Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [16 February 2024] [3rd Allotted Day]

"That Parliament approves the financial policy of the Government for the financial year 1 April 2024 to 31 March 2025." – [Deputy Prime Minister and Minister for Finance].

Question again proposed.

11.00 am

Ms Nadia Ahmad Samdin (Ang Mo Kio): Mr Speaker, Sir, I rise in support of Budget 2024. For Singapore to continue to prosper, we need our people to prosper. Every Budget brought forth in this House signals the Government's intent in tackling both challenges of today and seizing future opportunities for the people of Singapore.

Rising costs are an ever-present challenge globally and affect how we live in every way – from our kopi-peng to chicken rice, the transport we take to work to the way we are able to care for our loved ones. This year's Budget Speech, delivered by Deputy Prime Minister Lawrence Wong, set out various measures focused on mitigating the immediate impact of rising costs on household finances.

These include the U-Save and Service and Conservancy Charges (S&CC) rebates and additional Community Development Council (CDC) vouchers – tactically deployed to help Singaporeans navigate higher prices of food and electricity amidst the backdrop of global inflation. Larger families – especially those with seniors and children – get more help.

I would like to make three key points in my speech: our shrinking populations lead to fragile economies and slower growth in standards of living; and as one of the fastest ageing societies in the world, the importance of upskilling our silver workforce – which cannot be understated; and the implications of a global war for talent, which is happening in an increasingly fractured world. This competition and confrontation of multilateralism can be damaging for us in Singapore.

Sir, in Budget 2023, the Government sowed the seeds for a Singapore built for families, such as the enhanced baby bonus. But even as we encourage marriages and families, we must also acknowledge the other factors contributing to our declining total fertility rate (TFR): stress and health conditions which affect fertility despite couples' best hopes, involuntary childlessness, inability to secure childcare options in line with parents' wishes, housing in estates far away from grandparents or workplaces, busy schedules which make it difficult for youth to date and lifestyle choices from younger men and women who choose to stay single.

But without people, Singapore cannot exist. Deputy Prime Minister has signalled the Government's clear intent in a Singapore built for families, however the effects of these policies are not immediate and our demographic challenges are pressing. We are not endowed with any natural advantages to fall back on, such as oil, vast land or precious metals. The only resource we have is our people; and so, we have to invest in our human capital. Beyond a shrinking population, we are also a rapidly ageing one and no amount of vouchers or rebates will ever be a sustainable way of lifting the standards of our people over a long period of time.

To this end, I am supportive of the boost given to the SkillsFuture Scheme to build an even better future for all. My husband recounted a conversation that he had with a taxi driver to me. Uncle asked where my husband was heading to – to which my husband replied he was heading to school. Uncle said, "Wah, this age, still going to school ah? Very good." My husband said, "Ya uncle, I'm studying part-time, must upgrade and learn new skills." Uncle replied, "But all these 'learn new skills' is for young people like you, not old people like me."

Being under 40, neither my husband nor I are eligible for the enhanced SkillsFuture subsidies or the akan datang top-ups. But uncle's perspective is shared by many of our older workers. Beginning again or learning something new after 20 or 30 years of working is not easy. I have shared in this House how proud I was of my parents, who had no choice after SARS to change course in their late 40s and 50s – my mum, from a homemaker to early childhood education. My dad, from more than 30 years in the airlines to a training company with his peers.

For this reason, I am heartened by Deputy Prime Minister Lawrence's commitment to focus efforts on the objective of upskilling our greying workforce. Sir, there are two broad ways to use SkillsFuture. The direct way is to acquire certification – leading to a new role. The less obvious route involves a journey into problem-solving and innovation. We sometimes associate SkillsFuture with mainly "jobs of the future" – from green sustainability, to coding and artificial intelligence (AI). But seemingly unrelated courses can benefit us too.

An illustration of this comes from the story of Apple. In 1972, Steve Jobs purportedly took a calligraphy class at Reed College – despite knowing that the class would earn him no credit towards a degree. He reportedly learnt about typefaces and varying the space between different letter combinations. I quote, "None of this had any hope of any practical application in my life. But 10 years later when we were designing the first Macintosh (Mac) computer, it all came back to me. And we designed it all into the Mac."

We ought to help citizens understand the application of SkillsFuture credits in this manner. The knowledge and skills acquired through any learning is catalytic for generating fresh ideas and solving challenges by drawing from diverse disciplines. This culture of continuous learning and curiosity is what will position ourselves as valuable assets.

We also need good public communication to support the mindset shifts required. An article published on Channel NewsAsia (CNA) on 8 September 2023, highlights issues around utilisation rates of SkillsFuture. The article noted that across all ages, seven in 10 people have not used the credits since it started in 2015. Diving into utilisation rates by age bands, we can make some observations: 16.8% from 25 to 29; 38.8% from 30 to 39; 38.6% from 40 to 49; 37.1% from 50 to 59; and 26.4% for those above 60.

Utilisation rate in the 40 to 49 band is a signal of hope and we must encourage this. The availability of the credit is one part of the puzzle. However, there are other considerations requiring a shift in attitudes and mindsets and flexibility in the employment ecosystem – families being willing to shoulder more caregiving responsibilities while one spends their evenings in class; enlightened employers providing employees the time-off to do so; and society being willing to support the gap in potential loss of income for gig economy workers.

According to the recent National Trades Union Congress (NTUC) Every Worker Matters Report, 77% of respondents felt they lacked the time to attend training. A separate 2021 study shared that this could be due to fatigue from work and other life commitments. We say "活到老, 学到老", but in order to effectively put this into practice we must also tackle system barriers, such as inflexible working hours – 55% of workers felt they lacked the support from their employers from self-initiated training. I am glad that the NTUC is championing these efforts.

Fundamentally, Singaporeans must know that SkillsFuture is an initiative that is more than chasing certificates. It is a pathway to empowerment and progress. I would like to inquire on the complementary measures the Government is taking to nudge the utilisation rates. I also worry whether these skilling efforts will see fast enough change and we must consider how to supplement our workforce with talent in a way that is integrated with our Singaporean values and that brings additionality to our people.

Sir, all this is amidst a backdrop of challenges to global multilateralism and greater competition. Protectionism is on the rise and we are seeing disquiet and unrest born from a lack of economic opportunities and inequities – US-China relations keep the world on tenterhooks; the war between Russia and Ukraine rages on; and the world feels the effects from the humanitarian tragedy and hostilities in Gaza due to the Israel-Palestine crisis, even as more call for a permanent ceasefire.

Yes, Singapore has worked hard and our reputation outsizes our 700 square kilometres or so. But in a world where bigger countries threaten to dominate due to might and size, smaller countries like Singapore must navigate these turbulent waves. Each move or statement we make comes with trade-offs we must think hard about. This is our reality.

And so, from the beginning, we have made it a point to emphasise rule of law, effective governance, balanced foreign relations amidst global tensions and staying open to the world. Singapore's ability to attract investment and have multinational corporations (MNCs) set up their regional headquarters here create jobs for our people. As of 2023, it is reported that the headquarters of 4,200 MNCs can be found here and is the base of choice for companies as a gateway to Asia, but we are starting to see signs of that trend being challenged.

In December 2023, Unilever announced its relocation of some roles based here to other markets across Asia. Earlier this month, Electrolux also confirmed the closure of its Singapore regional office and relocated to Bangkok. A 2023 survey by the European Chamber of Commerce found that "7 in 10 businesses indicated that they are ready to relocate their employees outside of Singapore if there are no relief from rising operating costs." When businesses leave, jobs leave too.

Further, other economies are competing. The UK recently launched the AI Futures Grant Scheme to attract AI researchers and engineers. Dubai has made a notable push for talent and investments through their D33 Economic Agenda and agile visa reforms. Closer to home, Malaysia initiated their 2030 National Industrial Master Plan and Indonesia launched the Golden Visa programme for high-quality investments.

There is a global war for talent and investments, and Singapore needs to be the hub for opportunities that attracts, but more importantly, builds and retains the talent to help our people to prosper. Sir, in Malay please.

(In Malay): [Please refer to Vernacular Speech.] Mr Speaker, in my English speech earlier, I touched on how fragile our position is in the world. As a country where 90% of our food is imported from other countries and where we have no natural resources of our own – we have been fortunate to be able to attract investments, create jobs and build good foreign relations to help our country transform into a successful nation. While our reputation on the world stage outsizes our small land mass, let us not forget that this is an unlikely anomaly.

But tall buildings and magnificent infrastructure alone would be nothing without peace and stability both internally and externally. We are a unique society with different faiths, races and backgrounds. As our people become more educated and their views grow more diverse, I would like to see more efforts through Forward SG to equip Singaporeans with the skills to have constructive and respectful discourses between the Government, private sector and our people; and the space to encourage effective ground-up changemaking.

Peace is not top-down, but instead must be supported by bottom-up efforts and must start from the young. I would like to suggest more partnerships and cross-sector efforts in particular for our youths – for example, programmes, such as the Model United Nations, involving students across both secular schools and madrasahs, building common experiences to enable our youths to work together and interactions to allow young adults to hear and exchange views as regional or global forums.

Secondly, I am grateful that the Government is setting aside $3.5 billion for the Age Well SG initiatives over the next decade. I am concerned about our seniors, especially those who have complex and chronic health needs. Obesity, diabetes, high-blood pressure – these are health conditions which threaten our quality of life. Through Healthier SG, I hope more can be done to encourage our seniors to go for regular health check-ups and connect with family doctors in their neighbourhood and more can be done early-on in their illness to prevent it from spiralling out of control and negatively impact healthy lifestyles.

