Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [18 February 2022] [1st Allotted Day]

"That Parliament approves the financial policy of the Government for the financial year 1 April 2022 to 31 March 2023." ‒ [Minister for Finance].

Question again proposed.

Mr Speaker: Leader of the Opposition.

12.50 pm

Mr Pritam Singh (Aljunied): Mr Speaker, what caught my attention about the Budget speech was the Minister for Finance's characterisation of the Budget as a first step to renew and strengthen Singapore's social compact towards a fairer, more sustainable and more inclusive society. The Workers' Party agrees with this important direction in pathfinding the way forward for our little red dot. Workers' Party Chair and Member of Parliament for Aljunied GRC, Ms Sylvia Lim, will speak further on this, with inputs on inclusivity and innovation in her Budget debate speech tomorrow.

However, there are aspects of the Budget that are of concern to us. We disagree with the decision to raise the Goods and Services Tax, especially at this time, and the Workers' Party Members of Parliament who speak after me will put forward alternative ideas for revenue generation.

I will outline the Workers' Party's position on the GST and briefly introduce the areas that Workers' Party Members of Parliament will speak on. Then, I will share my views on the main prongs of the Budget.

First, the GST increase. While the GST hike was anticipated, it comes at a difficult time for our people. Inflation is on the upswing and prices are high. Supply chain disruptions are having an outsized impact on people's purses. There is real concern on the ground that the announcement to raise the GST will lead to price rises across the board. In fact, some price rises have already occurred, with speculation that these were in anticipation of a GST hike.

The Workers' Party's position is that the Government need not raise the GST. There are other options for raising revenue. A Straits Times column last month discussed the urgency of rebuilding public finances in the face of Budget deficits and the drawdown of reserves. The GST was held up as being one of the largest and most stable revenue sources, difficult to replace with any other kind of tax. The impression created by the article and similar arguments was that raising the GST is the only viable option for financing offset packages for the needy and healthcare, and to balance the Budget. We disagree that there are no other options.

The Workers' Party has previously raised several proposals in this House, both on taxes, as well as adjustments to the reserves framework. These options do not constitute a raiding of the reserves, as the PAP enthusiastically and inaccurately portrays. We have supported the call for fiscal prudence as a principle of governance. But we also believe that the judicious use of progressive tax measures can achieve wider societal goals in Singapore.

Within this term of Parliament, we have proposed a wealth tax and raised the prospect of more progressive corporate tax policies. We have also supported the carbon tax.

The Government, for its part, has not rejected further wealth taxes outright but spoke of the difficulties of implementing some of these tax measures. These will have to be proactively explored, particularly in view of the limited impact of some measures announced in the Budget, which had been characterised as a tax on wealth.

For example, on the additional registration fee, or ARF tier, for luxury cars announced by the Minister for Finance, a senior manager of a large car dealership which includes luxury vehicles in its stable, was asked if the higher ARF would curb spending on high-end cars. He was quoted in The Business Times as saying: "It is possible, but I think there's still enough wealth going around".

As the Government continues to explore wealth taxes, the Workers' Party's view is that a distinction needs to be made between different types of wealth taxes. We should recognise the legitimate accumulation of wealth through effort and tangible business activity, especially that which creates jobs for Singaporeans. Even as there remains scope for wealth taxes, the values of entrepreneurship and equitable reward for hard work can, nonetheless, be recognised and even promoted through tax rebates or relief for such individuals. However, wealth accumulated through capital appreciation should be dealt with differently and taxed accordingly in the name of a fairer and more inclusive society.

The Workers' Party has also previously asked if we can tweak the reserves framework and the way reserves contribute to our Budget. We have proposed including a portion of land sales into recurrent revenue and also an adjustment of the Net Investment Returns Contribution (NIRC) allowed for recurrent spending to be raised to 60% from the current 50%. The Government has disagreed with these reasonable suggestions.

In 2001, then-Prime Minister Goh referred to the reserves as a golden goose. The Workers' Party remains of the mind that we can continue to grow the golden goose, but at a slower rate. The impending population bulge for our seniors portends stress lines for our healthcare needs and our welfare system. The Minister projected that, starting from current levels of healthcare spending and assuming increases at a similar rate in the next 10 years, the Government could be spending $27 billion on healthcare yearly by 2030, compared to $11.3 billion in 2019.

But, the fact is that our population is getting older and living longer. While it is responsible to ensure that wastage is minimised as far as possible, our healthcare needs will likely be on an upward trajectory.

For the very Singaporeans whose energies contributed to the reserves and who have played their part to fatten the golden goose, spending for them in their golden years and at their time of need should not even be a question. Moderating the growth of the reserves also improves intergenerational equity and accounts for the changing needs of Singapore and its people.

It must be noted that the Government has shown, over time, that they are of a similar mind. At the 2001 National Day Rally, then-Prime Minister Goh said that the reserves must be protected and fattened. However, changes to the reserves scheme have been implemented by subsequent PAP Governments. The 2008 change of the Net Investment Income to Net Investment Returns (NIR) with the immediate conclusion of up to 50% of NIR contributions from MAS and GIC and the inclusion of Temasek in the NIRC formula in 2015 were all deliberate moves. These changes have made the NIRC component the largest source of revenue for the yearly Budget from around $2 billion in 2006 to close to $22 billion for the upcoming financial year.

This number will only continue rising. This is despite the fact that the Government's adjustments have slowed the rate at which the reserves grow. Here, I ask that the Government not rule out changes to our Budget framework. Just as we should not kill the golden goose, we should also not fatten the golden goose at the expense of the people's well-being.

On the necessity of a GST hike, the Workers' Party has also made the point that the Government should lay out its revenue and expenditure projections for the rest of the decade. This is so that the necessity of a GST hike can be considered properly and with greater introspection. We note that the Government has resisted the publication of such revenue and expenditure projections, but the publication of such information is not unusual in other jurisdictions.

Just last week, on 23 February, the Hong Kong government issued its budget statement. At Appendix A, the Hong Kong budget includes a medium range forecast of its revenue and expenditure positions for each subsequent year up to fiscal year 2026 to 2027, with assumptions laid out.

Can the Minister tell us why MOF does not make such medium-term forecasting a part of our public-facing budgetary process? And, more specifically, does MOF have such projections at least up to five years in the future? And what is the hesitation in publishing these projections? Doing so would allow the public to have an in-depth insight as to the need to raise GST and the sustainability of public finances in the years to come.

The question of projections with respect to public finances must also be considered in the context of the absolute necessity of raising the GST at this point in time. For example, a Business Times article today advanced the view held by market watchers that Singapore could potentially make a net gain in terms of revenue from the global move to introduce a standardised minimum corporate tax rate.

Even so, it is of little doubt that the GST has been put to good use by the Government to finance spending. But after more than two decades, its drawbacks remain. The GST is a regressive tax that hits lower-income earners harder. And this fact has been recognised since the GST was introduced in the early 1990s. My colleague, Sengkang GRC Member of Parliament, Ms He Ting Ru, will speak more about the GST.

Like now, the concerns back in the 1990s were about the average Singaporean worker who was vulnerable to increases in the prices of necessities. Today, with offset packages targeting low- and middle-income Singaporeans, it is the middle-class that is particularly anxious. In spite of the headline-grabbing GST offset package announced at this Budget, there is an anxiety as to how much prices will rise in future over the period the offset package would cover.

In addition to the concerns about spikes for specific Consumer Price Index (CPI) items, there are also concerns about minor price hikes across the board that will hurt cumulatively, not too different from the analogy of the frog in a pot of gradually boiling water. Should the aggregate of price rises be significant, the impact of the additional offsets may not be as optimistic as highlighted in Annex F–2 of the Budget Statement for 3-room and 4-room HDB households where the enhanced Assurance Package is estimated to offset the GST hike of 11.8 and 7.9 years respectively.

As Singaporeans well know, no offset package lasts forever. The Government expects that, in time, Singaporeans will internalise the GST hike.

At this Budget debate, the Workers' Party will raise additional alternative proposals to raise revenue so as to stave off the GST hike. In particular, Sengkang GRC Members of Parliament, Louis Chua and Jamus Lim, would explore other levers for revenue generation. Apart from the reserves' framework, the alternatives proposed are not inconsistent with the principle that recurrent expenditures should be backed by recurrent revenues.

What continues to weigh heavily on Singaporeans today is the rising cost of living, including for the middle-income or "sandwiched" class.

Cost increases in electricity, gas and transport were thrust upon Singaporeans last year and over the last few months. Energy prices continue to rise. The enthusiasm with which the Government spoke of the electricity retail market in 2018 as a means to manage the cost of living has become decidedly more muted with the exit of multiple retail players. In December, the electricity tariff for households was raised by 0.6% and there was a recent revision of household refuse collection fees which took effect last month after a previous hike in 2017.

A TODAY article from late October last year quoted the Monetary Authority of Singapore (MAS) predicting that food, preschool and healthcare costs may go up this year. In view of the current economic outlook, it is safe to say that this is a foregone conclusion.

According to data released by the MAS and MTI last week, the headline CPI remains at what it was last December at 4%. CPI data from last month show that utilities and other fuels rose 11.8% compared to a year earlier and transport is up 12.7% year-on-year.

Lower-income Singaporeans, working Singaporeans and middle-class Singaporeans are all being hit very, very hard.

There is also a pattern of increasing public transport fares over the last three years, as shown in information from the Public Transport Council. While adult card fares were alternatingly increased and reduced between 2014 and 2017, they were raised by six cents in 2018, a further nine cents in 2019 and then another three to four cents in 2020. While measured in cents, these increases are by no means small to many who have to incur these costs every day – not as a luxury or as discretionary spending, but as an unavoidable expense simply to get to work and back.

About three weeks ago, ComfortDelGro Taxi announced an increase in fares by 8%. Just last Friday, all the other taxi companies announced that they would follow suit. All these and the other inevitable price hikes to come over the next five to 10 years will blunt the impact of the GST Assurance Package, to say nothing of the psychological impact of the package's reduced effectiveness against a backdrop of rising prices.

The Workers' Party's position on the GST notwithstanding, I welcome the announcement of the formation of a Committee Against Profiteering to address concerns that some businesses could use GST as a cover to raise prices. I would like to raise a few issues relating to the Committee.

First, in order for this Committee to be effective, the public should be clearly informed as to what evidence they would need to file a complaint with the Committee. Otherwise, it would be a case of the word of a person against that of a business.

Second, at a time when inflation due to the supply chain crunch is a real concern, some businesses may have good reason to raise prices, or a legitimate reason to raise prices. For example, because of the rising price of raw materials and not under the pretext of the GST hike. This may cause misunderstanding amongst the public about resorting to the Committee to investigate the price hikes. But if rising business costs are due to supply chain woes, then prices should correct in time and even fall as the supply chain crunch eases. If they do not, then it would be legitimate for the Committee to inquire why this is the case.

Third, the Committee should look into the businesses that move to raise prices before the GST hike is introduced. It should not rule out looking into complaints of such pre-emptive price rises that try to bypass the Committee's terms of reference. SMEs, hawkers and sole proprietors should be allowed to respond to the Committee if they have been falsely or unfairly accused of raising prices.

Finally, the Committee should closely track price rises at heartland shops where many Singaporeans purchase food and essentials. Minister of State Ms Low Yen Ling has written to me to nominate one Member from the Opposition benches to sit on this Committee. I have extended this invitation to our Parliamentary colleagues from the Progress Singapore Party (PSP) and Non-Constituency Member of Parliament Ms Hazel Poa has agreed to sit on the Committee.

Let me now move to topics other than the GST.

The Workers' Party is of the view that the Budget is broad-based in providing assistance to individuals and businesses to address both immediate as well as short to medium term concerns. Specifically, it provides a useful transitional support such as the Small Business Recovery Grant to businesses in eligible sectors that have been hit hard by COVID-19. One input we have is to ask the Government to actively consider appeals from businesses that fall outside the eligibility criteria on a more flexible and case-by-case basis as far as possible.

We also support CPF transition offsets to help phase in the raising of employer and employee CPF contribution rates for senior workers. This raising of rates is vitally important in supporting the retirement adequacy of senior workers.

What was not fleshed out in significant detail was the Minister's commitment that the Government intends to refine how Employment Pass (EP) applications are assessed to increase certainty and transparency for businesses. Even while it is a given that Singapore will always be open to foreign talent, we must always prioritise Singaporean talent who represent the Singapore Core. If a Singaporean can do the job or be trained to do the job, the Government should not inadvertently make it easier or more convenient to resort to hiring foreigners. I hope Minister will share more details of the Government's thinking on the new EP framework in his wrap-up speech.

The Budget also renders important support to businesses to ensure that our workers at the lower end of the salary spectrum will see meaningful salary increments.

In this regard, I hope the Minister for Finance can consider moving more decisively to ensure that Singaporean workers who take home less than $1,300 can rely on the PWM Credit Scheme to raise their wages immediately. With the PWM Credit Scheme as announced by this Budget, I would argue that this can be achieved forthwith instead of waiting for all PWM sectors to be rolled out incrementally before the low-wage situation for these workers is addressed. Let me explain.

Assuming that we want to provide immediate relief to the 32,000 full-time Singaporean workers who earn less than $1,300 with a generous $400 a month wage hike for 13 months each financial year, a back-of-the-envelope calculation shows that it would require about $167 million year to significantly uplift the well-being of these lower-income workers. This sum would constitute 8% of the $2 billion set aside under the Progressive Wage Model (PWM) Credit Scheme and only 9.2% of the $1.8 billion that the Government has committed each year over the next five years for this scheme. I hope the Government is persuaded to move quickly on this even as discussions on PWM sectors are ongoing. As they already earn very low salaries, these 32,000 workers can and should be supported with higher wages immediately.

A second intervention I would suggest for low-income workers amongst us concerns the changes to the Workfare Income Supplement.

The Finance Minister has introduced a new minimum income criterion of $500 a month. There was no such criterion in the past. The Minister has said that the policy intent of this is to encourage part-timers and casual workers to take up regular full-time work.

However, this new criterion will penalise part-timers and casual workers significantly. There are legitimate reasons why Singaporeans take up part time or casual work. Some may be caregivers who do not have the flexibility to take up the full-time work. Others may not be able to stand for eight hours a day, for example, in a food and beverage setting for various reasons, including their advanced years. For some individuals, full-time work can be gruelling; for others, retraining is easier said than done. Yet some others simply cannot find full-time work in the limited areas they are qualified for and take what part-time or casual work they can find.

According to the MOM Labour Force, Singapore 2021 data set, there were 46,600 residents who earned less than $500 a month last year. The new criterion will deny the work for Workfare Income Supplement to these workers.

I would urge the Minister for Finance to remove this criterion so that our most financially vulnerable workers can benefit from Workfare.

The Workers' Party believes that the Government can move the needle for these low-income earning Singaporeans in a decisive way. It would be consistent with the philosophy of this Budget: "Charting our way towards a fairer, more sustainable and more inclusive society" to alleviate the financial stress of our most vulnerable Singaporeans.

In his Budget speech, Aljunied GRC Member of Parliament, Mr Faisal Manap, will speak on other segments of Singaporeans who continue to be left behind because their plight has not been adequately addressed.

Next, the carbon tax. Singapore's net carbon emission goal, as part of our green transition, recognises the important shifts that are taking place across the globe. The Budget announcement of a carbon tax of $50 to $80 per tonne of emissions by 2030 is consistent with a commitment to mitigate the climate emergency. Hougang Single Member Constituency Member of Parliament, Mr Dennis Tan, will focus on Singapore's transition to the green economy in his Budget speech.

More generally, Workers' Party Members of Parliament have made several interventions and suggestions during the debate on the climate Motion in this House last month, covering subjects such as greenwashing, just transition and accelerating electric vehicles (EVs) adoption, amongst others.

I note the Finance Minister's commitment to provide U-save rebates to the cushion the impact of the carbon tax on households from 2023. Going by the Government's own calculations taken in a linear way, it would follow that a carbon tax of about $ 75 per tonne could potentially increase utility bills by $2 a month. However, unlike the new tiers for personal income tax, the upper end property taxes and ARF hikes for luxury cars announced at the Budget, the Minister did not reveal the absolute quantum of revenue the carbon tax is projected to bring in up to 2030.

The Government should reveal these figures. This is not only for the purpose of showing how the carbon tax revenue would be utilised to support decarbonisation, this information will allow meaningful debate to take place on the funding for these decarbonisation measures and whether and how cost of living pressures for the average Singaporean could be further alleviated through the carbon tax.

Before concluding, I am reminded that in Singapore, "A"s are not usually given for effort, but for outcomes. With this Budget position as a first step in renewing and strengthening Singapore's social compact, the Government should reveal how it reports on initiatives that were previously announced and whether they met their goals. The new social compact ought to require a report card that goes into far greater detail than the bi-yearly Singapore Public Sector Outcomes Review.

Let me explain using the Industry Transformation Maps, or ITMs, as an example. A transition is taking place from the original ITM to ITM 2.0, which is now dubbed the ITM 2025. I wish to ask if there is it is a report card of what has been achieved by the initial ITM, especially for deliverables where Singaporean workers are supposed to benefit.

In previous exchanges in this House, notably in 2020, we received assurances that Singaporeans are benefiting and are prioritised in such efforts to generate quality jobs so there was no need to worry. To date, however, we do not have a detailed data set, sector-by-sector of how many jobs were generated by ITM 1.0 since its inception in 2016, 2017, and how many of those jobs went to Singaporeans and at what wage levels?

The ITM 1.0 roadmap set out to develop new and redesigned jobs with better wages provide more overseas opportunities and more strongly support Singaporean workers' upgrading and skills deepening. Without numbers, however, it is hard to tell whether these broad and lofty goals were achieved. The overall picture maybe rosy with rising wages and low unemployment maintained. But the precise deliverables of the ITM have to be followed up upon, to know whether outcomes have been meaningful or whether alternative approaches to improve outcomes should be considered.

A significant goal of the ITM was to further the interests of Singaporean workers. To this end, the timely reporting of ITM 2025 outcomes should be made a key objective of this Government. When I asked for specific figures for the first ITM outcomes and what it has achieved for Singaporean workers, MOM stated that more time was needed before we could obtain the full data.

Surely, enough time has passed for such data to be available, as the planning for ITM 2025 is well underway? If such data is released, it can ameliorate the persistent angst surrounding competition between Singaporeans and foreigners over job opportunities.

Further, making such information accessible will help Singaporeans better understand the overall economic landscape so that they can develop their skills in specific industries. This is really about empowering the Singaporean worker to make informed choices surrounding their economic future in line with the nation's.

In this regard, the announcement of further adjustments to foreign manpower policies announced by the Finance Minister is instructive. The value proposition for businesses to hire Singaporean workers ought to become more compelling, given the anticipated increases of S Pass qualifying salaries and separately, foreign worker levy hikes announced in the Budget.

With the minimum qualifying salary for new S Pass holders increasing from $2,500 to $3,000 this September and further increases already forecasted for September 2024 and 2025, it would be useful for the ITM framework to proactively track, disclose and identify which are the ITM sectors are more reliant on S Pass holders and where there could be opportunities for Singaporean workers. Businesses will also benefit from this information as they can be incentivised to redesign jobs to attract Singaporeans.

The same expectation should be set aside for the large taxpayers' dollars set aside for national plans like the Research, Innovation and Enterprise 2025 Plan where $25 billion has been allocated from 2021 to 2025. The outcomes of such initiatives should be a major feature of the new post-pandemic social compact where the Government seeks to renew between citizens and the Government. My colleague, Aljunied Member of Parliament Mr Leon Perera will explore the national goals the Government should focus on aggressively, including poverty alleviation, inequality and social mobility. Ready access to data on outcomes of Government initiatives, including multi-year ones will greatly support all three prongs that Mr Perera will advance.

To conclude, COVID-19 was and remains a generational crisis. But it has also proven to be a priceless opportunity to reflect on the robustness of our social compact and the live reality of Singaporeans, particularly at the lower- and lower to middle-income levels. It is also an opportunity to reflect on our values as a people. How much do we value the efforts and contributions of those around us, regardless of social economic class or nationality? How does the Singapore system recognise the effort and labour of those who work with their hands like our conservancy and landscape workers, or those who invest their lives in looking after the needs of others or nurturing future generations of Singaporeans, such as our teachers and our nurses? What about our artists and sporting talents? And what about the foreign workers in our midst? Their living and working conditions must be a priority for not just their well-being, but our well-being too. I say for our well-being too because caring for others establishes the standards that we set for ourselves on the type of people we wish to be.

While COVID-19 has been debilitating for the economy and for many families, from a community perspective, it reminded us of the nurse, the teacher, the cleaner, the security guard, the bus captain and so many others who continue working to keep Singapore on an even keel. The efforts of these Singaporeans make my colleagues in the Workers' Party and I proud to the Singaporeans. These times have shown the resilience of our people, a subject my colleague, Aljunied GRC Member of Parliament, Mr Gerald Giam, will peg his Budget speech upon.

The Workers' Party notes the broad thrust of the Budget and supports the call of greater fairness, sustainability and a more inclusive society, a philosophy that comes with much promise of the future. However, the Workers' Party will object to the Budget as we disagree with the decision to raise the GST.

Mr Speaker: Mr Liang Eng Hwa.

1.19 pm

Mr Liang Eng Hwa (Bukit Panjang): Mr Speaker, Sir, following the Budget Statement on 18 February, we have watched, with grave concerns the tragic developments in Ukraine. I echo the statement by the Foreign Affairs Minister that we are shocked and appalled by the blatant aggression and are saddened by the loss of lives and destruction there. It once again reminded us of the importance of our own ability and our will to defend our sovereignty and our independence. We must expect no one else but ourselves to defend what is ours.

Sir, the conflict may be half the world away from us, but its implications and ramifications will impact us in many ways, amongst others, its' effect on the global economic recovery as well as the elevated oil and gas prices. Can I ask the Finance Minister for an update, notwithstanding the Foreign Affairs Minister's Statement, as to whether the Ukraine situation will have a bearing on the Budget that he delivered on 18 February; and also, what other implication or impact will there be for our economy?

Sir, now my take on the Budget.

Social compact is not a new concept to us. It has always been the underpinning core values of the Government, manifested in many of our policy formulations. It is a vision that galvanises us as a nation and unites us in our commitment to care for each other. Yet, after listening to the Finance Minister's Budget Statement speech, the meaning of social compact took on a refreshed and more tangible feel and operationalised versions of sorts or more realisable.

Over the last decade, countries and democracies around the world including Singapore, have been grappling with three deep-seated issues. Firstly, the widening income and wealth inequality brought about by globalisation and the proliferation of knowledge-based economy. Secondly, the stagnation of very slow wage growth for our lower-wage workers. Thirdly, climate change crisis. How do we manage the pace and the trade-off to pivot to a low or net-zero carbon society?

Budget 2022 will stand out for how we have made decisive and bold moves to tackle these issues head-on and to build a fair, inclusive and sustainable society.

Let me start with the tax changes announced.

In the Budget, we saw significant increases in the income tax rate as well as the wealth taxes: property tax, luxuries car taxes in the ARF. These increases will bring in an additional revenue of $600 million for the Government, not quite a needle-moving number that can pay for the projected rise in expenditure due to its narrow base. But it helps to steepen the overall progressivity of our tax structure and towards a fairer system.

Corporate tax changes are also expected to come next. The two-percentage point increase in GST will happen in 2023 and 2024, by one-percentage point step each. Coupled with this increase will be the massive upsized $6.6 billion Assurance Package to cushion the impact of the GST increase.

The GST increase and the upsized Assurance Package put together, actually further enhance the overall progressivity of our tax structure. This is because the Assurance Package will have more than adequate payouts and rebates to cover at least five years of additional GST expenses for the majority of Singaporean households and about 10 years for the lower-income households. The existing permanent GST Voucher scheme will also be enhanced to provide continuing offsets for the GST expenses of the lower- to middle-income household and the retirees' household.

On the other hand, the higher income and the wealthier will pay more GST, especially with the two-percentage point increase, as they tend to be higher spenders, bigger consumers and hence, will contribute more to GST.

Sir, over the last decade, we have been adding more social support features into our social security structure, which has helped improve the progressivity of the overall system, such as Workfare for the low-wage workers which, in essence is a negative tax; Silver Support Scheme, which targets Singaporeans in the lower 20% in terms of lifelong income; higher permanent GST offsets targeted at lower-incomes, seniors and smaller housing types; means-tested subsidies in public housing, healthcare, education, tilted in favour of lower-income and that majority of Singaporeans do not not pay income taxes.

Taken together, it attested to the system of social compact that we have always wanted where the better-off contribute more and those with less contribute less and will receive more benefits and support to help them cope with life.

In recent years, as income and wealth disparities continue to widen, the view that the better-off should contribute more in taxes has gained traction and it is heartening that in Singapore, we are also hearing calls from the high-income earners and those who are wealthy themselves. This reflects our values and mutual responsibility amongst ourselves as a society and as a nation.

Of course, there is often this argument that rising income or wealth taxes may diminish our competitiveness, or that wealth is mobile and can be easily moved to a jurisdiction with no or low taxes. Yes, we have to be watchful of this possibility but we should also not underprice ourselves.

Singapore has its very compelling proposition as a triple-A rated global hub, excellent infrastructures, deep and diverse talent pool, trusted and enforceable legal and regulatory structure, strong and stable Government, amongst others. We are rated among the best place to live in the world and we are a nation that is always passionate about excelling ourselves and constantly charting ahead and investing for a better future. And this is the Singapore premium.

We cannot just count on low taxes or lower costs as a way to attract investments and talent. It is not sustainable. The significant moves on tax structure in Budget 2022 demonstrates our confidence and also our self-assuredness as to what Singapore can offer. We have to keep working on strengthening each of these fundamental propositions and not only safeguard but also keep growing the value of this premium.

Sir, the other major move in this year's Budget is in the uplifting of income for the lower-wage workers and to tackle inequality. In a globally connected and knowledge-driven world, those equipped with in-demand skills and know-how tend to be duly compensated for their expertise. Salaries of the top earners have seen their income rise at much faster pace. We are not averse to that. On the other hand, the incomes of our lower-wage workers continue to stay stagnant or not keeping up with the rise in cost to live a better life. We are concerned with this widening income inequality and that is why we have Workfare and other skills upgrading programmes, among others, to intervene and uplift the wages of low-income Singaporeans.

In this Budget, we saw significant expansions to the Progressive Wage Model (PWM). It will be extended to more sectors with an aim to cover 94% of our full-time lower-wage workers and through an accelerated pace of implementation. The Government will co-fund the wage increase of low-wage workers through the Progressive Wage Credit Scheme (PWCS). Businesses with workers earning up to $2,500 per month will be assisted with co-funding of 50% in the first two years and 30% in the next two years. Those earning between $2,500 and $3,000 will also receive support, but at a lower co-funding ratio.

In a related move, companies who employ foreign workers will now be required to pay all their local employees at least the local qualifying salary of $1,400 per month. And to complement the Progressive Wages move, the Workfare Income Supplement (WIS) will also be significantly enhanced. The qualifying income gap will be increased to $2,500 and also extending to younger workers, aged 30, as well as increased payouts amongst the various WIS enhancements. These various measures amounted to a very substantial package to uplift the wages of the lower-income workers about $1.8 billion per year over the next five years or totalling $9 billion for both PWCS and enhanced Workfare.

Of course, fiscal interventions alone cannot be the only way to uplift wages. Businesses and consumers will also have to contribute their share to help raise the income of our lower-wage workers. And we should continue to encourage and support our lower-wage workers to upskill, so that they can also move up the wage ladder. Sir, this is a realisable step to strengthen our social compact and to tackle inequality.

On decarbonising Singapore, I applaud the bold moves by the Government. The announced carbon tax increases are steep, increasing five-folds, from $5 to $25 per tonne in 2024 and thereafter, by ten-folds and more by around 2030. It is thick enough to bite or hurt and can nudge and change behaviours and business practices. The sharp carbon tax increases demonstrates the Government's resolve to achieve net-zero emission by around mid-century.

Since our founding, we have always kept long-term environmental sustainability in mind and, in fact, have been ahead of the curve. In the 1970s, we have already scaled up the greening of our island by sustained tree-planting programmes and safeguarding our nature reserves. We mounted ambitious efforts to clean up our rivers, build comprehensive sewage, waste infrastructure, amongst others.

But this coming series of carbon tax increases will be our most ambitious move. It will have significant cost implications to businesses and households. Hence, without transitory support, some businesses may not be able to cope and some may exit. So, I welcome the clarification by the Finance Minister that the Government does not expect to derive additional revenue from the carbon tax levy. The carbon tax raise will be used to cushion the impact to households and businesses, as well as make decisive investments in new, low-carbon, more energy-efficient solutions.

Sir, although Singapore accounts for around 0.11% of the global carbon emissions, we strongly believe in contributing to the global efforts and see it as our moral obligations as citizens of the world. We should leverage on this major decarbonisation effort to catalyse the development of the green economy and to entrench ourselves in this global green transition and to create jobs, create opportunities.

Finally, Sir, I would like to touch on the current waves of cost increases. I have raised this concern in earlier Parliament Sittings, including whether we can delay the increase of GST, given the cost pressures at the moment. I thank the Finance Minister for listening to the feedback from Singaporeans and on the ground, firstly to delay the GST to start from 2023 and in two staggered one percentage point steps; and secondly, to introduce the $560 million Household Support Package to help Singaporeans to cope with their daily expenses arising from the current cost pressures.

Sir, allow me to continue in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker, the recent spate of price increases is a cause for great concern for Singaporeans. Whether it is electricity, food or transport, we can feel the overall trend of inflation and the pressure of rising cost of living.

Most of the goods we consume are imported, so any rise in international inflation, especially energy prices, will have a direct impact on domestic consumer prices.

While we have comprehensive measures to cope with the inflation, such as using a strong Singapore dollar to offset rising prices of imported goods, expanding and diversifying our sources of imports, and a slew of packages to help the low-income group, they do not fully offset external inflationary pressures.

Fortunately, in this year's Budget, the Finance Minister has added a $560 million Household Support Package to help Singaporeans cope with rising cost of living.

The package offers up to $285 worth of U-Save rebate per household living in HDB flats, an additional $200 top-up to every child and student's Edusave account and another $100 CDC voucher which is very popular among Singaporeans.

As the international situation and global supply chains continue to be unstable, I hope the Government will continue to pay close attention to consumer price fluctuations, especially utilities, and expand the package when necessary to help Singaporeans cope and tide over this difficult period.

Mr Speaker, I am also glad that the Finance Minister has responded positively to Singaporeans' concerns about the impact of raising GST this year. He has postponed the timetable to next year and the following year and will raise the GST one-percentage point per year in two years' time. This will significantly reduce the inflationary pressure.

Many Singaporeans feel that while GST increase is inevitable, it is better later than early. It is better to raise it in two tranches than two-percentage points in one go.

Most importantly, we will have a $6.6 billion enhanced Assurance Package to help most Singaporeans offset the impact of higher GST. For example, under this package, each adult Singaporean will receive a cash grant of between $700 and $1,600. The Government will also give out $600 to $900 in GST vouchers to lower-income elderly Singaporeans.

