imagine having to join that $1.8 billion rat race just to feel like you are being a decent parent, and you are not causing your child to lose out or letting them down. And this pressure flows downwards onto the children as well, because when parents are sacrificing so much of their own resources, time, money and effort, in the hope that they can at least catch up academically with their peers. All children want to live up to their parents' expectations and the more parents invest, the more pressure the child feels, regardless of whether they know to articulate it or not.

Our unwavering emphasis on academic excellence has created an opportunity cost, one that diminishes our youths' ability to discover, nurture and pursue personal passions beyond the prescribed curriculum.

Last year, in my Budget speech, I spoke about shifting from a performance-based culture to an appreciation-based culture, so that Singaporeans can feel the intrinsic rewards from what they do and derive motivation and satisfaction from contributing to something beyond delivering key performance indicators (KPIs). This year, I stress the importance of having a purpose-based culture.

History has repeatedly shown that excellence is derived through purpose rather than pressure. Walt Disney's creative empire was built on a purpose to create places where families could have fun together. Oprah Winfrey built a media empire from the purpose of empowering women and promoting positive self-image through her talk shows. Steve Job's passion and purpose was to build an enduring company where people were motivated to make great products. These examples highlight how intrinsically driven individuals pursuing their passion leads to long-term success.

Today, a child's schedule is filled with school, tuition and enrichment classes, leaving little room for unstructured exploration, creative thinking or simply being a child. The consequence is a workforce that is well-trained but often disengaged, with morale easily impacted by negative experiences that are bound to be encountered in the day to day. Without a strong anchor powered by personal purpose and intrinsic passion for what one does, this day-to-day unhappiness easily chips away at one's well-being and motivation.

Studies suggest that when children are constantly evaluated based on external validation, they struggle with low self-esteem, burnout and difficulty making independent life choices. Research in the International Education and Research Journal indicates that while extrinsic motivation, such as recognition from teachers and parents, can offer short-term incentives, intrinsic motivation is what fosters lifelong passion and excellence. It is important that children and youths are given time and opportunity to explore life, in order that they may discover their passion or purpose. Right now, too much of their mental and emotional bandwidth is spent on ensuring or worrying about whether they can perform up to par in standardised settings.

I acknowledge the Government's commendable efforts in recent years to introduce student-led learning in secondary schools, the shift away from mid-year examinations and the expansion of applied learning programmes. These are important steps in the right direction and I ask that we take another bold step forward.

To build on the progress made, I propose a further revamp of our education assessment models. A paradigm shift is needed, one that balances academic proficiency with opportunities for passion-based exploration. One, we can remove high-stakes examinations in favour of continuous, diverse assessments that factor in classroom participation, socioemotional skills, creativity and interpersonal skills, and we can start these in primary school; two, allow students to choose topics of interest for assessments, such as selecting preferred oral exam topics rather than answering pre-set questions; three, expand structured free time within school hours for students to engage in non-structured exploration, such as outdoor, community and cultural excursions without fear of falling behind their peers; and four, revamp the Primary School Leaving Examination (PSLE) to lower a paper-based weightage in favour of alternative assessment methods, such as performance tasks, presentations and portfolio-building, based on real-world applications and personal interest.

Singapore's success has always been built on adaptability. So, let us adapt again to foster a generation that thrives not only academically but also holistically, where passion and pleasure fuel purpose and performance, not pressure.

With these shifts away from exam-based assessments, we can minimise the role and effect of "money" in children's educational outcomes, taking the pressure off young parents to avail their bandwidth and energy towards other personally meaningful pursuits that also make them positive role models for their children towards a purpose-driven life.

I will now address our low fertility rate. Mr Speaker, the Government deserves recognition for its extensive family support policies, including parental leave enhancements, increased childcare subsidies, the increasingly generous Baby Bonus and expanded housing grants for young families. However, the hard truth is this: financial incentives alone are insufficient.

I have been in some conversations with older Singaporeans about the dismal birth rate and I often hear young people being judged as selfish for, I quote, "wanting to enjoy their own life instead of sacrificing for children."

I want to speak up for all millennial and younger Singaporeans, that wanting to have more joy and enjoyment in life is not selfish.It is human.

In the 1970s and 1980s, when we were still trying to develop our economy, there were not many options for entertainment, recreation or opportunities for activities to derive enjoyment from. Between work and home, ekeing out a living, home and kids afforded more joys. Having kids, nurturing kids and having the joyful companionship of growing kids were enjoyable. Life was simpler back then. There was less entertainment, less distraction, fewer options and less comparison.

Today, family life no longer conjures up the notion of joy. Having a family brings with it notions of obligations, duty, pressure and sacrifice. All of these do not seem pleasurable at all to the current generation who have different and higher aspirations for their lives. At the same time, a whole other host of pleasurable activities are now accessible. It is unnatural to ask people to choose pain over pleasure. The psychological barriers, such as fear of lost career progression, concerns over work-life balance and the daunting prospect of raising children in a hypercompetitive society, continue to dissuade young couples from embracing parenthood, and I say it is understandably so.

While financial assistance is crucial, we must redefine the experience of parenthood to align with the aspirations of young Singaporeans. Alongside financial support, we must reframe the narrative around parenthood. Rather than merely compensating for the costs, let us shift attention and resources towards promoting the joys of parenthood and helping people see the intrinsic rewards of raising a family.

As an imperative, depressurising the education system would allow young couples to feel better able to channel their finances to lifestyle and aspirational pursuits as a family rather than having to spend hefty sums on tuition and enrichment classes, which really makes for a very poor parent-child relationship.

We need to amplify positive parenthood stories that resonate with the aspirations of the current generation, for example, how lifestyle and travel experiences are more meaningful and fun when shared with a spouse and children than alone. We can help the public realise that the same skills honed through parenthood, such as socioemotional awareness and regulation, communication and negotiation skills, strategic decision-making for use of resources and fostering healthy teamwork with one's spouse, are all life and leadership skills that apply professionally, too, to help one thrive in their career.

Let us engage employers as allies to reshape workplace culture for better employee satisfaction and retention. Encouraging businesses to promote work-life reconciliation, such as family-friendly workplace cultures, "right to disconnect" policies or more "Bring Your Kid to Work Days", can make parenthood a compatible aspiration rather than a burden.

Lastly, we may need to slay the sacred cow of "self-sufficiency". This is a social compact narrative we have held onto the past decades as a cornerstone of our social support policies, when in reality, all the social transfers that the Government has been rolling out is actually speaking to the opposite.

If we adjust that mindset towards "collective sufficiency", Singaporeans can feel less like they need to go it alone. We need to invest in support networks for parents, where families feel connected, supported and less isolated in their parenting journeys. Having community spaces and informal childminding networks that parents feel safe to park their kids with – in the neighbourhoods – while they run errands or go on a short date with each other, can go a long way to create a sense of psychological security around raising children.

Our nation must acknowledge that fostering a more family-friendly society is not merely about easing financial burdens but also about building within society, the support systems that enable parenting to be less stressful, more joyful.

Mr Speaker, Singapore's future lies in a generation that is not only well-educated but also well-rounded in a people that are not just financially capable, but also emotionally fulfilled. The role of parenthood in providing emotional fulfilment is not talked about nor shared enough as yet. We need to take the lead in dialling down on pragmatism and amping up on the feel-good "cuddle" factor in our conversations around parenthood.

It is time to redefine our success metrics – from grades and rankings to personal fulfilment and well-being. It is time to reshape the narrative around family – from cost and sacrifice to joy and aspiration, to build a Singapore where both dreams and families can flourish. I support the Budget.

Mr Speaker: Ms Mariam Jaafar.

12.02 pm

Ms Mariam Jaafar (Sembawang): Sir, I declare my interest as managing director and senior partner of a global management consulting firm.

We are living in a time of geopolitical turmoil. Governments and businesses with global footprints are rushing to understand the impact of the new United States (US) tariffs and the responses of targeted countries, while watching for the next wave of actions. Headline-grabbing as they are, the US tariffs are but part of a broader America-first agenda.

At the same time, we see China pivoting from the West to strengthen its trade, military and diplomatic positions with the rest of the world. A global South gaining in confidence, forming and expanding alliances, like BRICS, and crafting their own paths in search of growth amid geopolitical fractures.

And finally, a Europe facing a reckoning, forced to re-evaluate its security posture and reliance on the US and Russia and its future role on the global stage.

Sir, what we have is a multi-polar world. An unbalanced multi-polar world. And this unbalanced multi-polarity is now playing out in new economic battlegrounds: one, tectonic shifts in global trade, trade fragmentation and regionalisation, slowing China-West trade while China-rest-of-world trade and South-South trade grows; two, a technology and artificial intelligence (AI) arms race, the semi-conductor wars, the AI diffusion rule, the arrival of DeepSeek; and three, economic nationalism, rising subsidies, tariff wars and trade barriers, a shift away from the World Trade Organization-led global trade governance.

We are also grappling with shocks from evolving conflicts, increasingly frequent and increasingly devastating impacts of climate change and polarised populations. A small, open trade-dependent economy, we have been committed to a rules-based trading system and a neutral and pragmatic principles-based foreign policy. And this instability, this increasing tendency of great powers to break rules, norms and long-standing alliances is disquieting.

What is at stake is not just whether we can grow the economy 1% or 3% this year or next year. It is whether we can sustain our hard-earned position in this world: a global trading and business hub, a financial powerhouse, a technology and innovation hub, a shining little red dot on the global economic and geopolitical stage.

Sir, we are in a good place. Four years after COVID-19, our economy grew 4.4%, real incomes are up 3.4%, corporate profits are up, inflation under control, income inequality lowest since records began in 2000. But we do not measure success by these numbers alone. We measure success based on the success of our people, on the degree to which our people are fulfilling their potential, on our ability to provide not just jobs, but better jobs, better opportunities, better lives for all Singaporeans, including seniors, ex-offenders, persons with disabilities or special needs and their caregivers. And this is why our new social compact matters.

The Budget advances Forward Singapore (Forward SG), with short-term measures to help all Singaporeans and investments for the future to keep our economy growing and our people thriving. Yet I believe a deeper treatment of the shifting landscape and what it means for Singapore is helpful. Singaporeans deserve a fuller understanding of what is going on, the potential impact on Singapore and what other countries are doing and what we might do in response to plan their own lives.

Some may say this is fearmongering. Some say that in spite of geopolitical headwinds, Singapore's value proposition would not suddenly become unattractive. Some say we need not worry, since we have a trade deficit with the US; and some say Singapore might even benefit, for example, from China Plus One.

Here is a rhetorical question. Did you ever imagine a day when the US would vote with Russia on a United Nations (UN) resolution backed by Europe? As former British Prime Minister Lord Palmerston once said, nations have no permanent friends or allies, they only have permanent interest.

The fact is, these trends are changing fast and the outlook is uncertain. Uncertainty does not in itself suggest pessimism. Within each of these trends, there are challenges but also opportunities for Singapore. What uncertainty does do is compel us to reframe our strategies and build a new vision for the future. We must articulate how we will thrive in the shifting landscape and I say we must build a future founded on resilience.

Our financial strength, far-sighted leadership, good governance and stability and the successive generations of the People's Action Party (PAP) Governments have helped us weather and emerge stronger out of many storms. From the struggles of the early years of Independence to COVID-19, we must protect and not squander these. At the same time, there are facets of resilience that we need to develop or strengthen further as we confront a future of heightened uncertainty. Three, I will focus on in my speech: a supply chain resilience, climate resilience and above all, a resilient people.

But what is resilience? Resilience is not just about being strong and stoic. Resilience is about our ability and willingness to adapt, to innovate, to overcome, to turn adversity into advantage, recognising that our greatest strength is our unity, holding dear our foundational values of openness, multiculturalism and self-determination.

So, first, supply chain resilience. COVID-19 and the Russia-Ukraine and Middle East conflicts laid bare the impact of supply chain disruptions and the importance of resilient supply chains. This importance has only been accentuated. Trade disputes, sanctions, unexpected crisis and conflicts can ripple through economies.

The impact of the 1 February 2025 US tariffs on China, Mexico and Canada is estimated to increase tariff costs by a whopping US$250 billion, materially impacting company profits. The 10 February 2025 steel and aluminium tariffs suggest that all countries will be affected in time, with impact dependent on trade balances and country concentration. Industrial goods, energy, electronics and data centres are the sectors expected to be most exposed.

Geopolitics is not the only thing affecting global supply chains. Climate change, digitisation and AI talent shortages are also reshaping supply chain. All this affects Singapore on three levels: one, our own needs; two, as a global foreign direct investment (FDI) and business hub; and three, as a logistics and trading hub. It could have a profound impacts on cost supply and price volatility and inflation, on FDI and jobs, especially in key sectors, like manufacturing and the digital economy, and on trade, our lifeblood.