This is particularly important for older women – the ones who have sacrificed so much. Many of them have been so busy looking after those around them, that they do not have time to look after themselves. We must do more to support the retirement adequacy and healthcare needs of older women and I would like to ask if the Government has considered nuancing the health schemes, given that many women have less CPF savings.

Beyond chronic health conditions, loneliness can have an adverse effect the lives of our elderly too. Recent studies suggest that social isolation was associated with around a 50% increased risk of dementia. I reiterate my calls for there to be targeted focus on mental well-being for our elderly and perhaps we can even take reference from the United Kingdom's Commission on Loneliness, where a Minister for Loneliness was appointed and there was strong cross-sector collaboration to tackle this issue.

(In English): Sir, the many ideas shared in the House over the past three days showed the increasing social needs and growing funding required. The Government will not be able to do this alone. To this end, I am glad that the Deputy Prime Minister also announced measures to further build a stronger culture of giving that encourages collaboration – for example, the Charities Capability Fund Collaboration Grant and the efforts to work with philanthropy on the needs in society.

We must work with philanthropic foundations, individuals and corporates to be strategic, complementary and catalytic in how we deploy capital towards social needs. I hope that the recently established SG Government Partnerships Office can play a role to involve ideas and efforts from our citizens, coordinate efforts and efficiently scale successful projects beyond pilots.

Sir, this tiny red dot has punched above our weight. Over the decades, many hardworking individuals have built their roots here in Singapore. We are ethnically diverse and culturally open. We prospered then because of that, and we must protect this now; continue to keep our hearts, society and workforce open so we can continue to achieve progress for our people, while being firm about our values as a country on the world stage. Sir, I support the Budget.

Mr Speaker: Assoc Prof Razwana Begum.

11.16 am

Assoc Prof Razwana Begum Abdul Rahim (Nominated Member): Mr Speaker, let me begin by stating my support for Budget 2024.

Mr Speaker, Budget 2024 is fiscally responsible, strategic and future-focused. It delivers an optimistic and balanced first instalment towards implementation of Forward Singapore. The Budget's central message is inclusivity. This Budget makes it clear that Singapore is a city for everyone and that Singapore's future belongs to everyone.

Mr Speaker, this Budget provides for the private and community sectors, but most importantly, it also provides for ordinary Singaporeans: (a) families who work hard every day to make a life for themselves and their children; (b) couples wanting to buy their first home, start a family and begin their life together; (c) young people embarking on their journey of lifelong learning; (d) children, seniors and people living with a disability or struggling with a mental illness; and (e) those struggling with socioeconomic disadvantage or adversity.

This Budget has something for everyone and provides both immediate relief for individuals and organisations, as well as practical and affordable policies and programmes for long-term growth and sustainability.

Mr Speaker, I will now make some comments on several aspects of the Budget. In doing so, I will focus on three values – equity, transparency and accountability.

The last few years have seen a significant increase in the cost of living. Interest rates have increased, making mortgage payments difficult for many and there has also been an increase in the cost of rent, general goods and services, transport and food. Many families are struggling to meet these costs and are being forced to make tough decisions about how to best provide for their children and families.

Mr Speaker, this Budget contains several initiatives intended to provide relief to families, including Workfare payouts, CDC Voucher top-ups and direct rebates. These initiatives are available to all families, yet, as is appropriate, are also targeted towards those families on low incomes or living with significant financial stress. I welcome this targeted approach, as it is important that such initiatives deliver the greatest benefit to those with the greatest need. Simply providing everyone with the same level of assistance is inequitable and does little to address structural or ongoing inequalities and disadvantage.

Mr Speaker, to ensure that families receive assistance that matches their need, the Government, private and community sectors need to work together. We need to reassure families that assistance is available for everyone and that there is no shame or stigma associated with seeking or receiving assistance when needed. We also need to implement culturally appropriate community education campaigns to remind all Singaporeans what type of assistance is available and how to access that assistance.

This is of particular importance to those families which may have become used to living with disadvantage or who, for socioeconomic, cultural or personal circumstances, are unable or unwilling to seek assistance when needed. As well as providing financial assistance to families in need, we also need to offer targeted personal support, including financial planning, parenting programmes, life-skills, employment and housing support and mental health and well-being support. We need to adopt a holistic, comprehensive case management approach.

Mr Speaker, there are many in our community who provide high levels of care to family members, including elderly relatives and family members with a disability or acute or chronic illness. Due to a range of factors, including the cost of professional care, many of those taking on short or long-term carer roles within the family home are from lower-income families.

We need to acknowledge the significant financial and emotional burden that providing home care can have on individuals and ensure that those with caring responsibilities also receive the appropriate level of assistance and relief.

Mr Speaker, on a broader level, Government-funded financial assistance, such as the initiatives contained in this Budget, are commendable and have been shown to have clear and measurable benefits for individuals, families and communities. They can also be expensive, particularly in the context of slowed or limited economic growth and the ongoing viability and affordability of such initiatives need to be considered. That is why we need to think long term and fiscally responsible and innovative in how we plan for our future and the future of our children and grandchildren.

In today's world, it is also important that we consider how social policy can be delivered in an environmentally sustainable way and, in turn, how environmental policy can be delivered in a socially responsible way. While governments around the world are grappling with how to do this, unless we address the reality of climate change, the socioeconomic needs of our population will only increase and the cost of responding to these needs will only become more and more expensive.

Mr Speaker, I, therefore, encourage the Government, private, academic and community sectors to begin an open-ended dialogue on how to continue to deliver financial assistance initiatives in a fiscally, environmentally and socially sustainable manner.

I will now make some comments about lifelong learning. The European Commission defines Lifelong Learning as: "All purposeful learning activity undertaken throughout life with the aim of improving knowledge, skills and competencies with a personal, civic, social and/or employment-related perspective." This definition is preferred by many researchers and policymakers as it reinforces that lifelong learning is not confined to an employment context, but instead extends into the personal, civil and social contexts.

This position is supported by the 1997 UNESCO Hamburg Declaration on Adult Learning, which notes: "Lifelong learning is important because it helps to develop the autonomy and sense of responsibility of people and communities; to reinforce the capacity to deal with the transformations taking place in the economy, in culture and in society; and to promote coexistence, tolerance and the informed and creative participation of citizens."

Consistent with this declaration is the view that human capital is a key driver of economic development and that countries that invest the most in developing their human capital enjoy the most rapid and sustained economic growth and the highest quality of life.

Mr Speaker, in promoting a culture and philosophy of lifelong learning in Singapore, it is important to adopt a whole-of-nation approach rather than a sector- or system-based approach. Lifelong learning is positive in and of itself and benefits society as whole, regardless of whether the learning leads to immediate or identifiable organisation or economic benefits.

It is also important to recognise that lifelong learning is relevant to all Singaporeans, including the unemployed and those in platform, low-wage or manual employment. If we only encourage those in established or influential positions to undertake learning and exclude those who are frequently considered less productive or deserving, we fail to address social disadvantage and we miss an opportunity to tap into a valuable resource.

Mr Speaker, in promoting a culture and philosophy of lifelong learning, we need to move away from viewing education as a time-limited activity that can only occur within traditional institutions, such as schools and colleges. Learning is an ongoing process of change and can occur in formal and informal settings, across multiple arenas and via multiple platforms.

We also need to foster a flexible learning ecosystem that values and rewards curiosity, creativity and adaptability, rather than just grades or academic results and that prepares individuals to think and thrive in a rapidly changing and unpredictable world. We also need to further develop and foster partnerships among educational institutions, employers and community organisations, so as to create multiple coordinated pathways for lifelong learning and skills development.

Measuring the impact of lifelong learning and its benefits is challenging. However, relying solely on hard indicators, such as economic growth or employment rates, may be counterproductive. An effective culture of lifelong learning will benefit all of society, including social factors and sustainable development, and will assist to create an inclusive economy where the advantages of growth uplift everyone rather than disproportionately favouring the already affluent.

Mr Speaker, we also need to move away from thinking that the primary purpose of lifelong learning is to train employees to generate greater output. Lifelong learning also assist employees to develop the capacity to think differently and to generate new perspectives. This may lead to innovative outcomes and solutions. Employers should encourage their employees to take time away from work to learn and then create an environment within their workspace where all employees can openly share knowledge, skills and ideas. Employers should also recognise and reward employees for their informal learning achievements and not just those qualifications gained in a structured environment.

Mr Speaker, I therefore encourage the Government to consider the feasibility of an inter-agency task force or commission to make recommendations to the Government on policies, programmes and strategies to embed an effective, equitable and sustainable culture of lifelong learning across Singapore. Such a task force should actively seek inputs from people from lower socioeconomic backgrounds, young people and women entering or going back into the workforce.

Mr Speaker, I will now make some comments on the proposed changes to Singapore's retirement fund.

In a recent report by Mercer, Singapore's retirement income system ranked 7th internationally, only falling behind Nordic and Northern European countries and Australia. Despite this, in 2023, OCBC reported that only two in 10 Singaporeans are on track when it comes to retirement planning. And in 2022, the Retirement and Health Survey reported that seven in 10 elderly Singaporeans received regular cash allowance from their family. The study also reported that an increasing number of Singaporeans consider the rising cost of living when planning for retirement, including the cost of domestic help to assist care for them and their family as they age. Mr Speaker, in Malay please.