Other subsidies include a U-Save rebate of up to $570, and $200 worth of CDC Vouchers for each household next year and the following year.

The total amount of these rebates is substantial and will be sufficient to offset the increased GST amount that most Singaporeans will have to pay over the next five years. For low-income families, the increased GST amount can be offset over the next 10 years.

For example, a family living in a 3-room flat with two children will receive nearly $5,000 worth of assistance from this Assurance Package, but roughly, this family will only have to pay an additional $400 GST. In other words, the subsidy that this family will receive is more than 10 times the additional GST they need to pay. Retirees living in 4-room flats will receive subsidies that can fully offset the extra GST they have to pay. For utilities, 1-room and 2-room households will receive rebates of up to eight to 10 months, 3-room and 4-room households will receive rebates of up to four to six months, and 5-room households will receive rebates of three months.

Mr Speaker, our tax and grant regime has always been inclined to helping the poor. The tax changes this time round further strengthen this characteristic by raising the income tax and wealth taxes for high-income earners on one hand and expanding the assistance and subsidies for lower- and middle-income families on the other hand.

Those with better incomes or wealth can afford higher taxes because of their better economic conditions. Most of them are also consumers who spend more, so their GST contributions are also higher than those of the lower-income groups.

According to MOF figures, 60% of the GST collected come from high-income earners and tourists. Under our overall tax and grant system, low-income earners will receive a $4 subsidy for every $1 of tax paid. The middle 20 percentile will receive a $2 subsidy for every $1 of tax paid. High-income earners will receive a subsidy of $0.30 for every $1 of tax paid.

These figures demonstrate vividly that our tax and grant system is really focused on taking care of lower-middle-income Singaporeans. I think this is a fair tax system that we aspire to.

This year's Budget reflects our pursuit of the spirit of social cohesion and joint advancement of all Singaporeans.

(In English): Sir, Budget 2022 to charge the new wave forward to realise our vision as a fairer, greener and more inclusive society, we want to level up our society, secure the well-being of our people and at the same time, we need to grow our economy, create exciting future opportunities to build our best home.

Every of the above that we want to do for the good of Singapore and for the good of people require financial resources. It is meaningless to have big plans and big ideas, but does not come with sound and sustainable financial plan to fund them. We need to have a clear mind how we intend to charge the way forward. But at the same time, we also need to have a clear mind how we can find the means to pay for these new ways.

Budget 2022 strengthens the foundations of our long-term funding plan, which is sustainable and fair, and it opens up further exciting possibility ahead for Singaporeans and Singapore. Sir, I support the Budget.

Mr Speaker: Ms Foo Mee Har.

1.39 pm

Ms Foo Mee Har (West Coast): Mr Speaker, Budget 2022 will be remembered for the significant tax changes announced. One of the main Budget announcements was that the GST rate hike will be delayed and spread out over two steps – one-percentage point per step on 1 January 2023 and another one on 1 January 2024. This move by the Finance Minister brought some relief to concerns amidst rising prices. We all know that it would have been more expedient for the Government to effect the total increase in one go and the earlier the better for the Government. But we appreciate the sensitivity shown to delay it and do it in two separate steps. So, this is appreciated.

Sir, Budget 2022 takes decisive steps towards strengthening our social compact. It unveiled a slew of taxes that impacts the wealthy – ranging from personal income tax, property tax as well as luxury car tax. These taxes are expected to raise $600 million of additional tax revenue per year when implemented. Taken by itself, this amount may not appear large. However, property-related taxes such as Additional Buyer Stamp Duty (ABSD) have in fact contributed significantly to our revenue base over the years.

Let me share. In 2021, Stamp Duty collection increased to $6.45 billion, that means a $2.55 billion increase in one year as compared to 2020, and that is 66% increase in one year. ABSD was further increased just a few months ago in December across all categories except for first-time local home buyers. The ABSD rate for foreign buyers now sits at 30%.

As ABSD targets mainly property investors, this has effectively become a form of wealth tax, apart from acting as a policy measure to cool the property market. Whilst I know the Government may not consider this as a stable form of revenue base for the Government, I think investors should not hold out much hope for the ABSD to be lifted, as it is now a significant part of Government revenue. In fact, we should expect more to come on the property front, including the low hanging fruit of injecting further progressivity to the basic buyer's stamp duty from the current 4% for properties valued at $1 million and above, for higher tiers to apply to more luxury homes.

Sir, our tax structures continue to be more progressive over the years. It was only recently in 2017, when the top tier personal income tax bracket was increased to 22%. Yet, this Budget proposes to increase it again, further to 24% from 2024. In Singapore, top 10% income earners who pay Personal Income Tax already foot approximately 80% of total personal income tax collected.

Sir, our unique system of taxes and transfers have been effective in addressing income inequality. We have seen a steady decline in our Gini coefficient from 0.45 in 2010 to 0.38 in 2020, after transfers and taxes. In this Budget, the Assurance Package – designed to cushion GST impact for middle- and low-income households, was boosted to $6.6 billion. Another $9.5 billion over five years is being set aside to support the Progressive Wage Model and Workfare Income Supplement scheme, benefiting 94% of full-time low-income workers. Sir, this is commendable and well-timed.

Our system is designed such that for every dollar of tax paid, the bottom 20% of our residents receive about $4 of benefits back, the middle-income residents get about $2 and the top 20% receive about 30 cents of benefits. I think we have all understood how it works, my colleague mentioned this earlier too. The principle of helping those with less inherent in our system of taxes and transfers has gone some way to moderate the vagaries of globalisation and inequality.

Mr Speaker, rather than depend so heavily on taxes to redistribute wealth, can we also not tap on strong spirit of giving amongst wealthy families?

Globally, increasing numbers of wealthy individuals are engaging in philanthropy. A "Global Philanthropy Report" by Harvard identifies some 260,000 foundations with total assets of more than US$1.5 trillion. In Singapore, we have also seen more privileged individuals "giving back", including the setting up of private charity funds with $200,000 and more.

More and more family offices are setting up in Singapore, with strong mandates to do good and to give back to society. We should therefore enhance our philanthropic policy framework to accommodate new forms of giving and encourage the establishment of more foundations, of greater sophistication.

Currently, our policies are geared towards straightforward forms of giving. But wealthy families aspire to make significant contributions beyond plain chequebook giving. They hope to tap their financial resources, unique capabilities and networks, in creative ways to make an impact. They want their gifts to be transformational and so do we. Enhancing our policies around philanthropy can help establish Singapore as a philanthropic hub – a pillar of excellence to build alongside our hub status for finance and sustainability.

This intent to promote Singapore as a philanthropic hub is not new. Several changes to taxation and regulatory framework were indeed made by then-Second Minister for Finance, Tharman Shanmugaratnam, in Budget 2007. However, the concept of philanthropy has evolved rapidly over the years. Wealthy families and philanthropists are keen to explore new models such as social impact bonds, impact investing, venture philanthropy and so on. Have our current policies kept up with the times?

In its early days, Singapore benefited in similar ways from generous giving by visionary philanthropists and organisations, such as Tan Kah Kee, Govindasamy Pillai and Ngee Ann Kongsi, to build our communities, our schools and our hospitals. Today, we have a window of opportunity to work alongside a new generation of philanthropists, using modern, innovative and creative ideas, so that their contributions can be a fulfilling experience for both the donor and the beneficiary.

Mr Speaker, Budget 2022 sends the strongest signals yet to businesses about the need to get serious about transformation and going green.

The Finance Minister announced Singapore's commitment to sustainability by bringing forward the timeline for the country to attain net-zero carbon emissions by and around mid-century. To achieve this, the carbon tax will be raised progressively to $50 to $80 per tonne of emissions by 2030, higher, much higher than many had expected. The higher carbon taxes will accelerate our drive towards a greener economy.

Sir, I support the Finance Minister's ambition to sharpen our competitive edge and capture growth opportunities in the green transition. We should aspire to be the leading location in Asia for expertise in carbon services and be the trusted regional marketplace for carbon credits. However, we need to carefully navigate this journey to go green, to avoid dislocating our industries or losing our attractiveness as an investment destination.

We will need to take an ecosystem approach for the transition, laying clear frameworks, standards, roadmaps and sector-based solutions to build green capabilities and collaborations. We will need to champion green financing and be the preferred issuer of green bonds to enable sustainable investments across sectors. We will need incentives – incentives to green our buildings and step up investments in sustainable development and renewable energy.

Sir, the higher carbon tax will translate to elevated energy prices impacting businesses and households, and the increase will be significant. This is especially so for the manufacturing sector with utilities making up to around 9% to 10% of their operating costs. So, I urge the Government to ensure transition measures will be in place to cushion the increase in electricity costs.

Sir, in many of my interactions with businesses large and small, the most frequently cited concerns relate to manpower constraints, an issue that has been further exacerbated by COVID-19 restrictions. The planned increases in qualifying salaries for employment pass and S Pass holders, which will take effect from September, will hurt. With the tight labour market, employers shared that the $500 dollar increase in work pass qualifying salaries will likely translate to just "forced" salary increases for their foreign workforce, as there are few alternatives in the foreseeable future.

Sir, the use of salary thresholds is a blunt instrument that does not take into account specific skills requirements and gaps in the market. A points system which considers a range of non-salary factors will make the work pass system more transparent and economical. The higher work pass thresholds have triggered international firms to review the sustainability of their operations in Singapore.

Many businesses worry about how they may weather the storm in the coming years. Increase in taxes, higher carbon and energy prices, as well as higher local and foreign manpower costs are the main challenges. Companies need urgent help to fast track digitalisation, reskilling of local workers as well as job matching to aid their transformation. They are also screaming for the Government to calibrate the timing, the timing of new policies to provide some breathing space for the transitions.

Mr Speaker, the outlook for rising costs is worrisome. After reaching a near-decade high of 2.4% in January, Singapore's core inflation is anticipated to possibly exceed 3% and above in the second quarter. More economists are predicting that given the externally driven inflation catalysts, they expect inflation will be sustained at high levels for up to two years. With the Russia-Ukraine crisis, crude oil prices have been soaring and hitting over US$100 today. Sir, I would like to ask the Finance Minister whether the Government will do more to help households and businesses if inflation turns out to be more persistent and higher than expected?

Finally, Budget 2022 is estimated to be the third straight budget-deficit year for this term of Government. Whilst I do agree with the expansionary policy to ensure that recovery will be sustained, so I support the Budget, it is equally important that we do not lose sight of the fiscal prudence that has defined Singapore's approach to budgeting. The Government commonly accumulates surpluses in the early years of its term to ensure that the constitutional requirement to achieve a balanced Budget is achieved.

Sir, I would like to ask the Finance Minister, given the new emerging risks to our recovery and growth, especially given the Russia-Ukraine crisis, how will the Government respond, if we will not be able to achieve a balanced Budget for this term of Government? With that, Sir, I support the Budget.

Mr Speaker: Ms Janet Ang.

1.54 pm

Ms Janet Ang (Nominated Member): Mr Speaker, I am honoured to join in on this year's Budget debate. I would like to declare that I am Council Member of Singapore Business Federation (SBF) and hope to represent the business community's perspective. If I may start with a quote from Martin Luther King, who once said: "The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy." I believe that men and women, we all are standing at times of challenge and controversy right now.

Mr Speaker, Sir, the Singapore business community is very appreciative of the strong and decisive actions by the Government in dealing with survival issues in 2020 and preparing to emerge stronger with "Test, Trace and Vaccinate" in 2021. Singapore is amongst one of the most inoculated against COVID-19 with, I believe, 86.1% of population vaccinated and with low casualties. Still, we see how the Omicron strain, while fortunately not as deadly as Delta, is causing stress in our healthcare system and a slow-down in our easing of safe management measures and opening up of borders.

We cannot afford to be complacent. Our muscle for alertness and resilience has been developed and put to the test time and again over the past two years, and we must continue to keep it well-oiled and ready for action, but at the same time, not be paralysed by fear. So, gratitude to everyone from the Multi-Ministry Task Force, to our healthcare workers and essential workers on the front lines who have helped keep the lights on and the rest of us safe. A big thank you, from all of us, to all of you.

Mr Speaker, my personal take on this year's Budget announced by Minister Lawrence Wong is the following: one, it is a Budget that balances short-term and longer-term objectives; two, it is a Budget that recalibrates Singapore's financial and fiscal policies to ensure sustainability going forward; three, it is a Budget where all Singaporeans can play a part in returning our economy to a state of readiness for growth while caring for those amongst us who are more vulnerable and who have less; and four, it is a Budget that invests in the future of our people and our businesses to be ready for new engines of growth even as Singapore continues to have to strengthen our healthcare defences to tackle the evolving pandemic situation and maintain public health stability.

Whether it is the $500 million Jobs and Business Support, or the timing of the GST rate hikes; whether it is the carbon tax increase to signal the urgent action for de-carbonisation, or the R&D budget for the Singapore Green Plan 2030; whether it is the investment in new capabilities of our people and our local enterprises, or the rollout of the Assurance Package and the uplifting low-wage workers with Progressive Wage Model implementation, it is a Budget that has taken an integral development approach to ensure that our people, our environment and our economy progress in tandem and in harmony.

Whether Budget 2022 delivers on its design now depends on how well Team Singapore executes.

In the latest National Business Study conducted by SBF, businesses that reported being negatively impacted by COVID-19 declined from 63% in 2020 to 32%. There is growing optimism as eight in 10 firms are confident about sustaining their operations in 2022, compared to seven in 10 firms in the previous survey. Nearly half, about 47%, of businesses are confident that the economy will improve in 2022, compared to 31% of businesses in the previous survey. I must add that the survey was pre-Russia-Ukraine situation.

Businesses adopt a cautious outlook towards global and regional economic climate. In the survey, businesses reported that manpower cost and availability are key challenges that they face, along with demand uncertainty, travel restrictions and changing regulatory environment.

However, 2022 will expect to see more job openings and better compensations as businesses look to build up their human capital. Companies are focusing on digitalisation, re-engineering of work processes and diversifying supply chains as key areas of business transformation. Even though most firms are aware of the importance for digitalisation, many lack manpower and resources to transform their businesses. Businesses need Government support in technology adoption and development of human capital as they push towards a more digitalised future. So, assistance with digitalisation remains the top area of support reported by businesses, with 43% desiring Government help in this aspect.

Support towards human capital development rose to be among the top three areas of business support needed in 2022, with 37% of businesses reporting a need for such assistance.

The level of business internationalisation remains consistent with 2020. This is another area that they are counting on Government and the whole-of-society's support. There is no evident drop-off even in the face of travel restrictions. China, Vietnam, Indonesia and Malaysia continue to be the popular destinations for expansion. Meanwhile, geopolitical risks including the US-China continued trade tensions, the acceleration of inflationary risks, the escalating costs of energy and the recent Russian-Ukraine military conflict will dampen the optimism going forward. Still, we need to focus on what we can influence and keep moving forward.

Budget 2022 does cover many of the areas that the businesses have called out for Government support:

(a) everyone is relieved to hear Minister Lawrence Wong announce deferring and staging GST rate hike implementation;

(b) the continued support for businesses to invest in new capabilities like digitalisation and automation is very much welcomed by the business community but the escalating costs of IT manpower and the shortage of IT skills continue to be a challenge;

(c) Singapore being open to the best global talents to complement our local workforce gets the thumbs-up by both local business leaders and leaders of MNCs, though they still worry about policies not being aligned to the goal; and

(d) a Budget carrying both the stick and the carrot to rally our businesses into action toward achieving our Singapore Green Plan 2030 is acknowledged as inevitable and that there is a lot of work ahead of all of us.

For the purpose of my speech today, I would like to speak on four issues and put forward some ideas which have come up in my discussions with industry leaders and trade associations and chambers (TACs). We hope the Government can support and help to address these.

First up is manpower availability and costs. The business community in general is concerned with manpower availability and costs as it is. Some sectors in particular, F&B and construction, are very concerned with the adjustment to Foreign Worker Policies (FWP) in this year's Budget. These industries have been hit hard with labour shortage, exacerbated by border restrictions. And many companies in these industries have participated actively in WSG-organised recruitment fairs over the past two years in an attempt to hire more Singaporeans to fill the open positions but have had little success. These industries are local industries, and their manpower cannot be offshored. Our restaurants and our BTO flats depend on them being able to have the workers. It is hoped that the Government can look into sectorial differentiation when implementing the changes to the FWP at least for the foreseeable short- to medium-term.

Some manufacturing companies which are more labour intensive are concerned that there may be a hollowing out of manufacturing to lower-cost locations. Perhaps, we might have to accept that outcome as inevitable considering Singapore's scarce labour resources. Meanwhile, I would like to suggest that Government and industry could get together to review the costs across the entire supply chain of our key industries and consider our strategic competitiveness end-to-end. This will also help identify supply chain risks and identify actions to mitigate supply chain disruptions which we have experienced during the pandemic.

There is also a suggestion by TACs for an Alliance for Action (AfA) to be set up to look into manpower issues for overlapping industries.

Next point – SMEs need capital and credit, talent and network. Singapore has had an aspiration to grow global champions from amongst our local enterprises. Temasek-linked companies have done Singapore proud in putting Singapore on the map, whether it be DBS or SIA, pre-COVID-19, or Keppel or Singtel. Outside of tech companies like SEA or Grab or Carousell and other tech companies, the question is why our Singapore medium-sized companies do not get the same lift?

It boils down to a lack of capital, talent and network. Last year during the Committee of Supply, I applauded the $1 billion "Local Enterprises Funding Platform" set up by Temasek and the Government. I did suggest for the support be extended beyond the large local enterprises (LLEs) to include our local SMEs, or at least, the medium-sized companies. In Singapore, we have promising mid-size companies which may be "stuck" due to a lack of capital, lack of access to tools and networks especially for going beyond Singapore, and lack of leadership and expert capabilities needed to break out and stand out. With some support by way of talent, capital and network, we give ourselves a better pipeline of global champions in-the-making.

Let me segue to share with you two stories, which saddened me a little, but I thought I should share. The first story is the story of the M&A journey of a Singapore mid-size company. When they were looking for partners, they received 40-over NDAs signed by companies from all over the world but none from Singapore. The next story starts off well with how the Government's Temporary Bridging Loans (TBLs) and Enterprise Financing Scheme (EFS) were going to help our local companies tide over the difficult COVID-19 times. Unfortunately, the relief was short-lived as the companies found their commercial credit lines with their banks terminated and transferred to the Temporary Bridging Loans (TBLs) and Enterprise Financing Scheme (EFS) offered by the Government. I am sure these are sound credit risk decisions made by the bankers. But for the SMEs, they are in a tight spot. Perhaps there are misunderstandings in the implementation of TBL and EFS that needs both sides to dialogue and move forward. It would be interesting to see how many of such cases did happen. That said, the SMEs do welcome the announcement that Minister Lawrence Wong made in this year's Budget that EFS will be enhanced to include Merger and Acquisition and Trade Loans.

Talent is a big topic and a big challenge. I will focus today on one small suggestion: that is, getting our cohort of Public Service scholars to get their feet wet and their hands dirty by being assigned to our promising SMEs for a year or two, or even six months, as part of their bond. This experience will, in fact, equip them with the empathy they will need when crafting policies for the country and sharing the talented resources with our SMEs.

Leveraging IP is also an exciting opportunity for our companies but our local enterprises who have attempted to do so, share that IP filing and registration need deep pockets. Some of the TACs have requested for Government to consider providing funding support to guide and enable businesses to actively leverage on intangible assets as a competitive advantage. This would include leveraging on overseas IP owned by Singapore companies. I believe that MinLaw and IPOS are already supporting but perhaps SMEs can be made more aware.

Point three, going green. Our businesses have woken up to the Singapore Green Plan 2030 vision as a call to action for today. It is no longer something to think about tomorrow. The carbon tax rate increase and the roadmap ahead are a clear conviction that sustainability is a matter of importance and of immediate action. The writing is on the wall. COP26 targets are not just the Government's business. They are everyone's business.

Sir, our companies, however, need help from getting educated on everything "green and sustainable" to how to set their net-zero plan. Financial support for green transition is critical for businesses as they map out their net-zero plans. I will speak more about what is needed during my cut with MSE. For now, suffice to say that the "Made-in-Singapore" brand needs to soon carry a new mark of global sustainable standard.

My fourth point, investing in our people for the future. To navigate a tight labour market, businesses are turning towards building a strong local core through enhancing recruitment efforts and offering competitive wages. Businesses will continue to upgrade their team's skills and upgrade their expertise and knowledge, and the support by Government via the SkillsFuture Enterprise Credits, the newly set-up NTUC administered grant for transformation plans and other programmes, for example: schemes to support ICT, will all go a long way.

Minister for Education Chan Chun Seng has in recent speeches called out the key role that the IHLs – ITE, Polytechnics and Universities – can play in partnering our enterprises to skill up and transform.

I would like to share a couple of examples of Industry-IHL partnerships targeting at addressing skills gaps in the industry, with the hope of inspiring more to do so. I declare that I am the Chairman of Singapore Polytechnic (SP) and so, pardon me if my examples are from SP.

The first example is how industry can proactively work with IHLs on their curriculum to enable the students to be work-ready, job-ready when they graduate. The SP faculty at the School of Chemical and Life Sciences developed an opportunity for deeper linkage with industry via the Diploma in Perfumery and Cosmetic Science. The School co-created the Industry Now Curriculum (INC) with industry experts like IFF-Lucas Meyer Cosmetics and Johnson & Johnson Pte Ltd. The innovation involves three semesters of learning in class and lab, one semester of a co-supervised "live" industry projects sponsored by industry partners including start-up companies like NUSMETICS Pte Ltd. The students then go on to complete their final two semesters in a year-long internship with an industry partner. The feedback has been very positive and to-date, 41% of the first cohort graduating May this year are already offered jobs. With the positive feedback on the course, the second cohort of students undergoing INC have doubled in size.

The second example is a bold eco-system collaboration. SP designed and setup an Advanced Manufacturing Centre in collaboration with 16 industry partners including experts like TÜV SÜD Digital Service, ASTech Pte Ltd, Bosch Rexroth, Delta Electronics and Onn Wah Tech Pte Ltd, and others. Together, they curated the "Advanced Manufacturing Learning Journey" curriculum focused on enabling companies to re-imagine and re-think manufacturing processes. Since the launch in October 2020, 177 companies and 632 professionals have gone through the "Advanced Manufacturing Learning Journey". More than 20 companies have taken the next step to work with SP to assess where they are and have gone on to develop projects with SP staff, some involving SP final Students as part of their Final Year Projects (FYPs), while others have SP students working projects as part of their internships.

There are many initiatives which all the IHLs have rolled out to support industry. The call to action is for all our Singapore companies to accelerate the reskilling of their workforce for transformation and for the Singapore workers to seize the day and get re-skilled to stay relevant in the dynamic, fast-moving workplace. The Government has put their money squarely on investing in our people to be ready for the future. So, it takes all to work together.

Mr Speaker, while we are in this Chamber, there are people, businesses, homes and institutions in the cities of Ukraine being bombarded by artillery and aggression of the Russians. How can this be happening? If it can happen to Ukraine, can it happen to us? I shudder at that thought. Singaporeans must not think it could never happen. What are the lessons for us to draw on? One thing for sure is that our total defence and diplomatic corps cannot be over-emphasised. Singaporeans cannot take our existence as a nation for granted.

Our founding fathers, Mr Lee Kuan Yew and his old-guard colleagues wrote our Singapore story. They had the courage to dream big, to create a "First World oasis in a Third World region". Their rallying cry was for this "mudflat to become a metropolis".

We were poor then, but we were certainly rich in spirit. Many of our forefathers were immigrants. Many were the Work Permit holders, Employment Pass (EP) holders and S Pass holders of their time. Some may have come as workers, others as merchants and traders from afar. Yet others came as missionaries, as teachers and nurses. Singapore had nothing then. We were nothing. Why did they come? I will wait for Mediacorp screenwriters to tell that story!

Whatever the reasons that brought them here to our shores, they had the grit to defy all odds and in spite of the diversity of race, cultures, language, religions, our forefathers and mothers, uncles and aunties bonded together behind that big dream. And so, here we are today, having inherited a Singapore that is one of the world's globally recognised city state with strong governance, high trust, smart, innovative and hardworking people, though a little "kiasu" or risk adverse at times.

Through the COVID-19 crisis, we saw how well we could ride the rolling waves of the pandemic with our reserves and the resilience of our people; the reserves that have been built over years of prudent fiscal discipline and strong monetary and economic excellence. In the wake of the pandemic, we saw the hearts and minds of Singapore citizens and residents reflect the care, the generosity, the empathy and the love for neighbour – whether our essential workers or our migrant communities.

Going through the storm is one thing. Building back up is where we are now, and we must not fall into potholes of narcissism, discouragement and pessimism. I believe that Singaporeans at the core have a strong sense of integrity and a deep sense of responsibility to our work, to our family, to each other, to our country.

As we learn to live with COVID-19, we must learn fast to tackle this next pandemic of climate change that is already upon us. We must take responsibility for the development of our own skills, leveraging the support that the Government is providing. Together, let us not wait for the fish to be handed to us but let us learn to fish for ourselves, our family and our neighbours, and live the dream that our forefathers could only imagine.

Let me close with a few lines from our NDP 2021 theme song, which I hope will inspire us to join our hands as we "Chart our New Way Forward Together". I will not sing for you, but here are the words:

"There were times we were uncertain,

But we just kept walking on.

It's always darkest just before the dawn.

See this island, every grain of sand.

Hear this anthem, it's the voices of our friends.

Come whatever on the road ahead,

We did it before, and we’ll do it again."

With this I conclude with my support for the Budget 2022. [Applause.]

Mr Speaker: Assoc Prof Jamus Lim.

2.18 pm

Assoc Prof Jamus Jerome Lim (Sengkang): Mr Speaker, in my speech, I wish to explain why raising GST is a bad idea at this point in time, how it will also be bad for working families and what we can do as alternatives to raising GST to meet our fiscal needs.

Minister Wong began his speech by painting a cautiously optimistic picture of both Singapore's as well as the global economy. We grew by 7.6% last year, exceeding even the upper bound of MTI's forecast. Unemployment also plunged to 3.2%, close to pre-COVID-19 levels. And exports, the traditional engine of growth for our economy, expanded by around 12%. With growth, employment and trade figures strong, there is some justification for a renewed sense of confidence as we emerge from the pandemic.

But the economic picture is not all peaches and roses. In January, inflation clocked in at 4% compared to prices a year ago and the highest prices in almost a decade. Higher prices have been exacerbated by an overall increase in the cost of living in the city, which has already been rated as one of the most expensive in the world. And tailwinds from the generous fiscal stimulus as well as the favourable external environment will fade further. Growth, accordingly, is expected to fall to around half that of last year.

It therefore strikes me as premature to be contemplating any form of tightening in the stance of fiscal policy at this time. While the removal of wage support for all but the most hard-hit sectors of the economy was prudent and economically sound, going in the other direction of making fiscal policies more contractionary takes a sensible argument to an absurd conclusion. Doing so would introduce unnecessary frictions into what is still a nascent recovery. It runs the risk of shooting ourselves in the foot, of scoring an own goal.

But this is precisely what will occur with an increase in our Goods and Services Tax (GST). The example of Japan is prescient here. Japan applied consumption tax hikes – their equivalent of the GST – three times in recent history: first in 1997, then in 2014 and subsequently in 2019.

The first two times, GDP collapsed and the economy promptly went into a recession. Inflation also jumped. What is worst, the subsequent collapse in output meant that the tax increase itself failed to produce sufficient revenue to justify its increase. The most recent time was also accompanied by a recession, although this time, the effects were exacerbated by the onset of COVID-19.

While the most recent Omicron variant has turned out to be less detrimental to economic performance than earlier ones, this episode is a reminder to us that a GST hike would rob us of the precious opportunity to revive support for the economy if, knock on wood, some unforeseen Pi or Rho variant – and I understand I am showing off my very limited knowledge of the Greek alphabet here – were to emerge.

In Singapore, we last hiked GST in 2007. This did not trigger a recession the following year. The economy eked out a 1.1% growth rate in 2008. But it nevertheless represented a sharp drop in activity compared to 7.8% the year before.

Back then, we were helped by the fact that on both years, global growth remained in positive territory. This time round, the global environment may be less favourable. The International Monetary Fund forecasts a slowing of world GDP growth from an anticipated 4.4% this year, to just 2% in 2023 and 1.6% in 2024. Thus, global growth will be slowing just as the burden of an increase GST will be kicking in.

A hike in GST is unarguably a contractionary fiscal policy that could offset what had hitherto been a very healthy consumption and investment growth over 2021. The private sector, by anticipating the anticipated tax changes and the need to save more, could further scale back on spending today.

A GST hike is also particularly ill-timed because it holds the potential to stoke already elevated inflation. While the direction of inflation in the future is anybody's guess – and economists have a particularly dismal track record of predicting price dynamics, one that would make a weather forecaster blush – it would not be surprising if inflation remains elevated through till year end. Supply chain constraints have not resolved as quickly as previously anticipated; energy prices are high and could rise more in response to geopolitical tensions and the likelihood of global sanctions; labour markets are tightening, spurred by the global great resignation and lying flat movements. Indeed, MAS expects as much, having raised its latest forecast of inflation to the 2.5% to 3.5% range.

Moreover, this state of affairs may even become a more lasting fixture. There is a risk that inflation expectations have become unmoored from the traditional 2% health by advanced economies worldwide and is now permanently higher by up to half a percentage point, compared to prior the pandemic. And if this turns out to be the reality, then rolling out a GST hike at this time will only add fuel to the inflation flame, which is already starting to burn uncomfortably hot.

It is for this reason that any delay of the hike, were it to occur, is critical, as opposed to the historical pattern of rolling out increases in July. Doing so in a staggered fashion – 1% in 2023 and another in 2024 – will certainly cushion the impact. And this measured approach is echoed by economists and observers, and SMEs have also expressed their relief about the delay.

But the key question, Mr Speaker, here that remains is this: will the Government stand ready to potentially re-examine the timing with a view toward an even more significant delay should macroeconomic conditions remain unfavourable for a tax hike come 2023 and 2024?

Should the Government proceed with a tax hike at the pre-announced dates, will they complement the hike with a justification based on the contemporaneous economic situation?

But why raise GST at all? The reason provided by MOF is that our revenue needs have risen, especially with regard to providing healthcare for a rapidly ageing population. There is no doubt that we should do more to take care of the elderly among us – the Merdeka and Pioneer Generations that have contributed so much to bringing Singapore to where it is today, as well as generations that will enter their twilight years in the future.

My concern, Mr Speaker, is whether GST is the ideal instrument for doing so. On its face, GST fulfills many of the criteria economists traditionally look for, in optimal public finance. It is efficient because taxing all of consumption usually does not distort spending behaviour compared to taxing income or other taxes specific to certain goods and services. It is broad-based, meaning that it can raise significant revenue across a large population and it is simple. Unlike income, we do not need to futz around with appropriate measurements and exemptions. You just pay a fixed fraction of what you buy, period.