Take volatility. If the price of steel is very volatile, what happens to small and medium enterprises (SMEs) and their Singaporean workers in industries, like construction, that have traditionally kept very little wiggle room in their contracts? Or if tariffs, export controls or data sovereignty requirements are placed on data centres and AI infrastructure, what happens to our digital and AI hub ambitions?

For countries and companies, the strong and stoic approaches to building supply chain resilience are stockpiling and onshoring or reshoring. But these can be expensive. And as geopolitical headwinds grow stronger, companies must diversify sources, rethink their logistics and supply chain strategies, refine their go-to-market, invest in new partnerships and try and shape policy and negotiation.

To help them reconfigure their supply chains, companies will need a deeper level of insight into their supply chain. For example, insight into the landed cost of components that go into the products they buy that will help them figure out optimal so sourcing strategies for each component and not just the finished product. They can also break up their manufacturing processes and move different processes to different sites to improve trade compliance and reduce cost.

Sir, the Government can help to open new markets and new supply with new trade deals and to negotiate tariff implementation, whether it is reshaping, delaying exemptions or other exchanges. The Government can also champion new partnerships and contracting models, focusing on collaboration. An ecosystem approach will benefit many sectors as supply chains around us reconfigure. Singapore can play a role now.

I think whether China Plus One will directly benefit Singapore is arguable. A lot of what is moving out is of lower value-add, too low for our relatively high-cost base. But there are indirect benefits in managing this new supply chain as a connector, as an orchestrator, enhancing our position as a trading hub. And so, we should build up supply chain and procurement centres of excellence here.

Next climate change. We know climate change is existential for us. We know that whether 40 degree-days become the norm or flooding in Woodlands or Bukit Timah will become more frequent or whether parts of Marine Parade will sink under rising sea levels, will depend more on what other companies do than what we do. But we still need to be build climate resilience, even if it is the strong and stoic kind.

I am glad Budget 2025 puts more in climate adaptation and resilience by topping-up funds for coastal protection, for example, alongside climate mitigation. In my Budget 2021 speech, I called for Singapore to act boldly on the green economy with President Trump's executive order to pull the US out of the Paris Agreement, US firms are awaiting clarity on the new administration's climate actions.

But climate change is not waiting and refuses to be ignored with extreme weather becoming more common. Europe remains steadfast in its commitment to its Green Deal while adapting for economic realities; while Asian companies are primed to seize opportunities with many doubling down on investments in green business build builds, electric vehicles (EVs), batteries, solar, green hydrogen, low carbon, agriculture technology – setting the stage for another revolution, clean energy.

Singapore's geographic constraints lead to a limited ability to deploy large-scale renewable energy sources and high cost. Importing energy and green and green hydrogen have their own high challenges. This not only has implications for our net-zero goals, but also limits economic development in growth sectors, like AI, advanced manufacturing, semi-conductors and biopharmaceutical.

Thus, the potential deployment of nuclear power in the form of small modular reactors (SMRs) is noteworthy. It could also have significant economic impact. One of the first SMR programmes in the world, the Rolls Royce SMR programme in the UK, when fully operational, is forecast to create 40,000 regional jobs in the UK by 2050 and generate £52 billion in economic benefit.

While critics say that SMRs are costlier than renewables and slow to deploy, the high cost of renewables in Singapore make us uniquely positioned to make the business case work. The $5 billion top-up to the Future Energy Fund to invest in nuclear electricity imports and hydrogen is timely. It must be complemented with strong regulatory support, capability build and very importantly, stringent safety regulations. To gain the political support needed to make nuclear energy a key pillar of our green economy, we need to assess and develop these conditions carefully.

Finally, a resilient people, a resilient nation is one built on the strength, adaptability and courage of its citizens. Sir, this is our SG60 year. At milestones like this, we often recognise the struggles and sacrifices made by our pioneer generations in building Singapore. Sustaining the miracle of Singapore is not about resting on our laurels. Every generation must struggle and sacrifice. Ours is no different.

The question is how we support Singaporeans. We need to invest in education and lifelong learning healthcare, including mental health and social well-being.

In my maiden speech in this House, I called for the Government, businesses and citizens to make us the nation that learns the fastest, to invest in our people and double-down on skilling and lifelong learning.

I am heartened by how SkillsFuture has evolved since then. Budget 2025 continues that evolution, extending support to those over 30 and training allowances to part-time programmes. We must make sure that these programmes are properly curated to improve the chances of participants landing a better job.

With SkillsFuture in full flight, the next area to focus on is economic empowerment. We need to continue to create job opportunities and push for fair wages to give Singaporeans financial stability. We need a national programme for career guidance and development that helps individuals navigate their career progression. And we need to do much more to encourage entrepreneurship and innovation. Our people must dare to dream. They must want to work on moonshot projects: in AI, green energy and other critical areas. We must give them resources and support, across life stages. In Woodlands, we are launching a Youth Adulting Programme that will help young adults learn about careers, skills, entrepreneurship, technology and innovation, along with financial literacy, mental health and building relationships, which I jokingly tell my team it starts with a healthy date.

This next phase will require us to build a culture that is more open to failure, if you learn from it. We need to teach our kids and their parents that it is not just the bankers, doctors, lawyers, chief executive officers, Ministers with straight-"A"s and a fast-track career that deserve to be admired and emulated, but the business owner who overcame failures. We need to teach our kids that success is not a function of Tik Tok views and likes, but of hard work and discipline, struggle and sacrifice.

Sir, I must say a few words on global talent. I must. While we build new growth areas for Singaporeans, the skills required to jumpstart and grow these fields are currently in short supply globally, and countries are racing to build the same skills. The competition for highly skilled workers is shifting into the geopolitical sphere, leveraging tools like immigration policy.

Singapore has always been forward-looking in this area, attracting top science, technology, engineering and mathematics (STEM) talents, reaching out to our diaspora, developing Global Innovation Alliances. Back in the mid-2000s, as the Economic Development Board's (EDB's) Boston Center Director, my husband supported Mr Philip Yeo, who was then building up the biomedical sciences sector in his meetings with some of the biggest names in life sciences. They came to set up labs here, grooming Singapore talents. Today, we are a biotech hub.

Now, we need highly skilled talents in AI, quantum, green energy, nuclear fusion, and people with experience commercialising and scaling these innovations in these areas. We should look at what more we can do to win the geopolitical competition for talent, such as better headhunting with network analysis, allocating global talent funds, tapping on remote talent and building global talent ecosystems.

A credible strategy to attract the best and brightest globally requires solid political support, and that starts with improving the conditions for all citizens to thrive. In tandem with skilling and job creation, we have done a lot to strengthen our social safety nets, make Singapore more family friendly, and promote physical and mental well-being.

In my Budget 2023 speech, I advocated for more support for Singaporeans who had lost their jobs, ex-offenders and those struggling with debt, after seeing some of my Woodlands residents in these situations. Each of these groups is now receiving more support and will receive more support under Budget 2025. I will continue to push for vulnerable groups, and for policy implementation to go apace, not get overtaken by cost increases or other events that reduce the real value of the support. In the Committee of Supply (COS) debate, I will speak on the need to ensure that policies land in a human-centred way on the ground, with those at the frontline empowered to deliver support consistent with the policy intent, and to make the calls for deviations for deserving cases.

On families, I have spoken for more paternity leave, flexible work arrangements and childcare leave for those with more children. The Large Family Scheme and lower childcare fee caps will help many families in Woodlands. In the COS debate, I will ask for more help for parents to cope with raising children, so they can enjoy the experience for the blessing that it is. And let us give more support to those who are trying so hard to have children.

Together with Dr Wan Rizal and others, we tabled the Mental Health Motion. I shared the stories of my Woodlands residents, including one who succumbed to suicide. Many reached out to me after that. I am grateful for their support and input. In the COS debate, I will push for elevating mental health, closing the gaps between mental health and physical health support.

Sir, undergirding all our strategies, we must continue to build a sense of togetherness and belonging, and reinforce personal and collective responsibility. Just as self-determination is a foundational value for Singapore, self-determination must remain a core value for Singaporeans, who must, in turn, be empowered and supported when they face job losses, health crises and personal setbacks. Collective responsibility breeds unity which breeds collective responsibility, a virtuous cycle.

Belanja-a-Meal@Woodlands, which has been running for five years, giving hawker meals to 300 beneficiaries, and Store@Woodlands, which has been running for four years, giving 400-plus families groceries of their choice, are funded almost entirely by sponsors, schools, preschools, residents and the general public, not by Government funds, because they believe in our cause. Volunteers from all over Singapore, including Sengkang, help us run the store. I am reminded of the words of former Senior Minister, President Tharman, here:

"No one has a monopoly over compassion." No one, no party, has a monopoly over trying our best, overcoming hurdles, to help our residents. We all have to use our ingenuity, creativity and networks to make it a collective responsibility in our communities. We are in this together. In this way, we make our people more resilient in a shifting geopolitical landscape.

Will we be forced to pick a side?

Sir, few discussions on geopolitics do not involve US-China tensions and the inevitable question: will we be forced to pick a side? We have maintained our neutrality, acting in our national interest, and we must continue to do so.

But we must also recognise our geopolitical influence. Despite our size, Singapore is respected for pragmatic, principles-based strategic diplomacy, balancing relations between the US, China and the Association of Southeast Asian Nations (ASEAN). Perhaps, Singapore now has a duty to step up, to be a bridge between China and the West, to reduce tensions and improve global cooperation and integration. We need Singaporean officials on global forums, and we need Singaporean talents to step up into leadership roles in companies that operate in the geopolitical arena, as their understanding of China and the US, uniquely positions them to add value.

In closing —

Mr Speaker: Ms Jaafar, you might want to round up.

Ms Mariam Jaafar: Yes, Sir. The years ahead could be stormy, where extreme weather patterns, disease outbreaks, protracted conflicts and great power competition converge to induce global disruptions of increased frequency and magnitude.

We must view every disruption as an opportunity – an opportunity to strengthen our supply chains, to protect our planet, to empower our people and to increase our international influence. Together, as one united people, let us commit to building a resilient future, a resilient Singapore. [Applause.]

Mr Speaker: Prime Minister and Minister for Finance.

12.22 pm

The Prime Minister and Minister for Finance (Mr Lawrence Wong): Mr Speaker, I thank all Members who have spoken and supported the Budget.

Members have raised many suggestions. I will not be able to respond to all of them today. But I assure you that we have heard every suggestion and we will study them carefully. The detailed issues relating to specific programmes and schemes will be addressed later at the COS debate.

The questions raised by Members during this debate revolve around three main issues. First, how are we supporting businesses and workers to navigate our new economic reality? Second, how are we helping Singaporeans to cope with the strains and stresses of life? And third, are we overly conservative in our fiscal projections and plans? Let me address these three issues in turn.

First, how do we navigate a very uncertain global environment so that we can continue to create good jobs and opportunities for Singaporeans? Quite a number of Members spoke about this, including Ms Foo Mee Har, Ms Tin Pei Ling, Mr Darryl David, Mr Edward Chia and Ms Mariam Jaafar just now.

Sir, the entire global system is changing. We can see it unfolding in real-time before our eyes. The multilateral trading system has been weakened by growing protectionist sentiments and unilateral measures. Countries are focusing more on their defence and security interests. So, it has become more about zero-sum competition rather than win-win cooperation. All these will disadvantage small and open economies like Singapore.

The major powers say they do not want to fight; they do not want conflict, but they are preparing for conflict. All of them realise that there is a need for a strong industrial base to sustain any war effort. In particular, the Western countries feel that they are at a disadvantage. It is not difficult to see why.

Twenty years ago, China accounted for just 9% of global manufacturing output. It accounts for one-third of global manufacturing output. That is more than the next three countries, the US, Germany and Japan, put together. China alone.

So, naturally, there is a huge attempt to rebuild manufacturing in America and Europe, and that is why competition for investments will only intensify.

So, we have to be prepared for tougher competition and do what we can to stay in the game. We are topping up the National Productivity Fund, which will provide us extra firepower to stay competitive and attract investments. We are taking steps to strengthen our infrastructure, enhance our enterprise ecosystem, as well as our innovation and technology engines. These moves will translate eventually and ultimately to better jobs and better opportunities for all Singaporeans.

We also have to brace ourselves for increased scrutiny of high-tech activities done out of Singapore, something which we discussed in Parliament last week and which several Members also highlighted.

We are an open hub. We welcome and harness technology from different countries. But the key countries, the key sources of technology, are now concerned about technology leakage. They want to keep their proprietary technologies controlled tightly within a safe ecosystem.

To be clear, we do not enforce the unilateral export controls imposed by any single country. But we will make efforts to address these concerns. We will lean forward and provide assistance where appropriate in accordance with our laws. Members may have read in the media today some actions we have taken.

We made these proactive moves because we want to ensure Singapore remains a reliable and trusted partner in global trade and commerce. In today's fragmented world, we must work even harder to stay open as a hub, where businesses from all over the world can operate with assurance and confidence.