(In Malay): [Please refer to Vernacular Speech.] The initiatives outlined in the Budget are intended to ensure that Singaporeans can retire at a reasonable age and are in a financial position to enjoy a quality of life similar to that when they were in the workforce.

Mr Speaker, comfortable retirement is a shared responsibility between employees, employers and the Government; and all stakeholders need to work together to ensure that no one in retirement is left behind or is forced to live in poverty or significant disadvantage.

To achieve this goal, we need to explain the new Budget initiatives more clearly to all employees and employers and actively encourage and support all employees and employers to maximise the social and economic benefits of this new system. Mr Speaker, retirement planning also need to be culturally specific, as religious beliefs and practices can significantly influence attitudes towards wealth, saving, and financial planning.

For example, the Islamic prohibition of both earning and charging interest (riba) requires retirement funds from banks to establish alternative arrangements for their Muslim customers. Such provisions are available but may not be widely known to the Muslim community.

There are several initiatives that may assist in strengthening retirement planning for Muslims in Singapore, including providing culturally relevant financial guidance; conducting seminars, workshops and outreach programs within the Muslim community that emphasize the importance of retirement planning; developing a wider range of Sharia-compliant investment options to meet the specific needs of Muslim retirees, including sukuk bonds or Islamic equity funds. Mr Speaker, in English, please.

(In English): Mr Speaker, I will now make some comments relating to healthcare. The healthcare initiatives outlined in the Budget are intended to reduce healthcare costs for all Singaporeans, including the elderly and those living with chronic health conditions. As is happening across the globe, healthcare costs in Singapore are rising.

As our population ages, more and more people require increasingly expensive care and this cost inevitably falls on the consumer, insurers and the Government.

To assist offset these costs, I have several suggestions. The first is to recognise the personal and economic benefits of early intervention. Many of us wait until later in life, sometimes too late, before we take measurable steps to protect our mental and physical health and well-being.

We need to do more to support and encourage young people to adopt and maintain a lifelong healthy lifestyle and perhaps this could be achieved through increased community education programmes targeted at children and young people.

We also need to do more to attract and recruit suitably qualified healthcare professionals and to enhance the job satisfaction, professional development and career progression of our health professionals, and we do more to monitor and support the health and well-being of our health professionals, including those experiencing burnout.

While our healthcare sector continues to struggle with human resource issues, the provision of timely, targeted and professional healthcare will remain a challenge.

Mr Speaker, we also need to do more to enable our elderly to live safely and with dignity and within their own homes, and to do so without having to rely on family-funded care provided by domestic helpers who frequently have little relevant formal training. We need to professionalise aged-care, and ensure that in-home care by affordable, professionally trained healthcare professionals is available when needed.

Finally, we need to support and fund research into how AI can be applied across the healthcare sector more broadly, including aged care. AI technology is developing far faster than any of us can ever hope to understand. However we need to be as prepared as possible for emerging technologies and be ready to embed these technologies into existing healthcare systems.

Mr Speaker, I will now conclude by making some comments about a safe and secure Singapore, and the development of National Cybersecurity Command Centre

Mr Speaker, one of the fundamental roles of any government is to ensure the safety and security of its people and Singapore does this well. By many measures, we are one of the safest countries in the world and it is only because of this that we are in a position to develop and implement all of the socioeconomic initiatives contained in this Budget.

Mr Speaker, we cannot, however, be complacent, and must always remain vigilant to existing and emerging threats. The socioeconomic cost of a major cyber incident could be enormous and have far-reaching implications on public trust and confidence.

Mr Speaker, the development of a National Cybersecurity Command Centre is aligned with Singapore’s Smart Nation initiative and demonstrates that safety and security remain a priority for this Government.

Mr Speaker, the safety and security of a nation is not only defined by its approach to hard or technical issues, but also how it responds to the health and welfare of its people. Integrating human-centric design principles and robust safety protocols ensures that our Smart Nation Initiatives not only enhance convenience but also prioritise the well-being of individuals and communities. We also need to adopt an interdisciplinary approach to cybersecurity, integrating insights, methodology and expertise from various fields to comprehensively address complex security threats.

Mr Speaker, Budget 2024 clearly demonstrates that this Government will always have our back, and that all Singaporeans can continue to feel and be financially, socially and environmentally secure. I fully support the Budget Statement11.33 am

Mr Speaker: Ms Carrie Tan.

11.33 am

Ms Carrie Tan (Nee Soon): Mr Speaker, I note that many of my hon colleagues have raised concerns about the sustainability of our fiscal health, given the generous support schemes that Deputy Prime Minister Wong announced, which Singaporeans are getting used to and some are starting to expect as a given.

In view of such concerns, I speak to the House again on well-being and emphasise its role as a critical success factor to continued growth, to sustained growth. In my Budget speech last year, I spoke of the need to consider a different model of progress that looked beyond economic growth. To be clear, I am not suggesting de-growth.

On the contrary, what I am advocating for is a mindfulness and a slowing down that can help to unlock more potential in order to sustain or even to leapfrog growth. Slowing down our minds and cutting away senseless busyness, to make time and space for things that nourish our hearts: one, family – to bear and nurture children because we desperately need to raise our total fertility rate (TFR); two, caring – to build stronger relationships and community to help alleviate costly institutional healthcare; and three, for dreaming – to nurture and actualise new aspirations.

These are all desirables that Singaporeans expressed in many Forward Singapore conversations. How do we put these words into action?

I use an advertising sector parlance from my early career and offer this House three strategic actions towards a big, hairy, audacious goal – the twin goals of well-being and high growth. The three strategies are: one, charting Singapore’s well-being with a Well-being Index; two, doing less to achieve more; and three, enhancing collaboration with citizens.

On the first, a National Well-being Index – because we love KPIs and what does not get measured does not get tracked. Now that we have made mental health a national priority, how do we know if we are doing better? And we would not, unless we start measuring and tracking.

There are already ongoing national mental well-being surveys or studies, such as the Quality of Life Survey, which is helpful to track people’s level of satisfaction with their lives. Well-being is not simply an existence of happiness or satisfaction. It is also the absence of dis-ease or dysfunctionality within our collective system.

Hence, what we also need to monitor are figures such as the rate and incidences of mental health conditions, suicide rates as well as chronic disease rate, and factor all these into a set of indicators that makes sense. We need to be accountable for all the strategies that have been announced by the national mental well-being task force and make the outcomes visible and trackable. It is human nature, that when people are unwell, they worry more and become more needy, whereas a people with high well-being will feel more secure and feel that they have more capacity to give.

Secondly, let us exercise our imagination to achieve more with less. It may sound easier said than done, but I offer a quick hack. Perhaps what we need to do is start approaching complex and wicked problems with new lenses – a strengths-based lens instead of a scarcity lens, a trusting lens instead of a skeptical lens. I spoke about this in my Adjournment Motion a few months ago on improving public rental housing to enable human thriving. That is one example.

What other policies need a fundamental shift in philosophy and thinking?

There were two things in Deputy Prime Minister Wong’s Budget announcement that signalled to me that this shift is taking place and I am glad for it.

One is the extension of preschool subsidies for non-working mothers. Removing the condition of the mother’s employment tells me that the Government respects the choices women are making, regardless of what they choose and that supporting children in their early years should not be conditional. This reduces stress and enables families more freedom to navigate their caregiving needs, enhance their well-being and ensure that all children have an optimal early childhood start.

The other is the SkillsFuture Level-Up Programme – providing training allowance to those who embark on full-time courses. To me, that is a very empathetic policy, showing an understanding of people’s worries and making a full commitment to support and invest in anyone who wishes to grow and upgrade themselves. There has no bond of any kind that has been announced to date tied to this training allowance, and I hope it stays that way, which signals to me the Government’s willingness to trust. To trust that citizens will make the best of the opportunity to create the desired outcomes for themselves, which is a better livelihood, and that itself is aligned with national interest.

In this year’s Committee of Supply, I will be making cuts on issues related to the preschool sector, caregiving, sustainability and integrating persons with special needs, with suggestions on how shifting the underlying philosophy and narratives of some policies to a strength- and trust-based lens can help us improve and accelerate outcomes without spending as much money.

Third, enhancing collaboration with citizens. The Government cannot tackle wicked problems alone. As we transition and evolve our social compact from a less educated population leaning on intellectual elites to craft and implement policies as it was in the 1970s to the 1990s, we now have one of the most well-educated citizenry globally.

The Singapore Government Partnerships Office (SGPO) is hence a positive step forward that must be adequately resourced and developed. As we do this, we must recognise that we are somewhat new at this, and there may be some teething blues as we increase citizen participation and work more closely with one another.

Capability-building of facilitators who have ecosystem thinking, to be skilled at navigating cross-system cultures, mobilising people and building relationships across diverse sectors is key.

I recall in my first year as a Member of Parliament (MP), I sent an email to Deputy Prime Minister Mr Heng Swee Keat, who then forwarded it to the Minister for Culture, Community and Youth Mr Edwin Tong. In the email, I recommended the formation of a team of 100 organisational development-trained facilitators from diverse sectors. I am not sure if they took up my suggestion but I do see many Public Service roles now titled “Community Engagement” and I see increase in efforts to train volunteers to help facilitate national dialogue sessions. This is good and we can do more.