While this is precisely why we do not rely on GST alone to raise income, there are also some problems. It is generally sound to diversify the Government's revenue stream as opposed to relying on narrow forms of taxation, more recent research has questioned whether consumption taxes are truly more efficient, especially if we relax some of the standard assumptions. But perhaps, most importantly, most people believe that it is actually easier to ensure that income taxes are progressive, that is, those who are better able to afford a higher tax burden, pay more. The GST is a flat tax rate applied to all purchases of goods and services, which hits lower-income households disproportionately more. In and of itself, it is, therefore, regressive.

The Government's solution to addressing regressivity has been to pair GST with a voucher system, where cash rebates of a certain amount albeit not matched directly to actual spending, are issued to lower-income households. This transfer can indeed be progressive and it may be the case that the overall tax system, even after raising GST, will remain progressive. But an increase in GST will, in and of itself, reduce progressivity, which means we end up less progressive than compared to the status quo.

I, therefore, welcome the Ministry to clarify if the plan to raise GST while expanding the scope of the permanent GST Voucher (GSTV) scheme would be net for the nation as a whole be more or less progressive, relative to a scenario of not increasing GST at all.

This is because we all understand that the generous $6.6 billion Assurance Package, while certainly welcome during the transitional period, will not last forever. After all, the earnings of lower-income groups have been eroded comparatively more as a result of the pandemic. Prices are rising everywhere and furthermore, support payments via the COVID-19 Recovery Grants will expire by year end.

I have focused much of my remarks on the importance of supporting the less fortunate, not just because of some heightened notion of equity. Many studies have pointed out pandemic-induced changes will have lasting effects on incomes, savings, educational attainment and other socio-economic outcomes for poorer households.

Mr Speaker, the poor were already relatively behind prior to the pandemic. As a society, we can ill afford to have them fall further behind. It will be an affront to our sense of equality, of opportunity and genuine meritocracy as well as a stain on the morals and values we hold as a society.

Finally, it is worth recognising that the permanent GSTV scheme leaves important gaps for certain groups that fall beyond the remit of the programme. Income threshold for qualifying for GSTV will exclude those above the 40% percentile of earners. This means that those earning more than around $2,800 a month – a decent but hardly comfortable salary – will face the full force of the GST increase once the transition period concludes. While cut-offs have to occur somewhere, it is worth remembering that many households in this income bracket are also in the "sandwiched generation", who face expenses of supporting their aged and retired parents, as well as their young, school-going children.

One alternative – but admittedly more complicated – scheme for enhancing the progressivity of the GST is to consider GST where progressivity is built right in. This means the purchase of goods and services that the wealthy are much more likely to purchase – fancy cars, high-end properties, first class tickets and luxury experiences – be subject to a higher rate of taxation.

The Government has in this Budget and over the past year taken some significant steps in this direction. An increase in the Additional Buyer's Stamp Duty (ABSD) by 5% and 10% for the second and third properties is welcome, if a little blunt, since it does not entail any associated minimum value, and PR and foreign purchasers confront even steeper rates.

The Budget further sharply increases property taxes for homes with annual value exceeding $30,000. It remains to be evaluated whether these additional taxes successfully target the wealthy, or whether much like the ill-fated estate tax, they end up affecting mainly upper-middle and marginally higher-income households while the ultra-rich retained their ability to shield themselves from progressive taxation. It will also be valuable to revisit in a few years' time whether such taxes move the needle, in terms of freezing and reversing the rising income and wealth inequality in Singapore.

The other question that inevitably arises is, are there no alternatives to a GST hike?

Mr Speaker, I will submit that there are. My colleagues at the Workers' Party have in the spirit of providing credible alternatives work out several additional levers, where if deployed, could stave off the need to increase GST. We have worked out the revenue possibilities for each of these levers which could amount to close to the $3.6 billion expected in revenue from a GST hike.

One lever which we call, say, "the corporate tax lever", accepts the broad premise of the OECD-led effort to implement a global minimum corporate tax rate of 15% known as BEPS. We assume a reasonable loss of corporate and personal income taxes arising from the agreement of 20% and 10% respectively and full compliance of the corporate tax rate to the new global minimum for multinational corporations, which amounts to about the two-thirds increase in the effective rate from current levels. However, we allow small and medium enterprises to retain their current 3% effective rate. This could generate $3.45 billion.

Another lever which we call "the wealth tax lever" puts asset taxation at the front and centre of revenue generation. We adopt the Government's current threshold of 10 years required for land leases to be classified as permanent, above which land sales receipt must be fully channelled into reserves and extract just the first nine years for recurrent expenditure, while redirecting the remainder into reserves. We also incorporate the Government's proposed property tax changes expected to generate an additional $380 million. And finally, we follow the net wealth tiers that had been previously proposed in this House to derive revenue from this channel under very modest recovery assumptions and this could generate $3.7 billion.

A third lever, which is the reserves' contribution lever, the Workers' Party had spoken at length about this possibility before. To reiterate, we can reduce the share of reserves interest income that we send straight back to reserves currently held at 50%, to a lower but absolutely still respectable 40%. Importantly, this does not constitute a draw on the reserves stock. The level of reserves will not go down, but merely represents a reduction in the rate of accumulation of reserves and this alone could generate $4.31 billion.

The final lever, which we call "the externalities lever", entails increasing so-called sin taxes – those levied on gambling, alcohol and tobacco – as well as carbon-generating activities for which we apply an increase to $80 a tonne but channel only half the revenues towards mitigating the transition and encouraging the adoption of green technologies. We limit the increases in each of these channels to no more than 28%, which is what the GST increase will entail. And these additional increases will then allow us to increase the effective corporate tax rate to just 8% and this would generate $3.65 billion.

Of course, I would be the first to admit that the Government, with its army of Ministry analysts and superior access to data and information, would be able to fault some or all of the assumptions underlying these scenarios.

What then is the purpose of this exercise? First, it is to put on the table the tantalising possibility that we can, in fact, choose not to raise GST by adjusting some of the levers available to us. We have deliberately worked out the math behind each of these alternatives such that any single one of these levers will be sufficient to meet the revenue needs that raising GST will offer.

Second, we will also show that even when we mix and match among the proposals to craft a revenue mix that we can accept – after all, the math suggests that any single one of the levers will be sufficient to fill the GST hole, much less alternative permutations and combinations of them.

And third, and perhaps most importantly, is to underscore our desire to engage in good faith debate on whether there are genuine options available to us in meeting the revenue hole, other than raising GST. The most thing for us is to cease stating "I wish", but to start stating "I will". We must instead consider nothing impossible and treat possibilities as probabilities.

Allow me to end with a few quick reflections on several aspects of this year's Budget.

In last year's Committee of Supply debate, I flagged the importance of elevating our national R&D expenditures to a share closer to that of most innovative nations in the world. I am happy to hear that the Government will continue to increase public R&D spending but I will only add three points.

First, more can be done given how we still lag the OECD average for total R&D spending; although, of course, we need to ensure that our outcomes match our inputs. Second, we should ideally direct this towards downstream activities that the part of R&D, and hence, the stated goal of elevating local firm R&D is the right one. And third, the guiding principles of the BEPS agreement means that one acceptable way to lower the effective tax rate for our SMEs and to continue attracting foreign investment is to do so through R&D tax credits.

I am, likewise, heartened to hear of the continued efforts to improve the lot of our low-wage workers. The Workers' Party has repeatedly called for a roll-out of the minimum wage for Singaporeans and the Local Qualifying Salary (LQS) effectively institutes such a floor for a significant majority of Singaporeans.

Progressive Wage Model (PWM) is being rolled out to additional sectors, but I am left to wonder if the Ministry has evaluated how many workers would still remain uncovered by either the LQS or PWM stipulations. If there is room to increase the LQS to an amount of $1,600, which roughly corresponds to a take-home salary of $1,300.

Finally, I believe that the Small Business Recovery Grant targeted at SMEs in the sectors hardest hit by COVID-19 is a good example of how fiscal policies should be timely, targeted and temporary. Simplifying the qualification process for this application, however, would surely be welcome.

Mr Speaker, there is much to like in this Budget which has embedded many elements that I believe will help us improve both efficiency as well as equity in our economy. But stubborn reliance on raising the GST in spite of alternative, more progressive forms of revenue generation is the fundamental reason why I cannot lend my support.

Mr Speaker: Mr Christopher de Souza.

2.38 pm

Mr Christopher de Souza (Holland-Bukit Timah): Mr Speaker, Sir, this was not an easy speech to draft, but I hope it will be taken in the right spirit.

We can have all the right fiscal policies in place and the mettle to see them through, notwithstanding the pain and pinch, but what we have not sorted out is political succession.

Singapore has the unique capability to plan decades in advance across many policies – manpower, trade, climate change, defence, to name a few. But we must ensure that we have successive generations of leaders to see those policies to fruition and, Mr Speaker, I say that political succession planning is key in this regard.

Just last year, I stood here to talk about what I had hoped to see in our 5G Prime Minister. That race should not matter, that he or she should be able to lead the leaders into 2040 and beyond. I focused on 5G because at the time it looked as if the 4G Prime Minister was secured – Deputy Prime Minister Heng.

Yet just a few weeks later, the bombshell came. Deputy Prime Minister Heng had taken himself out of the running citing several reasons. Do not get me wrong. I respect the Deputy Prime Minister for that. It was an act of selflessness in the face of a force majeure, being the pandemic. In short, the Deputy Prime Minister said the next Prime Minister should have a longer runway to the premiership and a long run in the premiership. That he, meaning the Deputy Prime Minister, was not getting any younger and the pandemic was still getting longer. So, Singapore was at the heart of Deputy Prime Minister's decision. I respect that but it does not solve the issue of succession.

To make Singapore's long-term plans work, such as those contained in this year's Budget, Singapore must have a long-term leadership succession plan. These are not my own personal musings. A recently published book by Shashi Jayakumar entitled "A History of the People's Action Party, 1985-2021" was launched by the Prime Minister late last year. Dr Jayakumar is not one to mince his words. He had to be as accurate in his analysis as he could be because many of the people that he wrote about are still alive. What was a central focus of his book? Renewal – principally, leadership renewal.

I was at the book launch and should at this point, declare that I have known Dr Shashi Jayakumar for 20 years. We were University mates and I count him as a close friend. But putting personal affiliations aside, there were several themes that struck me as I listened to the three speeches given at the book launch.

The first speech was given by Peter Schoppert, Director of NUS Press, the publisher. Let me quote two poignant points he made which put into context why the book and themes such as renewal had to be accurately recounted. This is what Schoppert said, and I quote:

"It's a brave historian who writes a contemporary history. That historian is brave on at least two fronts. First, the contemporary historian writes about people who are very much with us. You will see in the book that interviews form a very important source for the book and, of course, interviewees have their own views and they can read what you said about them, they can answer back. They might even be in the room when you launch the book. They might even be invited to launch the book for you. Secondly, the contemporary historian must give a judgement on events as they are still current, as they are still playing out."

Being the author, Dr Shashi Jayakumar was invited to deliver a speech about the book at its launch. What he chose to focus on was insightful and piercing. I quote: "There are many themes and ideas in this book and I do not have time to enumerate on all of them, but I did briefly want to highlight two points. The first is renewal – this is felt to be an urgent imperative. From the very beginning, Party files showed that Mr Lee Kuan Yew was thinking about the issue at an extraordinarily early point, from the early 1960s in fact. I really find this amazing. In this area of renewal, things that would see fruition much later, time and again, would be thought of by Mr Lee and others within the Party from a very early stage."

Prime Minister was invited to launch the book and Prime Minister, too, picked up on the importance of renewal. I quote Prime Minister: "A pivotal general election had just taken place in December 1984. In that election, many of the PAP old guards either retired from politics or stepped down from leadership roles. In the new Cabinet, from the founding generation – only Mr Lee Kuan Yew, Mr S Rajaratnam and Mr EW Barker remained. After the election, the younger Ministers chose Mr Goh Chok Tong to be the leader and he became the first Deputy Prime Minister."

Two Opposition candidates were elected. Mr JB Jeyaretnam in Anson re-elected and Mr Chiam See Tong in Potong Pasir for the first time. At the post-election press conference, Mr Lee interpreted the election results using a biblical reference. He described it as the inevitable transition from the Independence generation to a new generation of voters who knew not Joseph.

Prime Minister went on to say, "The Party's early years, pre-1985, were full of drama and excitement, whereas the post-1985 story has been one of relative calm and stability. Year after year, Singapore continued to sustain its strong growth and rapid transformation. We carried out two leadership transitions smoothly – from the 1G to the 2G, and then from the 2G to the 3G. This has been a story of stability and progress. Of evolution, not revolution. Of patient building and improving. Of ensuring that tomorrow will be better than today. This book recounts how the PAP continuously transformed and renewed itself over the decades."

So, renewal is key, Sir, and we need to concretise the plans for it. Before I go into the meat of my speech, let me respectfully ask a few questions.

What if Senior Minister Teo Chee Hean were 15 years younger? What if Senior Minister Tharman were 15 years younger? They would be ideal candidates for the 4G Prime Minister-ship. Or what if Minister K Shanmugam, Dr Vivian Balakrishnan or Dr Ng Eng Hen were just 10 years younger? They, too, would be ideal candidates for the 4G Prime Minister-ship.

The point I am getting at is that I can appreciate that there are many constraints in choosing a leader – age, years in politics, circumstances beyond one's control. To get my point across, let me share what leadership means to me. And here, I offer a very humble parallel through the lens of sports.

In secondary school, Junior College (JC) and in the club leagues, I was asked to captain hockey teams. I accepted the invitations. Was I the best hockey player on the team? No. In every team I captained, there were three or four players better than me. So, why was I asked? Maybe because I could read the game; maybe because I had deep friendships with everyone on the team; maybe because I was able to decipher what our potential as a team was and worked our guts out to materialise that potential. Whatever the reason, I gave it my best shot and the players better than me also became part of the team's cause.

When I moved on to play for Singapore in the men's national hockey team, we chose the best person for the captaincy. It was not me. There were four or five of my teammates who were better players than the captain who was chosen. So, why was he chosen? Because he could read the game better than any one of us. He could gel a team better than any one of us and he understood his opponents and their tactics well.

The point I am getting at is that we cared less about who the captain was. We were more concerned about how Singapore was faring on the scoreboard and, when we played in Malaysia and India, the matches could get very tense.

Sure, choosing the right teammate to wear the captain's armband is important. But what mattered more was the whole team's performance. What mattered in any stadium we played in, whether on home soil or internationally, was what was on the scoreboard. What is Singapore's score? Is Singapore up or is Singapore down? What do we need to do better for our performance as a team? For whom? Ourselves? No. For Singapore and the Singapore flag we wore over our chest.

The point I am making is that you, the 4G, can choose someone who is not necessarily the smartest, but you need to choose someone who is the best fit to bring together a team. You have in your ranks hon Members – Chan Chun Sing, Lawrence Wong, Ong Ye Kung, Tan Chuan-Jin, Desmond Lee, Edwin Tong, Tan See Leng, Indranee Rajah and many others. There was Ng Chee Meng but we had sadly lost him in Sengkang. Among the 5G, you have hon Members Sim Ann, Chee Hong Tat, Zaqy Mohamad, Janil Puthucheary, Alvin Tan, Desmond Lee, Sun Xueling and many others, first among equals – primus inter pares – team effort. We lost Amrin Amin and Lam Pin Min who would have been key members of the 5G team. I miss Amrin and Pin Min. They were exceptional Members of Parliament. Now, please do not get me wrong. I, for one, have no ambition whatsoever to be Prime Minister, in case that is already not obvious.

Here is another caveat. If I did not mention a Member's name in the speech, please do not read anything into it. I only have 20 minutes to give the speech and I do not want to breach the time limit.

The point I am making here, and the point behind this speech is: for us in Parliament to show the world that, in the middle of this pandemic, we can even sort out the succession plan. We do not need to think variant-to-variant, day-by-day, month-by-month; rather, Singapore plans decade-by-decade. The manifestation of such far-sightedness is our leadership renewal. We must get it right and we must make the world aware of the succession plan.

Please do not mistake me. Do I think we have the best man as Prime Minister now? Yes, absolutely. Around the dinner table, when we meet over a meal, my father and mother would say to me, "Is Prime Minister alright? Is Teo Chee Hean alright?" These questions come up, especially when Singapore is going through tough times and tough spells. These are real concerns. It is a concern for the person. My response to my parents is that: "Prime Minister and Senior Minister are fighting fit but that the load is heavy to carry."

Please do not misinterpret me. The point I am making is that we have solid leadership now, but we must, with utmost imperative, line up the future Prime Minister and his or her deputies, so that they get the longest runway possible before taking over the controls in the cockpit.

Again, so as not to be misunderstood, I would hope that even when the 4G is in place and holding the reins, Prime Minister, Senior Minister Teo, Senior Minister Tharman and the seniors in Cabinet will stay on as Senior Ministers or Coordinating Ministers to shepherd the new team.

Allow me to move to a different but somewhat related point. Allow me to share some private-sector perspective on this.

I am a lawyer at Lee & Lee. My clients, including MNCs, look very carefully at political predictability when making decisions as regards which country to invest in. Time and again, my clients have shared that Singapore's predictable political environment gives them confidence to invest their business, human capital and infrastructure long term in Singapore. Germane to that is their understanding of Singapore's political succession planning. And, here, I am talking about political succession planning within the PAP.

Is this a speech better suited for a Party conference or a speech in Parliament? I would say it is an appropriate and relevant speech to be made in Parliament because the PAP and its succession planning have been organic to Singapore's success story. Along with PAP's effort, coupled with the sweat of Singaporeans, Singapore has transitioned from third world to first and become a choice destination to invest in the 2020s.

It is with this belief and principle in mind that I make the propositions today, that is, the ruling party of the day – the PAP, must swiftly choose the next Prime Minister and next Deputy Prime Ministers and give them as long a runway as our current Prime Minister can manage.

This reminds me of a conversation I had with hon Member Sitoh Yih Pin in Morocco. We were there to learn counterterrorism measures and whether Morocco's counterterror tactics could be deployed in Singapore. In between the busy schedule, Sitoh and I spoke about political succession among the 4G. Why? Because we like to play political chess games? No. The backbenchers discuss these things between themselves because we want to see Singapore succeed. Sitoh is a real fighter. He has no need to mince his words. So, we talk frankly.

Sir, I have been in politics longer than many of the potential candidates for the 4G Prime Minister-ship. I entered in 2006 at the age of 30, at the request of the Prime Minister. Many of the candidates for the 4G Prime Minister entered in 2011 and 2015. I come with no personal agenda. I make this speech with no personal agenda.

Here, in this Chamber, I have, for years, been pushing for causes and policy changes under the steady hands of four Speakers and under the watchful eyes of five Whips.

Members, please know, in articulating these views, I have Singapore at heart. My humble message to the 4G is this: please apply your minds to succession planning and articulate swiftly your thinking and choice as regards to the leadership to Singaporeans. They deserve nothing less.

In conclusion, Sir, I support the Budget but we are capable of so much more. Let us show the world what Singapore is made of. In the throes of a crisis, we can pick a future leader and the core team to take Singapore through its next chapter and beyond. That shows the world that we have mettle. That shows the world our ballast in a time of crisis. That shows the world our deep reservoir of resolve and our steely determination to persevere and fight on.

Mr Speaker: Ms He Ting Ru.

2.56 pm

Ms He Ting Ru (Sengkang): Mr Speaker, the last few years have sometimes felt like something straight out of a storybook: it was the best of times as we witnessed Singaporeans stepping up and volunteering to help the vulnerable amongst us during lockdown. It was the worst of times as we watched the early outbreak in the dormitories unfold, together with reports of terrible living conditions. It was the spring of hope, as we opened up to Phase Three at the end of 2020. It was the winter of despair as, in particular, our key workers and restaurants suffered many reverses and took many steps back in our path towards reopening. Old certainties have been shaken, the script had to be torn up multiple times and many a time, we have been left wondering – and perhaps still are – if the light at the end of the tunnel was actually that of an oncoming train.

And today, even as we struggle to stay afloat amid what feels like endless price increases, we are also faced with understandable anxiety over climate change, the situation in the Ukraine, as we wonder whether we are witnessing the birth of the great conflict of our times. Today, more than ever, we have seen that the way we react when we are threatened, the actions we take when we are under pressure, are the most accurate reflection of our characters, of who we are as individuals, organisations and as a society.

It has not been easy. The various peaks and troughs which we have experienced since COVID-19 hit us have been exhausting and there will be more to come still. Our path to living with COVID-19 is a long one and the fatigue experienced by many of us – from our frontline care workers, young parents, teachers, business owners – is real.

It is also troubling to hear pleas, both online and offline, for our leaders and policy-makers to "come down from the ivory towers" to see what the situation is on the ground. The situation where our people feel and perceive that this Chamber is an ivory tower that is out of touch with reality is highly concerning and one which cannot be allowed to carry on. We should adopt a reflective approach on the possible drivers for this feeling amongst the public and work together to overcome it.

The Budget this year is entitled "Charting Our New Way Forward Together". It acknowledges that a "New Way Forward" is required and that we, in this House, have a duty to ensure that we do so together and that we do not leave anyone behind. This is something we can all get behind. Indeed, the Workers' Party's 2020 Election manifesto's preamble is entitled "A Singapore For All". But the key is to ensure that the formulation of our policies and their effects on the ground move us decisively towards achieving this aim.

As a society, we need to decide together how best to invest in our people, how we should spend our tax dollars. After all, what does it say about us as a society that our senior residents come to us and tell us as a matter of course that they have requested for their medication dosages to be cut down because they cannot afford to pay for the full dosages that doctors have prescribed to them to treat their medical ailments? What does it say about us when our young parents have to make daily choices about how to apply the last dollars in their bank accounts as they cannot afford to buy both nappies and formula for their newborns, when the family is hit by an unexpected job loss through no fault of their own?

These are real-life scenarios that all of us have seen our residents tackle. And while it is true that many helping hands are available, we are often told that much time, energy and stress is involved in navigating the support system. While these systems are in place to prevent abuse – and quite rightly so – we must also ask ourselves and continue to ask ourselves important questions: who we are as a people and what values do we stand for? Do we want our policies to empower Singaporeans to be our best selves or do we restrict Singaporeans from being our worst selves?

As we think about our new way forward together, it is still a key principle that Singaporeans must be self-reliant and we must be responsible. Is this consistent with our laws and policies that are formulated with the assumption that everyone is out there to game the system, on the lookout for unfair advantage for themselves to the detriment of others?

Does this approach not build a culture of Singaporeans trying to figure out what is legal or allowed, rather than applying their own mind to what make sense and is reasonable for both themselves and their fellow citizens?

Another clear example is the current debate surrounding our medical certificate (MC) culture. The requirement for many employers for the doctor's note for any absences from the workplace due to medical reasons stands in stark contrast to my experience in my first job in the city of London. Indeed, in the UK, employers are only allowed to ask for "fit notes" if employees are sick for more than seven days. Workers are asked to self-certify if they are sick for less than seven days. In fact, it was not unheard of for employers to offer "duvet days" to their employees: days off not because they are ill, but because employees sometimes just need some time to rest. These are often structured in a way that works best for their firm or industry, and have been shown to actually increase productivity and the mental and physical well-being of workers.

I am not advocating a wholesale copying of these approaches, but I believe it is worth looking at our own labour market to see what positive changes we can make by studying these examples. To those who worry that these practices may result in people taking advantage, I observed that these practices appeared to work well in a highly dynamic, profitable and productive environment, as the common understanding was that people were serious about their jobs and were willing to work hard in order to progress in their careers.

Indeed, we cannot discount that the financial services coming out of London remain world-leading and innovative. If the argument that these are the things that could not work for Singapore, then we should take a long hard look at ourselves and ask: "why not?", followed by "how do we get there?". How do we move to a society where people are empowered to exercise good judgement and be truly responsible? How do we ensure that people do not succumb to the temptation to indulge in corrupt practices because it is the right thing to do, and not because they have a high salary preventing them from being tempted?

Against this backdrop, I would like to turn to the most pressing problems and issues facing Singaporeans as we emerge from the COVID-19 years. In particular, our residents in Sengkang keenly feel the press of having to deal with lasting financial and social effects of the pandemic. Many of them are members of both the "sandwich" class and also the "sandwich generation", and rising prices have and will continue to hit them hard while they struggle to provide for both the elderly and the very young in their families.

For these Singaporeans, the concept of inter-generational equity, or intergenerational solidarity, is extremely important in ensuring that one generation does not unduly bear the brunt of paying for expenditure of either a future or previous generation.

My colleagues have and will continue to touch on these issues. But while this concept may appear to be remote in Singapore at the moment, I would also note that as we restructure our economy and society, we should be wary of allowing a situation to develop where political outcomes and opinions are, or are seen to be divided strongly along intergenerational lines.

This has been seen in the West in the phenomenon of "Boomer blaming" for everything – from Brexit to toxic work environments that degrade mental health, and only serves to exacerbate generational grievances. And we need to tackle this matter in a holistic way, ranging from creating more opportunities and spaces for the generations to learn from and support each other, and to ensure that our fiscal policies do not, and do not get interpreted as unfairly favouring one generation to the detriment of other generations.

Coming back to the issues surrounding the here and now, the ever-increasing cost of living is a topic that we hear feedback about time and again. Individuals, households and businesses have approached us for assistance with juggling the impact of relentless price increases. They have noted that a final 2% tax increase means a 28% increase in the amount of tax to be paid. They have also noted that there have already been price increases prior to the tax hike taking effect.

Just the other day, I noted during one of my estate walks that a Buangkok coffeeshop stall has put up a sign stating that rising prices have obliged them to increase the price of all items by 50 cents, which definitely far exceeds 2%. Furthermore, global brands such as Nestle have also sounded the alarm and announced that they will increase prices of their products – and these increments will not be captured by any GST Voucher scheme. I fear that the cascading and knock-on effect that such cost increases will be devastating on households already on a knife edge.

Additionally, the war in the Ukraine, which has finally come to a head last week, will only lead to more supply chain disruptions and global price rises, and if it proves to be prolonged, it may end up having a far larger effect than predicted or catered for. We will not be spared in Singapore.

Already, crude oil has hit multi-year highs of over $100 a barrel and stock markets have reacted with volatility. Food prices will not be spared, as Russia and the Ukraine are major exporters of agricultural products, and Russia is one of the largest exporters of fertiliser globally – any drop in supply would lead to an increase in costs, which means farmers will pay more and have to pass it down to the end consumer. Russia is also a major supplier of natural gas, which has implications for us in Singapore, as around 95% of our energy needs are still powered by natural gas. This will only add to the woes currently experienced by our households and the businesses already grappling with huge increases in their energy bills. Notably, politicians in Germany are already advocating a natural gas reserve to shelter consumers from price shocks in the wake of the conflict. All these further underscores the need for our green transformation to take place urgently.

The situation is grim in the near-term. It is why the Workers' Party cannot agree to a GST hike – whether delayed or staggered – especially as we believe not all other alternatives have been exhausted. Yet we also acknowledge that there are long-term pressures on our public purse strings, as we search for a shift towards long-term sustainability on all fronts, be it environmental, demographic or economic. After all, the world cannot keep growing endlessly, a fact illustrated by figures released in November last year which have shown that India's fertility rate has dropped to below replacement rate for the first time ever.

In view of this, we also believe there is room to make our GST system less regressive beyond the current approach to further ease the burden on the lower-income groups. It is why we have to consider if our GST can start allowing for exemptions on certain essential items – treatment that is often seen in the case of other economies. The list of items should be kept to essentials such as food supplies, healthcare and care services, including childcare.

This is what economies, such as the UK, Australia and Japan, currently do and their experiences should inform us as we come up with our own list of exemptions that would be most beneficial to more vulnerable Singaporeans, and to avoid the pitfalls some countries have come across while deciding which items should be exempt and which not. Exempting items such as healthcare, infant care and childcare will also help to ease current and future cost pressures in industries that struggle to fill their manpower requirements with local workers. And I note there are stark implications for those industries with the foreign worker policies which are being tightened by the measures just announced in this Budget.

Additionally, I note that exemptions applying to children's products and childcare would surely be welcome relief for parents or prospective parents and go towards addressing our low total fertility rate (TFR), as financial concerns are often cited as one of the key reasons why people delay having children or decide not to have them. I need hardly add that raising our TFR is an existential problem for us that we have been unsuccessfully trying to solve for decades.

Consumption taxes are regressive by nature. While it is true that exempting essential items from GST is regressive, the alternative of keeping our existing system of no exemptions is likely to be even more regressive. This is because those who are on a lower income spend a far larger proportion of their income on consumption, which is always taxed in our case. Therefore, exempting key essential items from being taxed will significantly reduce the impact on lower-income groups. Additionally, while it is true that higher-income earners also benefit from such exemptions, these items, being essential in nature, should result in any derived benefits being self-limiting – after all, how much more rice can a rich person eat?

Another argument is that it is too expensive to implement these exemptions and that this will increase compliance costs for businesses. However, with the advent of AI and advances in technology, these costs should be much lower compared with when GST was first introduced and any upgrades to accounting or associated software should be a one-time cost for both Government and businesses. Additionally, compliance costs will likely be of far greater concern to smaller enterprises, and I note too that small businesses with turnovers of less than $1,000,000 are not required to register for GST.

How can it be that a country such as Singapore, which has long-prided itself ourselves on having targeted, efficient – even convoluted at times – policymaking, could shy away from implementing a system of GST-exempt items by saying that it is too much effort?

Turning now to how we measure our spending and our progress, I repeat previous calls made in this House to rethink the long-term sustainability of how we measure our progress.

Since its adoption in 1944 at the Bretton Woods Conference as the formal measure of a country's economy, gross domestic product (GDP) has proved to be a useful measure of the progress made by a country. And Singapore has done extremely well from our difficult beginnings.

Yet, in recent years, there has been a sense amongst many of us that GDP does not tell the full picture by any means. In particular, healthy GDP figures in 2021 and 2022, especially compared against the depressed bases in 2020, leave out the entire story of our country. There is a growing acknowledgement that beyond economic growth and survival, we should also thrive as a society and be mindful of the impact that we have on our planet. GDP measurements alone fail to address these shifting values in our current world. GDP alone also does not capture the full picture of how we care for our people.

To illustrate this point, many may not realise that GDP does not measure things, such as planting a tree, and that it does not measure the unpaid household and care labour undertaken by so many of our fellow Singaporeans. Yet, one would be hard-pressed to argue that these do not matter in how we measure our progress as a society.

How do we, therefore, determine whether enough has been done to address concerns about, for example, mental health and well-being? After all, it is clear that there is much work to be done in Singapore, judging by the number of registered psychologists and psychiatrists in Singapore, especially in the public sector. There are also long waits to see counsellors in schools and tertiary education institutes, and concerns have been raised about the quality of support received.

These are but some examples of what should matter to us as we measure our society and how we measure our holistic progress. Many economists have been advocating for years that countries start developing a dashboard which contains a variety of other measures for how well an economy and society has been doing.