As we navigate these external challenges, we also must continue to press on with productivity improvements in our own economy. Our labour productivity has been growing at around 2% per annum over the past decade from 2014 to 2024. Most of this is driven by the outward-oriented sectors of our economy. So, we can still do better to improve productivity for our domestic-oriented sectors.

I know many SMEs are concerned about the high costs of doing business. Several Members, including Senior Minister of State Desmond Tan, Mr Mark Lee and Mr Lim Biow Chuan, reflected these concerns. But there are economic realities we cannot avoid.

Our land cost reflects its scarcity in our small island nation. As long as Singapore does well and there is strong demand for land, there will be upward pressure on land prices. Our energy costs are affected by global price levels. We import our energy and we have limited renewable energy options. Our labour cost reflects the wages of Singaporean workers. We all want wages to rise. But wage increases have to be matched by productivity gains.

Assoc Prof Jamus Lim highlighted that wage increases in recent years have lagged productivity growth and there is scope for wages to go up further. But we should be looking at the data over a longer timeframe. Over the past decade, real wage growth has been commensurate with productivity growth. We will continue to push for this – to push for higher productivity as well as higher wages. That is why we opted for the Progressive Wage Model, which ensures continued skills upgrading for workers as they move up the wage ladder.

We will also keep an eye on costs and provide short-term help to companies where needed but without blunting the incentive for them to restructure. That is why we have corporate income tax rebates in this Budget. And we are increasing co-funding levels for the Progressive Wage Credit Scheme to help companies co-pay the wage increases for lower-wage workers.

We are also supporting companies on the regulatory front. Deputy Prime Minister Gan Kim Yong is leading the Inter-Ministerial Committee for Pro-Enterprise Rules Review to review our regulatory processes and cut compliance costs. He will give an update on this work at the Ministry of Trade and Industry's (MTI's) COS debate.

Our more important effort is really to help companies consolidate, restructure and transform. That is something the Government can encourage, facilitate and nudge. But in the end, the business owners themselves, the companies themselves, must be prepared to make the change.

Take retail as an example. Some retailers are concerned about the impact of the Johor-Singapore Special Economic Zone and the Rapid Transit System (RTS) Link. But with e-commerce, competition is already happening and it is happening and taking place from all over the world. Today, Singapore consumers, all of us, can already purchase many items from abroad and have them shipped to our doorsteps at cheaper prices than the local retail price. There are many examples. You can look for yourself.

So, retailers have to adapt and re-think their business models. Some have done so successfully. Take the example of baking supplies company Phoon Huat. It started out in 1947 as a single shop in Middle Road. But with continuous transformation, it has expanded its operations significantly. It now has its own production facility, a distribution centre and 20 retail stores in Singapore. And with support from Enterprise Singapore, it has built a thriving e-commerce platform, which enables it to export to more than 20 countries. It has also adapted to changing consumer preferences, for example, by launching its own gourmet brand and refreshing its brick-and-mortar stores to provide experiential spaces for baking demonstrations and classes. So, this is how constant innovation and transformation can allow businesses to stay competitive and relevant.

It is not easy to make such transformations. But for firms that are willing to do so, the Government will provide our full support.

Mr Derrick Goh asked about the kind of support that is available. In fact, we have many schemes to help our SMEs. In this Budget, I have highlighted three new initiatives: the SkillsFuture Workforce Development Grant, the refreshed SkillsFuture Enterprise Credit and the Enterprise Compute Initiative. These new initiatives arose out of our engagements with the trade associations and chambers (TACs) and the Singapore Business Federation. We continue to welcome their feedback and their important work in getting their members to transform their businesses.

At the same time, aside from the new initiatives, there are many existing initiatives for SMEs that remain part of our overall enterprise support efforts. For firms that fully utilise the support schemes, the total amount of help that they can get is, in fact, considerable.

In the past, the utilisation of many of our enterprise schemes has tended to be lower than what we had projected or hoped for. We have been discussing with the TACs to find out why, so that we can raise awareness amongst the SMEs and also do what we can to make the schemes more accessible. We hope the latest Budget moves will help. And if the utilisation of these schemes turns out to be higher than expected, and more funding is required, I assure you the Ministry of Finance (MOF) will be happy to provide additional resources.

Besides uplifting the overall SME sector, we are also developing a pipeline of promising enterprises, some of which will eventually grow to become global companies of the future.

The multinational enterprises (MNEs) we attract to Singapore support this enterprise development strategy. Because the smaller firms can partner with the MNEs and eventually expand to new markets abroad. As Mr Neil Parekh highlighted, such partnerships are beneficial and we will continue to create more opportunities for collaboration.

Some enterprises are started by global entrepreneurs or founders from abroad who are keen to use Singapore as a launchpad and we welcome more of them to come here and to launch their next big idea here.

There are also homegrown companies emerging from our research and development (R&D) ecosystem, which Deputy Prime Minister Heng Swee Keat mentioned yesterday. And more young Singaporeans are now prepared to take the plunge into entrepreneurship.

So, on the whole, if you look at our enterprise ecosystem today compared to 15 years ago, I would say things have improved considerably. But there is still much more that needs to be done and we will press on with our efforts.

With constant industry transformation, we can expect more churn in workplaces – existing jobs will be redesigned and new jobs will be created. Understandably, all these will contribute to anxiety and concerns amongst Singaporeans about jobs. Several Members, like Miss Cheryl Chan and Mr Faisal Manap spoke about this; and Ms Denise Phua and Ms Jessica Tan also highlighted the disruptions that could be posed by rapid technological advances.

These concerns are real and I acknowledge them. But we have to understand the underlying reasons and avoid pinning the blame on foreigners. Because we can see this happening in so many other countries, where foreigners are blamed and the public discourse ends up spiralling into very negative, toxic and xenophobic directions. That is not what we stand for in Singapore and we must never allow that to happen here.

Our approach towards foreign workers is clear. We welcome them to work here, but we do this in a controlled manner and ensure they complement Singaporeans. And we have continued to finetune, over time, our system of controls. For example, we have introduced the Complementary Assessment (COMPASS) framework for Employment Passes. We have introduced new measures, like the Workplace Fairness Act, to protect Singaporeans against workplace discrimination. This approach has contributed to positive outcomes, including low overall unemployment rates, good employment outcomes and rising real incomes for Singaporeans.

But we are not resting on our laurels. The Government will do more to better support Singaporeans, young and old, to better equip everyone for the changes in our economy.

That is exactly why we are taking decisive steps to strengthen SkillsFuture. It has been 10 years since we started, as some Members highlighted. We have made several significant changes. Senior Minister of State Desmond Tan and others highlighted this too.

We have introduced the SkillsFuture Level-Up Programme for mid-career workers and the SkillsFuture Jobseeker Support scheme to support those who are involuntarily unemployed and need help to get back to work.

In this Budget, we are making further moves, including to nurture more promising Singaporean corporate leaders and we will do more. Several Members also spoke about this, including Miss Cheryl Chan about a talent development strategy. We want to develop Singaporean talent and we want to see more Singaporeans take on leadership positions in the corporate sector.

We are also supporting in this Budget senior worker employment. That is something close to the heart of many labour Members of Parliament (MPs) and many of them spoke about this passionately – Senior Minister of State Heng Chee How, Mr Patrick Tay and Mr Mohd Fahmi Bin Aliman. We are convening the Tripartite Workgroup to dive deeper. There will be many issues to work through and I look forward to making progress with all of them with our tripartite partners.

So, while we have made progress on SkillsFuture, we know that there is still much more to be done. Because you can compare our adult education and training system with all the investments and established infrastructure we have in the formal schooling years. That is still so much to do to fully build up our SkillsFuture system. This is not just in Singapore. If you look around the world, in countries everywhere, generally, governments have invested more in pre-employment training than in adult education and training. But compared to other countries, in fact, Singapore is already at the forefront in many respects.

So, there are no ready models for us to look to. We have to experiment, innovate and find our own way forward. But we are fully committed to this endeavour and I expect to put in additional resources in the coming years to further strengthen SkillsFuture. Sir, we cannot save every job, but we will support every worker in Singapore. We will create even more opportunities and better jobs for all Singaporeans. [Applause.]

This leads to the second issue, which is, how is the Government providing enough support to help Singaporeans cope with other stressors and strains in life?

Mr Pritam Singh, the Leader of the Opposition and Mr Leong Mun Wai said Goods and Services Tax (GST) increase has made it worse by adding to inflation. In fact, Mr Singh said that the GST increase "turbocharged" inflation.

But let us be clear. As a small and open economy, our inflation was driven primarily by global factors – wars, supply chain disruptions, and rising energy costs. As Mr Saktiandi Supaat noted, even before the GST increase, prices were already going up globally and in Singapore. And here in Singapore, the central bank, MAS, had assessed that the effect of the GST increase on inflation would be "transitory".

Indeed, this was the case. In 2022, Consumer Price Index (CPI) inflation was 6.1%. Then, the GST went up by one percentage point on 1 January 2023 and another one percentage point on 1 January 2024. What happened to CPI inflation? It moderated to 4.8% in 2023 and came down further to 2.4% in 2024. Where is the turbocharging? Look, I know elections are approaching, but this Chamber is not an election rally. Let us not get carried away by the hyperbole, but have a debate based on facts.

The fact is inflation has eased, both globally and in Singapore. But people are still concerned about cost pressures. It is not unique to us. It is felt across many other advanced economies, where the headline economic indicators are positive, but sentiments are poor. In the US, they even coined a name for it. They called it "vibecession". But there is a reason for the negative vibes. It is not just about feelings and sentiment. It is because price levels remain high even though inflation has eased and these create real pressures, and it takes time for people to adjust to these new price realities.

We understand these concerns. That is why we are continuing to provide temporary help measures through the CDC Vouchers and other measures. And for the one-off SG60 surplus sharing package, we decided that a key plank would also be in the form of vouchers, so that they can also provide some relief on the cost front.

As I said in my Budget Statement, we will continue to provide cost of living support for as long as needed and within our means.

The Workers' Party (WP) and the Progress Singapore Party (PSP) appear to be unhappy and displeased that the Government is providing vouchers to help Singaporeans with the cost of living. They suggest that the Government is relying solely on vouchers to help with the cost of living. But we have never said that.

These are temporary help measures. They are not long-term solutions. In fact, they only make up a small part of our overall Budget. The cost-of-living measures and the SG60 Package account for about 5% of our Budget. A much larger part of our spending is in structural programmes, especially to equip and empower Singaporeans through education, skills training, skills upgrading, job training and the significant moves we are making on SkillsFuture which I highlighted just now. All these will ensure Singaporeans do not just receive help but are able to stand on their own feet and seize better opportunities for themselves and thrive in a rapidly changing world.

As we have repeatedly emphasised, the more durable and sustainable way to tackle cost of living is to ensure that Singaporeans enjoy higher real incomes, and that must be supported by a strong economy and productivity gains. That remains the key thrust of our approach.

And objectively speaking, we have done relatively well. Singaporean households, across different income levels, have experienced sustained real income growth over the past decade. And what we have achieved has outperformed many other advanced economies, as we can see from this chart. [A slide was shown to hon Members. Please refer to Annex 1.]

I show these statistics not to blow our own trumpet, but so we know what the facts are and how we compare with other economies. But I fully recognise that even with a strong and growing economy, the day-to-day lived realities for Singaporeans may be different. Life in a compact city like Singapore, with no hinterland, can be competitive and it can be stressful – something which Members on both sides of the House were quick to bring up in their speeches over the last two days.

And that is exactly why as part of Forward SG, we have been taking steps to strengthen our social support system. We want to provide greater assurance to Singaporeans across every life stage on their basic needs, like education, retirement, healthcare and housing. We want to provide more support for the disadvantaged and vulnerable groups. We want to ensure that no one is left to fend for themselves in Singapore. And if anyone faces setbacks, we have a system in place to help them recover and bounce back stronger.

These are desired outcomes which I am sure we can all agree to. The question is how do we achieve them?

Members have offered many suggestions. Ms Hazel Poa said we need to put more emphasis on social rather than economic considerations and that we are overly reliant on the price mechanism, citing land as an example.

But pricing all resources properly is not about giving more weight to economic over social considerations. It is simply about getting our policies right and doing things the right way. If we do not price properly, then we are giving a hidden subsidy. A subsidy means someone has to pay. If it is not paid by consumers, it is paid by taxpayers. If it is not paid today, it will have to be paid tomorrow. Because at the end of the day, there is no free lunch.

So, our approach must be to get the price right, then, we decide how much to subsidise.

Take public housing as an example. The Housing and Development Board (HDB) has to pay the market price for the land when it develops a new flat. But when it prices the new flat for sale, it does not recover fully the cost of the flat. Instead, it prices it on the basis of affordability, as we have said time and again.