I urge relevant resources for the SGPO and People’s Association (PA) to train and leapfrog facilitation capabilities to right-size salaries to make sure they are realistic and adequate to hire relevantly skilled people. Such support to public agencies is critical for meaningful inclusion to engage Singaporeans in sometimes contentious and difficult conversations and to do so in early stages of policy-making to avoid U-turns on policies and avoid unnecessary spending.

As a social entrepreneur, I have first-hand experience of how tenacity and sustained commitment is needed for real and sustainable change to happen. And it is not always easy to keep morale high as we go through the transition blues, messiness and pains as we will encounter along the way. It is also much easier to grouse and complain than to commit time and effort to create change. And how do we keep people enthused to contribute and to stay the course?

As my past three years being grassroots advisor in Nee Soon South has shown me, when people enjoy working together, they feel cared for and appreciated, the hard work is worth it. And this, we can only achieve by shifting the balance from a performance-based culture to an appreciation-based culture. To shift this, we have to slow down our pace and appreciate what we already have and take time to appreciate one another. Speaker, in Mandarin please.

(In Mandarin): [Please refer to Vernacular Speech.] As the population ages, there is shortage of manpower and people's mental health is beginning to decline. How can we achieve a society that is less stressful, physically and mentally healthy and yet, continue to prosper?

In the face of these challenges, it is necessary for everyone not only to be willing to speak but also be willing to act. Many people may have seen that there are many who can talk but very few who can truly do and are willing to do. Therefore, the Government continues to implement digitalisation and encourages both individuals and businesses to transform.

Some residents complain that excessive mechanisation for efficiency has reduced the personal touch and I understand this very well. But is it inevitable? How can we strike a balance, using technology with a personal touch, making it convenient for us without sacrificing the interaction and communication between people? This is something we should and must reflect on.

So how can we make everyone willing to act and willing to contribute? What I have experienced as a grassroots advisor in Nee Soon South over the past three years is that, as long as everyone cooperates happily, whether they are employees or volunteers, if they can be accommodating and show gratitute towards each other, they will be able to contribute joyfully and everyone can make a difference.

In unity, we learn to be inclusive. In giving, we learn gratitude. I believe this is an invaluable way of interaction in our society. I hope that in the future, through our own practice, we can pass on these values to the next generation of Singaporeans. Citizens and the Government can work together so that even with fewer people, we can still get things done and sustain physical and mental health as well as continued prosperity.

(In English): With that, I conclude with a prayer that the strategies I offer – tracking our well-being, achieving more with less, enhancing collaboration with citizens, and above all, adopting a strength-based and trust-based lens, will help us on a Uniquely Singapore holy grail, towards the biggest, hairiest and most audacious goal of them all – well-being while sustaining high-growth in our economy. I support the Budget.

Mr Speaker: Mr Louis Ng.

11.44 am

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this is a Budget about building our shared future together. A shared future that has been built on the work by all of us and our migrant workers over the past few decades. As we talk about being an inclusive society, we must not forget our migrant workers. Yet, our policies at times, show that there is an “us” and “them”.

In the past eight years as an MP, I have seen firsthand the backbreaking work our migrant workers do for us. I have listened firsthand to the stories of the homes and families they left behind. And I have personally met the families they have left behind and felt the pain they feel every single day.

Mazibur is a cleaner in Nee Soon East. I have known him for eight years. He came to Singapore in 2012, leaving his daughter Jannat when she was only 22 days' old. Mazibur has not returned to Bangladesh since. Jannat will turn 12 years old this year. He has missed all her birthdays and milestones growing up. When I went to Bangladesh a few years ago to meet all our Nee Soon East cleaners' families and have lunch with them, I met Jannat. It is sad that I got to meet Mazibur's daughter before he did. Jannat wrote to me and what she wrote tore through my heart. She said, "Take care of my father, I love him a lot". I promised her I would.

Sir, Mazibur's story is not an uncommon one. Many low-wage migrant workers similarly endure long periods of separation from their families.

As a father of three young girls, I just cannot imagine how painful and how difficult it must be to be so far from their loved ones. We enjoy time with our families in the homes that these migrant workers build and keep clean for us. The least we can do is to take care of them and ensure that these workers have safe living spaces, safe food and safe avenues for reporting illegal employment practices.

In a speech delivered at the height of COVID-19, Prime Minister Lee assured our workers, "To our migrant workers, let me emphasise again: we will care for you, just like we care for Singaporeans." I am glad we do care and, over the years, our policies on migrant workers have improved. In this Budget for Singaporeans, I hope we continue to make improvements and remember to care for our migrant workers.

Many of our youths have set a shining example in caring and speaking up for migrant workers. I have been inspired by the passion of these youths. One such youth is Kari Chua. Kari co-founded the migrant worker ground up Sama Sama in 2016. Sama Sama and their partners support migrant community leaders to address mental health issues, enhance the quality of life and ensure equitable opportunities for migrant workers. Migrant worker NGOs like Sama Sama back up their calls with concrete actions through ground-up initiatives to support our migrant workers. Many Singaporeans like Kari are calling for the Government to do more to treat our migrant workers fairly. I hope we heed their call. I will raise three recommendations.

First, we significantly improve the living standards for migrant workers.

Second, we ensure the food catered for migrant workers comply with existing food safety standards.

Third, we recognise and treat kickbacks as a form of corruption, by ensuring that there are equivalent penalties and whistleblowing protections.

I am not asking for any preferential treatment for our migrant workers. I ask only that we treat our migrant workers the same way that we would want our loved ones to be treated. I ask that we be fair and inclusive – have one set of policies that apply to all.

My first recommendation is that we ensure that the housing standards for dormitories are at least equivalent to the dormitory conditions for our full-time National Servicemen (NSFs). I am glad that MOM announced a set of improved standards for worker dormitories last year. It is a huge step in the right direction. By 2030, the dormitories must meet an interim set of housing standards. By 2040, the dormitories must meet the new standards. MOM said that these housing standards are meant to improve the dormitories' ability to contain disease outbreaks. I am glad that MOM is acting on lessons learnt during COVID-19.

In addition to addressing the public health risks, it is also right that we make sure that our migrant workers have decent living conditions. However, many feel that the interim and new housing standards simply do not go far enough. Our current standards require at least 3.5 square metres per migrant worker. By contrast, each NSF in SAF gets seven square metres of sleeping and resting space. Why the double standards on this question of public health? Viruses will not discriminate between our migrant workers and our NSFs. We are now asking for dormitories to improve this from 3.5 square metres to 3.6 square metres per migrant worker by 2030 and 4.2 squares metres by 2040. We are asking for a 0.1-square-metre increase within seven years. To put things into perspective 0.1 square metre is less than the size of two A4 pieces of paper.

Another example is the spacing between beds in migrant worker dormitories. Currently there is no requirement for spacing between beds. It is only in 2040 that we will mandate a spacing of one metre between the beds. The pandemic taught us hard lessons about how diseases spread like wildfire when people are packed into tiny, cramped dormitory rooms. Yet, for the next 16 years, we are choosing to accept this risk. We are choosing to roll the dice and pray very hard that we will not have another pandemic in the next 16 years. It is a gamble with the lives of those living in the dormitories and it is a gamble with the lives of Singaporeans.

I understand there is a cost factor. Business costs are rising and employers have financial constraints. We must consider this, too. MOM has said that dormitory standards cannot improve more quickly because beds are short in supply and rising in price. Surely, then, the way forward is to study and implement solutions that tackle those problems, rather than wait for them to go away.

JTC used to own and manage dormitories directly. I am glad MOM will be building and owning two migrant-worker purpose-built dormitories (PBDs) through the new entity called NEST Singapore. Again, it is a step in the right direction. MOM has announced that the MOM-owned PBDs seek to promote innovations in public health resilience and liveability. They also aim to transform practices in migrant worker housing.

Indeed, if the private market cannot efficiently deliver services at minimum standards and costs necessary for public health, we should ask the hard question of whether Government agencies should reassume the role of managing and operating more dormitories more urgently. By expanding the number of dormitories owned and run by MOM, there would be significant economies of scale and perhaps even lowered costs for employers. It could be a win-win solution for both employers and employees.

Again, we must remember that this is a question of public health. This is a life and death issue when, not if, the next pandemic happens. We already know that the SAF was largely successful in keeping COVID-19 transmissions low. We already have a successful model to learn from – with a minimum standard of seven square metres per resident and all the measures that SAF took. All I am asking is that we learn from experience and urgently improve the living conditions of migrant workers.

My second recommendation is that food catered for migrant workers is safe for consumption. Our migrant workers need a proper place to rest and proper food to eat. I am glad that MOM recently ensured that there are measures in place that protect catered food from contamination until it is collected by dormitory residents for consumption. MOM clearly takes food safety very seriously. But that solves only one part of the equation. The other parts need to be urgently addressed, too.

The Singapore Food Agency (SFA) requires that all catered food be consumed within four hours after it is prepared. SFA also requires that all catered food be labelled with a consume-by timestamp. Many Singaporeans will be familiar with these timestamps for catered food or buffets. This four-hour rule is strictly adhered to for food catered for Singaporeans. However, a different set of standard seems to apply for some migrant workers. Workers tell me that many of them are catered with food without a consume-by timestamp. Many workers tell me that they regularly consume food way past the four-hour timeframe. It is quite obvious that this is true. We know their catered lunch is cooked in the wee hours of the morning before workers even leave for work. We know the food is delivered to the dormitories early in the morning as well. By the time workers have their meal around noon time, the food is way past the four-hour timeframe.