Yes, GDP matters, but it does not do well in measuring our human, social and natural assets. A uniquely Singapore dashboard should, therefore, be developed and published together with GDP results. This can contain quarterly or annual measurements of our progress in terms of poverty reduction, social mobility and wealth distribution in an easy-to-understand way, allowing us as a people to understand at a glance what our targets are and the progress we have made or failed to make beyond GDP figures.

The dashboard should also contain measurements of the impact that we have on our environment and planetary health. Lessons can be learned from the introduction and abandonment of the "Green GDP" by China in the early part of the century. Our impact dashboard could, for example, contain indices relating to our emissions, land use changes, waste reduction efforts and have specific measures on how well we are doing in our transition to a green economy – a topic that my colleague Dennis Tan will elaborate more on.

Finally, we need to move from being merely a circular economy – as outlined by MTI in 2019 – to what I think of as a "circular society". This means that while we aim for zero waste in terms of material use and energy resources, we also need to ensure we do not waste wealth, technology and knowledge, have a thriving knowledge commons and a strong culture of philanthropy.

The last point in particular is something I note that this Budget aims to promote through various tweaks to tax incentives and co-funding measures. To know how successful the increase in spending has been, philanthropic indicators on the dashboard could include details such as trends relating to donations and the nature of who is donating.

As little is currently known about how a circular economy or society can promote better social equity, more research is certainly needed – particularly in the local context. Narratives of a circular society can and should be developed, as the long-term sustainability of our country and planet is at stake. We must stop assuming that infinite economic growth is possible and start shifting towards formally measuring our progress on other things that matter.

Mr Speaker, we are indeed at the crossroads, and it will be negligent of us not to put our heads together to figure out how best to chart out a sustainable way forward for Singapore. Headwinds will be strong and frequent in the years to come, and our people will need to demonstrate grit and fortitude to survive and thrive. The difficult environment we see ahead of us will test us and we should not add further to the financial and other burdens of our people by raising our GST when there are other available options. It is therefore regrettable that we must vote no to a GST increase and therefore cannot support this Budget.

Mr Speaker: Ms Jessica Tan.

3.15 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Speaker, thank you for allowing me to participate in the Budget debate.

We are still dealing with the pandemic and it has been challenging for business and individuals. We need to continue to support those still impacted. But we must position Singapore for the future and we must grow our economy to provide opportunities and quality of life for Singaporeans. Beyond growth, we must also ensure that Singaporeans and Singapore have the capability to seize these opportunities.

I will focus on three topics in my speech today. One, investing for growth and the future. Two, strengthening our social compact. Three, inclusion and ensuring that no one is left behind.

Investing for growth and the future. In the Budget debate last year, I spoke about the need for Singapore to grow and to step up the momentum for businesses and individuals to build capability to seize opportunities when the economy opens up. One year on, this call is more urgent. While COVID-19 is still with us, Singapore continues to attract investments in electronics and biomedical manufacturing, as well as new investments across sectors such as agri-food, chemicals and materials. These create new jobs and opportunities. Many of these new jobs are PMET jobs and require relevant skills and competencies. But to be able to seize these opportunities, our businesses and workforce must have the relevant capabilities.

Let me touch on building capabilities. The pace of digitalisation has accelerated as businesses were propelled to go digital to adapt in order to be able to operate in the pandemic. Many are still in the midst of their digital transformation. Now, with climate change, high global energy prices and the Ukraine situation, there is a pressing need for businesses to become more sustainable. We have seen that companies that had invested in digital were better able to pivot and do business in the pandemic.

For companies to become greener, it will require not only funding but more importantly know-how, rethinking of how work is done, how goods are produced and services delivered. Processes and, more importantly, behaviours need to change. We do not want to have to wait for another crisis for our businesses to become more sustainable. Digital can also help with more sustainable business practices. The two are not mutually exclusive. The ambition, as outlined in the Budget, is to achieve net-zero emissions by 2050. How can we ensure that we do not leave our small businesses behind? With the new carbon tax, if businesses do not transition and invest in clean technologies, they will definitely find it hard to survive.

Businesses tend to see sustainability as the need for compliance and cost. What can be done to help businesses understand the benefits, competitive advantage and growth opportunities?

In the joint study that was done by Economic Development Board (EDB) and Enterprise Singapore (ESG), it outlined the role that Singapore can play to become a key carbon service hub. Carbon services can generate new businesses and jobs in Singapore. The estimates are that economic opportunities from carbon services could create a projected gross value added (GVA) of between US$1.8 billion to US$5.6 billion in Singapore by 2050. What can we do to help our businesses build the capabilities to participate in these opportunities and more importantly, to thrive?

Let me now touch on a more immediate challenge that businesses across many sectors are facing, that is, getting the manpower to meet the business demands. The feedback from companies across industries is the difficulty to meet their manpower needs. These range from tech talent to roles across different segments. This is impacting their ability to operate effectively. The impact of the pandemic on manpower and the level of Omicron infections has made the situation even more pressing. As business picks up, the situation will not allow our businesses to address demand and will impact their ability to grow. What targeted support can be given to allow viable businesses to address these current manpower constraints to transform and more importantly, to grow?

Minister Wong in his Budget Statement stressed the need to "redouble our efforts to invest in new capabilities". Technology and digitalisation have picked up pace across all sectors in Singapore. Workers even in non-tech jobs need to understand and know how to use technology in order to do their work. This is not just about how to use the latest technologies and devices as they will continually change. While there will be an additional $200 million to fund enhanced schemes to build digital capabilities in our businesses and workers, I think we also need to look at what support will be given to companies to help workers, especially those in the workforce gain the knowledge and skills they need in this new world of work. These skills are not about having deep technology skills in artificial intelligence, data analytics, or any future technologies but rather how to work with these new and ever-changing technologies to be able to do their work and thrive.

With the greater reliance on digital, the security and resilience of our digital infrastructures are crucial. We need to continually invest and strengthen our digital infrastructures. Minister shared that broadband access speeds will be increased and investments made in future technologies. Can Minister Wong also share what investments will be made to strengthen the reliability and the security of our digital infrastructures?

Let me move on to the point about strengthening our social compact. I thank Minister for a Budget that has heard the challenges and recognised the current cost and inflationary pressures that Singaporeans are facing and for delaying the start of the GST increase to 2030, with the two-step implementation.

I would like to make a few points about the Assurance Package. While the support in the Assurance Package should and does provide more for the lower-income, the Assurance Package does also signal the Government's intent to also cushion the impact of the GST increase to include more middle-income households. This is demonstrated in the components of the Assurance Package of Cash Payout, Additional GST U-Save Vouchers, GST Cash Vouchers for seniors in the Senior Bonus, Medisave Top-ups; and the Community Development Council (CDC) Vouchers to address essential expenditure of families in areas of utilities, groceries, education and health. A subtle but important point to note is that the cash payout eligibility is on assessable income and property ownership, rather than the annual value of residence.

Annual value (AV) of the property is used as the main criterion for means testing and eligibility for many support schemes. While I do not disagree that the value of the property reflects one's means, it does not always mean that all who live in these properties have the means or have more. A point that I have raised previously is the application of the AV criterion for those who live with their extended families in properties with annual value above $21,000. These persons could be elderly parents or siblings who live with relatives as they need care or cannot afford housing. In some of these cases, they do not have means but because of their residential address, they do not qualify for any support. An example is the COVID-19 Support Grant (CSG). Those who have lost their jobs and meet the CSG eligibility criteria, but live in a home of AV above $21,000, regardless of ownership, are not eligible for the COVID-19 Support Grant.

With the trend of smaller families and people marrying later, we do have more couples who have to provide for both their young children and senior parents or relatives. Some call this the "sandwiched generation". I do have such families in my constituency who live in private properties with annual value between $21,000 and $30,000.

In the spirit of renewing and strengthening the social compact, Minister Wong has said: "we want every Singaporean to know and feel that he or she has a stake in our society, and that they will not be left to fend for themselves when times are down". I would like to ask if there can be refinement of the use of the AV criterion for eligibility of support schemes? I am not asking for the AV to be removed but rather can it be refined to apply to home ownership rather than residence for extended family members or higher AV for the "sandwiched generation".

I must make a point here. As we look to the Government to continue to provide and support Singaporeans when they need it, as part of the social compact, we too, need to do our part and balance that with what each of us can do. So, as we talk about cost pressures and one of the biggest cost pressures that is now facing us is fuel cost. As a taker, I do also say that individuals and businesses, apart from asking for support – and I will continue to ask for support for businesses and individuals, we all need to do our part to also finds ways to conserve, to be greener. Otherwise, it is just addressing cost but not finding better ways to do things; otherwise, it is not sustainable. I am not talking about "green". I am talking about being able to fund this.

Let me move to my last point about inclusion and ensuring that no one is left behind.

Mr Speaker, Singapore has a rapidly ageing population, the employment landscape of our workforce has changed. Those above 55 years of age make up 25.7% of the workforce in 2020. As part of PAP.sg efforts to better understand senior employability, in the last quarter of 2021, we conducted an online survey with seniors aged 50 years and older; 934 people responded to the survey and 98% of respondents are Singaporeans, 60% are currently working and almost 60% of them have post-Secondary education. We have a balance of male and female respondents. The respondents are from a variety of industries, working in a diverse range of occupations; 98% liked the work they are doing, citing meaningful work and having relevant experience; 60% of respondents who are working face challenges at work, with about one-fifth of them citing challenges like needing to learn new skills, dealing with changes and new norms. Amid the challenge of learning new things, the most commonly cited skills-gap is in learning new digital skills.

With digitalisation and the drive for sustainability, can we rethink how we prepare and enable matured and senior workers – who want and can work – to actively participate in quality jobs in the growth sectors in the post-COVID-19 economy?

I welcome the enhanced announcement in Budget 2022 for the Workfare Income Supplement (WIS). The rise in qualifying income cap from $2,300 to $2,500, and the extension to younger workers aged 30 to 34 will definitely benefit workers and the increased payouts for each tier will provide more support for lower-wage workers. I do, however, want to appeal to Minister Wong to reconsider the introduction of the minimum income criterion of $500 per month. This will impact older low-waged workers or those who are caregivers and need to the flexibility of part-time work. For this group of workers, while they can and do want to work, part-time work may be more suitable for them.

Let me give the example of one of my residents, Mdm Lee – this is not her real name. She is 69 years of age and works as a relief programme coordinator at an eldercare centre. She covers the duties of staff who are on leave or medical leave. Her estimated monthly income ranges from $200 to a little over $500 a month. She is currently eligible for WIS and is appreciative of the support. However, with the minimum income criterion, Mdm Lee is concerned as she will not be eligible for WIS. Will Minister consider a review of the minimum income criterion for WIS, as it will impact those that the scheme is intended to support.

Mr Speaker, I started my speech touching on the importance of economic growth. Economic success is necessary, but on its own, it is not sufficient for Singaporeans to make Singapore home. If we focus only on economic growth, our people will just leave Singapore and go where the economic opportunities present themselves. Budget 2022 sets out to "charting our way forward" I thank Minister Wong for a Budget the aims to "realising our vision of a fairer, more sustainable, and more inclusive society", to "see through the pandemic today" and more importantly, "to build a better Singapore tomorrow." I support the Budget.

Mr Speaker: Dr Tan Wu Meng.

3.31 pm

Dr Tan Wu Meng (Jurong): Mr Speaker, today I will speak on the climate crisis, our climate ambition, our energy security and our survival.

Last year, I spoke about Singapore's burning platform, a world on fire with COVID-19. With natural habitats being destroyed, we must expect more pandemics, some worse than COVID-19. But climate change is a graver challenge than any disease.

So, we need to stress-test our assumptions, test our plans for the future before the future tests us. So, we need to move quickly and boldly.

An earlier generation spoke of mudflats to metropolis in one generation. It happened. And now we face a new ambition, again, born of necessity and survival. Can we go from carbon-positive to carbon-neutral? From what is unsustainable to what is sustainable within one generation? Because that is the implication of reaching carbon net-zero by the middle of this century.

There is not much time and we need to be seriously bold because the climate crisis is about Singapore's survival, whether we stay above water. In 2019, a research paper in the journal, Nature Communications, showed very vividly, with maps, how hundreds of millions of people around the world would be underwater by the end of this century and that is just assuming a low-carbon emissions scenario.

It is our economic survival, too. In a world where carbon border adjustment taxes are being talked about; in a world where consumers choose what to buy, where to work, how to invest based on sustainability; in a world where narratives can shift from free trade to sustainable trade. We need to be ready and it means Singapore needs to raise our ambition to stay above water, to survive and to thrive.

We can only do this fast enough, within one generation, by moving boldly and ahead of the market.

Mr Speaker, our climate response must stand up to stress tests: energy security – for a carbon-constrained world; pandemic security – for a world with new diseases; social security – to ensure a just transition. All these link up with our Total Defence because, if Singapore is underwater, if we cannot keep the lights on, we are not even going to be at the starting line in a challenge. If we are laid low by a pandemic or our people are splintered and divided, we are not going to be able to deal with whatever threats come our way, kinetic or otherwise.

I spoke on pandemic security during last year's Budget. I have spoken on social security over the years. Today, I will focus on our energy security.

Mr Speaker, energy security has been a big issue around the world in recent years, and especially in recent days. Energy security is existential for Singapore. Not just keeping the lights on in our hospitals, in our homes. It keeps our NEWater plants, our desalination plants going. Our water security depends on our energy security. We know what it means if Singapore's water supply is ever called into question. And we need to think about energy security that way too.

Today, from public domain data, about 95% of Singapore's electricity is generated using natural gas. Supplies by pipeline, also LNG terminal, but it is still almost all natural gas – 95%. Some would say it is a serious concentration of risk. Recent events around the world, market shifts, events in Eastern Europe, are a reminder of this.

Electric vehicles (EVs) will further concentrate this risk because EVs also draw energy from the electricity grid. But if the pandemic has taught us one thing, it is that we need to move from "just in time" to "just in case". There is a case for Singapore to further diversify our electricity sources and to do so ahead of the market – for energy resilience, energy security, also to reduce our carbon footprint as part of the climate crisis response.

Sir, there are no illusions about it. There is a price for "just in case". There is a cost to preparing in advance for danger and for crisis. But by strengthening social support in a progressive way, we can help Singaporean families even as Singapore proceeds through a necessary transition, a just transition.

Sir, so, how do we diversify our energy security, reduce our carbon footprint, raise our climate ambition? Solar is part of the solution, but Singapore is small, we are solar-constrained. Even with solar photovoltaic panels on every building's rooftop, on every external surface of every building, solar alone would not be enough.

Regional power grids can be useful, but they do have limitations. When there is an energy crunch, some regional grids will come under the same market pressures as our own. Even if you use an undersea cable, a high-voltage direct current (HVDC) transmission line, that line is still one underwater dredging accident or incident away from being unplugged. So, we need to look at other options, too.

In July 2021, I had asked in Parliament about Singapore's potential as a hydrogen hub, in particular, low-carbon hydrogen, and whether we should move ahead of existing market conditions. We already have established capabilities in the energy and chemicals sector and in transshipment. Mr Speaker, indeed, there is already interest in hydrogen around us and in the region.

Reuters News Agency recently reported that a Japanese-Australian venture has been testing transport of hydrogen, using a ship as a liquid hydrogen carrier. They reported that just this past week, a Japanese-built ship, the Suiso Frontier, delivered the world's first long-distance liquefied hydrogen cargo from Australia to Japan. Early days, but proof of concept.

American think-tank, CSIS, in October 2021, published a commentary. They assess that Australia, by 2030, could well be a "major player" in global hydrogen production and trade. Their green hydrogen, when exported, will need to be shipped to destination markets.

So, the question is, which cities in Southeast Asia have the potential to be a hydrogen hub in the hydrogen economy? Is Singapore among them? And, if so, do we want to be first mover, second mover or too late to move?

Moving ahead of the market will help Singapore build capabilities, reduce the risk that we will be left behind. Starting up hydrogen-based electricity generation and fuel-cell capability will help us build the experience to scale up when we need to. Because the most difficult step is going from no capability to having some hydrogen capability.

On other developments, Mr Speaker, we should also keep a very close watch on developments in nuclear energy, both fission as well as fusion.

The International Energy Agency (IEA) in 2021 observed that nuclear power output avoided about 55 gigatonnes – 55 billion tonnes – of carbon emissions over the past 50 years, nearly equal to two years of global energy-related CO₂ emissions.

For nuclear fission, we should continue assessing the safety of small modular reactors and whether a future generation of small modular reactors can be safely deployed in the Singapore context. We should keep on looking at this.

For nuclear fusion, it is still early days, but promising prospects. In December 2021, a team at the Joint European Torus (JET) facility near Oxford generated 59 megajoules of energy for five seconds – enough energy to power 35,000 homes for those five seconds. Again, early days, but notable developments.

Sir, we need not decide yet, but we need to understand and build analyses and skills regarding these evolving and emerging technologies, so that when the time comes, Singapore can make informed choices, even hard choices, about these new energy technologies.

Mr Speaker, when I was born, the global carbon dioxide concentration in the atmosphere was 333 parts per million (ppm). Today, you look at the Keeling Curve, the CO₂ concentration is 420 ppm. It is still going up. Climate crisis – still ongoing. Singapore needs to be ready.

In last year's Budget debate, I said: "…we must also ask ourselves beyond what is possible today, what is necessary for tomorrow. What do we need to do, that we cannot yet do?"

Sir, the climate crisis and our climate ambition means we need new capabilities for our energy security and our decarbonisation. Necessary dreams as we face up to necessary realities. I stand in support of this Budget.

Mr Speaker: Mr Louis Chua.

3.43 pm

Mr Chua Kheng Wee Louis (Sengkang): "It was the best of times, it was the worst of times". Mr Speaker, those were the opening lines from the novel by Charles Dickens, A Tale of Two Cities. Lines which I find to be quite apt to describe the situation we find ourselves in today.

Two years into the pandemic, we are still battling the latest wave of infections brought about by the Omicron variant, with many of our healthcare workers struggling to cope with the stressful working conditions today. COVID-19 fatigue has also meant that many of us cannot help but feel overwhelmed at times even as we try so valiantly to live with endemic COVID-19.

On the economic front, it seems that economic growth is starting to pick up again. Singapore's GDP grew by 7.6% in 2021, with the Government projecting an above-trend 3% to 5% growth for 2022, with total employment seeing the highest quarterly growth – since 2014 – of 47,400 workers in the fourth quarter. Yet, the rosy headline numbers belies the risk to the fragile global and local economic recovery, not least because of geopolitical tensions and rising concerns over inflation, among others, and one cannot rule out the tail risk of a recession in the near future.

Inflation and the rising cost of living, in particular, have been of grave concern to policy-makers globally and the man-on-the-street alike. As shared in one of my speeches in November last year, it was unclear if the current inflationary pressures in the market are transitory or permanent, though the US Federal Reserve has since then dropped the term "transitory" in its description of inflation and with concerns about stagflation now appearing in the market lexicon instead.

Locally, the MAS has been concerned enough about inflation to surprise the market with a tightening of monetary policy in October, given that external and domestic cost pressures are accumulating. And soon after its first tightening in three years, MAS acted again in its second tightening in three months, given upside risk of inflation. Even if what Minister of State Low Yen Ling shared in this House ensues and that inflation is expected to ease in the later part of this year, it does not mean prices are going to come down. It just means that prices will still rise but not jump and still continue to eat into the real incomes of Singaporeans. Who can forget the slew of price increase signs being put up at coffeeshops since the start of the year and the more than 30% increase in fuel prices or the 23% increase in electricity prices since a year ago?

In the context of rising inflation and an uncertain global economic recovery, a GST hike, while delayed, would still be counterproductive, given the potential drag on private incomes, consumption and, ultimately, our GDP.

As my fellow Workers' Party colleagues have shared earlier, there are alternative revenue sources that can and should be considered beyond the regressive tax that is GST, with options to use more of Singapore's existing physical headroom, for example, having the added benefit of minimising the impact to our local households and economy alike.

My speech will thus focus on three main areas which warrant urgent consideration.

Minister Wong made adjustments to residential property taxes and the Additional Registration Fees (ARF) for cars as part of Singapore's answer to wealth taxes. I welcome these changes. When viewed from a glass half-full perspective, it is a step in the right direction when it comes to tackling wealth inequality and strengthening our social fabric – albeit a small step. However, when viewed from a glass half-empty perspective, the measures are a tokenism rather than a meaningful attempt at wealth taxes in Singapore.

Higher property taxes and ARF are expected to result in a $430 million increase in annual revenues and, even if we include higher personal income tax rates, the total annual increase is just about $600 million. This is significantly below what some academics have put forth as possibilities in our conservative estimates of what the net wealth tax could bring at about $1.2 billion annually. For example, in a November 2021 CNA article, Assoc Prof Walter Theseira from SUSS noted that a wealth tax might conceivably pull in a similar amount to raising the GST by a few percentage points, while a Bloomberg article on 16 February quoted Mr Christopher Gee, Senior Research Fellow at the IPS, as sharing that a similar wealth tax rate in Singapore, as that of Switzerland presumably, would generate $2.7 billion in Government revenues.

Consider the case of property taxes which, as the Minister said, is currently Singapore's principal means of taxing wealth. As what Business Times' correspondent Ben Paul shared in his article, "As an owner/occupier of a modest apartment in the core central region, property tax is not a particularly big expense for me. In fact, it is nothing, compared to the maintenance fees and costs of general upkeep for my unit."

While the increase in the headline marginal property tax rates appear high, the actual impact on the households involved are unlikely to be material. As noted in Annex C-2 of the Budget Statement, an owner-occupied condominium in a central location is only expected to see an increase of $200 a year while a very large, landed property is expected to see a $15,400 increase. The corresponding numbers for non-owner-occupied properties are $1,004 and $19,200 respectively. Based on my analysis, a centrally located condominium in Cairnhill that is being leased out as an investment property, only raised rents by 2% to offset the higher property tax rates while that of a luxury development located on Nassim Road commanding monthly rentals of almost $20,000 a month need only raise rents by 7% to offset the higher property taxes. To put into context, rents in 2021 for a private residential property already rose by 10%.

The other tax change is that of introducing a new ARF tier for cars. For a Bentley Flying Spur, which retails for almost $900,000 without COE, the new ARF tier is expected to increase ARF by about $59,000, a fairly large number in itself but represents just about 6%-7% of the cost of the car. For someone who is prepared to pay almost $1 million for an asset that depreciates rapidly over 10 years, is it even meaningful in the grand scheme of things for this person?

Thirdly, higher personal income tax rates are not wealth taxes per se. But I do agree with the principle that those who earn more should contribute more and it is a fine example of what progressive taxes look like. However, the increase appears to be very modest once again, once you work through the mathematics. For example, someone making $1 million in chargeable income would pay a grand total of $5,000 more in personal income taxes, or 0.5% of chargeable income, while someone making $1.5 million would only pay $15,000 more, or about 1% of chargeable income.

I would even argue that the last increase in personal income tax rates in Budget 2015, where the top marginal personal income tax rates were raised to 22% among others, was an even bolder move than what we have today, raising more revenues at $400 million a year back then, as compared to $117 million a year, with today's change. Also bearing in mind that from 2015 to 2019, that is, the latest available year on SingStat, the number of individuals with assessed income of more than $300,000 has increased by 22% within this timespan as well.

I recognise that the Government will continue to study the experiences of other countries and explore options to tax wealth effectively. And I sincerely hope that more meaningful efforts to change our tax system and raise wealth taxes can be made sooner than later. Yes, I agree that taxing wealth has its challenges. But consider a hypothetical case of a multi-billionaire tech founder who made a windfall after his start-up's IPO and has retired from the firm. From time to time, he collects dividends as his income while continuing to hold shares in the listed company, which accounts for the vast majority of his wealth.

Meanwhile, he is renting multiple luxury apartments instead of owning just one place of residence. And does our tax system adequately capture the wealth of what could be one of Singapore's richest? Would this person even be paying income or wealth taxes at all? If we think about the Forbes' 50 richest list in Singapore, just how much of their wealth is in their residential addresses or the cars that they drive?

As highlighted by a 2018 OECD report on the role and design of net wealth taxes, which provide for certain tax design recommendations, in countries where capital gains are not taxed, there may be a stronger justification for levying a net-wealth tax. A similar argument can be made for countries that do not levy taxes on inheritances. Singapore will fit into both of these cases as a country with no capital gains tax, no tax on dividends, no inheritance tax, no estate duties and still has one of the lowest effective personal income tax rates globally. We must guard against only going through the motions when we move towards addressing wealth inequality, while still leaving the least fortunate among us still pleading, "Please, Sir, I want some more".

Let me now speak about corporate income taxes amidst BEPS 2.0, of which Singapore is one of 141 members of the OECD G20 inclusive framework on BEPS.

Corporate income taxes have consistently been the largest contributor to the Government's operating revenues and 2022 is no different, at an estimated $18 billion, or 22% of operating revenues. However, while part of the goals of this Budget is to build a fairer and more resilient tax system where those with greater means contribute a larger share, could there be more scope for certain corporates to pay their fairer share of taxes, especially against the context of a looming GST hike, which ultimately, is borne by the end-consumer and not the corporates?

To be clear, I fully recognise that many local SMEs and small businesses, especially those in the retail and F&B scene, have been struggling to make ends meet amidst the pandemic and the changing safe management measures (SMMs) rules over the past two years. And I applaud efforts by the Government to strengthen our local enterprises. However, it is interesting to note that while more than $29 billion of Job Support Scheme (JSS) funding was provided to corporates in the last two years, it appears that corporate profitability, as a whole, did not fare too badly.

In FY2020, while the Government expected cooperate income tax (CIT) revenues to fall by 18% year-on-year or around $3 billion to $13.7 billion in FY 2020, the actual CIT revenue turned out to be $16 billion, not too far from FY2019 levels. Revised FY2021 CIT revenues are expected to exceed FY2019 levels at $17.5 billion, growing by 9% year-on-year or $1.4 billion, and this is expected to continue into FY2022, reaching a new high of $18.2 billion.

This brings me to my key point on BEPS 2.0. I acknowledge the Minister's comments that the Government needs more time to study these issues thoroughly and will announce changes in the corporate tax system when we are ready. However, if things go according to plan, BEPS 2.0 is already on the horizon, with the implementation of the two-pillar solution targeted to start in 2023 next year.

I thank MOF and IRAS for patiently addressing my various Parliamentary Questions over the past year on this issue and, I believe, the various public officers involved have done plenty of detailed analysis and scenario planning on this issue by now. With less than a year to go before the implementation of the two-pillar solution and with OECD already having published in December last year the model rules for domestic implementation of the 15% global minimum tax, my question is, what is the Government's current estimates or range of estimates of the net impact of pillar one and pillar two to our CIT revenues?

While Minister Lawrence Wong noted that pillar one will result in a negative revenue impact to Singapore, this is, firstly, limited in scope, as it is expected to apply only to global MNEs with a global turnover of more than €20 billion, with just around 100 of such companies globally. Secondly, it is only 25% of the profits in excess of 10% of revenues that will be allocated away. And, thirdly, I do not believe that profits are being artificially inflated here in Singapore, given rigorous transfer pricing rules.

On the other hand, for pillar two – this applies to a much larger group of MNEs. Any company with over €750 of annual revenue would now be subject to a global minimum corporate tax. In Singapore alone, the Government shared that there are over 1,800 such multinational enterprise (MNE) groups operating here that are unlikely to be affected. As I have shared in this House last year, I hope that the Government will view the global minimum tax reforms as an opportunity rather than a threat, given Singapore's strong non-tax advantages and attractiveness to MNEs, bearing in mind the current average effective corporate tax rate is closer to 3% in YA2019.

If we look at the subset of non-SMEs or those with revenues exceeding $100 million and making an accounting profit, then in YA2019, the average effective corporate tax rate is even lower, at 2%. Profitable non-SMEs contributed $10.4 billion or 64% of total CIT paid by all companies. If we assume a 15% tax rate instead, this could hypothetically balloon seven times to $71.5 billion. Of course, this is purely hypothetical, since obviously, not all companies will be scoped into the rules and there could be some slippage from both pillar one and pillar two rules and the actual impact will be much lower. But the point remains that, technically, even a small shift towards the proposed global minimum rate of 15% could result in significantly higher corporate tax receipts for the Government.

Beyond the dollars and cents, the more important conceptual point to me is this: if a global MNE is already operating in Singapore, what incentive would it have to incur additional relocation costs, when the minimum corporate tax rate of 15% would be normalised globally? And with tax considerations out of the way, why would not a global MNE keen to tap on the attractive growth prospects in Asia, base their headquarters here in Singapore? The World Bank has consistently placed Singapore as among the best places in the world to do business and I am confident that our competitive strengths and strong non-tax advantages will continue to provide a competitive edge to companies seeking a place of business.

Lastly, let me touch on the other elephants in the room, the Net Investment Returns Contribution (NIRC) and our reserves. It is comforting to note that instead of a $54 billion draw on the reserves, as announced in Budget 2021, the actual amount we utilised across three years was $43 billion, savings of about $11 billion. It was previously said that we have drawn on our reserves equivalent to over 20 years of past Budget surpluses. We have used a generation's worth of savings to combat a crisis of a generation.

I asked Deputy Prime Minister Heng during last year's Budget debate, after accounting from the draw, where would our reserves be, compared to five years ago and 10 years ago, though I do not think there was a direct answer to the question. Hence, I would like to ask Minister Lawrence Wong, after considering the $43 million drawn on our past reserves, are our reserves today higher or lower, compared to five years ago?

I ask this because it is important to put into context the growth in our reserves as we debate the source of funding for our future expenditures, even if the Government continues to be guarded over disclosing the absolute size of the reserves itself. It is not that I disagree with the need to be prudent and I agree we should not take our reserves for granted. But just looking at the MAS Official Foreign Reserves (OFR), they stand at around $566 billion as of January 2022, an increase of $185 billion or close to 50%, compared to two years ago. Temasek's net portfolio value as of March 2021 stands at $381 billion, up to $75 billion or 25%, compared to a year ago. And I believe GIC would have grown its portfolio as well, given generally supportive market conditions in the last two years.

Yes, I understand that the design of the NIRC framework is to provide a stable, sustainable source of income to our Budget, smoothed out over market cycles. But it is also helpful to remind Members of this House that our financial reserves grow not just from the balance 50% of NIRC not utilised, but also from inflows directly into the reserves, such as from land sales which averaged around $13 billion a year in the past 10 years and from MAS interventions in the foreign exchange market to dampen appreciation pressures, given Singapore's excess of domestic savings, over investments and persistent capital inflow.

If the goal of this Budget is to ensure a fairer revenue structured, that means everyone chips in and contributes to a vibrant economy and strengthen the social compact, but those with great means contribute a larger share. If so, should we not revisit the contribution of our investment returns as opposed to the individual Singaporean who is grappling with the rising cost of living? Over the past five years, the NIRC provided an average revenue stream of around $17 billion, or 3.5% of our GDP. If the assumption is that Government spending is at 18% of GDP today, but expected to go to more than 20% of GDP by 2030, could we not raise the contributions from the NIRC to the Budget and raise its share of GDP too?