I will give you a concrete example: a 4-room Build-To-Order (BTO) flat in Sengkang. This was in the October 2024 BTO exercise. After accounting for grants, a resale flat nearby in that area, is around $545,000. Five years ago, it was about $360,000. So, resale prices have gone up nearly $200,000.

What about the sale price by HBD for the new flat? The BTO price has not gone up by that much. Instead, it has increased in line with median income over that period and was sold at about $370,000.

So, resale prices have gone up a lot. BTO, yes, but not as much and in line with median incomes. The difference is a subsidy that is borne by the Government. That, together with the higher cost of construction, is one of the key reasons why HDB's deficit has increased sharply. If you look at its annual statements in FY2018, the deficit was $2 billion. In FY2023, it was $6.8 billion. The Government's funding to HDB to cover its deficit has correspondingly increased over the years to cover the deficit.

Some of you may ask and this is the right question to ask: is this sustainable? It will not be sustainable if overall property prices keep rising faster than incomes and the financing gap keeps growing year after year. But this will not happen, because we keep a close watch over the property market and we ensure it does not happen.

That is why we have introduced cooling measures where necessary, by increasing the Additional Buyer's Stamp Duty (ABSD) for multiple property and foreigner purchases and we have significantly increased BTO supply as well as Government Land Sales to make up for the disruption that occurred during COVID-19. These measures have helped and will eventually stabilise the market.

More specifically, when you look at the HDB market, in the short term, resale prices can be up, they can be down. In localised popular areas, they will generally be higher than the less-popular areas. That is why we introduced a new classification system with the Plus and Prime flats. But overall, in the longer term, we are confident that HDB prices will remain affordable. Why? Because only Singaporeans can buy HDB flats. We can and we will build enough housing for every Singaporean household.

For now, we have focused on ensuring that the new flats are available for first-timers, especially young married couples and parents with young children. We are already seeing concrete improvements. The application rate for first-timer families across all flat types has stabilised. In fact, it has come down from 3.7 times in 2019 to 2.1 times in 2024. This is the application rate. So, application rates are now below pre-COVID-19 levels.

With a sustained and robust supply of new flats and as the overall market stabilises, we will have scope to consider how to adjust our policies to meet the needs of other groups, including second-timers and singles.

There have also been calls for us, for the Government, to make bolder moves on social policies.

You can look around the world. There are many examples of social support arrangements that started with the best of intentions, but only ended up with more problems. For example, some promise sizeable pension payments funded by younger generations, but now have problems paying for them. Others offer free universal healthcare, but now face rising costs and an overburdened healthcare system.

To be clear. This is not about Government spending. We are prepared to spend more, where necessary. But it is equally if not more important to get the policies right and to ensure the overall system is fiscally sound and sustainable.

On that basis, we have been taking steps to progressively strengthen the key pillars of our social system and our social compact.

We started in Singapore with the basics: universal access to primary school for education, Central Provident Fund (CPF) for retirement, Government subsidies and the 3Ms – MediSave, MediShield Life and MediFund – for healthcare and HDB for housing. We have progressively enhanced these pillars. We have got Workfare Income Supplement for lower-wage workers, Silver Support for the more vulnerable seniors and SkillsFuture to support all our workers.

Take retirement as one example. Our CPF system will be 70 years old this year. In a time where many pension systems are struggling with sustainability, we continue to provide assurance for Singaporeans' retirement adequacy in a sustainable manner.

At its core, the CPF enables Singaporeans to save for their own retirement, with support from their employers. But we do not just leave this to individuals alone. Families are encouraged to help their loved ones save more and we provide avenues for them to do so, with matching grants from the Government.

The Government provides risk-free interest rates, with extra interest for lower balances to boost savings. We support lower-wage workers to earn more and save more through Workfare and progressive wages. And for seniors who had lower incomes during their working years and so less in retirement, we have Silver Support to cover them.

These improvements have been made to CPF over the years, and more recently, when we looked at the data, we saw the need to do more for two groups. First, the Institute of Technical Education (ITE) graduates whose wage trajectories were not rising fast enough compared to their peers in polytechnics and universities; and second, young seniors in their fifties and early sixties who could use more support for their retirement.

That is why we introduced the ITE Progression Award last year, which will support ITE graduates to pursue a diploma and provide a top-up to their CPF accounts when they complete their diploma studies. We also introduced the substantial Majulah Package for young seniors, which included the one-time Retirement Savings Bonus, the MediSave Bonus as well as an ongoing Earn and Save Bonus.

Several Members of Parliament, in particular, Mr Louis Chua and Mr Saktiandi Supaat, spoke at length about retirement adequacy. I have listened to them carefully and we will consider all your views and suggestions.

On the recommendations of the CPF Advisory Panel, many have, in fact, already been taken up. There are now various low-cost funds included under the CPF Investment Scheme, which members can choose to invest in.

The question is whether there is scope for a low-cost life cycle fund done in a more comprehensive and structured way, beyond just leaving CPF members to choose for themselves. Because these options exist. They can choose but whether there is scope to do it in a more structured way. If we were to do that, that fund must be able to earn better returns than the prevailing Special Account rate, not the Ordinary Account rate. That is 4% on a risk-free basis and up to 6% based on the extra interest.

Actually, that is not easy to beat on a consistent basis. Sure, you can opt to take more risks for higher returns. Mr Louis Chua mentioned an 80:20 portfolio promising above 7% returns. But that is, I think he qualified, potential returns. If you are lucky, you may get 7% or more. What happens if you are not so lucky? What happens if you retire at a time of market downturn? How do we provide assurance to Singaporeans?

So, these are issues we will have to consider carefully. But we will certainly continue to review, finetune and improve the CPF system to better meet the needs of our seniors and to prepare for a future with increased longevity and life expectancy.

This same approach applies to other areas too, which many Members spoke about. For example, many MPs, Mr Vikram Nair, Assoc Prof Razwana Begum, Ms Hany Soh, Mr Alex Yam, Ms Nadia Samdin, Mr Louis Ng, Ms Carrie Tan, amongst others, spoke about more support for families. And support not just in terms of financial support, but leave arrangements was a popular refrain in the speeches. We will have to look at all of these suggestions.

Others like Ms Denise Phua, Mr Don Wee, Mr Ang Wei Neng and Mr Sharael Taha have highlighted the need for more inclusive hiring practices and employment support for persons with disabilities. I agree. We must do more for people with disabilities. In my Budget Statement, I said we are embarking on a comprehensive study to look at post-18 pathways for people with disabilities. We will want to do more for them.

Many Members, such as Senior Parliamentary Secretary Eric Chua, Mr Henry Kwek, Mr Xie Yao Quan and Mr Dennis Tan, also spoke about the need to help our seniors age well and ensure they are not left behind in their silver years. In fact, we have made significant moves over the past one to two years to support these groups, including in this Budget. But our attitude is we are never satisfied with the status quo and we will continue to review and study how we can make things better.

Likewise on the subject of caregivers, which many Members spoke about too, including Mr Yip Hon Weng, Mr Ang Wei Neng, Mr Sharael Taha, Ms Ng Ling Ling, Ms Joan Pereira and Dr Tan Wu Meng.

Caregiving arrangements vary from family to family. Some have sole caregivers while others will share the responsibility over several family members. We recognise the crucial role that caregivers play and the sacrifices they make, such as leaving employment to care for family arrangements or forgoing their careers in order to spend more time to take care of their family members. We want to provide support for those who have to take up this role as it is not easy for them.

It is difficult to put a monetary value on caregiving. Furthermore, there is no one-size-fits-all approach to support caregivers. So, our approach has been to provide support for the family as a whole.

In this Budget, we have significantly enhanced the Home Caregiving Grant and increased subsidies for care services in nursing homes and in the community. But this is not the end of our moves. In fact, we will study more to see how we can further strengthen our support for caregivers.

Members also had suggestions covering different areas. Mr Dennis Tan, Ms Jessica Tan and Mr Xie Yao Quan had suggestions on means testing.

This is something we grapple with all the time because there is no perfect means testing criteria. Even on incomes, we can decide on per capita household income, family income, but we do not have the data, lifelong earnings income, a whole range of criteria to use. And we know that, increasingly, it is not just about income as a means test but also wealth. Several Members of Parliament spoke about wealth inequality. Then, you have to look at wealth measures and how do you look at that? What measures do you use? That is why we have Annual Value (AV) as a proxy.

So, these are issues we will continue to finetune in terms of the means testing criteria.

Ms Jean See, Ms Yeo Wan Ling and Mr Gan Thiam Poh highlighted other groups that may need more support, like freelance and agency workers as well as working mothers.

Ms Usha Chandradas earlier championed for the arts. Mr Ong Hua Han reminded us to ensure our arts and sports scene remains inclusive. Dr Wan Rizal and Miss Rachel Ong advocated for mental health issues.

These are some of the key points that Members have raised. We keep an open mind and we study all your suggestions carefully.

Beyond ideas shared in this House, we continue to engage widely and hear views from all Singaporeans. We do so through various participatory platforms – something which Ms He Ting Ru talked about, like citizen panels, youth panels and Alliances for Action (AfAs).

These platforms are resource intensive. They take a lot of time, but we find them useful and we will plan to do more. We may not be able to do implement every idea, there will be differences of views. And if we cannot implement, for whatever reason, we will explain why.

Our commitment, the Government's commitment, is that we will do whatever is necessary to ensure that every Singaporean feels supported at every life stage. And the numbers, what we spend on, reflects this commitment. [A slide was shown to hon Members. Please refer to Annex 2.] In fact, we spend more on social development than on the economy and security. Actually, social spending is already greater than what we spend on both the economy and security combined.

So, we are not just saying we will do. We have done so in concrete terms and we expect social spending to continue to grow in the coming years. It is partly driven by our ageing population and rising healthcare costs. It is also because of our efforts under Forward SG to strengthen our social compact. We have fleshed out many programmes in this Budget and the previous one. But as I said, there will be more to come, as this is a multi-year effort.

Ultimately, a strong social support system should not be reliant on the Government alone – even though the Government will do more, but it cannot be reliant on the Government alone. We will do more but our actions must also be complemented by individual and community responsibility. And we very are fortunate to have charities and social service agencies doing excellent work on the ground. We appreciate and thank all of them. [Applause.]

In this Budget, we are supporting them further with more matching grants for their fundraising efforts, something which Mr Melvin Yong and Mr Keith Chua welcomed. And we will continue to work with all of them as partners to uplift our fellow Singaporeans.

I should also add that many of the issues we are dealing with requires changes, not just in policies, but also in our attitudes and mindsets. The Government will spend more on healthcare, but Singaporeans also have to do their part to stay active and maintain a healthy lifestyle. The Government has and will continue to invest in SkillsFuture, but Singaporeans must want to improve their skills, and businesses must give their workers the time and space to go for training.

And that is why Forward SG is about strengthening our social compact. It is about our shared responsibility – how we support one another, care for those in need and lift each other up. That is how we build a more inclusive, and a stronger and more united Singapore.

Finally, on the third issue, are we overly conservative in our fiscal projections and plans, especially in light of our surplus position?

Mr Liang Eng Hwa asked about the treatment of the Significant Infrastructure Government Loan Act (SINGA) and how it contributed to the surplus. Under SINGA, we borrow for major and long-term infrastructure projects. The spending for such projects is capitalised, which allows us to spread the expenses across the useful life of the asset. This, as we have explained, is more equitable as the asset will benefit both current and future generations. This accounting treatment has been in place since FY2021.

Dr Lim Wee Kiak asked about the assets linked to the $3 billion money laundering case, which have been surrendered to the state. These assets are progressively being liquidated and, when they are liquidated, monies will be added to the Consolidated Fund. These funds are not earmarked for specific purposes but will be part of our overall revenues to fund the Government's Budget.

Several Members, including Mr Singh, the Leader of the Opposition, Ms Hazel Poa and Mr Leong Mun Wai, questioned the need to increase the GST, given our strong fiscal position. I should remind Members that we are in this strong, fiscal position precisely because the Government took the necessary steps early in this term to raise revenues.

But if we were to rewind the clock and consider our situation, imagine what our situation was at the beginning of this decade? We were in the thick of battle, fighting COVID-19. I know it feels like a bad dream and a distant memory to all of us, but those were truly tough times.

In 2020 alone, we had five Budgets. In 2021, we had three Budgets. We sought the President's approval five times to draw from Past Reserves. And this was in 2020 and 2021. We had no way of knowing when the pandemic would end, how the virus would mutate, how many more new waves of infection we would face, how many more restrictions we have to impose and how much deeper a fiscal hole we would end up with.

But we already knew for sure that spending needs would rise over the horizon. It was coming, year after year. We could see it happening. Healthcare spending was rising, especially with our rapidly ageing population. We looked at different ways to raise revenues, including through property and income taxes. But these moves were still not enough to cover the expected increase in expenditure, which was sure to happen.