We know for a fact that our requirements are being breached. The Ministry of Sustainability and the Environment (MSE) has said that in the past five years, SFA has not received any reported cases of catered food for workers in dormitories without a consume-by timestamp. MOM has also said that they have not received specific complaints from workers about not being able to consume food within a reasonable time of preparation. This is at odds with many workers' experiences and the realities on the ground. I know that MSE and SFA take food safety very seriously. I also know that MOM takes worker safety and welfare very seriously.

My recommendation is that MOM and MSE work together to investigate this and set specific requirements to ensure that catered food is consumed within a safe period. Migrant workers deserve food that is safe for consumption, just like all Singaporeans.

My third and final recommendation is that we recognise and treat kickbacks as a form of corruption. We should ensure that there are equivalent penalties and whistle-blowing protection. I have called for this in my previous Adjournment Motion and I am calling for it again.

We know that from 2021 to 2023, MOM investigated 210 cases of kickbacks per year and took 70 employers to task each year. That is more than one employer every week being taken to task for collecting kickbacks. Also, we do not know what the full number of unreported cases is. Our laws to protect our workers are only as good as our ability to enforce our laws. We cannot enforce our laws if workers are fearful of reporting abuses when they happen.

I have personally spoken with migrant workers whose employers coerced them into paying a sum of $3,000 in kickbacks. For some, this is more than four times their monthly salary. A crime had been committed against them. Yet, their hands were trembling as they spoke to me. They were fearful of the consequences of reporting their bosses. Many of these workers incur debt to work in Singapore in the first place. Losing their jobs may mean they have no way of repaying the loans they took to work in Singapore. One of them told me, "When I came to Singapore in 2016, I paid $14,000. In 2018, I paid $1,500 for my Work Permit. Now, they said that if I do not pay them $3,000, they will fire me". The worker faced the stark choice of paying his boss $3,000 to renew his Work Permit or face repatriation. The same worker told me, "I am a really poor man. I have no money to give them. In this situation, I am really helpless and feeling depressed. I am an honest and hardworking man."

We can only start solving a problem by calling a spade a spade. This is one spade digging a grave for fairness and inclusiveness. What kickbacks really are is that they are corrupt gratification that employers coerce from vulnerable workers. The penalty for collecting kickbacks is a fine of up to $30,000 and/or imprisonment of up to two years per charge. By contrast, the punishment of corruption is a fine of up to $100,000 and/or imprisonment of up to five years per charge. We need to review the penalties for employment kickbacks to ensure that they are commensurate with the penalties for corruption. I propose that the maximum sentence be raised to five years of imprisonment and/or a $100,000 fine, matching the penalty for bribery under the Prevention of Corruption Act.

We also need to make sure we have the same or even stronger whistle-blower protection for informers of corruption for workers to report kickbacks. The Prevention of Corruption Act has strong protection for informers. No complaints can be admitted as evidence in any civil or criminal proceedings. No witness is permitted to disclose the name of informers or any information which may lead to the discovery of the informer. I propose that we introduce whistle-blower protection for informers who report kickbacks paid to employers.

We all know the zero-tolerance approach Singapore takes to corruption. Kickbacks are corruption. There is no reason to treat kickbacks migrant workers pay any differently from other corruption in Singapore.

Sir, migrant workers are the builders of our society – the builders of our economy. In the words of Minister Shanmugam, "These workers are here, they are helping us to make Singapore clean. They build our HDB flats. They build our buildings. They handle our waste management. They form the base of our economy and, therefore, they help us build our prosperity. You know, we say we have 57% of Singaporeans in PMET jobs. How is that possible? It is possible because the base is built by foreigners. So, I think we have to appreciate what they do for us, and we have to have a better understanding and empathy."

I am glad many Singaporeans have shown appreciation for the work migrant workers do for us. Our youths, like Kari, have been calling for our migrant workers to be better protected. Deputy Prime Minister Lawrence Wong said, "We need to do more to look out and care for the more vulnerable amongst us, including our migrant workers".

I hope we can start by looking into (a) improving their dormitory standards sooner; (b) ensuring that they have safe catered food; and (c) treating kickbacks as corruption.

The priority in this Budget and in our policies has to be Singaporeans. There is no doubt about that. But it does not mean that our migrant workers should be left out, left behind. To be the truly inclusive society we aspire to be, a shared future we talk about in this Budget must also include our migrant workers. To be a fair and just society, we cannot have one set of rules, guidelines and policies for Singaporeans and a different set for migrant workers.

Sir, I promise Jannat I would look after her father. We should look after all our migrant workers. I do this not just because of a promise, but because it is the right thing to do.

At the start of my speech, I talked about how our policies differentiate between "us" and "them". I have shared this quote in Parliament previously, and I will share it again, "There is no us and them, only us – one human family connected in ways we sometimes forget."

I hope our policies can continue to change and recognise that our one human family in Singapore includes our migrant workers.

Mr Speaker: Ms Hazel Poa, you have a clarification to make? Go ahead.

12.00 pm

Ms Hazel Poa (Non-Constituency Member): In my speech on Monday, I said that the $10,000 Central Provident Fund (CPF) top-up in the Institute of Technical Education (ITE) Progression Award is differentiated treatment between polytechnic graduates.

In response, the hon Member Mr Xie Yao Quan yesterday made the point that it is fair and right to compensate for the wage gap between ITE graduates and polytechnic graduates. But my point is that because this CPF top-up is given to them after they have completed their diploma courses, they are not just ITE graduates, they are Diploma holders and will be earning salaries as polytechnic graduates.

So, can Mr Xie clarify what wage gap he is talking about? This is my first question.

Also, going by his logic, does Mr Xie similarly think that it is fair and right to give a CPF top-up to polytechnic graduates who progress to university, to compensate for the wage gap between polytechnic graduates and university graduates? That is my second question.

What about a person who starts working at a lower pay grade due to lower qualifications but, subsequently, rose through the ranks to reach the same position as someone with higher qualifications? Does Mr Xie also think that it is fair and right to compensate for the wage gap? That is my third question.

Since Mr Xie is a People's Action Party (PAP) backbencher, I would also like to seek clarification from the Ministers whether they agree with Mr Xie's position and what is the position on my last two questions to Mr Xie?

Mr Speaker: I do not see Mr Xie Yao Quan in the Chamber. So, perhaps, when he is back later and before we conclude the debate, if he wants to clarify, I will allow him. For now, I will call on Deputy Prime Minister and Minister for Finance.

12.02 pm

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

Members have raised many suggestions during this debate. I will not be able to address all of them in my response. But I assure you that we have heard your feedback and we will study your suggestions carefully. For more detailed issues relating to specific schemes and programmes, these will be addressed later at the Committee of Supply (COS).

The questions raised by Members in this debate largely revolve around three broad issues. Are we doing enough to help Singaporeans cope with higher prices? How will we achieve better growth and help Singaporeans secure a better future? Is our system of social support sufficient to support Singaporeans? So, let me address these three issues in turn.

First, on helping Singaporeans cope with inflation and cost pressures. Several Members, including Mr Yip Hon Weng, Mr Gan Thiam Poh, Mr Henry Kwek and, Ms Hazel Poa and many others, spoke about this.

Let us start by looking at the reasons for high inflation over the last two years and these reasons are certainly not unique to Singapore. For more than a decade before COVID-19, global inflation was generally stable, hovering at around 4% per annum. Singapore enjoyed relatively stable inflation too, and in most years, it was lower than global inflation.

But in 2021, prices in global food, goods, energy markets rose quickly, as strong demand came up against constrained supply due to pandemic-related restrictions.

Then, the Russia-Ukraine war broke out in early 2022. The two countries are major suppliers of key commodities, like oil and gas, fertiliser, and wheat. This brought about a further surge in prices. Many countries also saw a surge in demand for domestic services, and did not have sufficient workers to meet the demand.

These are the key drivers of inflation everywhere and Singapore, like all other countries, felt the impact too.

Even so, inflation in Singapore did not reach the peaks seen in several parts of the world.

One reason was effective monetary policy. MAS tightened monetary policy five consecutive times starting in October 2021. This meant allowing the Singapore dollar to appreciate more quickly, which helped to shield us against the sharp spike in imported inflation. Had MAS not acted, core inflation for the whole of 2023 would have been 6.6%, instead of 4.2%.

Other major central banks acted too. So, with this overall monetary tightening and the stabilisation of supply chains, significant headway has been made in bringing inflation down around the world. Our inflation too has started coming down, in line with the rest of the world. In Singapore, our headline inflation was already moderating since last year, and is expected to moderate further this year. We expect this trend to continue, similar to other advanced economies.

Several Members, including Ms Ng Ling Ling, Mr Ong Hua Han and Mr Faisal Manap, also highlighted other specific cost items – namely housing and transport. So, let us drill deeper into this data.

Take public housing. Over the last 10 years, the average price of a 4-room Build-To-Order (BTO) flat in non-mature estates has remained relatively stable, even as median household incomes increased. So, in real terms, the affordability of such BTO flats has, in fact, improved. The challenge we face was with the prices of BTO flats in choicer locations which are more expensive. That is why we have introduced the new Standard, Plus and Prime framework. Because with this framework, we can keep the BTO flats in these better locations affordable through more upfront subsidies. But it will be a fair system because the additional subsidies will be clawed back when the first owners sell the flats.

Or take public transport, the Government is already providing generous subsidies to keep our public transport system going. Fares have increased, but household incomes have risen faster. And that is why the proportion of household income spent on public transport has fallen over the last 10 years.