I hope that Minister Wong will agree with me that raising the NIRC contribution rate will not result in a drawdown of the reserves and will, in fact, still allow us to continue building our reserves.

So, to belabour with the point, this will not mean that we will not get a steady stream of income from the reserves to benefit today's generation of Singaporeans and our children and our grandchildren. On the contrary, as Minister Wong has said, it is about being able to invest even more in our people and social infrastructure. It is to me about ensuring that we invest not only in financial assets overseas but in our people, Singaporeans, who to me are the most important resource of this country. It is simply about sustaining the value of our financial reserves and sustaining the lives and livelihoods of our fellow Singaporeans. Mr Speaker, allow me to conclude in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] We are still in the amidst of the COVID-19 pandemic. While economic growth seems to have started to pick up again, there are also some underlying concerns. Hence, we are very concerned about the risk of raising GST when the pandemic is still ongoing and there are many uncertainties with the economic recovery. Instead of raising GST, Workers' Party Members of Parliament suggest that alternative sources of government revenue be considered.

In Budget 2022, the Finance Minister will adjust the Additional Registration Fee for luxury cars and the property tax as a way to collect wealth tax. While I welcome these changes, I also feel that there is much room for improvement.

I talked about corporate tax and NIRC. Our effective corporate tax rate is close to 3%, well below the global minimum tax rate of 15% announced by the OECD.

If Singapore imposes a global minimum tax of 15% on MNCs subject to the tax reform, it will not only raise our corporate tax revenue significantly, but also achieve the objective of this Budget, which is to build a fairer and more resilient tax regime where people wealthier will contribute more.

Singapore has strong non-tax advantages and appeals to MNCs. Therefore, the Government should view the tax reform on global minimum tax rate as an opportunity, not a threat.

Finally, I suggest that we consider increasing the NIRC component to our Budget. This will not reduce our reserves; instead, we can continue to grow our reserves steadily while ensuring that we use our national resources more effectively to help sustain Singaporeans' livelihood. Our people are Singapore's most important asset.

Mr Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.30 pm.

Sitting accordingly suspended

at 4.04 pm until 4.30 pm.

Sitting resumed at 4.30 pm.

[Mr Speaker in the Chair]

Debate on Annual Budget Statement

Debate resumed.

4.30 pm

Prof Hoon Hian Teck (Nominated Member): Mr Speaker, Sir, giving his Budget Statement the title "Charting Our New Way Forward Together", the Minister for Finance devoted much space in his Budget speech to talk about the need for revenue to bring all the plans that he had laid out to fruition. That prompts the question: "why raise taxes?" This is a fundamental question in political economy. I think that we can offer three answers.

First, we raise taxes to create the fiscal capacity to support a well-functioning society. Second, we raise taxes to achieve economic inclusion. Third, and particularly relevant in the Singapore context, we raise taxes to pay for recurrent spending so that we can prioritise the use of our national reserves to manage external shocks as we remain integrated with the global economy.

First, building fiscal capacity. We can take a cross-country perspective and an intertemporal perspective. When a country's income per capita is low, the need to raise taxes is great so that the country has the resources to provide public goods like national defence, law and order as well as relief for the poor. Yet, the viable tax base is small because the tax administration and enforcement ability is low at this stage of economic development.

Historically, countries that are starting on the path of development turn to trade taxes in order to generate government revenue to pay for their expenditure. Trade taxes have tended to make up a larger share of total revenue at the early stages of economic development because it is relatively easy to keep track of the flow of goods at major shipping ports. These countries then shifted to greater reliance on direct taxation of income which happened late in the 19th century and broad-based consumption taxes which happened from the middle of the 20th century.

In Singapore, when we became a newly independent country in 1965, customs and excise duties made up more than 50% of the share of total tax revenue. It steadily declined through the decades and now make up less than 5% of tax revenue. Consumption taxes were introduced in Singapore only later in 1994.

There is a sense in which the way the tax revenues are spent, notably on education which has been a priority in the very early Budgets. It is a form of investment in building fiscal capacity. Spending on public schooling generates a virtuous cycle.

As the human capital base is expanded, the size of the economic pie grows so the tax base correspondingly increases. At this stage of our development, boosting innovative activities will play a bigger role in growing the economy and thus, the tax base in the post-COVID-19 world. The support given in Budget 2022 to further strengthen the collaboration in engaging in R&D projects between SMEs and our Polytechnics and ITEs ultimately expands our fiscal capacity.

The initiative dubbed "Singapore Global Enterprises" provides fiscal support for our large local enterprises (LLEs) to break into overseas markets. As our LLEs expand into overseas markets and become bigger and more productive, they become more profitable and can afford to pay their workers more. It is a statistical and practical fact that larger firms doing the same business, tend to pay their workers more, because they are more productive and they tend to break into overseas markets. The tax base is accordingly expanded.

However, there are there are also factors acting to contract our fiscal capacity. One is the demographic transition and increased life expectancy. With a bigger share of the population becoming economically inactive, the tax base becomes relatively smaller. That is a fact well recognised by many.

Another factor that can reduce our fiscal capacity comes from the harm that is caused by climate change, a point that many Members have alluded to. The proposed schedule of increases in carbon taxes introduced in Budget 2022 can be justified on the basis of helping businesses internalise the negative externalities caused by emission of greenhouse gases.

Unlike a tax on labour income, as an example, which reduces economic efficiency because people respond by working fewer hours when their take-home pay is reduced. A carbon tax, nevertheless, increases efficiency because it reduces activities that society wants to reduce. Roughly speaking, an efficient outcome is for the carbon tax on firms to be set equal to the amount of external damage caused by the greenhouse gas emission.

Another point is that a carbon tax also has the effect of giving incentives for upstream firms to develop green technology by discouraging downstream firms from using devices that embody environmentally unfriendly technology.

Second, achieving economic inclusion. There is a classic trade-off between equity and efficiency when we use fiscal tools to achieve economic inclusion.

Budget 2022 raises the marginal tax rate of the highest income earners, among other measures. While this narrows the income gap, there are microeconomic distortions caused by such tax increases, also called excess burden. It is a standard concept in public finance. The idea is that the quantity of an economic activity, such as labour supply decreases when there is an increase in income tax rate. In designing an optimal tax policy, the Government has to take into account the fact that raising the tax rate has consequences for the tax base because if the income tax on income earners goes up, as an example, they work less, the tax base shrinks, so there is an efficiency loss.

Nevertheless, despite the loss in efficiency, every society has still got to choose a point on the equity efficiency frontier, sacrificing some efficiency in order to attain a desired level of equity. Since the excess burden of a given tax rate increase rises more than proportionately, it is optimal to broaden the tax mix from this perspective, such as relying also on other tax instruments, like raising consumption taxes and wealth taxes to pay for higher social spending. That argument calls for some diversification of tax instruments rather than a dependence on a very narrow particular tax.

Budget 2022 seeks to avoid the regressive nature of the increase in consumption tax rate with the Assurance Package and by boosting the permanent GST Vouchers (GSTV). Since the beginning of the 20th century and especially in the post-war period, in international cross-sections of countries there has not been a clear negative relationship between the level or growth of tax-based social spending and GDP per capita. In other words, looking historically – particularly over the last century and across countries as a whole, broadly, the message is that the social cost of financing higher social spending through taxes does not appear to be especially high, although obviously, to achieve a certain point on the equity efficiency frontier, there is an efficiency loss and society has to make its own calculation.

Being engaged in work confers non-pecuniary, that is non-monetary benefits that go beyond receiving wages. From that perspective, the use of wage subsidies or wage credits extended to firms as in the Progressive Wage Credit Scheme (PWCS) announced in Budget 2022 to co-fund wage increases for certain lower-wage workers, as well as the wage income supplements extended to workers through the Workfare Income Supplement (WIS) Scheme boost workers' take-home wage earnings without discouraging work. For me, it is significant that the WIS Scheme will be extended to younger workers aged 30 to 34.

Another point, investment in children from low-income families facilitates upward social mobility and, in that way, boosts future fiscal capacity when these children, having received help to overcome the initial disadvantages, take up good careers and pay taxes when they become adults.

Health spending, as a share of total Government expenditure, is expected to rise with the demographic transition. Enabling our senior citizens to live healthily adds to the country stock of social capital. It can be argued that even the younger segment of the current population may want the Government to raise taxes to pay for health spending going to the elderly so as to lighten the financial burden of providing care to their parents.

Third, and my final point, prioritising use of national reserves to manage external shocks, particularly negative external shocks. Remaining integrated with a global economy presents Singapore with the opportunity to grow. It is undeniable that much of our catchup from third world to first world was facilitated by international integration, but the earliest stage was very much about technology transfer. In the next stage, we will have to generate innovative activities. But in order to have a steady contribution to growth of the economy, our firms will have to be integrated into the global economy, selling not only domestically but into the region and into the world as well.

But remaining integrated with the global economy will come at a cost of sometimes sharp recessionary shocks. Responding to the global financial crisis from 2007 to 2009 and currently in the last two years, the COVID-19 health shock, if we were to respond to these negative shocks by raising taxes to finance the national efforts to save jobs, that would be tantamount to incurring huge excess burden on taxpayers – recall that the excess burden rises more than proportionately by every unit increase in the tax rate.

So, being able to draw down our reserves to fund these schemes to save jobs and especially in coping the global financial crisis for the Government to share some financial risk, allows us to smoothen the tax rate across business cycles. When the economy has recovered, it would be necessary to tax finance recurrent spending in order to keep our reserves for rainy days.

The fact that our social security system, the Central Provident Fund (CPF), is a fully funded rather than a pay-as-you-go old age retirement scheme contributes to our national savings and thus, adds to the stock of reserves.

Even as the share of the ageing population increases and life expectancy rises, I note that Budget 2022, in increasing the employer and employee CPF contribution rates of workers aged 55 to 70, will boost their retirement adequacy.

One context in which there is justification for the Government to borrow rather than tax finance is raising taxes for infrastructure investment which serves to mitigate the adverse effects of climate change, such as sea walls and dykes. Inter-generational distributive justice provides a basis for the Significant Infrastructure Government Loan Act (SINGA) passed in Parliament last year.

Mr Speaker, Sir, we each function as an individual within a society. The emphasis in that last statement is on the words "individual" and "society". Much of real life is not well represented by the story of Robinson Crusoe, a story that we tend to use in teaching international trade in the classroom. He was, of course, a castaway who lived alone on a deserted island for many years. As entertaining as the novel by Daniel Defoe is, Budget 2022 is built on the premise that we can build a dynamic economy, although more mature now, we have transited from third world to first world, the challenges are bigger and we need now to generate our own indigenous innovation to propel the productivity growth that we will continue to need in order to grow the economy, in order that our citizens will flourish.

But such an economy with social collaboration results in creating a surplus. So, the economy is not an individual living on an island trading with another, although that helps. But within the society, we each have different capacities, we each have different strengths. A society enables that social collaboration so that we create this social surplus. And that social surplus can be utilised through the fiscal system to leave everyone better off than if we had each functioned in isolation. I stand in support of the Budget.

Mr Speaker: Mr Leong Mun Wai.

4.47 pm

Mr Leong Mun Wai (Non-Constituency Member): Mr Speaker, the Progress Singapore Party (PSP) will not support this Budget because of the GST hike. Middle class Singaporeans will have to bear an additional GST burden of $1.2 billion per year. On top of that, many Singaporeans living in private properties who are asset rich but cash strapped, will bear a significant part of the $380 million property tax increase per year.

This Budget is a feeble attempt to increase the taxes on the rich after three decades of favourable tax policy towards them. The additional personal income tax raised is only $170 million per year, which many Singaporeans cynically pointed out, was not enough to pay for the $180 million per year funding for SPH Media Trust. The Additional Registration Fee increases for luxury cars is not really a burden to the rich, because the fee is transferable to future owners.

Not enough has been done on foreign manpower policy too. The increase in the minimum qualifying salary for Employment Pass (EP) holders is too little to be effective. I am also surprised that S Pass holders are needed in the finance industry where many Singaporeans are hoping to work. The more effective way to manage the quality of our EP holders is to ensure fair competition between the EPs and Singaporeans through imposing a standard wage levy on all EPs who do not make CPF contributions. If we impose a monthly $1,200 EP levy, as I had recommended in the Budget debate last year, and then again in the Foreign Talent and Comprehensive Economic Cooperation Agreement (CECA) debate, the levy will raise almost $3 billion and make the GST hike unnecessary.

As global inflation is on an upcycle, we will have to do more to help Singaporeans to cope with the rising cost of living and asset inflation. This is the best timing to share with Singaporeans a small part of the huge windfall profits chalked up by GIC, MAS and Temasek last year. However, not only did the Government not do that, it also increased the tax burden on Singaporeans. This is incomprehensible to me.

The Government used healthcare costs as the main rationale for raising taxes. However, Singaporeans have paid and are still paying dearly for healthcare. Is it fair to ask them to pay more taxes for healthcare again, especially in these challenging times?

Look at the facts: $100 billion of the Singaporeans' CPF funds are locked up in MediSave accounts, and Singaporeans contribute $10 billion to MediSave every year; $10 billion of reserves have been accumulated in MediShield and CareShield, while Singaporeans continue to pay $3 billion of CareShield premiums every year and the premiums are likely to rise every five years. Singaporeans also pay billions of dollars in private healthcare insurance.

Singapore is actually in a very strong financial position. We have the resources to pay for even the large healthcare cost increases forecasted by the Government. Look at the facts again. The Government reported $1.4 trillion of financial assets as of 31 March 2021. This is an indication of the size of our national reserves. Our nation's financial assets are currently closer to $1.6 trillion, due to an increase of $200 billion of reserves over the last two years, despite and after the COVID-19 drawdowns.

Net investment income from these assets is now more than $40 billion a year. Half of the net investment return, or $20 billion, is recycled back into the reserves. Another $10 billion of annual land sales proceeds is put into the reserves directly and not used for the current year spending. Thus, even without touching the growing reserves, we have a total of $30 billion of unutilised revenue annually, which can be deployed for the current year spending in the future. We can actually provide for our current generation while continuing to save for future generations at the same time.

Hence, the Government's argument for the future generation does not hold water. The virtue of frugality preached by the Finance Minister is telling cash strapped Singaporeans to tighten their belts again while the Government is sitting on massive reserves and unutilitsed revenues.

Of course, we cannot rest on our laurels and rely on our reserves and unused revenues all the time. I only want to stress that we have the buffer and time to make better long-term plans. Those plans should include the Government focusing on fiscal efficiency and discipline.

While the Government has been running Budget surpluses these years, public spending cuts have not been discussed openly. Our Budget has increased by about 7% per year over the last two decades to about $100 billion for FY2022. There is, thus, ample room for us to cut down on existing spending.

The Finance Minister has disclosed he is imposing a 3% cut on existing expenditure from next year. If he can achieve that every year, we will have a saving of $3 billion per year. Again, there is no need for the GST hike. We can probably do more cuts than 3%.

We advocate setting clear socio-economic targets for each expenditure. That is the reason we supported the SINGA scheme, which will bring big infrastructural projects under stricter financial discipline. For example, many Singaporeans are asking, what are the socio-economic targets for SPH Media Trust, to which the Government is committing $900 million over the next five years? How about the billions of dollars of taxpayer money spent on local Universities that have relied heavily on foreign talent, but do not seem to be producing sufficient local skills and talent needed for our economy? When public funds are used to support or rescue a commercial organisation, are there plans to claw back the funds when the commercial organisation starts to make money?

For the COVID-19 spending, many Singaporeans have questioned why the $30 billion Jobs Support Scheme (JSS) is used to support profitable companies without a claw back feature. The clawed back funds could have been used to help many more Singaporeans who needed help. So, as the amount of resources at the disposal of the Government grow larger, we need to check on the expenditures more closely.

We are also against the goody bag approach that is adopted by the Government to convince Singaporeans to accept the GST hike. Handing out short-term ad hoc goodies to Singaporeans instead of using permanent schemes, will not produce resilient Singaporeans but dependent Singaporeans. Let me give you a specific example. I have been recommending a minimum living wage of $1,800 per month in take-home pay for all Singaporean workers. This works out to about $2,250 in gross wage per month. This may appear high, but if you add Workfare Supplement, GST Voucher (GSTV), U-Save rebate, CDC Voucher, and now, Progressive Wage Credit Scheme (PWCS), you could easily reach the $2,250 gross wage per month.

Hence, instead of handing out drips and drabs to Singaporeans, the Government could have provided a lump sum to top up the average worker's gross wage to $2,250 per month. A permanent monthly wage of $2,250 will give workers more clarity in making personal financial plans for himself and for his family. That is how we make Singaporeans more resilient.

Mr Speaker, in conclusion: one, the PSP does not support this Budget because there is no need for the GST hike; two, our country is in a very strong financial position, but Singaporeans need all the help they can get to overcome their current financial challenges; three, with this Budget, the Government is asking Singaporean to tighten their belts again while it sits on massive reserve and unutilised revenues; four, as Singaporeans are already burdened with high healthcare cost, the Government should first control the escalating cost of healthcare by changing the way our healthcare system works; and finally, PSP thinks that Singapore can have a new financial compact which is better than this Budget. Speaker, Chinese, please.

(In Mandarin): [Please refer to Vernacular Speech.] The PSP is against the GST hike and therefore does not support this Budget. By increasing the GST, the Government will add $1.2 billion tax burden onto middle-class Singaporeans a year. At the same time, income tax and wealth tax increases for the rich are expected to increase by less than $600 million a year.

Singapore's fiscal position is good. At a time when Singaporeans are still facing various difficulties, we should try to come up with better fiscal solutions to help them. At the moment, we have at least $1.6 trillion reserves and $30 billion unutilised annual revenues. Why does the Government want Singaporeans to tighten their belt at this juncture when it is sitting on this gold mountain?

Singaporeans have already spent a lot on their current and future medical needs. Hence, our focus should first be on reducing rising healthcare costs, rather than adding to the burden of Singaporeans.

Government expenditure has grown rapidly by 7% per annum over the past 20 years. It is time to see how we can reduce non-social and non-medical expenditures. Of these, the Government's $100 billion Covid-19 relief package needs to be properly accounted for.

We are looking for a new financial compact that distributes national resources more equitably and benefits all segments of society.

(In English): Singaporeans deserve better.

Mr Speaker: Prof Koh Lian Pin. Sorry. Mr Saktiandi Supaat.

5.05 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, please allow me to seek a clarification from Mr Leong Mun Wai?

Mr Speaker: Please do.

Mr Saktiandi Supaat: Mr Leong Mun Wai mentioned that the GST hike will result in $1.2 billion in tax burden on middle-class Singaporeans in the long run. Can he share with us how he got that $1.2 billion figure as I do not seem to be able to find it in published material?

Mr Leong Mun Wai: I thank the Member Mr Saktiandi for the question. Speaker, I got the data by calculating from the ratio given by the Minister for Finance in terms of the share of the GST paid by the top 20% and the bottom 80%. It was in the ratio of 60%:40%. So, 40% to the bottom 80% and 60% to the top 20%. If the total amount of GST revenue to be raised from a two-percentage point increase in GST, will be about $3 billion, so, 40% of $3 billion, I got my $1.2 billion. Yes, that is how I got my $1.2 billion.

Mr Saktiandi Supaat: Sir, I have a second additional clarification, please. Can I ask Mr Leong whether he can confirm that his calculations do not take into account the amounts that middle-income residents of Singapore will receive under the Assurance Package and the permanent GSTV scheme? I just want to confirm that his calculations do not include those.

Mr Leong Mun Wai: Speaker, yes, the calculations do not take that into consideration. But I presume that the GST Vouchers and all the compensation payments will only apply to the lower-income Singaporeans. There are some applying to the middle-income, but the permanent GST Vouchers belong to only to the lower-income. So, at the end of the day, when the Government argues that this is not regressive, it is not true, because apart from the top 20%, who are the people who are there, the remaining 40% of the GST increase? It must be the middle class Singaporeans. I hope that answers Mr Saktiandi Supaat's question.

5.08 pm

Mr Saktiandi Supaat: I thank Mr Leong for his answer. The reason why I asked is that I just want to have an understanding. The way I interpret the Budget booklet and the Statement that Minister Lawrence Wong highlighted is that the Assurance Package and the permanent GSTV in some ways neutralise the impact on the majority, including the middle-income as well. Mr Speaker, let me proceed with my speech.

Mr Speaker, Sir, I thank the Minister for Finance for presenting the strategic yet empathetic Budget that is aimed at securing the long-term interests of Singaporeans as a whole as we face various global disruptions and uncertainties from various fronts. Budget 2022 is an ambitious Budget plan. It seeks to strike a fine balance between helping our businesses and people emerge from the pandemic and investing in our longer-term objectives by taking tough decisions today.

In my speech, I will start by addressing the concerns of Singaporeans namely the middle-income segment amid rising costs of living – including the GST increase, and one of the reasons why I sought clarifications from Mr Leong is because the middle-income segment is something that will be a theme in my speech, Mr Speaker – and the need to focus on real wage growth to combat rising costs. I will then turn to the brave decisions we are taking to build a fair, inclusive and sustainable society. Thereafter, I will round up with some thoughts on maintaining Singapore's hub status.

First, on the rising costs of living. As the economy recovers from COVID-19 both domestically and globally, we can expect inflationary pressures to drive prices up. MAS is projecting a 2% to 3% increase in prices this year, led in part by rising energy prices due to geopolitical tensions, continuing supply bottlenecks and a recovery in global demand.

Against this backdrop of rising costs of living, the GST increase has generated great public attention. The GST was last raised to 7% in 2007, some 15 years ago. While the increase to 9% – announced as early as 2018 in light of our ageing population and increased healthcare and social spending – will still be lower than the GST or VAT in many other countries such as Australia and the UK, but it is still a very visible price increase for the average Singaporean and Singaporeans are understandably concerned.

In this regard, I would like to thank the Minister for Finance for pushing back the start date and also staggering the GST increase across 2023 and 2024, as well as topping up the $6 billion Assurance Package that was announced in 2020, where the distribution of cash, rebates and vouchers will help households to offset five to 10 years of additional GST expenses.

But we cannot just stop there. To help Singaporeans cope with rising costs of living in a sustained manner, we must focus on growing their wages. Based on MOM's data, the real growth in our full-time employed resident's median gross monthly income has slowed down in the last five years. This looks at the income of a typical worker in the middle, after all workers are ranked by their income. After adjusting for inflation, the median gross monthly income has only increased 2.1% year-on-year between 2016 and 2021, down from 3.1% in the 2011 to 2016 period.

Mr Speaker, so, middle-income households also require more help, not just the low-income. The last two years have not been easy for everyone. While I am happy to hear that we will uplift lower-wage workers by extending the Progressive Wage Model (PWM) to security officers, drivers and workers in the retail and food services sector, what are we doing to boost the wages of our middle-income workers?

On that note, I have a few suggestions to make.

One, as a start, and probably to nudge the public and private sectors, we could raise the salaries of our frontline workers, regardless of whether they are lower-wage workers. I am mindful that it needs to be paid from somewhere. This includes our wider range of healthcare workers and Adult Educators (AEs) who are private-sector individuals working across the Early Childhood, Student Care, Universities, Private Education Institutions and International Schools and who are represented by the NTUC-affiliated Education Services Union (ESU). The nature of their occupation meant that these AEs, who are largely aged 35 and above, were one of the first to return to their workplaces as this pandemic dragged on. Increased remuneration would recognise their invaluable societal contributions in this pandemic and extend our appreciation to them like how we did for our nurses last year.

Second, I also welcome the raising of the minimum qualifying salary for foreigners to work in Singapore on Employment Passes (EP) or S Passes. Theoretically, this means that jobs which previously paid between the old and new salary thresholds – which could have gone to a foreign employee previously – will now have to filled by a local.

However, will the Government consider further differentiation of sectors beyond just carving out the financial services sector? Different sectors pay vastly different salary scales and the point at which they require foreign labour or expertise may vary significantly. Having a single uniform qualifying salary may also penalise sectors where Singaporeans are less interested in those jobs, while those employers cannot get pass holders to do the jobs.

Third, another way to raise wages is to ensure that our workers can quickly and smoothly transition from their existing industry – which may be a sunset industry with stagnating wages – to emerging growth areas. In facilitating our current and future workers' transition and upskilling, why is there no further focus on the Professional Conversion Programme or the Capability Transfer Programme in this year's Budget? Over the years, I see value in these programmes, especially as we face the risk of structural unemployment and an economy in transition and faced with global disruptions. How are these programmes going to sit alongside the new SkillsFuture Career Transition Programme announced by the Minister for Finance?

Fourth, given the context of an economy in transition, individuals may experience volatility in income levels or in employment altogether. It may be useful to relook at the option of assessing personal income tax on a current-year, pay-as-you-earn basis. And I have mentioned this in many of my Budget debate speeches. It is like a broken record; I have been raising this point. This is as opposed to a preceding-year basis, this system can help taxpayers – a significant proportion being middle- and upper-middle income Singaporeans – so that they can better manage their cash flow by matching tax payments with contemporaneous income.

Finally, we cannot forget our freelancers. Before the pandemic, the number of freelancers was already on the rise, reaching 8% of Singapore's working residents. Through the pandemic, I have heard from residents that they or their family members have turned to delivery and private hire driving "gigs". The launch of apps to connect gig workers and clients have only accelerated the growth of freelancing.

As an advisor to the NTUC-affiliated Education Services Union (ESU), one of the first groups of people that come to my mind are the private-sector individuals working across the Early Childhood, Student Care, Universities, Private Education Institutions and International Schools – otherwise known as AEs. The nature of the sector lends itself to freelancing as training providers and institutions are increasingly reluctant to hire these individuals as employees. Some AEs may even be compelled to start their own sole proprietor company and enter a business-to-business transaction just to get the job.

Common problems faced by freelancers include not getting paid on time, and onerous, unclear contractual provisions, such as those that unfairly appropriate the freelancer's materials or intellectual property.

Unlike employees who have some protections under employment law, freelancers often fall back on contractual terms that they agree with their clients. Is it possible for MOM to augment its "key terms of engagement form template for self-employed persons", to provide default contractual wording which freelancers can rely on to be the market standard and which they can rely on if the matter goes to the Court or the Small Claims Tribunal?

For AEs in particular, I understand that the ESU is currently working with SkillsFuture Singapore to formulate Tripartite Standards for freelance AEs. When that is done, I hope the Government can take the lead and require training providers to adopt the Tripartite Standards before they are eligible for SkillsFuture funding.

Mr Speaker, Budget 2022 also demonstrates our Government's resolve to tackle the tough but necessary decisions to build the fair, inclusive and sustainable society we want.

I am proud that our Government is "walking the talk" when it comes to addressing inequality – with higher taxes targeting the top 1.2% of earners; luxury cars, investment properties and on the top 7% of most valuable homes. These progressive measures will ensure that "those with more will contribute more", while "those with less will still contribute, but a lesser amount, and they will receive more benefits in return".

But on the Minister's point that there is some difficulty in valuing and taxing wealth accurately, may I ask if we are rethinking our 2008 decision to repeal estate duty, also known as inheritance tax? A recent OECD report has observed estate duty can be a particularly efficient way of enhancing equity and raising revenue if the class of exempted assets are minimised and the tax base is kept broad.

Besides being a fair and inclusive society, we also want to be a sustainable community. Just last month, many Members, including myself, spoke on the Motion for an "inclusive transition" to a low-carbon society. I am grateful that the Government has taken on board the suggestion to announce our carbon tax plans in advance, in order to give businesses the runway to plan ahead.

While the contemplated measures to help businesses – such as emissions allowances and support for green investments – are welcome, are we also looking at adjustment measures to prevent carbon leakage to other countries with "looser" requirements? For example, Indonesia's carbon tax is going to be set at US$2.10 per tonne, come April 2022. If businesses simply "offshore" their operations away from Singapore, not only do we lose jobs associated with such operations, we may also fall short of our goal to manage climate change. In addition, further details would be useful to assuage concerns that exemptions to companies using LNG, diesel and petrol may undermine our efforts in this space.

Finally, I turn to the longer-term priority to maintain Singapore's status and relevance as a leading hub, in order to survive and thrive as a resource-scarce nation.

Positioning ourselves at the forefront of sustainability trends by developing into a go-to regional marketplace for the trading of carbon credits is essential.

I had previously mentioned in the House that the global carbon credit market could be worth more than US$50 billion come 2030. In our efforts to build a carbon trading ecosystem in Singapore, as we are in such early stages, I would suggest organising a dedicated inter-agency taskforce now to coordinate these efforts. The creation of a vibrant marketplace with many active participants depends on a range of issues that we will need our different agencies to work out. I will be filing a cut on this during the Committee of Supply debate to address this in greater detail.

Second, on Singapore's overall attractiveness for foreign investments following the implementation of the agreed global tax reform, or BEPS 2.0. What are the Government's plans to preserve Singapore's attractiveness as an investment destination in view of this erosion of our corporate tax competitiveness? Is it possible to repackage some of these tax incentives, so that agencies like the Economic Development Board (EDB) can still continue to have these "carrots" in the bag as they pitch to foreign investors? What will happen to the investment tax credits with the changes?

The fairness of the global tax reform under BEPS 2.0, and the achievement of its stated aims, will depend on exactly how individual countries choose to implement the two pillars. As we consider our own implementation steps, I hope we can adopt a "wait and see" approach – to consider how other countries are implementing BEPS 2.0 before tailoring our implementation steps in tandem, rather than pioneer an implementation model ahead of the rest of the world. Operationally, supposedly 1,800 companies are going to be affected, but no indication which sectors and type of companies they are and how hard they will be hit.

Mr Speaker, before I conclude this part of my speech, I would like to address an assertion made by Mr Leong and Progress Singapore Party (PSP), which is that the GST increase will be borne by middle-income Singaporeans.

Sir, given the statements and information previously provided by MOF, I think that statement is neither a fair nor an accurate assessment. As you can see – and I have mentioned it earlier at the start of my speech and previous Budget speeches mentioned by Minister Lawrence and other Ministers for Finance, I have requested for more help to be given to the middle-income. I recalled in her response speech to an Adjournment Motion on "Taxation for a Dynamic and fair 21st Century Economy" just three months ago, Second Minister for Finance, Ms Indranee Rajah, clarified that over 60% of the net GST from households and individuals is estimated to be collected from the top 20% of resident households, foreigners residing in Singapore and tourists. That was not the first time this information has been given to the House. The Deputy Prime Minister Heng also highlighted this two years ago in his 2020 Budget debate response speech.

Also, all the Finance Ministers have explained that the Assurance Package will cover the majority of Singaporeans for five years' worth of GST increase and the lower-income for at least 10 years' worth. This, effectively, neutralises the GST increase for these groups for those durations and, in some cases, for even longer; and not to mention the permanent GSTV scheme which will add on to that Assurance Package as well.

So, to get a sense of how much the different households will receive, colleagues and Members, you may find it useful to refer to the infographics, and I have seen the infographics on MOF's website. In addition to the middle- and lower-income, they will receive offsets under the permanent GSTV scheme, over and above the amounts under the Assurance Package.