So, what should we do then to plug the funding gap? That is why we had to consider the GST increase. It was a difficult decision. It was a difficult choice. It is never easy to raise taxes and certainly not a tax like the GST. But governance is about making responsible choices, not just popular ones. We must ask ourselves: do we want short-term populism or long-term stability? Do we want to kick the can down the road or take the hard but necessary decisions?

So, once there were signs that the economy had stabilised, we decided to proceed with the GST increase. But we also rolled out a comprehensive Assurance Package, which effectively delayed the GST increase for the vast majority of Singaporean households. Essentially, once we decided to move, the GST rates were locked in. But with the Assurance Package, we could be more responsive to changing circumstances and we could push back effectively the impact of the GST increase.

And that is exactly what we did. We had multiple rounds of enhancements to the Assurance Package to tackle cost of living concerns and to ensure that the majority of households will not feel the impact of the additional GST for at least five years.

At the same time, we also have a permanent GST Voucher scheme, which we also enhanced. And this ensures that the GST and the GST Voucher Scheme, combined together, will support the lower-income groups and will protect them, not just over the next five or 10 years, but on a permanent and ongoing basis.

So, with that in place, together with the other revenue moves we made, we are in a better position now. And now, the additional GST revenues have started to come in. And the revenues are mostly from those who are better-off, foreigners as well as tourists. And it will give us the resources we need to improve our healthcare infrastructure and take better care of our seniors.

What would have happened if we chose to avoid the GST increase because it is unpopular? Or if we did not enjoy the unexpected upsides in corporate income tax collections, which emerged only in the last two years? We would have ended FY2024 in a deficit. The projected balance in FY2025 would also have been a deficit. And that would have meant less funding for essential services, less support for our seniors and fewer resources to invest in our future.

Basically, Singapore and Singaporeans would have ended up in a much weaker position.

Several Members, I know, criticised MOF's fiscal marksmanship. Look, when I started work in MOF decades ago, one of my main tasks was to provide fiscal projections, as an economist. That was what I did. I was one of those who would run the models and churn out the figures. So, I know exactly what this work entails and how difficult it is. I will not defend the figures if they are off the mark. But I will speak up for our MOF officers who do this work with dedication and professionalism against any unfair criticisms. [Applause.]

Ultimately, a Budget is a projection. It is based on the best available information at that point in time. We have to plan ahead. We have to make assumptions and we have to decide how we deal with uncertainties.

In a crisis, when there is greater volatility in the economy, it is inherently more difficult to predict the turning points. But if you set aside unexpected crises like COVID-19, our operating revenue projections have generally not been far off the mark. The average deviation over the 10-year period from FY2010 to FY2019 was within a reasonable range of 5%. In the latest two financial years, FY2023 and FY2024, the deviation has been larger, but still around 7%, which is comparable still to other jurisdictions like the UK and the Netherlands.

Let us dive deeper into the FY2024 projections because there were some questions raised about that.

Mr Louis Chua had filed a written Parliamentary Question in September asking about the overall fiscal position. Our reply referred to the figure reported in the Budget Book, which was also the figure provided in the Budget Statement. In fact, MOF only starts to put together the revised fiscal estimates around the December and January period, when we start to get more data to update our estimates. And as I have explained in the Budget Statement, one key reason for the revenue upside was the unexpected increase in corporate income tax collections.

Another reason, more generally, is that our economy performed better than expected, the Singapore economy. Remember, in early 2024, MTI started the year projecting that the economy would grow at 1% to 3%. We ended 2024 with gross domestic product (GDP) growth of 4.4%, well exceeding our expectations. But it is not just us. It is also the forecasts of many, in fact, I would say, virtually all private sector professional economists. So, when you have higher growth, it means higher incomes, which drives consumption and that shows up in higher collections – for GST, for example, and the Certificates of Entitlement (COEs).

Ms Sylvia Lim suggested that the COE collections were driven by Government policy which kept prices high. But, in fact, it was the opposite effect. The higher collections were a result of Government action by injecting additional COE quota. This helped to bring prices down by 10% to 30% from the peaks in October 2023. But it also meant more motor vehicle sales; and then, with more sales and more quantity purchased, that is why you have more revenues. So, it is not a price effect, it is a quantity effect.

In most other countries, poor budget marksmanship is when a government severely overestimates the revenue it will collect and underestimates its expenditure. That is what poor marksmanship is about. Then, the government makes unfunded promises that it cannot see through because there is no money or it borrows funds from somewhere else and kicks the can down the road, and leaves behind a growing burden for the next generation. But this is not the case in Singapore, where we practise responsible and prudent budgeting.

Ultimately, it is not just the matter of good marksmanship or poor marksmanship. It is a question of the right values and the wrong values, the correct fiscal principles and the wrong principles. And the WP and PSP may think we are being overly cautious in our projections. But this Government will never take risks with Singaporeans' lives and future. [Applause.]

We keep our public finances healthy year after year. We spend within our means. And if there are new or additional areas of need, we raise revenues to meet these new demands. We always ensure that we have enough, rather than risk falling behind and falling short. And should we have surpluses, that is good news. The money is not squandered, because it helps to fund future needs and allows us to provide more support for Singaporeans. And the fruits of Singapore's progress will be shared with everyone – as we are doing in Budget, to recognise the collective efforts of all Singaporeans.

Sir, that is the responsible way to steward and manage our nation's finances. We have 60 years of history to show that Singapore has abided by the right values and principles and Singaporeans can continue to count on this Government to continue doing the same. [Applause.]

We are in a fortunate position to have surpluses in FY2024 and FY2025. But on the expenditure side, I fully expect our spending to increase in the coming years.

Mr Leong Mun Wai commented that the monies are going into more and more endowment and trust funds. But, in fact, the majority of these funds are drawdown funds. In other words, the monies within these funds are going to be withdrawn and spent for upcoming needs.

Take, for example, Changi Airport. The monies that we set aside will be spent very soon, as construction on Terminal 5 (T5) begins this year. Changi Airport is owned by the Changi Airport Group (CAG). It is not owned directly by the Government. So, the T5 project is not eligible for SINGA borrowing. Instead, CAG will borrow for the project and the Government will be providing a guarantee to help lower borrowing costs, as I explained in my Budget Statement. But if we want Changi Airport to remain competitive as a global air hub, CAG cannot rely on borrowing alone to cover the full costs of the project and that is why the Government is providing significant support and funding through grants.

Even as our spending goes up, we will continue to keep within our means and maintain a balanced Budget over the medium term. That is why I do not see us being able to put back the amount we had drawn from Past Reserves during COVID-19, something which Ms Tin Pei Ling asked about.

But we will continue to be responsible and prudent with our finances. And if we maintain this approach, our reserves should be able to keep pace with our economy and we can continue to benefit from a steady stream of Net Investment Returns Contribution (NIRC) in our revenue stream.

Compare this with the fiscal situation in so many other advanced economies around the world, especially in the West. They are running record levels of fiscal deficits, and their national debts are growing faster than their economy. So, the fiscal space they have to sustain their higher levels of welfare, while continuing to invest in defence and the economy, is shrinking. And at some point, the reckoning will come. You do not even have to go far afield to look at western countries. Look nearer to home at what is happening in Hong Kong, which several Members also talked about. It used to have a healthy fiscal position. But look how quickly the situation can turn and how they are grappling with deficits now and have to take such drastic steps to consolidate their position. So, really, we should appreciate all that we have here in Singapore.

In contrast to so many other countries which are using their revenues to service interest payments, we have the opposite. We receive a boost to our revenues from our investment returns. Just think about it. Countries that have this luxury of investment returns are the ones that are endowed with oil and gas, or some other natural resource. They have been blessed by the heavens with these endowments. We have nothing, and yet, we are in this position. It is truly unique, and it is a Singapore miracle. [Applause.]

Our fiscal strength is a vital source of competitive advantage in these turbulent times. It is going to get worse. The ride ahead will be bumpier. There are dark clouds over the horizon. No one can predict what the next few years will bring.

But the risks have risen sharply. We have already seen wars in Europe and the Middle East. We may yet see conflict in Asia. We have to be prepared for a whole spectrum of possible global disruptions and threats. And in today's environment, sadly, global responses to these threats may not be as well-coordinated and effective as before.

But in Singapore, we know that if such shocks were to arise, we have the ability to respond swiftly to them, like we did during COVID-19. Our reserves and our fiscal strength will enable us to protect Singaporeans when it matters and to turn adversity into opportunity, to turn our vulnerabilities into strength.

Sir, our system has also enabled us to achieve good and equitable outcomes. The Government will continue to focus on accountability in spending, to ensure value for money in everything we spend. There are existing mechanisms in place to scrutinise our spending plans. I will not go through all of them, but we have well-established mechanisms to do so.

The Government continues to put out regular reporting of outcomes in the Singapore Public Sector Outcomes Review as well as KPIs in the Budget Book. And as Mr Pritam Singh himself noted, we have put out occasional papers wherever relevant, for example, MOF's occasional paper on our COVID-19 measures, our occasional paper on medium-term projections, which I said we will be updating, as well as MTI's report card on the Industry Transformation Maps (ITMs). So, we will continue to do so wherever useful.

On the whole, we have achieved outcomes that reflect our values as a society, one that is fair and equitable, prudent yet progressive, where those who have more contribute more to uplift those with less.

In this Budget, we did extend some measures to private property residents, arising from feedback from the residents themselves as well as from many Members. Mr Pritam Singh says it is "ironic" that they should receive climate vouchers. But why is that so? This is not the cost-of-living support. It is an effort to encourage everyone to do their part to be more energy-efficient.

But more importantly, let us look at the overall picture. [A slide was shown to hon Members. Please refer to Annex 3.]

We continue to have a highly progressive tax and transfer system. Members are familiar with the benefits and tax ratios which we highlight every Budget, and it is worth going through them again.

The bottom quintile of households receives $4 in benefits for every dollar of tax paid. Middle-income households also get more benefits than tax paid, as we go through the income thresholds and levels. In fact, it is only the top quintile of income earners who receive less in benefits, or 30 cents, for every dollar of tax paid. So, this is what our system has achieved, and these outcomes are a culmination of years of deliberate moves to enhance the progressivity of our overall taxes and transfers system.

There is no fiscal system in the world that can deliver perfect precision and equity. But I think we have found an approach in Singapore that works for us. It is not perfect, but we continue to make it better. Here, everyone contributes to taxes. The lower and middle-income will receive more support, while the higher-income and wealthier segments of the population will contribute more. It is a fair and progressive tax and redistribution system, anchored on our values of a fair and just society.

And the strength of our fiscal system is internationally recognised. A recent Organisation for Economic Co-operation and Development (OECD) report commended Singapore on our robust fiscal system. This is hard-earned credibility that we have built up over many, many decades. It is not something we should take for granted, because that same credibility can be quickly destroyed in the wrong hands.

And so, at the end of the day, on something as fundamental as this, Singaporeans will decide. Will they prefer a government that underestimates our needs, spends more from our hard-earned reserves, and leaves us weaker? Or will Singaporeans prefer a government that steadfastly upholds fiscal responsibility and discipline, and ensures we have enough resources for current and future generations to handle unexpected challenges?

Sir, the PAP's approach is clear. We take our duty as stewards of the country seriously. We remain true to our mission and manage our finances carefully for the benefit of all Singaporeans, now and in the future. We will continue to do our best to convince Singaporeans that ours is the right approach. It has served us well these last 60 years and it will continue to keep Singapore on the right track in the years ahead.

Mr Speaker, to conclude, the world is going through unprecedented changes. We are contending with tectonic shifts on multiple fronts: geopolitics and trade, technology and energy, demographics and culture.

Thriving amidst adversity is never easy but that is what the Singapore story is all about from the very beginning, and we have strong foundations today that give us confidence to move forward. We have a strong fiscal footing built up over years of careful stewardship by our forefathers. We have a clear plan for the road ahead, anchored on our Forward SG agenda. We are grounded in our shared values of solidarity and unity.

This year's Budget paves the way for us to chart Singapore's next lap, to navigate uncertainties with gumption and strength, to address immediate challenges decisively, and to secure our long-term future with confidence. It is a Budget put together by Singaporeans, with Singaporeans, for all Singaporeans. So, let us write the next chapter of our Singapore story and move onward together for a better tomorrow. [Applause.]

Mr Speaker: Mr Pritam Singh.

1.26 pm

Mr Pritam Singh (Aljunied): Thank you, Mr Speaker. Thank you to Prime Minister and Finance Minister. I assure him that my clarifications will not be with an eye on election rallies.

Let me just take two points the Prime Minister made in his speech with regard to some points I raised in my speech.

First, on the question of Climate Vouchers for individuals who are living in private household residences, the irony here is that the cost of living affects people across the board, including those in private dwellings. And giving them assistance also makes the point that the issue cuts across all segments of society, which was the metapoint that I made when I addressed the subject before I made that point in my speech.