We also track real wages closely. As Members are aware, real wage growth was negative last year. But we know that employers, many of them, are complaining of shortage of workers and higher wage costs, especially in services. So, it is not negative across the board. Some workers were still getting real wage increases. And at the household level, there was real median income growth, on a per capita basis, per household member basis.

Sir, I have provided some key data points, so that we can understand the facts around the inflation situation globally and in Singapore. In countries everywhere, including in Singapore, there tends to be a gap between economic data and perceptions. It is partly because it takes time for consumers to adjust to new economic realities. Perceptions and sentiments are clearly important, and we take the feedback from the ground seriously, but we also need to examine data closely so as to better shape policy responses.

It is in this broader context that the Government had extended support packages over the last two years to cushion the impact of inflation, particularly for lower- and middle-income Singaporeans.

This year, while inflation is moderating, we recognise that prices are still relatively high and there will be continued pressures for families and individuals. That is why I had enhanced the Assurance Package in the Budget. We have designed and sized the support of the enhancement carefully. There is something for everyone, regardless of age, property type, or income. But we also do not want to inadvertently stimulate demand too much and push up prices – something which Ms Foo Mee Har cautioned against. So, the support is targeted and tilted towards those with less.

What will we achieve through the enhancements to the Assurance Package in this Budget? For lower-income households, it will fully cover their increase in spending due to inflation this year. For middle-income households, it will substantially cover the increase in spending due to inflation this year.

We are not only helping families. We are also helping businesses cope with higher costs, especially SMEs. One of the reasons for rising business costs is higher wages for Singaporeans. For example, we are raising the wages for lower-wage workers. I am sure everyone supports this. But it will mean higher costs initially for businesses, especially SMEs. That is why the Government is doing more in this budget to co-fund the increase.

Similarly, as Senior Minister of State Heng Chee How highlighted, we are raising CPF contributions for older workers so that they have sufficient savings for retirement. Again, this will lead to higher costs for businesses. But the Government will offset half the increase in employer contributions for 2025.

We are doing more to help businesses in this Budget through the Enterprise Support Package. This is the most generous Corporate Income Tax rebate we have extended to date. For all eligible firms, including those that are not profitable, we are providing a cash grant.

The support can be used to defray cost increases, in wages, rentals, utilities, or transport, depending on the circumstances of each business.

I understand that some groups will feel that the help extended is still not enough. But I hope everyone can appreciate the bigger picture. We are going through a rough patch of high prices due to forces well beyond our control. We are not the only country facing these difficulties. The Government will do everything we can to help households and businesses to get through this rough patch. Already, the situation is improving, and it should get better this year.

But ultimately, the best way to deal with inflation is for businesses and wages to grow in real terms. To achieve that, we need better economic growth.

This leads me to the second issue – how can we sustain growth and help Singaporeans secure a better future? And here, many Members spoke up about this, including Ms Jessica Tan, Mr Saktiandi Supaat, Mr Shawn Huang, Mr Sharael Taha and Mr Vikram Nair, amongst others.

Securing economic growth is more than just a statistic. It is about how we stay relevant, add value to the world and make a living for ourselves. The reality is that Singapore will always be a little red dot. We have no hinterland. We have no natural resources, unlike resource-rich countries like Qatar and the United Arab Emirates (UAE). If we falter, no one will come to our rescue.

Moreover, businesses have so many options when they wish to invest or site their global or regional headquarters and operations. We know that Singapore is not the cheapest location. So, we must work even harder to add value and justify the Singapore premium. This is what we have been doing continually since our Independence.

Our economy today reflects this progress up the value chain. Take the example of a multinational enterprise (MNE) like Siemens. It has been in Singapore for more than a century, since 1908. Of course, Siemens today has changed many times over from when it started. It has significantly expanded and upgraded its business, from a small sales office to electronics assembly in the 1970s and now it provides technologies across a range of sectors, including transport systems, water treatment technologies and medical diagnostic equipment. Last year, it announced that it will establish a new high-tech factory in Singapore, which will employ significant levels of automation and digitalisation.

Along the way, Siemens has spun off new sub-units, including the semiconductor company Infineon Technologies – which some of you may have heard of – and some of these sub-units have grown into industry leaders in their own right, with their key manufacturing and research and development (R&D) locations based here in Singapore.

Sir, there are many other examples like this. MNEs have continued to grow and upgrade their presence here in Singapore because they value our skilled workforce, our infrastructure and our connectivity to help them better access key markets in the region and beyond. So, when you add it all up, it means that the value-added content of our manufacturing sector has increased. We are able to command better prices in world markets and this in turn benefits our workers, who are able to enjoy higher wages.

This is how we are able to stay competitive, despite our higher costs. One way to see this is to look at Singapore's share of global exports. Since 2010, even when our cost base has gone up, our share of the world’s total goods exports has been maintained at about 2%. Our share of global services exports has increased from 2.5% to 4.1%.

So, we are able to hold our own, maintain competitiveness and add value, make a living for ourselves, and for our workers. The question is, how do we continue to maintain or even increase our share of global exports in the years to come?

The only way is through productivity improvements, something which Deputy Prime Minister Heng emphasised yesterday. We aim for 2% to 3% economic growth per annum over the next decade on average. Of this, about one- to 2-percentage points should be from productivity improvements.

To be clear, this is a very ambitious goal. Only a few countries at our stage of development have been able to sustain such high productivity growth. It requires a continual transformation of our economy. Firms need to learn new ways to do business, workers need to learn new skills to contribute differently and to embrace new technologies, and new firms in new sectors must start up and grow and more than replace the firms in declining industries. As Ms Mariam Jaafar and several Members have noted, this is a massive undertaking. But we are aiming high and we are determined to do our best to achieve this.

One key strategy is to attract more high-quality investments into Singapore because these investments typically involve cutting-edge and innovative activities. They help to push the productivity frontier. That is why we need new investment promotion toolkits like the Refundable Investment Credit.

Another strategy is to maintain consistent and steady investments in R&D. That is why we are making the top-up to RIE2025 in this Budget, which will sustain Government investments in R&D at about 1% of GDP. This will yield dividends over time.

Some have voiced concerns about whether we will become a two-track economy – one track for MNEs and another for SMEs. I can understand these concerns, but it is not so helpful to think of the economy in terms of larger foreign and smaller local companies.

A better way is to consider the two broad segments of the economy: one that is outward-oriented and another that is domestic-oriented. Every economy, including Singapore, has these two segments. And each faces challenges and business conditions.

The outward-oriented segment of the economy comprises MNEs, but it also has many local enterprises, big and small. Collectively, they make up about 60% of the firms in Singapore: six zero. And there are many supplier and partnership arrangements between MNEs and local firms. We want to encourage more of these partnerships and we have enhanced the PACT scheme in this Budget to do so.

Companies in this outward-oriented segment are generally more productive and also have some scale. They have to be; they compete in the global marketplace. They must continuously innovate and up their game. Otherwise, they will fall behind and they will lose their share of the global market.

Not surprisingly, these companies have high take-up of Government schemes that help them invest in R&D, automation and productivity improvements. They do not need to be persuaded to do so. Everything is at stake for them. Given their higher productivity, this outward-oriented segment accounts for about 75% of our economy in terms of nominal value added. Three-quarters of our economy, outward facing.

The remaining 25% of our economy comprises mainly domestic-oriented sectors like F&B, retail and construction. These are more labour-intensive. There are, of course, also domestic services which are high touch in nature, like childcare and elderly care, and they require workers. So, these domestic oriented sectors tend to be less productive than the outward-oriented sectors. That is not unique to Singapore. It is the same for all other economies.

But the productivity of some of our domestic-oriented sectors lags behind similar sectors in other advanced economies. For example, take the construction sector. The productivity of our construction sector is about one quarter that of Switzerland.

Of course, within our domestic-oriented sectors, there is a range of firms. Some are embracing change and restructuring themselves to be more productive, others are less ready to do so. That is why we can and we must do more to encourage and support companies, especially SMEs, in this restructuring journey.

Several Members spoke about this, including Mr Chong Kee Hiong, Mr Keith Chua, Mr Neil Parekh, Mr Derrick Goh, and Mr Mark Lee, and we will consider all of your suggestions. But we also have to be careful that Government support does not inadvertently prop up outdated or unviable business models and hinder restructuring.

That is why our support schemes are geared towards supporting business owners who are themselves prepared to embrace change and to adopt new and more productive solutions. This is what we have done and will continue to do.

While we push hard on productivity growth, we also need our workforce to grow. This is one issue that comes up repeatedly in all our engagements with businesses, especially SMEs. They just cannot find enough workers, and they tell us all the time.

Some of the increase in the workforce will come from growing our resident workforce. But we know that the increase in our own resident workforce has been slowing and will not be sufficient to meet the demands of our economy. So, it will have to be complemented by a continued inflow of foreign work pass holders.

We already have in place a comprehensive system of controls to regulate the quality and the number of incoming work pass holders. This applies across every level of the workforce.

At the lower end of the income spectrum, we have Work Permit holders. They comprise about two-thirds of our total foreign workforce and mostly take up roles that Singaporeans do not want to do, for example, in construction.

We have not loosened our Work Permit controls. We have no intention to do so. But even at present settings, firms are able to bring in more workers, because of the demand. We are building more public housing, more residential housing projects. We are ramping up or going ahead with major infrastructure projects like the MRT, Changi T5, Tuas Port. Workers are needed to build these projects, and so the firms are bringing in more of them.