So, it is not right to say that the GST increase will be borne by the middle-income without taking into consideration some of these transfers and some of these longer-term and permanent transfers, which is quite unique for Singapore – the permanent GSTV scheme. Mr Speaker, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] I am glad that the Government has listened to the people's concerns and delayed the GST increase start date and staggered it over two years.

I am also heartened that, under the Assurance Package, the majority of households will get five years' worth of offsets and the lower-income will get at least 10 years' worth of offsets. For example, let us take a Singaporean couple with two young children, who live in a 4-room HDB flat and earn the combined household income of $8,000 per month. Even though they would have to pay $806 in additional GST per year with the GST increase, they could receive payments and rebates of $3,850 over five years under the enhanced $6.6 billion Assurance Package.

A three-generation family with two school-going children living in a 5-room flat could receive $6,740 over five years, offsetting about seven years of GST increase. This is the middle-income group that I mentioned earlier.

In another example, a lower-income couple with two young children, who live in a 3-room HDB flat and earn a household income of $2,300 stands to receive $5,010 of payments and rebates offsetting about 12 years in GST increase! This does not include the permanent GSTV scheme which they will also receive for a longer period beyond that.

If I can just summarise this using two Malay quatrains.

The first quatrain speaks about many segments of our society receiving extraordinary support.

The second quatrain states that the amount spent on the Budget is worth it because it makes us stronger and gives us hope.

(In English): Mr Speaker, Sir, in the last two years, we have dipped into our reserves and Singaporeans have worked very hard to pull Singapore through the COVID-19 challenges. I am glad to read that our collective efforts have paid off in buttressing the recession as well as resident unemployment.

We must now turn our attention to middle- to long-term goals and uplift our citizens' well-being, as well as to continue to help Singaporeans out of the long shadow of COVID-19. On that note, I support Budget 2022 which aims to secure the welfare and the future of Singapore and Singaporeans.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Mr Speaker. Mr Speaker, I think we got to clarify who is going to pay the $3 billion GST increase, since Member Saktiandi say even the middle-class is not paying. Who is paying for the $3 billion? Can anyone from the Government clarify?

Mr Speaker: Prof Koh Lian Pin.

5.26 pm

Prof Koh Lian Pin (Nominated Member): Mr Speaker, Sir, I declare my interest as a professor at NUS.

Budget 2022 introduces measures that reflect the many challenges and opportunities that Singapore faces as we emerge from this pandemic. The Budget addresses important bread-and-butter issues by investing in immediate support for our businesses, our workforce and our households. These measures will help Singaporeans manage the cost of living, ensure we continue to track a strong and steady economic recovery and create new jobs and opportunities for all.

At the same time, the Budget also acknowledges several additional priorities, such as strengthening our social support system, transitioning to a greener economy and tackling climate change as a global emergency.

These social, economic and environmental sustainability measures are hugely important, because they help build our resilience against present and future shocks to the well-being of our fellow Singaporeans, our economy and our natural environment.

Achieving these goals will not be easy and requires careful consideration of the many trade-offs, particularly when different priorities require common and limited resources, such as our land. Some of these new measures may also require businesses to acknowledge the environmental costs of their activities.

Faced with these challenges, it may be useful to look back at the most testing times in Singapore's history, for insights and inspiration that may guide us forward decisively and successfully.

In his speech to the Singapore Press Club in February 1972, former Senior Minister, the late Mr S Rajaratnam, noted that he once believed Singapore as a small city state – and I quote, "… without a natural hinterland, without a large domestic market and no raw materials to speak of, has a near-zero chance of survival politically, economically or militarily" – end quote.

However, when Mr Rajaratnam made that speech, he immediately acknowledged that he had already been proven wrong. Singapore had, in fact, not only survived, but also begun to thrive. The reason for that, as Mr Rajaratnam observed, is because we had been transforming ourselves into a new kind of city – the Global City.

We had begun to view ourselves, not as a self-contained city state, not as a regional city, but rather, as a world embracing Global City. Fast forward to today, as we embark on our sustainability journey, we may wish to consider that Singapore can be a "Global City for Sustainability".

In the same way that Singapore has had to transform ourselves when faced with an existential crisis half a century ago, we have to pivot ourselves yet again today as we face the existential crisis of climate change.

By working with other Global Cities as our eager collaborators, our allies, our co-inventors of new knowledge, new technologies and new opportunities, we can leverage our respective strengths, overcome our individual weaknesses and amplify our capacity to meet our challenges.

As a Global City for Sustainability, size matters not, because the world is our hinterland. We can free ourselves from the shackles of our geographic limitations. We can expand the canvass of our imagination through innovation. We can collaborate with other Global Cities to address the emerging sustainability challenges that the world faces.

Singapore as a Global City for Sustainability is not just a thought experiment. The transformation has already begun. Let me highlight a few examples in the areas of research, education and actions.

The Cities of Tomorrow R&D programme is a multi-agency effort led by MND, to identify challenges that cities face and to develop solutions to address these challenges. This programme has several research focus areas that address our sustainability goals.

For example, the programme will develop solutions for creating a more people-centric and pleasant living environment, by addressing the impacts of climate change in cities, while considering the social sentiments and needs of the people and communities. As Minister Desmond Lee noted during the Urban Sustainability R&D Symposia 2021, and I quote, "We aspire to build a city that not only meets our physical needs, but that also enables us to forge strong relationships and deep emotional connections with each other".

The programme will also support our transformation into a City in Nature, by developing the necessary tools and techniques for enhancing biodiversity and our natural environment and implementing nature-based solutions to tackle climate change.

These are timely and important goals that will undoubtedly deliver new insights and innovations to benefit Singapore.

In fact, as a Global City for Sustainability, we may want to be even more ambitious, by not only developing solutions that cater to Singapore's needs, but also exporting the solutions we develop, to meet the needs of other cities around the world.

This requires our Universities and research institutes to work collaboratively with our public, private and people sectors towards a common vision of transforming Singapore into a Global City for Sustainability.

Another area that requires close collaboration between these different sectors, is education. During the Straits Times Education Forum 2022 held in February this year, Minister Chan Chun Sing highlighted the need for Singapore to retrain about half a million adult learners each year, through continuing education and training programmes. As Minister Chan noted, and I quote, "The skills to learn fast, unlearn and relearn, become more important than getting a particular grade at a particular point in life".

This is especially true in our nascent but rapidly growing sustainability sector, where the need and demand for the upskilling of our workforce may prove to be the greatest.

Fortunately, our educational institutions have already been rising to the challenge. For example, Ngee Ann Polytechnic offers a specialist diploma in "Sustainable Facilities Management"; Temasek Polytechnic offers a diploma in "Energy Management and Sustainable Design"; SMU offers an executive education programme on "Sustainability and Sustainable Businesses"; and NUS offers a Master of Science programme on "Sustainable and Green Finance", just to name a few.

Many of these training programmes are taught by both academics and industry specialists, who are eager to share their perspectives, knowledge and experience in the field of sustainability.

There is clearly more to be done, to build capacity on sustainability across different sectors and value chains. My recent discussions with stakeholders in Singapore, point to three main buckets of skills gap, as follows.

First, the most basic and foundational knowledge on climate change and sustainability that every worker should possess. Second, function-specific skillsets to ensure the capacity of corporate function departments to support the rest of the company in developing and deploying sustainability initiatives. And third, sector-specific competencies to enable the successful transition of key industries towards more sustainable business models and practices.

Importantly, as we continue to develop and deploy more training programmes to fill these gaps, we should also be cognisant of the needs of other cities. By helping other cities build their capacity for addressing climate change and sustainability challenges, Singapore may also become a sustainability academy for the world.

With the bold and decisive announcements in this Budget of our net-zero ambition by or around mid-century, and our revised carbon tax policy, we are signalling to the world that Singapore is absolutely serious about taking concrete actions to tackle climate change.

As Minister Grace Fu recently highlighted, our carbon tax increase sends a clear signal to companies, that emissions have an explicit environmental cost. Companies must factor these costs in their business decisions. By putting an appropriate price on carbon, we are incentivising companies to transition to renewable energy, to improve their energy efficiencies and to invest in cleaner technologies. More importantly, as many of our Singapore-based companies have international value chains, these changes in corporate decision-making and behaviour can have far-reaching global impacts.

But in my opinion, there is an even more important and impressive aspect of our revised carbon tax policy. From 2024, carbon tax liable businesses will be allowed to use international carbon credits to offset up to 5% of their taxable carbon emissions. This is nothing short of visionary, as also noted by Mr Mikkel Larsen, CEO of Climate Impact X. This measure will go a long way towards supporting the growth of a vibrant international carbon market to achieve climate impact at scale. Crucially, this will also create demand for high quality nature-based carbon offsets, to help support forest conservation and reforestation projects internationally.

These green transition measures are well aligned with Singapore's ambition to be a Global Carbon Services and Trading Hub.

Mr Speaker, Sir, to transform Singapore into a Global City for Sustainability will demand "a measure of courage, imagination and intelligence" – to borrow the words of Mr Rajaratnam.

I am optimistic about the odds of our success, not least because our youth are bursting at the seams with an overwhelming sense of civic virtue, purpose and pride. In more ways than one, they are the reason we are on this sustainability journey.

Ms Kate Yeo, born and raised in Singapore, is currently a first-year undergraduate student at Dartmouth College in the US. Kate is deeply passionate about environmental and sustainability issues in Singapore and has been regularly posting her explainers and thoughts on Instagram as @byobottlesg.

After hearing about the green transition initiatives on Budget Day, Kate posted the following on Instagram, and I quote, "Still lots of details to be released, and of course we will still have to see how these policies will work in practice. But on the whole, I am hopeful – simply because Singapore is sometimes painfully pragmatic, and we do not set targets we cannot hit. If the Government says net zero by or around 2050, I have faith we will get there".

Mr Speaker, Sir, fellow Members of Parliament and fellow Singaporeans, in these challenging times, our youth are rallying behind us, behind our measures. They are putting their trust to do the right thing and to succeed. We must not fail them.

At the heart of cities are their people. While Singapore is uniquely challenged in several ways, we are also uniquely endowed in other ways, in particular, the indomitable spirit of our people has enabled us to survive and thrive throughout our history, despite all odds.

As we emerge from yet another "crucible of fire", to borrow the Prime Minister's words, we will level up and emerge even stronger yet again.

As Singapore confronts climate change and other sustainability challenges, we have the opportunity to be part of something bigger than ourselves, to punch above our weight once more, to achieve happiness, prosperity and progress not just for our nation, but also the world, charting our new way forward together as a bright green spark, as a Global City for Sustainability.

Sir, I support the Budget and thank you for the privilege to speak.

Mr Speaker: Minister Lawrence Wong.

The Minister for Finance (Mr Lawrence Wong): Mr Speaker, if you could just permit me because Mr Leong Mun Wai had asked a question just now about the net impact of GST on the middle-income groups. And, in fact, I believe Assoc Prof Jamus Lim had asked a similar question on the broad impact of the GST and the GST Voucher (GSTV) changes as well as other text changes.

Sir, all of these are relevant important questions. In fact, many Members would probably surface them in their subsequent speeches too. But I just want to assure Members that I will give a full response to all of this when I deliver my round-up speech.

Mr Speaker: Mr Henry Kwek.

5.42 pm

Mr Kwek Hian Chuan Henry (Kebun Baru): Mr Speaker, Sir, we currently are at the height of the Omicron wave. I know many residents who contracted Omicron or know someone who has. But Omicron too, will pass.

If the experience of US and Europe is applicable, Singapore will be in better shape within weeks or months. And once we get pass Omicron, experts globally have forecast a period of relative stability for this year, compared to the challenging last two years.

Therefore, it is time for us to start considering how to best encourage Singaporeans involved in COVID-19 management to go back to their industries.

When COVID-19 first struck around Budget 2020's period of time, I asked the Government to hire many displaced Singaporeans, especially mid-careers Singaporeans. There are others who made the same suggestion. Our Government wisely hired many Singaporeans to implement SMMs, to supplement our healthcare and social services, and to help our migrant workers cope.

With Omicron, the situation is now quite different. A large part of our SMMs may no longer be as preventing the hyper-contagious Omicron and we have to learn to coexist with COVID-19. And today, most of our industries are in a much better shape compared to 2020 and 2021. In fact, some industries are experiencing a shortage of staff. This contributes to rising business cost. This leads to higher domestic inflation.

Of course, a large part of this inflation we see is largely due to global supply bottlenecks, as well as surging energy costs.

But getting a number of Singaporeans currently involved in COVID-19 management back to the industries will certainly help our companies better manage manpower cost, thereby mitigating the rising cost of living.

Also, MOF's spending has done an exceptional job in preventing economic scarring in the lives of our people. I believe it is also equally important that these Singaporeans I mention do not stay away from their respective industries for too long, which diminishes their skills in the long run. And this is all the more important, because I believe our local labour supply will stop growing within a few years, even after the planned increase in retirement and re-employment ages.

To be clear, I am not suggesting transiting everybody transiting back to their private sector from this group of people involved in COVID-19 management.

A core team can remain. The rest can transit back in phases, based on whether their previous industries are ready for them and whether they need to be reskilled before going to a different one. We can also supplement this core team with non-Singaporeans from neighbouring countries, much like how non-Singaporeans serve as Auxiliary Police Officers (APOs) in some situations to supplement our Singapore Police Force (SPF) officers. And the non-Singaporeans involved in COVID-19 management can be brought in using additional work pass or S Pass, but with clear sunset clauses that their permits are tied to whether or not there is a continued need for COVID-19 management.

That brings me to my next point about reducing the cost and complexity for businesses through a decisive streamlining of safe management measures (SMMs), so as to fight rising inflation. Our Multi-Ministry Task Force (MTF) chairs have done an excellent job simplifying our SMMs and healthcare protocols as the virus evolves.

Recently, our Minister for Finance and other MTF Ministers have indicated that they will do a thorough review of SMMs after the Omicron wave subsides. I am in full agreement. Let us go decisive on this. I hope our MTF can come up with a carefully considered list of "no-go" activities and settings, but allow everything else to proceed. Such clarity will help our civil servants achieve a quick, decisive but effective relaxation of SMMs when the time is right.

My final point is about our SG Green Plan and our participations in climate change negotiations. Over the past few months, I have met a number of Singaporeans and international climate change groups and organisations, and recently many of them told me they were absolutely delighted to hear about our new net-zero pledge.

Given that I have spoken on a number of occasions about the importance of carbon offsets and carbon trading, I am also heartened to hear that our Government was involved in the negotiation of Article 6 of COP26, because it unlocks the possibility for Singapore to fight climate change internationally, while having this contribution potentially recognised under our National Determined Contributions (NDCs).

Article 6, as it stands today, mentions bilateral negotiation, but based on my understanding, without mentioning a large number of details, if bilateral negotiations determine how two countries, the one that contributes to projects and the other where the project is based, splits contributions to their respective NDCs, then I hope our Government can start bilateral negotiation with a sizeable number of countries, some from our immediate region and some from beyond. Doing so will ensure that our overseas climate contributions are not all in one single basket, so to speak and will not be disadvantaged in negotiations with any one country in the future.

Mr Speaker, let me now conclude with a few general remarks on our Budget.

Many people I spoke to were relieved to hear that the GST increase will be staggered and only starting in 2023, especially given where inflation is today. Tax increases are never popular. But many Singaporeans acknowledge our pressing and fast-growing needs. Just to name a few – it is not just increasing healthcare costs, it is not just paying for ageing infrastructure, it is not just investing for future capabilities. But, let us not also forget that there will be less Singaporeans working in the future to support more people. Less Singaporean taxpayers supporting more people.

By now, many Singaporeans are aware that our uniquely Singaporean GST model is progressive. It is, in fact, a tiered GST system where the well-to-do pays more. Some careful observers are also heartened to see that the Government took a number of other steps first before implementing the GST which affects many Singaporeans. These steps include: one, financing long-term lumpy infrastructure projects through bonds; two, transferring a sizeable amount of MAS foreign reserves to GIC, so that we can generate more future income through our reserves; three, implementing wealth tax in a measured and practical way; and four, getting the very successful to contribute their fair share of income tax.

All these show that our Government has listened carefully to people from all walks of life, balanced our country's needs with the complex global situation and come up with practical ways to make Singapore better. With that, I offer my strong support for this Budget.

Mr Speaker: Minister Gan Kim Yong.

5.50 pm

The Minister for Trade and Industry (Mr Gan Kim Yong): Mr Speaker, thank you for allowing me to speak at the Budget debate. I rise in support of the Budget. Please allow me to speak on the impact the conflict in Ukraine has on Singapore's economy. I will also respond to Members' comments on what we can do to help businesses and Singaporeans to cope with the rising inflation and the challenges ahead.

Let me start with the situation in Ukraine. Minister for Foreign Affairs, Dr Vivian Balakrishnan, had earlier delivered a Ministerial Statement on the matter. I will focus on its potential impact on Singapore's economy.

We are closely monitoring the rapidly unfolding situation. Our initial assessment is that the immediate and direct impact on our economy and firms has been manageable for now. Singapore companies have a limited presence in Ukraine, and we do not import many essential supplies from Ukraine and the region. We have adopted a multi-prong strategy to manage supply chain risks, especially for essential goods which we had enhanced during the COVID-19 pandemic. This includes diversifying our imports, stockpiling and producing locally where viable, and working with major importers and retailers to ramp up supply from alternative sources if necessary.

Having said that, the conflict is still evolving and the situation could change very quickly. Make no mistake. While Ukraine may seem very far away from Singapore, the conflict there will have real and significant impact on all of us.

With the sanctions being imposed on Russia by various countries and the disruption to supplies, global prices of energy and other products are set to rise in the coming weeks. Earlier today, Minister Vivian Balakrishnan announced that we will act in concert with like-minded countries to impose appropriate sanctions and restrictions on Russia. These measures will certainly come at a cost to us too. But I hope Singaporeans will understand why we need to make a clear stand, even if there is a price to pay, as Minister Balakrishnan has explained.

One key area we will be significantly impacted by the conflict in Ukraine is energy cost, as we import most of our energy needs. We have already seen in recent months a spike in the global prices of oil and natural gas, which Russia is a major exporter of. For example, liquefied natural gas (LNG) prices have doubled from about $17 dollars per one million British Thermal Units (MMBTU), around half a year ago to about $35 currently. The Brent Crude benchmark also surged past US$100 per barrel just a few days ago, compared to US$71 average we saw last year.

Motorists must therefore expect pump prices for petrol and diesel here to rise in time. Electricity rates for both businesses and households will also increase in tandem with escalating global energy costs. These will undoubtedly impact Singaporeans and further raise the cost of living here.

The crisis will also further strain global supply chains as Russia and Ukraine are major exporters of commodities such as wheat and metals like nickel and palladium. Supply disruptions for these commodities will raise the prices of goods that use these commodities as intermediate input. For example, a global disruption in the supply of nickel could affect the production of stainless steel used in manufacturing and construction sectors. Disruptions to palladium supply will affect the semiconductor industry and consequently, the wider technology goods market. We are working with our key companies to review their business continuity plans to minimise disruptions to their business operations.

We must also be prepared for the follow-on impact on trade and investment flows. A protracted conflict will affect business confidence and weigh on global economies and impact their recovery from the pandemic.

So, what does this mean for Singapore's economy? We earlier projected our GDP would grow by 3% to 5% this year with CPI all items inflation ranging between 2.4% and 3.5% and the MAS core inflation between 2% and 3%.

The Ukraine crisis has clouded our economic outlook. The actual impact on Singapore's GDP growth and inflation is difficult to estimate at this stage, given significant uncertainties. A lot will depend on how the conflict unfolds, the global response to the situation, and the longer-term impact on the global economy. However, what is clear is that inflationary pressures are likely to rise further in the near-term, especially through an increase in the prices of oil-related items in the first instance. The downside risks to our economy have also increased significantly.

Some may ask, can we shield Singapore from the impact of these external factors? As an open economy, we will not be able to totally insulate Singapore from the impact of higher global costs. Some ask whether we can help businesses and households. The Small Business Recovery Grant (SBRG) and the Household Support Package (HSP) we announced at the Budget will help our businesses and households, and I will talk about them shortly. We will continue to monitor the situation closely and if necessary, introduce additional measures to help them cope with the challenges.

Businesses are understandably concerned. After two years of the pandemic, many have been looking forward to ride the wave of a strong recovery in the global economy this year. The conflict has added considerable volatility and stress on what is an already challenging business environment arising from supply chain disruptions, higher electricity and fuel prices, and a tight labour market. Households have been similarly affected by these inflationary pressures.

The Government understands the strains that businesses and households are under and we will do our best to help them. We have put in place a multi-prong strategy to do so. First, we will work with industries and firms to keep Singapore's economy competitive so that it can continue to sustain real wage growth for Singaporeans.

Despite inflation having gone up, the real median income of full-time employed residents for 2021 grew by close to 1% in a COVID-19 year. The growth was significantly higher at 4.4% for lower-income residents at the lowest 20th percentile.

Second, MAS on 25 January this year, raised the rate of appreciation of the trade-weighted Singapore dollar. A stronger Singapore dollar will help moderate impact of external cost pressures.

Third, the Government works with a wide range of stakeholders to carefully manage the various cost drivers. In January this year, Minister of State Low Yen Ling shared with Members in detail, our measures to address inflationary pressures. These include carefully managing the supply of industrial and commercial space to help manage rental costs, working closely with industry partners to ensure that the prices of daily necessities are competitive and affordable, including diversifying food import sources to reduce our vulnerability to global price fluctuations and working with the Consumers Association of Singapore (CASE) to promote price transparency and help consumers make informed decisions.

Some Members expressed concerns about electricity prices. As Second Minister Tan See Leng explained to the House last year and recently in February this year, MTI and the Energy Market Authority (EMA) have put in place several measures to enhance our energy security and resilience and moderate the volatility in electricity prices. These include ensuring that the electricity gencos have sufficient fuel reserves, establishing a standby fuel facility which gencos can tap on to produce electricity and introducing the Temporary Retail Electricity Contracting Support, or TRECS Scheme. We have already extended TRECS from March to May and will extend it further if necessary. We are also working with gencos and electricity retailers to offer more supplies under such contracts.

Notwithstanding these measures, with the ongoing conflict between Russia and Ukraine, electricity prices are likely to remain elevated, or even increase further.

Members also spoke about the challenges that businesses faced in labour shortage and rising manpower costs. I am heartened that Members appreciate the difficult balance we need to achieve between ensuring sufficient manpower for our enterprises and uplifting the capabilities and employment outcomes of our domestic workforce, especially our lower-income workers. Singapore will continue to build a conducive environment for enterprises to grow, our economy to remain open and competitive, and for our workers to benefit from the growth. Minister for Manpower Tan See Leng will share more on what the Government is doing to help firms, especially the SMEs, manage the impact of our manpower policy changes.

The Minister for Finance had also announced a suite of measures in his Budget speech to support businesses, especially SMEs to cope with higher costs. The Small Business Recovery Grant (SBRG) of $1,000 per local employee up to a cap of $10,000 per firm will help eligible firms in sectors most badly affected by COVID-19. The extension of enhanced Enterprise Loan Schemes will facilitate SMEs continued access to financing and ease their cashflow. The enhanced SkillsFuture Enterprise Credit, or SFEC, will now be available to more small and microenterprises and the enhancement of the Productivity Solutions Grant will provide support for a broader range of solutions. Together, more firms will be able to tap on Government support to improve their efficiency and reduce their reliance on manpower. To encourage take-up, the Government will intensify our outreach to SMEs by proactively reaching out to them through the trade associations and chambers, as well as through Enterprise Singapore.

Households have also been affected by the rise in inflation, especially from higher utilities and grocery bills. The Government will continue to lean forward and help them manage the higher cost of living. The Household Support Package introduced as part of this Budget will help HDB households, which will receive double the quantum of their quarterly U-Save Vouchers in 2022 to help them defray the cost of higher electricity bills.

The support measures are not limited to just HDB households. All Singaporean households will receive an additional $100 in Community Development Council Vouchers to help them with their daily expenses.

All children under the age of 21 will receive a top-up of $200 to their Child Development Account (CDAs), Education Savings Account (ESAs) or Post-Secondary Education Account (PSEA) to help them with their education needs.

This is in addition to the wide range of support measures for seniors and low-income families that the Government has enhanced such as the Silver Support (SS) Scheme and the Workfare Income Supplement (WIS) Scheme.

Regular support measures such as the Public Transport Vouchers and the Permanent GST Voucher (GSTV) scheme also help ease the higher cost of living for many Singaporeans.

This is a reflection of our commitment to give more support to those who need it most.

Households that still need extra help can also continue to apply to ComCare for financial assistance. The Government will monitor the inflation situation carefully and will not hesitate to provide more help should there be a need to.

Sir, beyond the immediate challenges at hand, in the longer term, Singapore will continue to face resource constraints such as manpower. There is an urgent need for our enterprises to digitalise and improve their productivity. Firms that are resource-intensive must recognise the need to transform their businesses and workforce, so that they are able to do more with less and unlock new business opportunities and access new markets and customers.

Workers must also recognise that the best way for them to compete and stay employable in an increasingly volatile environment is to constantly learn and upgrade themselves, so that they remain relevant and productive.

I will share more about the challenges and economic opportunities that we see and how we will help businesses and workers overcome the challenges and capture these opportunities during the Committee of Supply debate on MTI later this week.

Sir, the conflict in Ukraine is a stark reminder that as a small country and open economy, we are vulnerable to the vagaries of international developments, be they military conflict, global inflation or supply chain disruptions, or other trends like technology and climate change. It is crucial that we strengthen our defences against such external shocks and to do that, we need to build a vibrant, diversified and resilient economy as well as forge a cohesive and united society.

While there are significant challenges ahead, I am confident that we can weather these headwinds if we work together – the people, the businesses and the Government. This way, we can face the future with confidence.

Mr Speaker: Mr Derrick Goh.

6.05 pm

Mr Derrick Goh (Nee Soon): Mr Speaker, Sir, we are in the midst of navigating the COVID-19 pandemic. We have fared collectively well so far and I attribute this to the leadership of our Government, in the trust and cooperation of our citizens.

I applaud the Government for boldly putting forward a holistic and expansionary Budget of $102.4 billion. Taken as a whole, the Budget is not only fairer, greener and more inclusive for individuals and businesses. Importantly, it tackles existing challenges and yet, prepares Singapore for opportunities that are before us.

Budget 2022 is a clear step forward as it demonstrates the Government's commitment towards a fairer society, where the better off amongst us contribute more with a progressive and resilient tax system. The GST hike, higher carbon taxes and wealth tax increases as sources of funds are not immediate and this Budget has provided more clarity and certainty for individuals and firms to plan ahead.

For the above reasons, this Budget, aptly titled "Charting A New Way Forward Together" resonates with me. Our plan is to ensure that no one – individual or business – will be left behind as we ride the wave into a more complex, more digital and greener world. To achieve that, I would like to highlight two areas which we will need to focus on: one, supporting and accelerating our SMEs in their recovery and growth in the new economy; and two, redoubling our efforts to tackle escalating crime trends, specifically to safeguard our citizens against digital crimes such as scams as well as to protect our youths from the perils of drug abuse.

I will first speak on supporting our SMEs which are the backbone of our economy. Although Singapore's economy is projected to grow 3% to 5% in 2022, businesses are cautiously optimistic as the world opens up. Headwinds remain. SMEs expect higher business costs for macro-economic risks, such as rising energy and commodity prices, worsening geopolitical conflicts and supply chains disruptions.

Locally, the Progressive Wage Model (PWM) and tighter foreign labour policies instituted will help uplift lower-wage workers and boost the hiring of residents respectively, but they translate to even greater expenses for our SMEs.

I, therefore, welcome the $500 million Jobs and Business Support Package. This provides payouts to SMEs most affected by COVID-19 restrictions on top of the extension of other financing schemes.

Budget 2022 is clear in its push for SMEs to strengthen its capabilities: $200 million for digitisation schemes, $600 million to expand the Productivity Solutions Grant and $100 million to company skills training.

All in, support for SMEs to transform and thrive in the new economy is sizeable. Nevertheless, what may weigh on the minds of SME owners are the certainty of cost increases against the uncertain benefits of transformation. Therefore, beyond funding, what is key to realise our plans for a new economy is good execution. The Government can consider more active role to engage and transform our SMEs quicker.

Mr Jimmy Goh, owner of an SME500 awardee, Sim Chwee Mini-mart, recently told me how grateful he was for the support provided by the Productivity Solutions Grant and advice from an SME Centre. This helped him to take the bold step to successfully digitised his father's traditional seafood trading business of over 30 years. While the digitalisation journey was rewarding, he shared the uncertainties that could deter SMEs, such as the heavy reliance on outsourced solution providers and, therefore, the worry of the loss of control of key business data and IT systems.

Another feedback provided to me by the Association of Trade and Commerce noted that SMEs amidst the journey are unclear of the road map to digitalise, such as the need for online marketing after developing a sales website. SMEs found themselves underestimating the cost and time required to build new digital channels.

As we speak about a greener future, what has hogged the media and public conversations has been above the line carbon tax increases. Looking forward, the focus for SMEs should really be about how to remain competitive and in fact capture more opportunities that are ahead. Increasingly, MNCs and governments will require SMEs to be ESG-compliant to continue to be on their panel of tenders. These standards are not easy to implement and sometimes confusing so it is no wonder that many SMEs do not quite know where to start and how to measure and report compliance.

While there are different resources available to help businesses in our pursuit of a digital and green economy, SMEs still see transformation as a cost rather than a strategic investment or advantage. This is where the challenge is not about funding alone, but it is about how our Government can play a bigger role in actively engaging our SMEs. More can be done to spark a mindset shift in SMEs, to marshal them towards the right resources, shape role models in different industries and to sustain partnerships in their transformation journey.

One angle is for the Government to rope in trade associations and chambers of commerce, or TACs, to contribute more as an effective bridge between our agencies and SMEs. So, I am glad Minister Gan just raised this point earlier and I hope to hear more details on this at the coming Committee of Supply debate. If we do this right, SMEs can really benefit and be ahead of the curve against regional competitors in the new economy.

Sir, as important as the Budget is focused on economic progress, is the strengthening of our social resilience. This includes keeping our country safe and secure. I note that Budget 2022 has provided for modest 1.8% increase in MHA's plan expenditure. I hope that it has catered for the expending resources and capabilities to deal with evolving crime trends. At last year's Budget debate, I called for more action and resources to curb the rise of scams.

For 2021, SPF reported over 46,000 crimes. While physical crimes have plunged, scams quadrupled from 2017 and victims lost over $633 billion last year. This is more than the $500 million jobs in the Business Support Package or the $560 million Households Support Package (HSP) to help our young and old. As we battle scams, it is not difficult to worry that more sophisticated cybercrimes that have emerged in other countries, such as ransomware where perpetuators steal monies and our data can also impact us.