The second issue, the Prime Minister asked about "Where is the turbocharging?" on the matter of inflation. I took reference from the reply that was given by the Government in early 2024. I think it was referred to by Member Saktiandi as well, where the MAS set out a projected number. With regard to core inflation for 2024, it was 2.5% to 3.5%, and it estimated that the GST rate increase would contribute slightly less than 1% to core inflation. So, if you take that figure with the lower end of the estimate at 2.5%, that is 40%, and that is the contribution of the GST hike. That is how I read it. Hence, that explains my characterisation of "turbocharged".

On the matter of the third subject, which was covered by the Prime Minister in his round-up speech, if I can just bring back what was mentioned at last year's Budget – when the Prime Minister was then Finance Minister – brought up in his round-up speech. He confirmed that OECD estimated that the investment hubs, Singapore, being one of them, would stand to see corporate tax revenue gain ranging from $5 billion to $11 billion. But that, on a more conservative estimate, this was $2 billion to $11 billion, and these increases would only materialise from FY2027. MOF was making assessments and detailed projections and would come back with detailed revenue updates. It has been a year. So far, we have not received these updates, and I hope the Prime Minister can share with us what these numbers are.

In 2023, the Prime Minister also spoke, towards the end of his speech, about the occasional papers. MOF released an occasional paper in 2023, covering the medium-term fiscal outlook up to FY2030. But that paper did not include corporate income tax revenues that would accrue arising from BEPS. The Finance Minister said also in his last Budget reply speech and I quote, "the occasional paper that we published last year may not be so occasional after all. We will keep on updating it from time to time so that everyone will have a sense of how our fiscal trends are unfolding, not just on a year-to-year basis, but over five-year and 10-year horizons." Can I confirm that MOF will be releasing this occasional paper on the medium-term outlook with BEPS reflected in its projections shortly?

And, finally, Sir, in the course of our last Budget debate as well, I remember a senior PAP backbencher saying that he was pleasantly surprised about what he had said only two three weeks earlier in the context of the Motion that we had in Parliament on the reserves, he had hoped that our corporate tax collections would overtake NIRC within a 10-year time frame. And merely two weeks later, during the 2024 Budget debate, that that overtaking had occurred: NIRC became the second top revenue source and corporate income tax overtook it.

The Prime Minister said that it was not so clear cut whether that trajectory would continue and that it was too early to tell whether it can be sustained, so we will continue to monitor. Can I ask the Prime Minister whether there is some clarity now, on that point?

Mr Lawrence Wong: Sir, I thank the Leader of the Opposition for the opportunity to clarify these points.

On Climate Voucher, I should just reiterate, I understand his explanation. I was just making the point that this is not a cost of living support measure, the Climate Voucher. It is meant to encourage everyone to go for energy efficiency. Members have asked for this, residents themselves have asked for this and we think that, in the broader scheme of things, it is a move we can make. I mean, the WP is free to object to it if they feel like it is not worth doing. And if they feel that they do not want to support this, please say so. But we think it is a worthwhile move to make to encourage energy efficiency.

On "turbocharging" of inflation and the explanation that Mr Singh provided, I think he would have also, if he had read the reply he cited, read other MAS statements, which stated very clearly the impact of GST on price levels is once-off and it is transitory. The impact on inflation is transitory. And the explanation he gave that the impact of GST on inflation, the once-off effect or the transitory effect, is high as a proportion of the base inflation, actually does not make sense. Because if I take that view, then I really should be raising GST at the time of very high inflation, then the proportionate impact would be quite small, because the 1% on a very high inflation base means that there is very little impact. But if that is the case and that is what the WP feels, then really there should not be any concern about the timing of the GST increase.

The third set of questions around corporate tax, they are related. Let me explain what the situation is. Go back to the beginning of the decade when we started looking at tax revenues. Actually, at that time, there was no certainty at all that corporate income tax would go up, even with BEPS. Because, remember, a stated objective of BEPS, the explicit-stated objective, one of it, is to transfer and re-allocate profits to market jurisdictions – large economies, markets.

We are going to be impacted by that very move. We would have profits re-allocated from us and we would be suffering. It has not worked out or it still has not been implemented, this part of BEPS. But that was the beginning, what they wanted to do. That is why we were concerned and that is why we did not think that we would be able to get more revenues from corporate income tax.

Later on, BEPS evolved and people started talking about having a minimum corporate tax of 15% applied across all countries. Yes, but that did not mean that competition would disappear and everyone would just operate with a 15% corporate income tax. As I have explained, even with a consensus earlier struck on a minimum corporate income tax, countries were already carving out manoeuvring space for themselves to introduce all sorts of different kinds of incentives in order to attract investments. This was the reality that we were faced with.

So, even if the domestic top-up tax yields more revenue, we are very likely to have to also spend more to maintain our competitiveness.

Thirdly, the situation today has gotten a lot fuzzier because the US has pulled out of the OECD consensus and we have no clue at all how this will emerge in the coming years. And that is why it is so difficult to say, let us give an updated projection. We do not even know what the global tax arrangement will be like in the next one, two years, given the unpredictabilities we face now. Even the Europeans are worried. The consensus has frayed. What is going to happen? What is the next move going to be? Will it be more tit-for-tat-type taxes or will there be some global cooperation? It is really unclear.

And that is why we are unable to provide any immediate updates to our corporate income tax revenues from BEPS in the near term. But certainly, as the situation gets clearer, we remain committed to providing further updates on our medium-term fiscal position, including revenues from BEPS, if any, pluses or minuses, and we will continue to publish these figures.

But in the meantime, we are fortunate that even before the domestic top-up tax, the minimum corporate income tax, has kicked in, companies have started to do more substantial activities out of Singapore and our corporate income tax collections have gone up. That is a big plus for us. But as I have explained, it is too early to tell whether this is a lasting trend. But whatever it is, it is good that we are in such a position and we will make good use of the revenues to ensure that Singaporeans benefit, to ensure that we continue to advance our goals.

Next, on the occasional papers, I mentioned that we will be committed to publishing and updating them. There are no significant updates that we have been able to make in recent times given the very complex global situation. That is why we have not given an update to the occasional paper recently. But as I have said just now, when we get better clarity around our revenue position, in particular, we will certainly be committed to providing an update to the occasional paper.

Mr Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Sir, I have two clarifications for the Prime Minister. Firstly, on the SINGA capitalisation of $4.2 billion and $4.6 billion for the two financial years. The Prime Minister mentioned this is because of the bond that we issued to fund the infrastructure and then it comes in as part of the fiscal position.

So, I would like to ask the Prime Minister whether we should remind Singaporeans that this is actually a sum of money that we need to pay over a period of time through depreciation of the assets? Because it comes in as cash now and if we were to use it for our current expenditure, we have to remind ourselves that this is an amount of money that needs to be paid over a period of time. And therefore, we should not see it as surplus, as in, like revenue surpluses. So, that is my first clarification.

Second clarification is, last year, the Prime Minister, the then-Deputy Prime Minister mentioned about the $5 billion that is expected to be spent on the Forward SG policy moves as a first instalment. Then he also mentioned that close to $40 billion is expected to be spent on the Forward SG policy moves by the end of this decade. So, I would like to ask the Prime Minister, for this financial year, what is the estimated amount that is attributable to the second instalment of the Forward SG policy moves, whether he anticipates this subsequent instalment to be an even higher amount and whether the $40 billion that was mentioned earlier, is it still the amount that we envisage will be spent?

Mr Lawrence Wong: Sir, I agree with Mr Liang's first point. Because as I said, there is no free lunch. The capitalisation of these large projects is the right thing to do for inter-generational equity. It is not just to generate near-term fiscal space for us, so we will do more to explain to Singaporeans the treatment of SINGA and why we should not assume that because we are doing this capitalisation accounting treatment, that there is somehow some additional freebie in the near term that allows us to spend more. That is not the motivation from SINGA.

On Forward SG expenditures, in last year's Budget, we said it was $5 billion. This year, we will probably spend about $5 billion as well. But overall, if you look at the social initiatives that we are putting together. And a lot of the Forward SG agenda will be on the social spending and the chart I showed just now clearly showed that social spending is rising. So, we fully expect more to be spent on this front – on Forward SG and on social development. It probably will go beyond $40 billion.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): Sir, I appreciate the Prime Minister's explanation that the Progressive Wage Model (PWM) is one approach and indeed, perhaps the Government's preferred one for uplifting wages at the lower-end of the income distribution. But as I said in my speech, where I think the squeeze is felt most acutely is by those in the middle, those who are sandwiched by commitments to their parents and children, but who do not happen to work in one of the eight sectors that the PWM currently covers.

So, the first question I have is what is what is being done to help these workers realise wage increments that are commensurate, both with their contributions to greater productivity and the high cost of living?

Related to this, the Prime Minister emphasise that skills upgrading and re-training is key to elevating nominal wages and I do not disagree with this in principle. But as I explained in my speech, real wage gains over the past five years have not kept up with increases in productivity and the cost of living. So, the question that begs to be asked is, how can the Government assure Singaporeans who do choose to re-train and reskill and upskill, that those efforts will ultimately be rewarded by actual wage increments when the unfettered labour market does not seem to already be doing so?

Mr Lawrence Wong: Sir, we are focused not just on the lower-wage workers. We are pushing their wages through progressive wages, Workfare and many other initiatives. But we are also focused on the middle-income and on the broad middle to ensure that Singaporeans do enjoy continued real wage increases.

Generally speaking, we have been able to achieve positive outcomes. I know Assoc Prof Jamus Lim talked about the last five years of data where wages seem to lag behind productivity growth. But you can slice data over any shorter-term period and look at the lags or when sometimes wages will be lagging behind, sometimes wages will be ahead of productivity.

Certainly, in the last five years, wages have not caught up with productivity. But if you look at the longer-term time frame, we want to ensure wages do match productivity increases and it has been so. It has been so. And we will continue to ensure this remains. The best way to do that is to ensure a strong, vibrant economy. But not just leaving it to market forces alone, but to support workers with all the investments we are putting into SkillsFuture, which is not only benefiting the lower-wage workers, but supporting the broad middle of our workforce. And that is why we are redoubling efforts, investing more in every worker through a whole range of incentives and schemes and programmes through working with the National Trades Union Congress (NTUC), our brothers and sisters in the Labour Movement through the Company Training Committee (CTC) grants, working with enterprises who are prepared to do work workforce transformation. We are putting in place all the building blocks that are necessary to strengthen our SkillsFuture system and to make sure that Singaporeans continue to enjoy sustained real income increases.

Mr Speaker: Ms Foo Mee Har.

Ms Foo Mee Har (West Coast): Thank you, Mr Speaker, I have two questions for the Prime Minister. The first question is, with the generous support measures, including the SG60 vouchers, I would like to ask the Prime Minister what impact these measures will have inflation on inflation? The second question is, I think what the Prime Minister spoke about the uncertain environment globally that is actually unfolding; actually, that is really real. I would like to ask whether the Prime Minister can, indeed, elaborate more, what would be some of the worst-case scenarios that the Government is preparing for and how we, as a nation, should prepare ourselves?

Mr Lawrence Wong: Sir, on inflation, MAS certainly will do its assessments in due course. The Government will also do the same. But we think it is manageable. As far as the Cost-of-Living Support Package is concerned, this is not new. We have been providing it in previous Budgets. In fact, if you look at the overall amount provided for cost-of-living support in this Budget, it is smaller than in previous years' Budgets – overall amount, not just vouchers alone. If you look at the overall amount, it is smaller. And one reason why it is smaller, is precisely because inflation has eased and we think it is correct to taper the overall size of the Cost-of-Living Support Package.

But this year, because of SG60, we have a special package to share the fruits of a nation's progress with all Singaporeans. It is once-off. It is SG60. It is not going to be year after year. And within the parameters and the amounts that we are giving out through SG60, overall, there should be a manageable impact on inflation.

The second question on worst case scenarios, I mean, there is a whole range of them that we will have to prepare for. As I have said, it can go from something as extreme as conflict in Asia, which we have not seen for the most part in decades, but we have to be prepared now. The risk is not insignificant; it has certainly gone up. You have hotspots in our part of the world where accidents, miscalculations can happen and it will certainly have a knock-on impact on sentiment, confidence and the whole economy.

But you could also have other kinds of emergencies and threats, cybersecurity, pandemics, supply chain disruptions, a whole range of things can happen, and even if they do not happen nearby, within Asia itself, something that happens far away can have knock-on impacts here in Singapore.

So, we just have to be prepared. Brace ourselves for a bumpier ride ahead. But at the same time, draw confidence from the fact that our fiscal strength allows us to respond swiftly to any emergency.

Mr Speaker: Ms Hazel Poa.