At the same time, we will ensure, as Mr Louis Ng said just now very eloquently, we must make sure that we take care of these workers. So, we will ensure we have the necessary infrastructure to accommodate these workers well, including building more dormitories – dormitories with the revised standards that we have put in place based on our COVID-19 experience and more recreational centres for their well-being. That is something we owe to these workers who help to build our country.

At the middle-income levels, we have Singaporeans doing the jobs, but there are not enough of us, and that is why we top up with S Pass holders and they include people doing important jobs like nurses and technicians. So far, S Pass numbers have been stable. We will continue to make sure that S Pass holders have the right skillsets and are in areas where we need them the most.

At the higher end of the income spectrum, we have Employment Pass (EP) holders. These are professionals with the skills and abilities to contribute at the upper end of the workforce. This is especially so for new growth areas like AI and the digital economy, where there is currently a shortage of skilled talent, not just in Singapore but also globally.

We apply salary cut-offs to ensure that the EP holders we bring in are of the right calibre. In particular, we have stated previously that we aim for EP holders to be comparable in quality to the top one-third of our local PMET workforce.

To keep pace with changes in wages, we will raise the minimum qualifying salary for EP applicants. The Minister for Manpower will share more details of the changes at its Committee of Supply. This is not a new policy setting because the policy intent to ensure that the salary cutoffs are comparable in quality to the top one-third of our local PMET workforce has already been stated. That remains the policy intent, but because local wages have gone up, we will have to adjust accordingly, and the changes will be announced by MOM at COS.

So, when you look at all of these different factors over the coming decade, we expect our workforce to grow at about 1% per annum, in line with the needs of the economy. This, combined with productivity growth at about 1% to 2%, is how we can achieve 2% to 3% growth for the overall economy.

Why are we doing all this? It is not to chase after a target. It is not to grow for the sake of growth. It is to secure better outcomes for Singapore and Singaporeans. That is why, in tandem, we are making several other major moves.

We are introducing new Workplace Fairness Legislation. This reflects the Government’s commitment to push against discrimination in the workforce and ensure fair employment opportunities for all workers.

We are investing more heavily in Singaporeans, something which many Members spoke passionately about. This is how we give our people the extra advantage to compete and excel in the global marketplace.

In particular, in this Budget, we are making significant enhancements to SkillsFuture and introducing new schemes to help our workers realise their full potential, regardless of their start points or stage of career.

And we have focused on the segments that face more challenges.

For young ITE graduates, we introduced the ITE Progression Award to encourage and support their upskilling journey. Mr Xie Yao Quan and Miss Cheryl Chan spoke about this. With this award, they will be better supported and they will have many opportunities to get an MOE-funded diploma, not just in the polytechnics, but also at other institutions like ITE, where they offer work-study programmes, as well as technical diplomas. We want our ITE students to do well, deepen their skills and go further. Get on a better career and wage trajectory in life. This Progression Award will encourage and support them in this journey.

For mid-career workers, the new SkillsFuture Level-Up Programme will support them with a substantial injection of skills to improve their employability.

Many Members, including Leader of the Opposition Mr Pritam Singh, Assoc Prof Jamus Lim, Mr Christopher de Souza, Mr Gerald Giam, Mr Desmond Choo and Mr Syed Harun, all spoke about this. There were many suggestions, such as to expand the scope of the SkillsFuture Credit, to reduce the qualifying age or to provide additional incentives and support.

I appreciate the strong support and interest. The Level-Up programme is a significant new addition to our SkillsFuture system. Let us make this move first. We have not even talked about the details yet, which will be announced by the Minister for Education at COS. So, we will make this first move, we will consider all your feedback and suggestions, and how to further finetune and enhance the scheme, as we gain more experience over time.

There is another segment we are paying close attention to, that is, Singaporeans with the potential to take on leadership positions in MNEs. Over time, more Singaporeans have taken on such regional and global leadership roles, and we want to nurture and grow this pipeline of Singaporean leaders.

Naturally, there is intense competition for these highly sought-after jobs. The MNEs will and should rightfully select and appoint their leaders by merit. But when companies look for or consider people for such roles, they will typically look for those who have already spent substantial time managing an overseas operation, because remember, they are looking for regional and global leaders. So, you must have spent time overseas, running, managing overseas operations.

This means that Singaporeans who would like to be considered for these positions must be prepared to be posted overseas, not just in your early 20s, when many young people like to be posted overseas, but also in your 30s and 40s when you are taking on managerial responsibilities and also when you have settled down and have families.

Understandably, at that season in life, relocating overseas is not going to be easy. There are many considerations. The spouse may have to stop work for some time. The children will have to adjust to an international school, and then come back to re-adjust to the Singapore system. So, we are reviewing this, we are considering how we can support or provide more support for Singaporeans under these circumstances so that we can help support them when they go overseas, when they come back and put them in a better position to be considered for leadership appointments in their respective companies.

Over time, I am confident we can develop and nurture more Singaporean experts and leaders across all fields. We have been doing this systematically in Finance for some time already and we can see the results. We now have around 4,000 Singaporeans holding senior roles in the financial sector, up from fewer than 2,000 in 2016. We now have a network of Singaporean finance leaders who come together regularly, they meet up and they support one another in their leadership journeys. We will redouble our efforts in finance and also in other key sectors of the economy.

These are our plans to secure better growth and better opportunities for all Singaporeans. This is also how we take concrete steps towards helping everyone realise their Singapore Dream.

This idea of a refreshed Singapore Dream was expressed by the vast majority of Singaporeans, especially our youths, during our Forward Singapore engagements.

To be clear, it does not mean that Singaporeans have given up on material goals. But they want to avoid getting trapped in an endless rat race of hyper-competition. They want to find meaning and fulfilment in what they do, beyond material success.

I think these are noble aspirations. There are undoubtedly some generational shifts because these aspirations are perhaps more commonly expressed amongst those born after Independence than before.

My colleagues and I in the 4G leadership, almost all of us were born after Independence too. So, perhaps, we instinctively empathise with these aspirations, and as part of Forward Singapore and as a first step in this Budget, we are doing more to help our fellow Singaporeans realise these shared aspirations – by providing more opportunities and diverse pathways for everyone to excel, to develop to their fullest potential and to be the best possible version of themselves.

Singapore must be defined not just by how far our talents can go, but also by how well we support one other. In this new environment, we recognise that there will be more stresses and strains on our people. With rapid technological advances and more intense competition, we can expect more churn at workplaces. Some jobs will become obsolete while new jobs with better pay will be created. All this will be very unsettling for those who are affected.

This brings me to the third issue we have to address: is our system of social support sufficient to assure Singaporeans through every life stage? Again, many Members spoke passionately about this – Mr Dennis Tan, Ms Ng Ling Ling and Dr Wan Rizal, just to name a few.

In fact, we have been working hard over the years to progressively enhance our social safety nets. We started in a more deliberate manner around the Asian Financial Crisis in 1997 when we first saw income trends diverging. We have continued to fine-tune and improve over the years. In this Budget, we are taking further steps to strengthen our system of risk pooling and social support.

The traditional pillars in any social support system are education, housing, healthcare, work and retirement. You find this in all countries.

In education, we have invested heavily in a first-class school system. We have also significantly increased our investments in preschool education, and expanded tertiary education options for our youths, including increases to the university cohort participation rates.

In housing, we have public housing and the Housing and Development Board (HDB). We celebrate 60 years of the Home Ownership Scheme this year. It is a significant milestone because there is no other institution like the HDB in the world, which has provided comprehensively for the housing needs of its people. Indeed, it may even be misleading to call it “public housing”, because when you look around the world, public housing elsewhere often develops into slums or even ghettos. Our public housing is really a national housing scheme.

And our housing policies are not static – we continue to review and update them and remain fully committed to keeping our national housing affordable and accessible for Singaporeans, including those from lower-income households.

In healthcare, we have Government subsidies and the 3Ms – MediSave, MediShield, and MediFund. We have continued to improve on this. We made MediShield universal and lifelong through MediShield Life. We have CareShield Life for long-term care. Recently, we have launched Healthier SG and Age Well SG.

In work, we have strived to create good jobs for all Singaporeans, not only to provide a good living, but also because work gives dignity and purpose in life. To uplift our lower-wage workers, we have added Workfare and Progressive Wages, as noted by Mr Raj Joshua Thomas and many others. These moves are delivering results.

In retirement, we have the Central Provident Fund (CPF), which we have been enhancing over the years. We pay additional interest to help those with lower balances. We introduced CPF LIFE because Singaporeans are living longer, and we want to provide them with a retirement payout for life. We provide Silver Support for seniors who had low incomes during their working years. And now, we have the Majulah Package to help seniors accumulate more retirement savings, especially our young seniors.

We will not stop here. We are continuously studying how we can do better.

But let us also understand this. For those who ask for higher CPF returns, you will surely know that higher returns must come with higher risks. To what extent can retirees bear this volatility, especially when they may need to withdraw their funds in a period of negative investment returns in the markets? These are some of the complex issues that the Government has to weigh and consider carefully. But in the end, we will ensure that the CPF system provides for the basic retirement needs of all Singaporeans so long as they work and contribute to their CPF consistently.

Around these five pillars, which I have just described, we have ComCare – to ensure that no family and no individual falls through the cracks.