Given the above, we need to dedicate more resources, both skilled staff and capabilities, to Singapore Police Force (SPF) to build on the initial success of the Anti-Scam Centre and leverage its partnerships with other stakeholders in the digital ecosystem. We need more public engagement with both individuals, as well as businesses. Everyone has a role to play in this multi-layered strategy.

An equally worrying trend is that of drug abuse by youths. We owe much thanks to CNB's effectiveness in seizing illicit drugs and apprehending offenders, particularly traffickers, to keep our community safe. Notwithstanding this, youths aged 30 continue to form about 60% of new abusers in recent years. This could be due to the more liberal attitudes they have towards drugs and the advent of new psychoactive substances could make this trend worse.

We know that along with drug addiction come many social ills. We cannot allow the lives of youths, who are our future, to be marred by drugs. Therefore, more could be done in a concerted effort to engage youths and teachers at schools, as well as parents at home to deal with at-risk youths for timely intervention. There is no silver bullet to solve these challenges. We have to act swiftly and resolutely to protect our citizens.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]

In conclusion, Sir, I am optimistic that the Budget is poised to pivot Singapore as we move towards a post-pandemic world. While challenges remain, we can take heart in the resilience and the unity they have propelled us forward and we can look ahead with renewed confidence.

I support Budget 2022 and the plans in charting Singapore's new way forward together.

Mr Deputy Speaker: Mr Chong Kee Hiong.

6.16 pm

Mr Chong Kee Hiong (Bishan-Toa Payoh): (In Mandarin): [Please refer to Vernacular Speech.] Deputy Speaker, people are most worried about inflation and the rising cost of living. From time to time, we hear complaints from the public that before the implementation of the new GST rate, the prices of utilities, food, coffee and daily necessities have already gradually increased, which makes many families anxious and worried.

Although the Government has announced various assistance packages to offset the impact of the GST hike next year and the year after, people are still worried that the new GST hike will increase their financial burden.

I am convinced that people must be protected and have more effective recourse when they encounter profiteering situations. Hence, I sincerely hope that the Government will continue to take cases of profiteering seriously and give more resources and power to the Consumers Association and the Competition and Consumer Commission of Singapore, as well as the soon-to-be-established Committee Against Profiteering, to deal with consumer complaints and effectively deal with unscrupulous businessmen who seek huge profits.

However, we also understand that not all price increases are for profiteering.

We understand that, in fact, businesses especially SMEs, coffeeshops and hawkers, are not only affected in terms of labour shortages, but are also under pressure from increased costs of raw materials, ingredients, utility bills, logistics and transportation.

Businesses often try to absorb cost increases in the short term in order to retain customers. Prices of goods and food tend not to change every year, but every few years. As a result, price increase tends to be in a step manner.

Businesses must adapt to the needs of the market and, if necessary, change their business models and processes to ensure that the products, food and the services they provide are value-for-money, or even great value-for-money, in the eyes of customers. Then, even with higher prices, consumers continue to patronise their businesses.

Given that almost everything in Singapore needs to be imported, we are price takers in the international market. Inflation will continue to exist. To ensure that citizens can still afford the products and food, we must ensure that workers' wages grow faster than inflation.

Therefore, I call on the Government to continue to create opportunities for our workers to upgrade their skills, knowledge and their abilities. At the same time, I also call on the Government to pay close attention to and ensure that the wage growth rate and inflation rate can be balanced and that appropriate assistance can be effectively provided when needs arise.

(In English): For workers' wages to outpace inflation and the rising costs of living, they need to have the skills and expertise that are in demand by the market. We need to equip and train our workers, give them the opportunity to upgrade themselves as they progress along their careers. This will allow them continued access to jobs with higher wages and better work conditions.

The Government, unions and businesses must work together to explore the most suitable training models for their sectors. In this regard, I would like to give recognition to NTUC and its affiliated unions for their various initiatives, such as the Company Training Committees (CTCs).

In addition to the tasks of identifying what kind of training is needed, the question is whether we can also get enough well-qualified trainers. How would the Government assist our unions in this endeavour?

There are plans to establish tripartite academies for sectors where transformation is needed. How will the training be conducted and courses be accredited? Will there be collaboration with our ITEs, Polytechnics and tertiary institutions? Can the Minister share more details on this?

As part of the NTUC Job Security Council (JSC), NTUC's e2i has helped match more than 46,000 workers to new or secondary jobs from February 2020 to December 2021. Do we have long-term studies to track how successful these job matches are and identify the main problems where the matches are not compatible so that we can improve on the process?

For persistent unemployment, mismatched skillsets need to be addressed and retraining for the affected workers is needed to equip them with new skills for growing sectors.

Next, I would like to appeal on behalf of some elderly private property owners regarding the increase in property taxes for owner-occupied residential properties. The property tax rates for the portion of Annual Value in excess of $30,000, will be raised from 4% to 16%, to 6% to 32%. These are properties that they may have bought long ago. Upon retirement, they have no income and are burdened with ever-increasing cost of living and now have to pay higher property tax as well. These are their homes, not investment properties that have rental income to offset the property taxes. Would the Government consider assisting this group of residents?

Last but not least, regarding the additional GST Voucher (GSTV) – U-Save rebates under the Assurance Package and the regular GSTV – U-Save rebates, would the Government consider disbursing the rebates based on per capita household income instead of the size of the HDB flat? This would appear to be fairer and more equitable. I would like to conclude with my support for the Budget.

Mr Deputy Speaker: Ms Poh Li San.

6.23 pm

Ms Poh Li San (Sembawang): Mr Deputy Speaker, Sir, Budget 2022 is balanced and designed with a clear focus on better preparing Singaporeans for the future. Most measures address concerns such as a green economy, assistance for badly affected businesses and supporting skills upgrading. The Budget is fair and inclusive. The Finance Minister has shared that by raising the top-tier tax rates from 22% to 24%, an additional $170 million of tax revenue could be collected.

Over the past year, there has been a 30% increase in a number of millionaires in Singapore, from around 207,000 in 2019 to 270,000 in 2020. The personal income tax rate varies in different countries. It is around 37% in the US, 40% in Switzerland, 56% in Japan and 45% in China. Comparatively, even though our top marginal personal income taxes are 24%, it is still relatively low compared to these developed countries. Singapore's top-tier owners should find the revised tax rate favourable.

Over the past week, I have spoken to several high-income earning Singaporeans. It is heartening to know that most high earners agree that the business-friendly social and commercial conditions in Singapore have helped them succeed and prosper. Some are supportive of the higher taxes to provide for heavier social spending. They understand that the changes to the tax system are necessary for the sustainability and stability of Singapore's infrastructure, conducive policies, secure environment and well-developed digital infrastructure.

Singapore has moved into a different phase of development. Going forward, Singaporeans should expect more tax changes to meet the demands of the changing demographics and economic conditions, with the top-tier owners expecting to contribute even more towards tax revenues.

Some high-income earners may feel that they have worked very hard for their success and that is not fair to have to share with others who did not work as hard as they did. I do agree that nothing is absolutely fair and it is never possible to completely justify who should be paying more or less taxes. However, it is important to cultivate the growth mindset that those who can afford to pay a little more taxes should do so.

Even with the higher tax revenue, the cost of living and doing business will still continue to rise. We will have to manage the rising inflation while maintaining our economy's competitiveness. One major area of concern is the push for productivity gains, especially in view of the curbs in foreign labour inflows, as a result of the COVID-19 pandemic.

Over the past decades, the availability of low-cost foreign workers has benefited business owners and kept businesses running competitively. To add, these foreign workers are willing to perform labour-intensive jobs, which Singaporeans tend to eschew.

We have to find a way to win ourselves of the heavy reliance on foreign labour as the easy availability of foreign workers has depressed are blue-collar workers' wages and it will continue to do so. There is no easy solution and we will need to assist our low-wage Singaporean workers by slowing the supply of foreign labour.

I am concerned that even with the Government's Progressive Wage Credit Scheme (PWCS) to support part of the wage increases, businesses will still have to pass along some cost increases to customers and consumers.

Through the Progressive Wage Model (PWM) and the Workfare Incentives Supplement (WIS), we have been increasing wages to attract more Singaporeans to take on various jobs, especially those that are currently taken on by foreign workers.

Though is a difficult period for many businesses that are facing severe manpower crunch, we should persist in this workforce transformation and build a strong Singaporean Core. We must try to continue to hire more locals.

In tandem, we need to redesign the operations and job processes and improve the working conditions for lower-wage jobs or Singaporeans need to change their attitude towards low-wage jobs. Business owners should also shift their mindset and relook at how to improve the work conditions that have been deterring Singaporeans to take on such roles. Having said that, workers will always take on jobs with remuneration that justifies.

I would also like to appeal to the Government to provide more support to social enterprises. Many social enterprises employ untapped resources that include post-retirement seniors and high-functioning special needs individuals. These senior workers can remain active and sharp. With some tweaks in the job roles, this particular group of workers can assist in certain jobs, previously done by foreign workers.

Though easier said than done, we should automate whenever possible. Understandably, many businesses are reluctant to invest in the capital expenditure required for automation. However, new technology and improved business processes is a must.

I hope the Ministry will consider providing better assistance to our SMEs to offset the upfront costs for automation and innovation. Assistance schemes could be interest-free loans or grants to partially offset initial capex investment, particularly for initial large investments required for scaling-up automation. Mr Deputy Speaker, I will now speak in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] We are heading in the correct direction in revamping our tax system, but the Government can do more.

Retirees will be hit by the double impact of the rising costs of living and the GST increase after next year. The Assurance Package cash payout and GST Voucher – Cash (Senior's Bonus) will offset the expense increases. However, many retirees have limited savings, they are worried about what would happen after the period of support ends. Families with special needs members also do not have any additional help.

Will the Government give more support to social enterprises that help to match interested retirees and able persons with special needs with micro jobs? For those who are able, matched with suitable tasks, they will be able to supplement their household incomes and be meaningfully engaged as they contribute to our community.

(In English): We will be starting a Wellness Kampung for seniors in the Sembawang West constituency. This will be a common space at the void deck where residents come together to socialise and exercise. There will also be an urban farm on the rooftop of a multi-storey carpark next to it, that will provide micro-jobs for the seniors.

It can be a modern-day kampung where residents exchange information about job opportunities like babysitting, tuition, part-time jobs, handy-man jobs and so on. I would like to ask Government agencies, such as HDB and SFA, to be supportive of such community initiatives and review their rules and regulations to facilitate more of such projects that can easily provide positive social impact.

Mr Deputy Speaker, Sir, I will now move onto the topic of a greener and more sustainable Singapore.

Green Capital, including carbon taxes and green bonds, is the catalyst to jumpstart our transition to a green economic ecosystem.

The issuance of green bonds will allow the Government and businesses to invest in new technology and build a strong foundation for a green ecosystem. These bonds will greatly reduce the financial risks to our Government, especially for mega infrastructure investment projects for green energy production and for transition to greener business models. As an example, the transformation to a more sustainable Jurong Island.

Though the newly introduced phased carbon tax increase will help businesses cope and transit more gradually to greener practices, there has been little mention of grants for developing talents needed to support the green economy.

R&D for renewable energy production and energy optimisation technologies is important. Presently, many countries are fighting for talents to support their sustainability related industries. It is advisable to start positioning Singapore as a serious regional green hub. We will need the talent to build our green industries.

It is also time for us to invest more in the training and nurturing of a new generation of innovators and engineers for the sustainability sector. In recent years, many young talents have pursued careers with big IT firms that have set up headquarters in Singapore. We also need to proactively plan for some of our very own Singaporeans to pursue engineering, in particular, environment engineering.

Advanced technology is the key to unlocking many constraints in harnessing renewable energy and achieving circularity in waste management. The Government must do more to signal to the nation about the importance of having talents in engineering and R&D.

Mr Deputy Speaker, in the final segment of my speech, I will share my concerns on the burgeoning spending on social services, in particular, in healthcare expenditure, as Singapore enters a rapid ageing phase.

On top of channelling resources on geriatric care and building more community hospitals, I urge MOH to focus more on upstream prevention healthcare services, such as free annual health screening services for Singaporeans above 35 years old, as early intervention and treatments are often more effective and less expensive.

The preventive efforts should also focus on encouraging the younger population to live a healthier and more active lifestyle. As we recover from the pandemic, more aggressive efforts should be put into community programmes focusing on nutrition and fitness. Although these programmes will take time and concerted efforts, this may well be the best approach to reverse the rising trend of healthcare spending resulting from diabetes and obesity.

Mr Deputy Speaker, I would like to say something in Malay about preventive healthcare.

(In Malay): [Please refer to Vernacular Speech.] With a rapidly ageing population, it is imperative that we get all Singaporeans on early preventive healthcare in order to survive the silver tsunami. The right direction would be to plan ahead for the long term, by shifting spending towards preventive and community-based healthcare.

Unfortunately, since then-Minister for Health Mr Gan Kim Yong declared "War on Diabetes" in 2016, the prevalence of diabetes is 9.5% in 2019, up from 8.6% in 2016. The prevalence of diabetes was higher among Malays and Indians at 14.4% and 14.2% respectively, compared to Chinese at 8.2%.

Would the Government consider allocating more resources to customise health measures to help bring down the prevalence among the different ethnic groups? There may be genetic, diet and lifestyle differences which need to be addressed, specifically in order to target this problem more effectively.

(In English): The frequent consumption of sugary drinks may cause diabetes and obesity. I am concerned about the mushrooming of bubble tea outlets all over Singapore over the past few years.

Another concern is the prevalence of binge drinking amongst Singaporeans. Young adults in the 18 to 39 years age group were most likely to binge drink in pubs and bars. Binge drinking may cause a whole host of health problems, as well as unsafe acts, such as driving under the influence of alcohol. Binge drinking has risen to 10.5%.

As part of a suite of preventive healthcare measures, I hope the Government is looking to regulate and reduce the number of bubble tea outlets, pubs and bars.

Another major area of concern is mental health, particularly worsened due to the pandemic. Mental health issues are unseen, and it is hard to understand the real extent of this social and health malaise. It is particularly debilitating because many young people are afflicted and the damage can be very long term or dire.

We have no choice but to ensure that we have qualified professionals and allocate sufficient resources in our healthcare systems to provide treatment and support for those affected. On this note, I would like to enquire from Minister for Health on the progress of the National Mental Health Competency Training Framework.

Mr Deputy Speaker, Sir, our people are our most precious resource and we must put in our best efforts to help them stay in good health, physically and mentally, so that they can attain their highest potential and live a happy life as Singaporeans. We are a small nation and there are only so few of us. All the more we need to take care of one another and leave no one behind. We need to stay united to survive in a competitive global environment.

The Budget has established a good framework for all of us to work together for our common future. I would like to conclude with my support for the Budget.

Mr Deputy Speaker: Leader.

Debate resumed.

Mr Deputy Speaker: Mr Edward Chia.

6.41 pm

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Deputy Speaker, Sir, I welcome the 2022 National Budget announced by Finance Minister Lawrence Wong. This Budget builds on the strong social compact between our Government with Singaporeans. In particular, our Government has made decisive steps in the ongoing transformation of our labour market, with a clear focus on uplifting lower-wage workers.

The Progressive Wage Credit Scheme (PWCS), introduced in Budget 2022, provides transitional wage support for employers to adjust to upcoming mandatory wage increases for lower-wage workers covered by the Progressive Wage Model (PWM). Employers understand their critical role in strengthening our social compact and the need for them to build business resilience through fair and progressive employment practices. The transitional wage support, along with support grants and schemes to upskill workers and raise firm level productivity will enable employers to sustain these wage increases. Speaking with other employers, these support measures give us confidence that the Government is with us as we uplift our workforce wages.

The decision to stagger the increase of GST over the span of two years is another strategic choice welcomed by businesses. Many businesses, especially those in consumer-facing sectors, are still reeling from the impact of COVID-19, hence this staggered increase provides the additional time needed for businesses to respond. A one-off GST hike during a period of inflation concerns would have exacerbated concerns over a potential drop in consumer spending.

Beyond immediate business challenges, we need to adopt a larger resilience agenda grounded in adaptability and decisiveness. This resilience agenda will move beyond defensive measures and short-term goals to encompass strategies aimed at achieving inclusive and sustainable growth. In my speech, I will expand on two key aspects of resilience: labour resilience and climate resilience.

Labour market resilience can be characterised by a low unemployment rate, sufficient supply of skilled labour and productivity and wage growth. As observed from Budget 2022, the Government aims to instil labour market resilience through two broad strategies. Firstly, to ensure that Singaporeans who are willing and able to do the jobs, will get good jobs with higher wages and better work prospects. By calibrating the minimum qualifying salary for Employment Pass (EP) and S Pass applicants, employers are strongly encouraged to further consider the quality of foreign workers that they want to bring in and how these workers also strengthen the larger workforce with our Singaporean Core.

The second strategy aims to increase the productivity of our labour force through the digitalisation of processes and skills upgrading. This strategy is materialised through schemes like the Productivity Solutions Grant (PSG) that subsidises the implementation of digital and automated solutions designed to raise productivity, and the SkillsFuture Enterprise Credit that offsets up to 90% of expenses for skills upgrading initiatives.

While most businesses would agree with the rationale behind these strategies to strengthen labour market resilience, they face operational and structural challenges that impede their adoption of these strategies.

After many conversations with business owners over the past few months, the difficulty in hiring Singaporeans is a real one. Job recruitment advertisements for Singaporeans yield low responses. In a recent meeting with a fintech startup, the entrepreneur shared of his difficulty in hiring software engineers. At the same meeting, a business owner in the manufacturing sector lamented that he was unable to hire sufficient staff to fulfil customers' orders. Anecdotes like these are repeated by employers from other industries even when all of them show eagerness to hire Singaporeans.

The hiring challenges is also keenly felt in our social services sectors. In my constituency in Zhenghua, I have received numerous appeals from young parents for childcare and infant care placements. Our anchor operator has just taken possession of a large space at the new Senja BTO development, much to the delight of parents. However, parents will have to wait longer for placements as the operator is still facing challenges in hiring sufficient teaching staff. The centre is unlikely to run at its optimal capacity when it opens.

Mr Deputy Speaker, Sir, I believe Singaporeans are talented and driven, but there is simply not enough of us. This is a consequence of our ageing population and low birth rates. Our local workforce is anticipated to shrink in the coming years. While I agree that we must provide gainful employment for Singaporeans and strengthen the complimentary factor with the foreign workforce, we may soon or already have reached a point where there is simply not enough of us.

Beyond complementing our local workforce, we need to look at supplementing our workforce. This is especially so for essential services and what I would term also as "enabling" services. For example, services such as childcare and infant care enables young parents to dedicate themselves to their jobs, thereby enabling them to be economically active. As we recognise and emphasise the importance of our mental health, there will be a growing need for counsellors in our schools, workplaces and in our communities. With greater mental health capabilities, we can help and enable as many Singaporeans to be at the their best mental and emotional state.

One thing that I believe that all Singaporeans enjoy is our hawker food. Our hawkerpreneurs and culture is recognised by UNESCO. But will we have enough Singaporeans, especially with other sectors competing for the same local talent, take up the woks as our hawker legends hang up their ladles?

Essential and enabling sectors remain highly dependent on human labour. For sectors such as healthcare, social work and early childhood, human labour is literally the commodity being traded and digital adoption is commonly seen as complementary to human labour but not a perfect substitute. There are also regulatory requirements on service provider-to-client ratios that cannot be changed despite higher levels of productivity. An example would be our early childhood sector where ECDA mandates a teacher to student ratio of one is to a range from eight to 25, depending on ages.

Mr Deputy Speaker, Sir, there is really not enough of us. I seek the Government to review the essential services sectors' manpower requirements and the projected needs in the coming years vis-à-vis our local workforce numbers.

There is also growing concerns within the business and international community that Singapore is perceived to be closing up and foreigners are not welcomed. We need to address these concerns as such perceptions have grave consequences for Singapore. As shared, our workforce is ageing, our labour force growth is declining, and we would not have enough workers. For Singapore to stay relevant in this fast-changing world, we need access to the best talent and have them be part of our team. Domestically, we need essential and enabling workers to support Singaporeans' aspirations and care for our seniors and children.

This need for Singapore to remain open has to be felt both economically and socially to build labour resilience. Singapore has always been a talent capital and being welcoming to different nationalities and races to call Singapore their new home is essential for our continuous development. Marriage data shows that we have also more Singaporeans marrying foreigners and this trend is likely to continue. All of this makes social integration and acceptance absolutely important. This acceptance of differences is occurring at all levels of our society – from preschools where I have seen children who are not yet attuned to our local languages to workplaces where respect for religious beliefs in food and practices require more sophisticated HR practices.

Retaining and growing our multicultural DNA is absolutely critical and now with even more diversity in it, we need to constantly work at it from our grassroots to our policy officers. Our social compact needs to be strengthened through social integration and I believe this is where much more effort can be put in our community with active involvement by companies too.

On the productivity front, the time lag between the implementation of productivity enhancement solutions and reaping their results is a very real challenge for businesses. Allow me to elaborate on this.

Even when businesses successfully leverage on the productivity enhancement schemes and implement more digitisation and skills transformation programmes, there will be a lag time before digital capabilities are running at full steam and employees are up to speed with their skills transformation programmes. During this transitional period, businesses face a shortage of "plug and play" labour to meet their business needs, compounded by labour shortages and the scarcity of tech talent in Singapore. As a result, even if companies are open to adopting new technologies, there is still apprehension and resistance to operationalising such solutions because of the inability to seize revenue opportunities in the short run.

Inevitably, businesses will eventually reach a tipping point for technology adoption. The COVID-19 crisis was such one crucial tipping point of historical magnitude. However, the purpose of cultivating labour market resilience is to ensure that businesses can ride on the waves of digitisation instead of being submerged under them. At present, operational and structural challenges are impeding businesses from actualising a resilient labour force. I acknowledge that a radical mindset shift on the part of businesses is needed to respond to larger global trends. However, I would like to ask the Government, what else can be done to address the short-term challenges that businesses face in building a resilient labour force? And what other measures can be put in place to guide businesses as they re-envision their business transformation roadmaps? With a clear labour shortage on our shores, what is the bigger strategy for our workforce composition that will enable us to remain competitive?

Another aspect of the resilience agenda is that of climate resilience. I affirm the Government's commitment towards strengthening Singapore's net zero goals and significantly raising carbon taxes. These steps are necessary and crucial in ensuring Singapore's transition to a green economy and affirm Singapore's commitment towards climate change.

Despite our efforts, the sobering reality is that it is unlikely for us to fully escape the effects of climate change. The floods that resulted from torrential rain in many states of Malaysia last December exposed the reality of extreme weather patterns caused by climate change. Hence, there is a need to strengthen our climate resilience through infrastructural interventions. The Government announced new plans in 2020 for coastal protection measures against rising sea levels to mitigate effects of climate change. The range of options to combat rising sea levels, include engineering feats such as reclamation and building sea walls, as well as nature-based solutions are being considered.

The Significant Infrastructure Government Loan Act (SINGA) will allow the Government to borrow up to $90 billion to pay for infrastructure that will last for at least 50 years.

To diversify the funding options for green infrastructure, Budget 2022 announced that $35 billion of green bonds will be issued by 2030 to fund public sector green infrastructure projects. This builds on the $19 billion worth of green bonds issued during Budget 2021. In relation to these new sources of funding, I would like to ask the Government to provide more details on the infrastructural projects that have been earmarked for development and specifically the opportunities for our local businesses to be involved in these developments so that they can build necessary capabilities. In addition to the other opportunities in the green economy, does the Government view engineering solutions in climate change adaption as a sector where our businesses can hone a niche in and eventually export solutions internationally?

Overall, this Budget will continue to strengthen our common resilience agenda and reinforce Singapore's strong social compact. Mr Deputy Speaker, Sir, I rise in support of the Budget.

Mr Deputy Speaker: Mr Cheng Hsing Yao.

6.55 pm

Mr Cheng Hsing Yao (Nominated Member): Mr Deputy Speaker, Sir, I support the Budget as outlined by the Minister for Finance. I would like to touch on a few points that I think need emphasising.

In my interaction with various people in business, I can sense an admiration for Singapore. Our consistent past achievements and how we are seemingly the only Asian society that managed to move towards endemic COVID-19 are two aspects that they admire.

The interest to invest or expand in Singapore is strong. However, one of the most common concerns is whether we have the manpower and talents to support the growth. The reality is that the Singaporean labour force is not big enough. Thus, I am very glad to hear in Minister for Finance’s speech that we will remain "open and welcoming to talent from around the world but we will focus on complementarity".

This message is very important. I would like to urge the Government to repeat and say it more. This is because of late, the voice of xenophobia has become louder. We need the business leaders and investors to be clear where we stand.

As a relatively wealthy nation, some of us might get complacent and believe that economic development is no longer the main priority. That cannot be further from the truth. The various vulnerabilities we face as an island city nation must be familiar to Members already. And we also have, as the Minister for Finance pointed out, more and more social needs that have to be paid for.

We can and should look into refining our progressive and wealth tax regime, with a caveat that we need to be careful of any unintended consequences. Ultimately, unless we can develop and keep our economy vibrant, we will struggle to keep our Budget balanced and start to have surplus again.

Every public policy comes with an underlying trade-off. As we become more aware of the trade-offs on the environmental and social aspects, we must not under-emphasise the economic ones.

The concept of "complementarity of foreign labour" is an excellent guiding principle that ingeniously addressed all the conflicting concerns. I would like to highlight two considerations when we translate this principle into policies.

Firstly, the growth and demand for talents will be extremely uneven across business sectors and companies. Even as some experience huge labour shortage, there will still be a significant number of people who are unemployed or under-employed. As businesses are being disrupted at a faster pace, so will the rate of displacement of jobs and skills. I expect the pace at which people will find their skills and knowledge getting outdated to increase going forward. For traditional sectors that we want to transform to raise productivity, the more successful we are with the transformation, the more people will be displaced by new machines and talents. When crafting our policies, we should separate the needs for growth, from the need to care for the displaced workforce, so that we do not unnecessarily limit our growth potential.

Secondly, opportunities come to those who are strong and successful. Not to those who are weak and needy. To stay successful, we have to keep seizing new economic opportunities while we are still doing well. If we forego one or two opportunities, we are unlikely to sense any difference. But that is a slippery slope. By the time we have lost our appeal, it is already too late. The difficulty for the Government is to convince the public of a future-oriented policy when nothing seems to be broken yet.

My final point is about a Singapore vision or dream. I want to, once again, thank the MTF and the whole of Singapore for the way we responded to the pandemic. The last two years were a big shock to Singapore and the world. In business, sometimes the best time to reform a company is after it has gone through a major disruption. Perhaps, we can use this time to put together a refreshed Singapore vision. The Minister has addressed a similar point, in terms of "renewing and strengthening our new social compact".

In the 1980s, when I was in Secondary school, the Government's "Vision 1999" had a big impact on me. It was a vision that covered many different aspects. But the parts that I related to the most were the target for Singapore to achieve the Swiss standard of living then by 1999 and the plans for Singapore's New Downtown. The latter played a part in why I have become an architect and joined URA to be an urban planner.

For mid-career folks like myself, who have gone from having handwritten letters to emails and then social media, what would inspire us? For the young ones who are digital natives, what would inspire them? It will be exciting to find out.

As we "chart our new way forward", to "emerge stronger" and "towards a low-carbon society", it might be useful to also define the qualitative aspects and value system of our society that we want to have in future. After two years of pandemic talk, I like the idea of having a holistic, refreshed and inspiring Singapore Vision to strive towards. With this, I support the Budget.

Mr Deputy Speaker: Miss Rachel Ong.

7.02 pm

Miss Rachel Ong (West Coast): Mr Deputy Speaker, this is a Budget of hope, social conscientiousness and sustainable growth.

Several residents I spoke with shared that Budget 2022 responded to the needs and aspirations of Singaporeans. It tackled some very difficult issues that our people are concerned about and is a big step forward towards a more equitable, harmonious and progressive Singapore.

It is also encouraging to note that a large part of the Budget is devoted to social well-being, particularly our seniors, who can retire better with stronger financial support and adequate healthcare. Our less privileged families and children will also not be left behind.

Our lower-wage workers will be given a much desired lift through increased Government expenditures in Workfare and subsidies to help employers co-fund progressive wage increases.

The other aspect of this year's Budget that struck a chord is the effort to redistribute wealth through progressive taxes on top-tier earners and expenditures, directing these to the uplifting of those most in need.

Those in the top income brackets, while being asked to contribute more, are still only taxed moderately, as compared to many first-world countries. It is noteworthy that the top 10% of our income taxpayers contribute to 80% of personal income tax revenue. This is a significantly higher contribution to total income tax revenue than the top 10% of income earners of the US and the UK by at least 10 percentage points.

I believe this redistribution of wealth serves well to build up the social foundation by which our people can thrive together.

If I may share some observations and two considerations on advancing our green transition.

Observations on carbon tax and climate resilience. As corporates around the world raced to zero in the weeks and months leading up to COP26, one glaring area of needed change to Singapore's efforts was our $5 per tonne carbon tax. With the gradual increase in carbon tax to $50 per tonne and a further $80 per tonne by 2030, this starts to address the need to price in externalities and is a laudable move.

My resident and community leader who also serves as the Sustainability Director at Lendlease Singapore shared with me that Lendlease uses a shadow price of US$20 per tonne in 2020, rising to US$100 per tonne in 2030 and US$140 by 2040, which are integrated into Lendlease's investment decisions and prices in financial risks associated with climate change.

Singapore should continue to assess our carbon tax on an ongoing basis, aligning with international best practices, to respond to and aid the transition towards a low-carbon economy. This recognises the ecosystem services that our environment provides and in Doughnut Economics Theory, this points to the ecological ceiling by which we should not cross.

A greener living environment should also ensure that our buildings and infrastructure are climate-resilient so that our people can be. Flood risk is a significant physical climate risk that low-lying nations must contend with. I understand that at Lendlease, climate change and adaptation plans are integrated in all major developments to ensure the communities served have access to facilities in case of floods.

Forward planning by the Government, as well as other private developers, should consider climate risks and ecological limits for Singapore. This goes far beyond carbon emissions to include rising water levels, biodiversity loss, amongst other ecological impacts.

While we are cognisant of our limited natural resources and the need to balance economic and societal needs, applying such ecological limits may compel all of us – Government, urban planners, corporates and people sectors – to be truly creative in the way we use our resources and overcome limitations.

As for the two considerations, here is the first consideration – reducing our direct emissions in tandem with electrification. Soaring electricity prices in recent months have impacted economic recovery for businesses. Even as we move towards electrification for vehicles and land transport, Singapore still has to deal with emissions arising from electricity generated.

While Electric Vehicles (EVs) are inherently more sustainable, producing less emissions per kilometre, EVs still have a significant carbon footprint unless the electricity is from a renewable source.

One transitional option could be reducing our Scope 1 direct emissions via the use of alternative fuels, such as renewable diesel, also known as RD, which produces only one-tenth of conventional diesel's emissions, for the land transport, logistics and construction sectors. This recommendation follows the encouraging news that our aviation sector will now have access to sustainable aviation fuel.