Ms Hazel Poa (Non-Constituency Member): First of all, let me clarify that PSP is not displeased with the vouchers, because we believe that they will help Singaporeans in the short term, but not over the long term. The Prime Minister has said that he has concrete plans for the future. So, can I ask if his plans include plans to lower our high cost of living with measures that have longer-term effects rather than vouchers?

Secondly, the Prime Minister, in response to questions about CPF investments, asked what happens if a person happens to retire at the point of market downturn? Does the Prime Minister not agree that this problem can be managed if we have differentiated rules based on age, for example, giving younger CPF members greater leeway in investing in higher risk, higher return instruments, and for older workers to limit their exposure to such investments?

Mr Lawrence Wong: Sir, I will take the second question first. Indeed, there are Lifecycle Funds, Target Date Funds, which provide that kind of glide path that Ms Poa talked about. If you are young, you take higher risk, and then as you get older it, the portfolio becomes a sort of a safer portfolio in order to minimise the risk. Actually, these funds are already available in the market. They tend not to be very popular with Singaporeans for some reason, but they are available and we hope that we can make them more accessible to Singaporeans.

But the question that I said just now goes back to not just having choices and options, but whether, on a more structured basis, is there some possibility of looking at redesigning or updating the CPF system? And even with the kind of glide path, Target Date Fund that we talked about, it is not easy to achieve a better outcome across the board on a consistent basis than the risk-free Special Account rate of 4% and up to 6% with extra interest. It is actually very hard. But anyway, as I have highlighted the considerations. We are studying the matter and we will look further into it.

On the earlier question on whether we are doing more in terms of structural programmes and schemes to help Singaporeans cope with the cost of living, yes, of course, we are. As I have mentioned just now, and all that I have said in the round-up speech, the bulk of our Government spending is in this, it is directed towards these structural longer-term programmes: in education, SkillsFuture, job training, upgrading Singaporeans, in ensuring that our economy is strong, so that Singaporeans earn higher incomes on a consistent basis, but at the same time, providing a social support system to provide greater assurances on the basics in life and to make sure that if anyone suffers a setback, we are there to catch them and help them recover stronger. Those are the things we are doing. Let us try not to put a wedge between the Government and the people.

There is no point in saying the Government is rich and has strong fiscal position and then painting this as being detrimental to the well-being of Singaporeans. A strong fiscal position for Singapore is not at the expense of Singaporeans. In fact, it benefits Singaporeans in so many ways because we are able to invest more in Singaporeans. We are able to provide them with more support. We are able to help them with so many different areas of life and ensure that everyone benefits from a higher standard of living.

It is easy to talk about spending more, sailing closer to the wind. You know, we have so much money, let us just be a bit more cavalier and relaxed about our fiscal rules; do not have to be so tight. But at the end of the day, who bears the price? Who pays the price?

If something were to go wrong, if a crisis were to hit, if we end up physically weaker as a country, who pays the price? It is not politicians. It is Singaporeans. It is our children and our grandchildren. Let us not gamble with Singaporeans' lives and future. [Applause.]

Mr Speaker: Ms Usha Chandradas.

Ms Usha Chandradas: I thank the Prime Minister for his assurance that he will consider my suggestions for the visual arts sector. I also raised a number of questions about how the Culture Pass is going to be administered. Could I ask if the Prime Minister has a response to those questions?

Mr Lawrence Wong: Sir, I think those specific questions on the Culture Pass are best answered by the Minister in charge of MCCY at the COS debate, and I am sure he will be happy to give a comprehensive response.

Mr Speaker: Mr Louis Chua.

Mr Chua Kheng Wee Louis (Sengkang): Speaker, just one clarification, but a bit of a long one. I mentioned the point about the top-ups to endowment and trust funds, about how just in these two years, we can set aside close to about $42 billion. I mentioned, not in the context of earnings management of companies, but how if you look at it in the context of transparency and the matching principle, in the sense that if you look at these top-ups to the funds, they are to meet our spending needs in the future, similar to how if you look at our SINGA expenditure, our development expenditures, these are also spendings that are meant for longer-term needs and purposes.

But in the sense that if you have the spending made from the endowment and trust funds, we get a lot less granularity versus the regular expenditures. I mean, those who go to the Budget website can see the whole full Heads of Expenditure under the different Ministries, under different spending categories. So, in that context, under the whole premise of greater transparency and the matching of the expenses against the periods in which they are incurred. Would the Prime Minister be able to share the rationale behind this?

Mr Lawrence Wong: Mr Speaker, the funds that we have set up are for specific purposes. They are well-established. We highlight what they are and if there is a need for more information on the spending and expenditure associated with each of these funds, we will take a look at how we can put out more information.

Mr Speaker: Are there any more clarifications for the Prime Minister? Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, Sir, thank you. At your instruction that I should ask all the questions in one go, and I have a lot of questions, so I have actually waited until the last one. If any other Members want to raise questions, I would encourage them to raise them before me.

Okay, I have questions in three categories: one, on the Budget structure, I have two questions; two, on the NIRC, I have three questions; and on public housing, I have four questions.

On the Budget structure, first, I want to highlight or emphasise that PSP is all for fiscal prudence. However, I think the Prime Minister and Finance Minister and the Government have always been taking the attitude that for the surpluses, the "more the merrier". So, what I want to say is that surpluses are not always the "more the merrier". There must be a balance.

My first question is, the Leader of Opposition has pointed out that this term of Government will have a Budget surplus of $14 billion. So, I would like to ask the Prime Minister: is the Government aiming to run a balanced Budget over its term, or as much surpluses as possible, because we are of the view that surpluses coming from over taxation and overcharging are the drivers of structural inflation in Singapore?

My second question is, does the Government believe that there is still a need to put back into the reserves for the $40 billion we spent on COVID-19? Because we all know from the statistics, from the data provided by MAS, that we have already accumulated more than $300 billion more in official foreign reserves over the last few years. And some of this has been transferred to GIC already. So, these are the two questions for the Budget structure.

Mr Speaker: You can move on to your next three questions.

Mr Leong Mun Wai: Okay. So, my next three questions are on the NIRC. The Government has repeatedly highlighted that NIRC contributes 20% of the Budget resources, implying that this money was spent on the current generation of Singaporeans. To determine whether this is actually the case, I would like to ask the following questions.

One, can the Prime Minister confirm that, indeed, on average, Budget resources equivalent to about 80% of the NIRC every year are being transferred to endowment and trust funds, which will not all be spent in the allocated year, but reported as an expenditure in that year?

Two, what are the total assets under the funds as of today? I think it is about $70 billion or $80 billion, but I would like the Prime Minister to confirm. In other words, these are the NIRCs that have been allocated to the Budgets over the last few years, not spent and still remaining in the endowment and trust funds.

Third question, we already have the SINGA framework which can be used to fund important infrastructure like Changi Airport and coastal protection at a much lower cost to the people than raising revenue from GST hike or COEs. Can the Government re-examine the need to divert so much resources from the NIRC to endowment and trust funds, so that we can redirect these Budget resources to fund social spending increases or to relook at the need for the hike in GST and property tax increases?

My last category, Speaker, is on public housing and I have four questions. PSP has presented the Affordable Homes Scheme and Millennial Apartment Scheme as viable solutions to our current housing problems. The Government has been criticising our ideas without much basis because it does not seem to have done research on them, and at the same time, the Government is not offering enough explanation as to how it is going to solve the ongoing problems that we are already experiencing today.

First question, what is the latest update on the solution for the lease decay problem?

Second question, can I ask the Prime Minister whether the Government has a better solution than the Affordable Homes Scheme to the lease decay problem, which threatens Singaporeans' retirement security because their retirement funds are tied to the value of their flats which may soon decay for those living in older flats?

Three, how is the Government going to ensure that the BTO price will stay below $1 million, as the land cost continues to increase in line with property price increases?

Four, what safeguards does the Government have in place if the resale market price collapses in the near future because of the increase in supply from the ramping up of the BTO supply in recent years?

And, sorry, Speaker, since you said I should ask all my questions, there is one more question I want to ask. This is actually the 10th question.

I would also like to chip in on the point raised by the Leader of the Opposition on turbocharging inflation due to the GST increase. I think the information provided by the Prime Minister is not enough to describe the situation because: one, the ground inflation is actually much more than what is reflected in the statistic. I have lived in Singapore for more than 60 years and in my personal experience, even including the experience in the 1970s when I accompanied by mother to go to the community centre to buy cheap rice from NTUC, the recent few years, really I can feel it, the prices are just leapfrogging, especially for cooked food. So, the ground inflation is different. I think the word "turbocharging" is not too far from the truth.

Secondly, the statistical inflation data that the Prime Minister has quoted – around 6% in 2022 but when GST was increased, the reported inflation actually came down to 4% in 2023 and around 3% in 2024. But he is an economist, I am an economist. We know that there is such a thing as anticipatory behaviour. A lot of the merchants were already raising prices in 2022. So, the 6% is a more of, a better reflection that people are anticipating that GST is coming.

Anyway, so, combining all three years, we have more than double-digit increases in inflation. That tells the story better.

Sorry for the long clarification. Thank you.

Mr Speaker: It was nine minutes for you.

2.04 pm

Mr Lawrence Wong: Sir, I will attempt to reply to all the points that have been raised.

First, on the Budget structure, I think Mr Leong has mischaracterised the Government's position. It is not the bigger the surplus, the merrier. We do not just look at it from that point of view.

We adopt a responsible and prudent fiscal approach in budgeting. We are prepared to spend more if they are good ideas.

As I said, the issue is not about spending more. The issue is about getting the policies right and making the right decisions to support Singaporeans. And if this entails more spending, we will. As you have seen in our social development spending, it is rising. And I fully expect it to rise further.

The issue at hand is really about the approach towards thinking about budgeting. Our approach is one where we recognise that there are fiscal rules. And if there are fiscal rules, let us respect the rules. Let us not just keep thinking about changing the rules the first time we run into trouble and need more money. Let us stay disciplined, operate within these fiscal rules and, if we need more money, we raise the revenues to support and cover the additional spending needs. That is the fundamental approach that we adopt.

I think PSP may have a different approach. And they are fine to have a different approach. But as I say, have a care about what you want and how you want to manage our country's finances. You may think it is not a big deal, just spend more, disregard the rules. But step by step, these are sure ways to weaken Singapore fiscally. And when that happens, it is Singaporeans who suffer.

He talked about whether we will put back into reserves. I thought I made that clear in my speech: we will not be putting back into the reserves. We will not be able to because we do not expect structural surpluses. We expect to run balanced Budgets over the medium term. Okay, that answers the first part on the Budget structure.

Next on NIRC. All the NIRC revenue goes into the Consolidated Fund and then we spend from the Consolidated Fund. Mr Leong's objection appears to be some of the spending goes into these funds, the endowment and trust funds, and that these are not real spending. But that is not the case, as I have tried to explain just now. Most of them are drawdown funds. In some instances, like the Changi Airport Fund, we are going to expend, spend the money quite soon when we build Terminal 5. In some cases a bit longer, but certainly within this generation, we will be spending a lot of that money. So, they will be spent. And there are good reasons why we set them aside now in order to spend and make sure that we have the resources we need for these near-term and longer-term expenditures, which will be spent.

Mr Leong says better to fund these projects through SINGA. They are, I think he said, lower cost. Actually, SINGA is not lower cost at all. SINGA costs money. It is just that SINGA is a different way of financing. For very large, long asset life projects, we think from an inter-generational equity point of view, it is better to spread it out. And so we have SINGA. So, we are going to do both. We are going to have real spending needs which will be covered through these funds and we will have projects that are funded by SINGA.

That is on the NIRC. And overall, if you look at the revenue moves that we have made – GST, as well as the other revenue changes, tax changes we made in this term of Government – as I have explained, we are now in a good fiscal position. But it gives us the ability to move quickly and to do things for Singaporeans.

Having this strong fiscal position does not come at the expense of Singaporeans. If you look at the tax burden, if you look at what we impose as taxes relative to many other advanced economies, our tax burden is in fact quite low. And that is objective data; you just have to compare.

And we intend to keep our overall tax burden low. But we will maximise effectiveness from every amount that we spend in order to make sure we maximise the benefits and outcomes for Singaporeans.

Thirdly, on public housing and lease decay, what is our solution? The solution is the Voluntary Early Redevelopment Scheme (VERS). We have explained the broad outlines of VERS already and we will provide more details in due course.

On BTO flats, how do we ensure affordability? We do so by making sure that the pricing of BTO flats will be done in such a way that Singaporeans will always be able to afford them. So, the pricing will have to look at Singaporeans' incomes. And as I had illustrated with a concrete example, the BTO price for that particular example has been updated in line with median incomes. So, that will be the way we ensure that BTO and HDB will continue to be affordable.

Are we worried that we are over building? Here, I am a little puzzled. I thought Mr Leong and PSP are worried about not enough flats. And we had this debate with the WP a few years ago about are we over building and therefore we are going to have a property market crash.