On the land transport front, Singapore has made limited progress, despite the fact that we have Neste, one of the world's leading producers of RD, producing 1.3 million tonnes per year at our doorstep. To date, I understand that none of this diesel is meant for local consumption, since there are no local distributors, and the supplies are currently shipped to Europe and the US where there are government subsidies for RD.

With oil prices rising, impacting both pump and electric prices, as well as internal combustion engines and EVs, Singapore should consider a third fuel alternative, especially when Neste is producing locally.

The second consideration – accelerating the renewables market. The ability to use international carbon credits to offset up to 5% of taxable emissions will support the development of a regulated carbon market in Singapore and the region. I would also like to suggest that Singapore incorporate and consider regulating the use of International Renewable Energy Certificates, also known as IRECs, as an alternative means to carbon credits for corporate compliance in taxable emissions. This can be applied to companies which are large energy consumers, for example, those under GHG Protocol Scope 2, but not the large emitters in Scope 1.

The Singapore renewable market is illiquid at the moment, with much demand and insufficient supply. Prices for Singapore RECs have doubled in the last one year, from $35 per megawatt hour (MWh) to $70 per MWh. By encouraging and regulating IRECs as an alternative environmental attribute next to carbon credits, this could provide greater liquidity in the market and also support major developers' pursuit of net-zero carbon developments.

Mr Deputy Speaker, though there will always be areas where we can do better, I am fully persuaded that this Budget shows up very meaningfully for our people in such a pivotal time as this. With this, I am grateful and I support the Budget.

Mr Deputy Speaker: Mr Shawn Huang.

7.09 pm

Mr Shawn Huang Wei Zhong (Jurong): Mr Deputy Speaker, Singapore has many notable science and tech achievements. Those of my generation would fondly remember the 1989 Sound Blaster by Creative Technologies' Sim Wong Hoo. It is probably difficult to comprehend why the hype over quality music and sound over a desktop computer. Back then, this was cutting-edge. It was a computer chipboard that enabled users to play and record speech and music, selling more than 400 million Sound Blaster cards worldwide and the first Singapore company to be listed on NASDAQ. Just two decades ago, Trek 2000 International Limited, a Singapore company, invented the thumb drive. Using a USB interface, the thumb drive, the thumb-sized storage device, had a plug-and-play convenience. It was a wave that swept the floppy discs and mobile storage segments.

Looking at the trend of mobile payments today, a cashless society and the rise of mobile wallets, Network for Electronic Transfers (NETS) started work on their ambition in 1986 with electronic transfers at point-of-sales; the digital or mobile wallet in the form of cash cards was then rolled out in 1996. Singapore was ahead of our time and spearheading technologies and pushing the frontier of fintech.

Today, on the list of the world's 10 most valued and largest companies by market capitalisation, except for two – that is – Berkshire Hathaway and Saudi Aramco, all the rest are IT and tech companies. The future economy will be driven by the fourth IR, moving from traditional digitalisation to an intelligent era – smart home, smart factories, lights out manufacturing – a great way to mitigate manpower and environmental issues, in smart cities.

The future powerhouses will be driven by innovation. According to the World Bank, in 2017, Singapore's R&D percentage spend of GDP was 1.94% or an estimated US$6.7 billion. At the same time in 2017, Israel spent US$16 billion on R&D. In 2021, Israel was 4.94%, Korea was 4.53% and Switzerland 3.37%. Slovenia, Czech Republic and Iceland ranked higher for percentage GDP spent on R&D. The OECD average is 2.4%. To further put into context, Alphabet Inc, the parent company of Google, spent US$31.5 billion on R&D Amazon, US$42.7 billion; and Microsoft US$19 billion, just to name a few. Although highly innovative companies with substantive R&D expenditures provide much opportunities and some form of inoculation, it does not guarantee survival.

Much still requires leadership. We know of Kodak, Nokia, Blackberry and Yahoo!. Interestingly, any keen observer will realise that Kodak and Fujifilm were in the same position. Kodak filed for bankruptcy but, in 2010, just when Kodak was close to bankruptcy, Fujifilm posted a 57% revenue growth between the years 2000 and 2010. This was because Fujifilm had the courage to face possible realities, act swiftly and change its business.

There was no time to be incremental, no time for quick wins, no time for low-lying fruits. These methods would not have been sufficient to steer a behemoth. The management quickly downscaled production lines, closed redundant facilities and they unified their research efforts, enhanced communications and improved the culture of innovation amongst the engineers. But this was not enough. The President of the company ordered a quick stock-take of all of Fuji Film's technologies and quickly mapped out how existing in-house technologies could be used to power future markets. It was an existential moment for them and Fuji Film survived, moving into pharmaceuticals, cosmetics and functional materials.

With rapid tech cycles and disruptions to industries, we must be courageous in investing and building our future capabilities. One example amongst the numerous is oil and gas. With peak oil expected to occur between 2025 and 2030, we will expect the subsequent decline of oil and gas within the next 50 years.

Singapore has substantial investments and revenue from Jurong Island and this is truly one Kodak moment we want to avoid. Avoiding Kodak moments is only one small aspect. There is the imperative to recognise long-term trends and the ability to foresee and, most importantly, is Singapore technologically agile and capable to pivot rapidly? Does it have the ability to build strong networks of ecosystems to solve disruptive and multidiscipline challenges of today and the future? Is our workforce able to build expertise in different ecosystems and networks to spur collaboration and innovative capabilities?

The World Intellectual Property Organization (WIPO) ranked Singapore eighth in the Global Innovation Index in 2021. It has been top 10 in the last 14 years. More recently, Singapore is second on the Bloomberg Innovation Index. Looking further into the details of report from 2018 to 2020, WIPO ranked Singapore number one in innovation inputs but ranked 15th in innovation outputs. In a sub-segment of knowledge and technology outputs, Singapore was ranked 13th.

To note, China, Korea and Japan ranked high in knowledge and technology output within Asia. Singapore produced less innovation outputs relative to its level of innovation investments. Singapore's education system, infrastructure, R&D environment as well as business ecosystems are our core strengths. And we rank very, very high on those categories. However, the ability to produce knowledge products and creative assets have been less than ideal.

To achieve the high level of productivity we aspire, we must maximise our innovation potential and project tangible and quantifiable results. We must not forget that the science, technology and innovation landscape is constantly shifting. Taking China, for example, China's feat is dramatic. China's global share of research papers in the few of just one AI has vaulted from 4.26%, which is about 1,000 papers in 1997, to 27.68% in 2017. This is global – 37,343 papers, AI patents filed, surpassing any country in the world including the US, a position it continues to hold. China also consistently files more AI patents in any other country. As of March 2019, the number of Chinese AI firms has reached 1,189, second to only the US which has more than 2,000 active AI firms.

Many countries are systematically gaining ground with China: Malaysia, Thailand, Turkey, Vietnam, India and Philippines, improving their rankings substantially in the last decade. Competition does not stand still. They are constantly on the move, moving at a rapid pace and gaining ground.

This is from a whole country's perspective. But in reality, science and technology activities are centred around clusters, tech ecosystems that are usually defined by geographical areas. Some of them are well-known, like Tokyo-Yokohama, which is ranked first. Second, which Shenzhen, Hongkong, Guangzhou followed by Seoul, Beijing and then San Jose, the famous Silicon Valley at the fifth. Singapore is ranked at 29th, behind Dejan, Nagoya, Osaka, Nanjing, Hangzhou, Shanghai, Taipei. Singapore is ranked 47th in in science and technology intensity amongst the top 100 science and technology clusters. In terms of total IP following activity, Singapore ranks 28th behind Ukraine, Mexico and Thailand.

The term "Start-up Nation" was title of a book in 2009 by Dan Senor and Saul Singer about the economy of Israel. The presence of thousands of start-ups and more engineers per capita than anywhere else in the world makes Israel a natural hub for innovation, best known for defence and military-inspired technologies. Entrepreneurs across the nation are now focused on building mixed generation applications, helped by government support, societal acceptance and presence of large numbers of multinationals eager to buy innovative technology from start-ups. Israeli companies are building a wide range of products and services for the world.

So, from Creative Sound Blaster Cards to pioneering cashless payments and disrupting the data storage industry, Singapore has journeyed a long way since Independence. We progressed from being and having the ambition for innovation in the 1960s, built up a strong core of citizens in engineering and science, attract technology advanced foreign investments, a national plan for research and development the formation of A*STAR, our research investments into biomedical science or Independent Review Entity (IRE) plans. And more recently, our highly successful Smart Nation initiative and a formation of Smart Nation and Digital Government Office (SNDGO) to better serve Singaporeans in Singapore.

Here are a few suggestions I would like to make.

First, the breadth and depth for Singapore's research, science and technology capabilities together with our creativity, innovation ambitions are critical in ensuring we remain agile in a disruptive world, navigate global challenges and achieve our strategic and national goals. Today's problems are complex and far-reaching into different domains. There are significant long-term and substantial science and technology endeavours that require a high level of aggregating efforts at the highest level – MTI with a A*STAR and Economic Development Board (EDB); PMO with National Research Foundation (NRF) and GovTech; MCI with Cyber Security Agency (CSA) and IMDA. And depending on the sector or domain, it would require further participation of other stakeholders, such as MAS for finance; BCA for building construction or LTA for transport.

Scientific America published an article on the need for the US to establish a Federal Department of science and technology as the STEM-related policies is administered by a bewildering array of entities which dilutes is effectiveness. It stated that the failures of producing COVID test kits, slow and ineffective rollout of COVID-19 vaccines and cybersecurity attacks on government agencies, despite multiple warnings. This reflects the central failure of agencies with science and technology ambitions to meet the challenges of the 21st century. Similar to events leading up to 9/11 in the US where organisational weaknesses were revealed in scattering of multiple intelligence capabilities across agencies and the federal government.

As such, there is a need to better organise scientific efforts. More recently, the US has elevated the Office of Science and Technology to a Cabinet-level appointment with plans to establish a new Department of Science and Technology. Many other successful and innovative countries have done so – South Korea, Japan, Israel, India, Denmark. Given the emerging trends and existential nature of science and technology for Singapore's future, it may be timely to consider re-establishing the Ministry of Science and Technology to bring laser focus on making Singapore scientific, technology and innovation efforts more effective.

Next, to succeed, we must keep our pace. In fact, we must double or triple our pace to maintain our competitiveness and relevance. These are important decisions and the choices that the Government takes on research, innovation science and technology will set the future trajectory for Singapore. One of the most important commitments is to increase the total R&D investment. To achieve and maintain global leadership requires sustained increase investments, both from a percentage GDP and also from absolute numbers.

Given Singapore's relatively small GDP, we must aim to commit a much larger percent GDP spent on R&D to sustain and keep up with the competition to achieve at least the OECD average of 2.4% today and with a further commitment to increase 3% to 4% of GDP in the next five years.

Third, for Singapore to maintain its competitiveness as a business destination for investments in R&D, the Government should review the speed and agility of business execution in Singapore and balance with the risk reward outcomes. Singapore must keep pace with decision cycle and execution agility of businesses today, especially so when added stability will reduce R&D investment risk, enabling businesses to invest in the long term and build innovative partnerships. These investments must be coherent with our ambitions to build up local enterprises, manpower and Singapore's overall capabilities.

Fourth, building local R&D capabilities by supporting local research and development clusters, collaborate, partner and sharpen product and service quality locally, build portfolio and credentials locally for international markets and accelerate growth through regional and global networks. ST Engineering is one prime example. For decades, MINDEF has partnered ST Engineering to develop capabilities in-house. To release R&D and capability development, ST Engineering was able to scale and export capabilities overseas. We can build more of these such champions and there are numerous opportunities.

For example, given that we are the largest customers of elevators in the world, there are opportunities to build a regional, if not, global elevator technology champion. Our Singapore water stories, one of the most compelling in the world, building capabilities and overcoming challenges, we have co-developed water technologies and there are opportunities to build a multibillion-dollar, Singapore water technology champion. We had a Singapore company that was a potential unicorn in the renewable energy for Singapore and the region. But today, we are not.

Route and building technologies. Healthcare, such as COVID-19 test kits, high-tech hand sanitisers, and the list goes on. I have spoken to some entrepreneurs who have mentioned the difficulty that their products having to face immense scrutiny by local registry or authorities, the skepticism of being a locally made product and the fear of endorsing a product. I think we can do much more to build a collaborative environment that encourages partnerships to help these entrepreneurs navigate through difficult requirements and enable them to build on their capabilities. We must seize every opportunity to build long-term R&D partnerships and co-create capabilities with our local enterprises.

Fifth, Singapore must be open to attract talent from across the world. In the United States, evidence shows that immigrants are often the most productive innovators and entrepreneurs. They are vital to competitiveness and fuel growth. In the United States, the National Foundation for American Policy finds that 55% of the billion-dollar start-up companies in the United States has at least one immigrant founder. These companies are not only valuable, but they employ a lot of people. Among privately held billion-dollar start-up companies in the United States, those with immigrant founders have created an average of 1,200 jobs per company in the US. The collective value of some of these 50 immigrant-founded companies far exceed the entire stock market of several countries.

America's ability to attract international students foster entrepreneurship. About 23% of billion-dollar startup companies had a founder who first came to America as an international student – Slack, Peloton, SpaceX and WeWork are all immigrant founders. The American education system has embraced international students as part of the learning experience and cultural exchange, which results in more robust, vibrant and competitive landscape.

Sixth, we must strengthen Singapore's skills and competencies by maintaining a strong supply of skilled workers, provide continued training and skills acquisition throughout their careers, build up alternate entry pathways for those who are doing mid-career switches and recognise the transferability of skills. This will provide the required opportunities for Singaporeans to remain agile and productive longer. It must also be recognised that present and future challenges are complex and multidisciplinary, which would require a team with diverse skills and expertise. We must stretch the potential Singaporeans to enable them over their lifetime on their own time to achieve the highest education and skills potential. It can be a diploma, it can be a degree, Masters or PhD or any other professional certifications, working experience that builds upon skillsets.

According to World Economic Forum, percentage of PhDs and higher education OECD average was 1.1% with most innovative countries taking the lead, like Israel, US, Switzerland, Germany at 3%, 1.4% or 2%, Sweden and Denmark. This OECD average is set to increase to 2.3% by advancing knowledge and research across academia and industry. Doctoral students and holders can make economies more innovative.

However, I want to caution that this is not a narrative about certifications but macro trend of increasing demand for skills and increasing competitive supply of skills worldwide. We must also be mindful not to be overly concerned with degrees and diplomas as we are all reminded by the likes of Bill Gates, Steve Jobs, Mark Zuckerberg, Sean Parker and Mark Darcy. None of them had University degrees, but a good combination of connective, interpersonal, self leadership and digital skills that set them apart from the rest. This opens possibilities across education, experience, skill archetypes, everyone that has a role to play. Most importantly, as we embark on this journey, we leave no one behind. I believe that everyone deserves an opportunity, an opportunity for a good job for every Singaporean. Every Singaporean including those who are neo-diverse.

The last 18 months was the most rewarding journey for me, a journey that is proved to those who are new diverse and can hold good jobs that pay well and have rewarding careers, careers in ICT and cybersecurity, an industry with much promise. I work closely with sister Denise Phua and a team in Autism Resource Centre (ARC), supportive bosses, Delan and Casey, my teammates Zaishao, Arian and Ken Hwee, with leading cybersecurity company Ensign Infosecurity, with the support of Tammy and Steven, it was an open collaborative environment, where ARC identified neo-diverse individuals and together with Ensign Infosecurity, trained them and emplaced them in high-quality jobs and provided them with job support.

The Ensign Infosecurity team also trained to make sure there was a conducive working environment for all it. It was a team effort and that was what made the difference, all of us doing a bit more for one another. From a small training pilot programme of four cybersecurity analysts a year, within two months, and because of these individuals' remarkable performance, we will now want to increase hiring by 400% from four per year to four for every quarter.

When I heard that the programme was a success, it truly touched my heart.

Be bold in investing in our future. Be bold in investing in our people and there will be a place for all of us. Geraldine, on your birthday, papa would like to wish that you have a Singapore that is tech and rich, inclusive and above all, kind, loving and in all we do, fighting for a better Singapore. Majulah Singapore! I support the Budget. [Applause.]

Mr Deputy Speaker: Miss Cheryl Chan.

7.30 pm

Miss Cheryl Chan Wei Ling (East Coast): Mr Deputy Speaker, in the 2019 Budget debate, I spoke about the need for a "decent living wage" for the lower-income workers, in particular, those with young families, so that they can have more cash at the end of the month and not have to live hand-to-mouth. I am glad that there are actions since by the Government, implementing Progressive Wage Model (PWM) across more sectors, more social programmes to support these families, and in this current Budget, there are more schemes to uplift the lower-income group.

This pandemic has seen our strong dependence on the essential workers in Singapore and globally. As we speak, the need for frontline workers to get us through this pandemic has not subsided. Let us remember, we need every segment in our society in good and bad times. Thus, I am supportive of the measures in this Budget that will drive us forward as a nation and help those that are more in need. Our ability to accept this and contribute meaningfully in our own way is what defines us as a growing country that keeps up with time.

I see Budget 2022 as a crucial turning point as we adapt to a post-pandemic life, pivoting our industries to the new economy and learning what it takes to address nation building with our citizens at different life stages. A few things stood out for me in Budget 2022 – our strengthened focus on the green transition, building new capabilities for the future, involving Singaporeans to enable healthy ageing in place and addressing concerns on cost of living.

Sir, as we seek to forge a new normal, the lingering effects from the pandemic and the lessons learnt must be taken dearly. With core inflation having risen to 2.1% in December 2021, and with the impending hike of the GST, it is only natural that the cost of living continues to bear on the minds of our people. While I am thankful that the Government uses tax rebates, cash payouts and other forms of aid to cushion the impact of the GST hike for a large majority of Singaporeans, particularly the low-income group, I would like to raise the following for consideration towards a multi-prong approach to address the rising cost of living on the longer-term horizon.

First, strengthening resiliency in critical supply chains locally and globally.

Supply chain bottlenecks have been a pertinent issue in 2021, exacerbating in the last quarter with a spill-over that may persist through a large part of 2022. The supply chain effects result in rising pressure on all fronts that touches the lives of every individual: from food, transport, utilities and more. With more severe weather patterns occurring globally and unstable political situations, the likelihood of an end to escalating inflation and costs are nowhere in sight.

Singapore's scarcity of natural resources and heavy reliance on imports for necessities from food to energy, meant the impetus to redesign our supply chains and buffers to better weather the inflation due to shortages from time to time is critical.

I am certain the agencies have thought about this, the need for diversification and the vulnerabilities of not doing so, as illustrated in the creation of NEWater and the "30 by 30" plan. But what I am suggesting is for a more concerted and focused approach by looking across the entire value chain and deepening our access of capabilities into the critical elements of each part of the value chain.

In building these capabilities, a more intentional effort to scale up the number of local enterprises, bringing their expertise international and to better export Singapore's brand beyond education and governance. Due credit is to be given to Enterprise Singapore for its efforts in helping local enterprises internationalise and assisting the startups. The next steps would be increasing the number and breadth of the different types of enterprises to enable them to create a value chain with scale that can truly create an impact to Singapore's ability in being more self-reliant, especially in the strategic industries.

While these companies' international growth is important to us, the larger benefit of their growth is the ability to tap on the resources of raw materials, labour and produce overseas to secure the supply for needs back in Singapore. There have been some successful enterprises like PSA, CapitaLand and many others, who have scaled its international operations over the years and are able to compete internationally. We need more of them and the group of enterprises to create different value chains that are significant to our own supply needs.

To illustrate this, I would use an example of the food industry. The "30 by 30" plan today outlined the focus on the supply of 30% of our nutritional needs by 2030, but it does not include how we are looking at the food volume supply. In expanding the food supplies, we need to look beyond just basic procurement of supplies. Instead, help local enterprises to scale with partnership models in Southeast Asia or countries where there are swathes of land for agriculture, but they require technology to increase the yield. This would help to enable faster experimenting the growth of different crops and allow us for expansion in future, when our local shores are constrained by land availability.

The second area I would like to touch on is to increase workers' ability to have more active incomes.

Most people are familiar with the concept of active income during their working years until retirement. But with longer life expectancy and later retirement age, the challenge we face is multi-faceted. Often, we hear feedback about ageism at the workplace, a lack of work scope redesign that caters for part-time work, returnees from expatriate postings overseas that are unable to find suitable roles due to seniority and so on.

As the world becomes more volatile and uncertain, the possibility of a young worker's career being truncated or relocated, due to the competitive external climate and remote nature of work is looming. Thus, I am glad that we continue to invest in the skills and ensuring our workers' relevance in the workforce.

Over the years, much has been done to support the upskilling of workers through SkillsFuture and SGUnited Mid-Career Pathways Programmes. However, beyond that, what can be done to provide supplemental pathways to enable our workers to have additional income streams beyond their day job? In picking up freelance roles, it will also allow flexibility in learning new skills, augment their savings and buffer the slack in the workforce. For this, I do not mean those in the gig economy that are doing some of the freelance work about deliveries and those where we think more in the blue collar, but really more those in the professional sense, because age will not become a barrier for these individuals and professionals who choose to continue working in the gig economy after the official retirement age.

In my previous speeches, I have also raised the need to provide micro jobs for the seniors and the special needs community to better allow more flexibility to provide them a sense of dignity in the road to independence. Could we consider how to expand the scale of micro jobs to fit the needs of part-time workers where women with family care duties and senior workers can also better participate in the workforce?

Beyond the need for financial retirement adequacy, our ability to increase the worker's ability to have more active income till later years will enable them to be active, mentally and physically, for a much longer time and such interactions will only help lower their need for healthcare services and thus expenses. While it is not uncommon for senior executives to take on advisory roles during retirement, could this practice be expanded to a greater portion of the workforce? From the expat returnees guiding local enterprises that are looking for internationalisation opportunities or for them to mentor companies by domain expertise or their area of interest, their wealth of experience and network will benefit the ecosystem. This would involve a whole-of-society approach and a change in mindset as to how they perceive their golden years to be. From a time to enjoy one's retirement – of course, I am not saying that they cannot; they could if they choose to – to another tranche of lifestyle where there is a transfer of knowledge from one generation to another.

Lastly, balancing the taxation structure and intensifying the use of existing resources.

Rising cost of living also impacts us as a nation as the Government expenditures increase due to sociological changes in demographics and inflation. While Singapore's comparative advantage is in skilled labour and expertise and the ability to attract investments due to our stable socio-economic political climate, it also similarly exposes the risks we as a nation face.

The recent Budget by Minister Lawrence Wong outlined new strategies in generating government revenues, primarily through progressive taxation on different income tiers. While this approach may help to enable a more inclusive and equitable society over time, we still run the risk of not being able to address the return of funds into our reserve that we have dipped into or cover the Budget deficits.

Also, many of the highly skilled labour and multinational corporations are global citizens in nature. They have the ability to relocate or offshore services as long as the conditions and the new host countries are palatable. This undeniably would have an impact on our Government revenues in the long run and there will be new constraints or challenges to raise corporate taxes unreservedly.

As we rethink our nation's taxation structure, it is equally sensible to be prudent in our use of funds and resources as well. This involves creative solutioning to problems, existing problems and new ones, working with existing resources and infrastructures instead of investing in new ones each and every time we think of solving a problem. In the longer term, it involves looking at the social compact and the partnerships between the Government and citizens, including the ones with private sectors as we move towards the green transition.

To summarise, Sir, with Singapore's reliance on imports for resources, inflation and by extension, the rising cost of living would be a constant fixture in the years ahead. The way to more holistically manage this issue sustainably, in my opinion, is for us to adopt a whole-of-Government and perhaps even a whole-of-society approach. We need to become more increasingly sustainable for our own basic necessities and having some degree of independence for strategic resources by being prudent and intentional in our use of existing resources in solving our country's problems.

I will end off with a quote from Charles Darwin: "It is not the strongest of the species that survive, nor the most intelligent, but the one that is more responsive to change". I believe Singapore and Singaporeans have the ability to do so. With that, Sir, I rise in support of the Budget.

Mr Deputy Speaker: Mr Yip Hon Weng.

7.41 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Deputy Speaker, Sir, I will share three perspectives on the Budget. First, what this Budget is essentially about. Second, what we should do less of. And finally, what more can we do, to build up the Singapore we love.

Mr Deputy Speaker, Sir, as we emerge from the worst of the pandemic, we will have to increase Government spending, to strengthen our social compact and to create opportunities and growth. Managing the Budget is a zero-sum game. We consume public resources; therefore we need to pay for it. Yet, the idea of increasing taxes to fund programmes evokes resistance.

In reality, revenue and expenditure are two sides of the same coin. To spend without regard for revenue, is not sustainable for the future. The question is how to raise revenue from taxes, in a fair and equitable way. One method is through a progressive tax system. This means that the wealthy and higher income earners will pay more taxes. This is a slight shift from previous Budgets in the direction of fairness and inclusivity. It brings to life our claims of a new social compact.

But we must strike a balance. There will always be populist calls for wealth taxes. But if we push the narrative that the wealthy are responsible for driving inequality, we risk provoking resentment and jealousy, against those who may have accumulated wealth through hard work and sacrifices. This will only further polarise society. Our current revenue structure is a balanced one, where ultimately, everyone contributes taxes, but those who are richer contribute more.

For the less privileged, I have raised concerns about the GST hike on previous occasions in Parliament. I shared my residents' sentiments that the GST hike should only be implemented after the job market stabilises. I am heartened that the Government has listened to ground feedback. It has not only delayed the GST implementation, but has staggered it over two years. This gives more time for the job market and economy to adapt and prepare. I have also previously asked whether additional assistance would be provided on top of the Assurance Package and the GST Voucher (GSTV) scheme. I am pleased that the Government will continue to absorb GST on essentials like healthcare and education. Permanent schemes like the Workfare Income Supplement and the GSTV schemes are also enhanced. Overall, it is a fair and comprehensive Budget with an eye for the future.

But, Mr Deputy Speaker, Sir, doing more for our people does not necessarily mean we should spend more. Instead, we should challenge ourselves and think hard about what we should spend less on. This is quite a contrarian view, as the Budget is a time when we discuss how Government will increase spending in various areas. The hard truth is that while it is good to have everything, our resources are finite. We should reduce non-essential, duplicative and non-strategic initiatives.

One tangible example is roadworks. Roads are often dug up and closed for various types of works, ranging from the installation of broadband cables, water pipes to electrical cables and so on. They never seem to end. Many of the works are certainly necessary. However, can we coordinate better amongst the agencies for a fixed period, where the road is dug up and all are repaired at that time? Moreover, frequent road closures slow down traffic, adding to inefficiencies.

Another example is the numerous Government apps and websites sometimes offering similar services. The more there are, the more maintenance is needed. It also inconveniences residents who have to navigate numerous websites and install many apps on their phones. Can we take some inspiration from the UK government, which consolidated their 300 over websites into one in 15 months?

Being prudent with finances is a virtue that is not incentivised enough. When a department receives a budget, the goal purportedly is to spend it all. The common mentality is that having surpluses would imply that the department did not work hard enough and need to find new areas to work on. We need to stop linking expenditure with KPIs. Ministries should not feel guilty about having excess money to return to the coffers. In fact, the Government should throw a grand challenge – create an award and recognise Ministries that best reduce their expenditure, streamline their operations and cut out non-essential projects. The savings can go to the people or be used for more important areas and social programmes.

Mr Deputy Speaker, Sir, one important area which we will certainly need to do more for is for our seniors. We are a rapidly ageing society. The provision of minimum protections around risks like illnesses, unemployment and old age are better shared by society and the community, rather than individuals, families or employers. I have three suggestions.

First, Mr Deputy Speaker, Sir, we want our seniors to live well. One particular area is to facilitate meaningful employment for our seniors, who wish to work. I applaud the raising of CPF contribution rates for senior workers. But we need to go beyond monetary incentives.

I wish to reiterate my hopes for the Government to play a bigger role in promoting micro jobs. Many Members have shared about this earlier. For example, to offer integrated search and listing platforms, with accreditation and training available for persons who may want to take up micro jobs in the community, such as healthcare assistants and babysitting.

Next, focus on job redesign by allowing employers to hire and retain senior staff in the long-term. We need to look into stronger support for workplace redesign for senior workers. How many companies have made use of the Job Redesign Grants for older workers? Will the Government take on a more proactive approach to coax and compel companies to move in the right direction?

Second, Mr Deputy Speaker, Sir, for those seniors who are frail and cannot work, we must ensure that we can better care for them. From my conversations with my residents, care navigation in Singapore has room for improvement. Today, Government agencies like MOH and MSF often focus on policy and administrative matters and devolve the actual provision of care to various social service agencies, or SSAs. Yet, some of these organisations have limited resources. They may also not be equipped to deal with clients saddled with multiple co-morbidities and complex social issues.

Having choices and a lack of clear information complicates matters for caregivers trying to find the most suitable and affordable formal care service for their family's needs. We need a simple platform that integrates all available resources and service providers, for caregivers to seek out all the available options and do their own cost-benefit analysis. Ultimately, we need an integrated care system that works on the ground. This means better sharing of information, care plans, resources, networks and financial support schemes. Caregivers need only to browse this one-stop centre to have all their concerns addressed.

A Yio Chu Kang resident, Mr K, confided that he gave up his career and went into full-time caregiving to both his aged parents. The burden fell upon him as he was the only son. He did not feel safe leaving his parents in the care of a foreign domestic worker, who may neither have the professional experience nor temperament to care for the elderly with special needs. He does not regret the decision, but it is no doubt a setback for his career. Most of us would agree that caregivers like Mr K should be applauded for prioritising family over career. But we should not take the sacrifices of caregivers for granted. As a society, we must do more to uplift caregivers.

Lastly, Mr Deputy Speaker, Sir, we need to help seniors at the end of life to leave well. In my past experience working in the healthcare sector, I see how people die badly. They die in pain, with tubes connected to all parts of their bodies in a sterile hospital environment, just to have life extended by days and at max, by weeks. It is a torture, both for the individual as well as for the families. We need to facilitate their departure to be as comfortable as possible, and for them to live out their remaining lives with dignity.

We must push for higher standards of palliative care. Only four in 10 of healthcare professionals received training in palliative care, according to a 2021 survey. Consequently, most healthcare professionals did not feel prepared to give palliative care. The Singapore Hospice Council is doing good work and they are developing a training framework on palliative care. Will the Government provide more resources and funding to support this effort? How will the Government take the lead to improve the quality of palliative care and to generate more awareness in Singapore?

In conclusion, Mr Deputy Speaker, Sir, the pandemic has posed many challenges to our society over the past two years. Our Budget is well-balanced and provides a path forward as we emerge from COVID-19.

To be prudent, we should reflect on what we can spend less on – cut waste, reduce redundancies and for the Government to coordinate better. Resources should be channelled to areas where more help is needed.

One clear area is in caring for an ageing population. The signs are already here. We may be an ageing society, but what we face need not be a "silver tsunami". It can be a "silver fountain" – one of vitality and productive longevity, where we all keep well, age well and die well. I support the Budget.

Mr Deputy Speaker: Leader of the House.