So, are we concerned about high prices? Are we concerned about the opposite? If we are concerned about high prices, then we need to build more, particularly because we have to catch up with the disruption in supply that happened during the COVID years. And that is what we are doing. We are catching up with supply. And it is because of that disruption in supply that has created that imbalance in the market. That is exactly why we have to build more now to restore that balance, and as I said just now, we can be assured that we will be able to restore balance because HDB flats are only purchased by Singaporeans. And we will be able to build enough HDB flats for every Singaporean household.

Finally, on inflation, that is the last point that Mr Leong mentioned and he says the statistics are misleading or does not reflect the reality on the ground. But statistics are what they are. Unless Mr Leong is accusing the Department of Statistics of not collecting CPI data properly. It may happen in other countries. It certainly does not happen in Singapore. We have a proper system of collecting CPI, updating the basket, the inflation basket and the data is what it is. I stand by the data. It has come down. There is no basis to say that GST increase has "turbocharged" inflation. And even MAS itself, in its assessment, would have reflected that in its monetary policy statements.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Sir, I appreciate your indulgence. Just a quick clarification. The Prime Minister mentioned earlier on that had there not been a GST increase, we would have run a deficit over the past two years. I recall, during our debate on the GST that the fiscal hole that would have been met by the GST increase would have been something in the order of $3.7 billion. I understand that last year, we ran a very small surplus, but this year we appear to have run a significant surplus. So, were GST receipts substantially larger than we expected this year?

Mr Lawrence Wong: Sir, I mentioned that we would have been in deficit in FY2024 and also FY2025 because of both factors: if we did not do GST; and the unexpected upside in corporate income tax. So, it is both factors, not just GST alone. As I said in my Budget Statement, if we were to plan on previous assumptions for corporate income tax, it would be about 3%-plus of GDP. It has gone up to 4%-plus of GDP now. And when we plan for Budget 2025, we have assumed the higher base.

But without that unexpected increase on corporate income tax, without the GST rate increase, certainly FY2025, based on whatever we are proposing to spend in the Budget, would end up in a deficit.

Mr Speaker: Mr Neil Parekh.

Mr Neil Parekh Nimil Rajnikant (Nominated Member): Thank you, Mr Speaker. I find it strange that we have spent all this time trying to defend a surplus, while most developed economies in the world are begging for a surplus. [Applause.]

So, I had to stand up and say this. In my view, we have benefited a lot through the reserves that we have had, not just the NIRC, but the fact that we have been able to maintain such high quality credit ratings, which make people want to lend to us, which make people want to invest in our country and which make global companies want to come here and pay corporate income tax to us. So, I think we should be thankful of where we are. We should be thankful to our preceding generations for putting us where we are and we should make sure that we keep up the good work that has been done by our preceding generations for us and keep on adding to that.

I would also like to add a question for the Prime Minister. Corporate income taxes are quite fragile. They are here one year, they are gone the next year, largely because of profitability, largely because of the fluidity of capital today. What strategies do we have in place to keep Singapore attractive as we deal with a very complex world where many people are competing for investment dollars and consequently, new projects, which can be a source of significant corporate income tax on the revenue side?

On the employment side, we are investing a lot in SkillsFuture. But many of the skills that will be needed in a few years, especially because through the advent and the expansion of AI, we do not know as yet. So, how do we plan for the unknown? If I may say, it is very hard to do. But what plans do we have in place other than what we are good at it already, which is being nimble?

Mr Lawrence Wong: Sir, I thank Mr Parekh for his comments, especially the point about how we should be appreciative of everything that our forefathers have built and what we have inherited here in Singapore.

On the point about how we make our investments sticky, which is really what Mr Parekh talked about, how do we anchor these investments, recognising that they have many options and the MNEs do have leverage.

The simple answer and the only answer is that we have to up our game. We cannot just compete on costs. We have to improve our capabilities, offer a value proposition to them. And that is why we are investing in R&D, we are investing in capabilities, we are investing in Singaporean workers, so that the MNEs come here and they see in Singapore an ecosystem which they can plug into and which adds value to their operations. They will say, "Look, this is useful. This adds value to me and I want to do more out of Singapore." That is something we will continue to do.

Having good local companies help too, something that Mr Parekh talked about. Because when they have good local companies based here, they supply to the MNEs, they form partnerships with the MNEs, it strengthens the ecosystem. It makes the investments stickier. So, that is what we are committed to doing. That is what all the initiatives in the Budget seek to do.

On SkillsFuture and training for future skills, it is inherently a very difficult topic. No one can tell what the new requirements of the future are. But I think there are some basics which we can already train for, there are some fundamentals we can train for, and we are doing that.

And in designing many of our programmes and courses, the course providers, our IHLs, the partners we work with, do not just design these courses in a vacuum. They often engage industry partners and understand what the latest business trends are, what are the latest requirements, and then customise skills programmes accordingly.

So, that is a fundamental approach we take which hopefully will enable us to be quick, nimble and to be able to adjust to new and shifting trends.

Mr Speaker: Ms Hazel Poa.

Ms Hazel Poa: I wish to make another pitch to the Prime Minister to consider measures to lower cost of living. Does he not agree that if we lower cost of living, it will benefit all Singaporeans, whereas if we take the approach of investing in education and training, to raise wages, then, not everybody can benefit from that, especially older Singaporeans and retirees?

Second clarification, since the Prime Minister mentioned that our CPI data is collected correctly, can I ask how our CPI calculations take into account shrinkflation – that means the price may remain the same, but the portion is smaller?

Mr Lawrence Wong: Sir, it is not as though we are doing nothing to manage cost of living pressures. I mean, if we have talk about some of the big items of cost of living, what are they? Housing is one of them with, which we have discussed. And I have described exactly how we are helping to manage cost of living pressures precisely by pricing the BTO flats different from what is in the resale market, with growing subsidies, precisely to keep it affordable for Singaporeans.

Our approach is, let us get the pricing right. Because if you do not get the pricing right, basically, you are giving a subsidy. Somebody has got to pay. We get the pricing right, then, we will subsidise where there is a need to, and we have, on housing, for example. We can debate how much subsidy is correct, but we are, and we are doing more.

And so, all of the measures that we are doing, it is not just about equipping, training, empowering Singaporeans with skills to get better incomes. It is also to strengthen our safety nets. It is also to strengthen our safety nets. It is to make sure Singaporeans are able to afford the basics, be it healthcare, retirement, housing or education, and it is to make sure that we are able to help those who suffer setbacks and enable them to recover and bounce back stronger.

On CPI, the Department of Statistics has its methodology. Shrinkflation is a different matter. I think there are different ways in which we can address that. Mr Melvin Yong mentioned some of that, through Price Kaki and also through maybe getting retailers to put out unit prices. These are some measures we can think about. But it is a constant battle to make sure that we ensure Singaporeans have the ability to cope with cost pressures which we know exist.

So, we recognise the concerns are real. Setting aside the headline statistics, setting aside the fact that CPI inflation is easing, we do recognise that there are real concerns because Singaporeans have to adjust to new price realities. And that is why we are doing more to help them through cost of living support. That is why we are doing more to make sure that Singaporeans will have enough in this Budget to address their concerns on cost of living.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Mr Speaker, Sir, first of all, I must commend Prime Minister for impressively answering my 10 questions, although I have said that giving out 10 questions in one shot is unfair for the person who is replying to me. I have a few more clarifications arising from what he has replied just now.

First of all, the difference between PSP and PAP is that PSP prefers to put more money into the pocket of Singaporeans. Government can reduce some expenditures but also reduce the taxes. So, my first question is, can the Prime Minister answer my question as to what is the total amount of assets they are now being kept under the endowment and trust funds?

Next question on public housing. Can VERS be a solution anymore, because the lease decay itself has already set in, as demonstrated in the Ang Mo Kio Selective En Bloc Redevelopment Scheme (SERS) case. The economics of SERS has totally changed as a result of the lease decay. And so, we would have expected that the same economics will be applied to VERS. Given the economics have changed, will VERS continue to be a viable solution?

Anyway, the Government owes Singaporeans a clear answer. Since my housing Motion, when the Government promised to update us on VERS, it is more than two years already. And the lease decay problem has surfaced for more than seven years. Till today, there is no clear answer about lease decay.

The next question, is it possible that without introducing the Prime and the Plus schemes, the BTO price would have already gone above $1 million? The Government is using the Prime and the Plus schemes to slow down the increase to $1 million, but on the other hand, increasing the HDB deficit, which, in turn increases the burden on the Budget. That is something that is not sustainable.

Last question, on whether the ramp-up of this BTO supply now will eventually lead to an adjustment of the resale market. Actually, PSP's stance has always been, we are not in favour of just ramping up the supply. We have said in our Housing Motion that we should also increase the supply of quality rental flats so that this does not become a supply in the hands of owners but is a rental flat supply. Because if we increase the number of owners owning flats, then, there will be a point where all the Singaporeans have owned flats already, and the next thing will be a downward adjustment in our HDB prices.

Okay, my last question is, will we reach a point when Singaporeans are faced with no choice but to increase our population faster to 10 million, in order to arrest the decline in our HDB price?

Mr Lawrence Wong: Sir, I would disagree with Mr Leong's characterisation of the PAP Government's policy as refraining or denying Singaporeans from funds, or keeping the funds and not leaving it in the pockets of Singaporeans, as he put it.

That is not the case at all. Whatever we collect, we put it back to benefit Singapore and Singaporeans directly. That is what the Budget is about. It is not about the Government holding back something. It is about making sure that all that we collect goes back to Singaporeans in different ways. Some, of course, are direct transfers, but not all of it. After all, the PSP itself says that you should not do so much because this will create entitlement.

So, yes, some part of it goes into direct transfers, short-term measures. But a lot of it goes into a whole range of different programmes which benefit Singaporeans. We are putting back the funds to benefit all Singaporeans. That is our approach.

On the size of the endowment trust funds, I do not have the figures off-hand. We can deal with that separately in the COS or in a separate Parliamentary Question.

On VERS, yes, we know that it is something outstanding and we will provide details. Because the first flat for VERS is not due anytime soon. But eventually, the time will come when we have to do VERS and as we approach that date, we will certainly provide more details.

The issue around Plus and Prime flats, let us be very clear. Why did we have to do Plus and Prime flats? Because for Standard flats, we know that the resale market moves up and down in the near term, but we will price the BTO flats not based on resale market alone, but we look at incomes and price for affordability. So, there is a subsidy there.

But if we apply that same subsidy to localise popular areas, the flats will be more unaffordable, and can we make the subsidy more? Well, we can, but then, you have a problem where there will be a lottery effect. People will immediately know the subsidy is greater in these popular areas, "Let us go for that. And when I win the BTO, I will strike lottery". And that is not good. That is not equitable.

So, the right thing to do is to have a Plus and Prime framework where we provide more subsidies in order to bring down the headline price, make it affordable but, at the same time, when the person sells that flat, the additional subsidies is returned to HDB. I think that is a fair and equitable way and that is why we have the Plus and Prime framework.

On rental flats, do we want to have home ownerships for all Singaporeans? That has always been a policy. That is what Singaporeans want and I think that gives every Singaporean a stake in our nation's success.

So, we will continue with home ownership. It has been the foundation of Singapore society, the foundation of Singapore's success. I think it continues to be a very important key pillar for nation building. We want to ensure a nation of home owners and we will continue to finetune and improve HDB policies to make sure that every Singaporean who wants to, can own their own homes.

Mr Speaker: Mr Leong, one final one. Just get straight to your clarification.

Mr Leong Mun Wai: Thank you, Mr Speaker.

Mr Speaker: I hope it is not an old clarification, a repeated clarification.

Mr Leong Mun Wai: I just want to clarify one last point with the Prime Minister. He did not really quite answer my question. Without the Prime and Plus scheme, do you agree that our BTO price, in certain areas, would have gone above the $1 million?

Mr Lawrence Wong: That is hypothetical. I would not know. But let us put it this way. When my parents bought their Marine Parade flat in the 1970s, it was $30,000 or $30,000 plus. At that time, will they ever, ever imagine that they could sell the flat for $500,000 in the 1990s? No, not at all.

But why have flats gone up? It is because of incomes. It is because Singapore has succeeded. It is because our standards of living have gone up. That progress, that success has benefited every homeowner in Singapore. That is what homeownership provides. A concrete stake in our nation's progress and not just that, but eventually, a home and a nest egg which you can tap on for retirement.

It is a sound and a key pillar of our social compact, which we will continue to improve, enhance and build upon. [Applause.]

Mr Speaker: Ms Hazel Poa.

Ms Hazel Poa: One last clarification. When will the Government be able to let us know the details of VERS?

2.33 pm

Mr Lawrence Wong: I do not have the answer now, but you can ask the Minister for National Development at the COS. I am sure he will give you a response.

Question put, and agreed to.

Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2025 to 31 March 2026."