Through ComCare we provide financial assistance, short- and medium-term as well as long-term assistance to those in need. But we have gone beyond just providing financial support. We lean forward to take a more family-centric approach – bringing together different agencies and community partners, and customising support for lower-income families, especially those with young children, through ComLink, and now, ComLink+.

We have also provided more support for vulnerable groups, such as children with special needs, ex-offenders and persons with disabilities, something which several Members spoke passionately about, including Mr Eric Chua, Miss Rachel Ong, Mr Ong Hua Han.

The latest addition to our system is SkillsFuture. Something we started about a decade ago. We have made good progress, but we still need to do more, and that is why we have made significant enhancements to SkillsFuture in this Budget.

We are also working on the new support scheme for those who are involuntarily unemployed as part of our enhancements to SkillsFuture. This will be targeted at involuntarily unemployed workers in the lower and middle-income groups. We will provide them with temporary financial support and encourage these individuals to go for training if needed, or to get matched to new jobs. In other words, this is really more of a jobseeker support scheme than an unemployment benefit.

We considered whether or not to make this an insurance scheme, but for an insurance scheme to work, it will require universal enrolment, otherwise, the insurers will be cherry picking. There will be what economists call "adverse selection". The scheme will not be viable. If we make it mandatory, or require universal enrolment, this will require contributions from employers and employees. It will add to the business costs which small and medium enterprises (SMEs) and lower-income workers are already concerned about.

That is why we have decided to fund the scheme using taxes instead. In other words, all of us as taxpayers and the Government will help you bounce back if you face unemployment setbacks.

I thank Members who have spoken on this, especially our tripartite partners, as well as the Labour MPs like Mr Patrick Tay, who have given us suggestions and ideas for this scheme. We are working out the parameters and will share more details later this year.

Sir, what I have just described are all structural moves. They are not temporary or short-term measures. We have been strengthening them year after year, and we will continue to do so.

And that is why over the last 20 years, social spending by the Government has quadrupled. As a share of the Budget, we are also spending more on social support. In this Budget, half of total ministry expenditure is committed to social spending, which is a lot. A substantial portion of this is spent on structural schemes, not temporary measures.

Some Members would like the Government to do even more. But other members have reminded us that the Government should proceed carefully, so as not to breed a sense of entitlement, dependency or undermine individual responsibility and self-reliance.

Indeed, we are very careful about getting this balance right. We have not changed our ethos of social support – it is not about giving handouts, but giving people a leg-up.

ComLink+ and the SkillsFuture Level-Up Programme have been designed so as not to erode personal and family responsibility. Likewise, the upcoming scheme providing temporary support for those who are involuntarily unemployed will also abide by these principles.

We catch Singaporeans when they fall and make sure they do not fall behind. We invest in them and provide them the support to bounce back from life’s setbacks and do even better for themselves.

In the end, this is about ensuring that families and individuals enjoy better incomes and better living standards.

If you look over the past decade, the lower-income groups in Singapore have, in fact, progressed faster than the rest. Real incomes of the bottom 20% increased slightly faster than the middle income, and twice as fast as the top 20%. This is based on incomes alone, it has not taken in consideration our progressive system of taxes and benefits which favours the lower-income. So, if you were to add all of that together, the overall picture is in fact, better for the lower-income.

But we will not stop here. We will continue to work hard to keep on improving. We learn from other countries, and we are open to all ideas – from Members of Parliament, researchers, and community advocates.

That is the spirit of Forward Singapore. We will consult widely and make bold and effective changes to take Singapore and Singaporeans forward.

During this debate, many Members – Opposition MPs, PAP MPs, Labour MPs – all of you have laid claim to the policy shifts announced in the Budget.

Well, I am glad everyone wants to be associated with the Budget. As the saying goes, failure is an orphan, but success has many fathers, and mothers too, I should add! [Applause.]

Basically, we welcome all who wish to associate themselves with these forward-thinking initiatives, because in truth, no one has a monopoly on ideas. There are many stakeholders also outside this House who have claimed credit and in fact, who have shared with us many ideas too.

The Government has and will continue to provide more information to facilitate informed discussions of policies, something which several Members spoke about. We are committed to doing so.

For example, the Ministry of Finance (MOF) publishes the Singapore Public Sector Outcomes Report every two years. This covers a broad range of outcome indicators. Not just input, but outcome indicators. We continue to finetune and improve this report. So, let us have you feedback and suggestions on what additional indicators we should track and we should incorporate.

Looking ahead, there will be even more opportunities for ground-up and civic engagements, something which Ms He Ting Ru, Dr Tan Wu Meng and Ms Denise Phua spoke about. We will provide more platforms for individuals and groups to contribute meaningfully, not just through feedback sessions, but also youth panels, citizens’ panels where participants play active roles to co-create and update policies.

And in the end, the real work is about translating ideas into effective policies that work for Singapore. That is our test. Is it effective? We all want better wages, better assurance, better security for our people. But what is the effective way to achieve these goals? How do you pay for them? How do you guard against inadvertent consequences? Many things start from good intentions, but they do not all achieve what is intended. These are the careful deliberations that have to be made.

If we look at the many policies the Government has introduced over the years, it is clear that we are different from what other countries do. That is because we do not just blindly copy. We learn from others. We are not ashamed to say that we do so. We adapt to our own needs, we discuss with key stakeholders, especially our tripartite partners to get buy-in and then, we develop something that applies to our context.

That is how we have innovated massively on the social front as we have on the economic and financial fronts. We have Workfare rather than welfare. We have progressive wages instead of minimum wage. SkillsFuture, instead of preserving obsolete jobs. And soon, support for jobseekers instead of unemployment insurance.

This is not just about changing the words. This reflects our policy emphases and priorities and how we go about effecting change for the betterment of Singapore and Singaporeans.

We recognise that we may not always get it right, but we will always improve and keep on doing better.

We will continue to evolve and improve our system of social support. We will maintain the right incentives, actively enable self-reliance and make sure we are able to fund these schemes. This is how we sustain a social trampoline that promotes rather than dulls economic progress that ensures the fruit of progress is shared by all. This is how a strong economy and a strong society coexist and reinforce each other.

Sir, our approach to investing in our people and building our social support system has yielded very good outcomes – even while we spend only a fraction of what other governments spend.

Take education for example – we provide quality education that produces results. We have one of the highest mean scores in reading, mathematics and science in the Programme for International Student Assessment (PISA). Members are aware. These results give us confidence – because PISA does not test rote learning. They test students' ability to apply what they have learnt to unfamiliar settings and real-world contexts and our students do well in these tests – and we have achieved all this while keeping education expenditure at about 2% of GDP, which is less than half the Organisation for Economic Co-operation and Development (OECD) average of about 5% of GDP.

Our long-term and prudent approach has enabled us to keep Government expenditure at less than one-fifth of GDP – 20% of GDP. This has in turn allowed us to keep our tax burden low. In fact, 40% of all workers do not pay personal income tax. The effective tax burden for middle-income households – at around 10% of household income – is significantly lower than other advanced economies. UK and Finland, for example, have middle-income tax burdens that exceed 30%.

Our fiscal system is also fair and progressive: where those with greater needs receive more help than what they pay in taxes.

The lowest 20% of households receive about $4 for every dollar of tax paid – $4 in benefits for every dollar of tax paid; middle 20% of households receive about $2 for every dollar of taxes; and the top 20% of households receives about 30 cents for every dollar they pay in taxes.

Members are familiar with these statistics. We shared them before. They have not changed.

But how does this compare with other countries? There are some inherent limitations in comparing across countries but we have done some computations. Singapore, in fact, does better than advanced economies, like the UK and Finland, especially for lower and middle-income households.

And the statistics that I mentioned just now also do not include other intangible benefits – like access to quality education, healthcare, housing or having safe streets in Singapore. This is how we provide and take care of our people.

Of course, a progressive system must mean that the better-off contribute more and this includes paying more in Property Tax for those with higher-value homes.

With the Annual Value (AV) band changes that we have announced in the Budget, the higher owner-occupied Property Tax rates will apply to those living in homes with AVs above S$40,000 – or the top 7% of properties in Singapore. Top 7% of properties.

Of course, within this group, there is also a range and those who pay a lot more in Property Taxes generally have homes with much higher value – we are talking about higher-end condominiums, semi-detached houses, bungalows and Good Class Bungalows. That is what the Property Tax is designed to do – it is a wealth tax for those with more assets.

But we do recognise that there are some groups – especially seniors and retirees – who may need some support to cushion the impact of the Property Tax increase; and this was highlighted by several Members including Ms Joan Pereira, Mr Lim Biow Chuan and Mr Yip Hon Weng. So, beyond the 24-month interest-free instalment plan – which I have announced in the Budget – those who face difficulties in paying, especially retirees and seniors, can approach IRAS for assistance.

Next, I should also deal with some specific questions on tax changes.

Ms Usha Chandradas asked about the withdrawal of the tax concession on royalty income accorded to authors, composers and choreographers. The concession was introduced in 1983 as she highlighted, at the time when Personal Income Tax rates were much higher. Since then, tax rates have come down and the concession now benefits only a very small group of taxpayers. So, we have decided to withdraw the concession so as to ensure parity in the treatment of royalty income with other sectors. But at the same time, we are putting in much more resources to provide additional broad-based support for the arts sector. So, we are not withdrawing resources from the arts sector, we are putting in more resources for the arts sector.

There were also other tax-related suggestions from Ms Usha and other Members of Parliament, including Mr Don Wee, Mr Edward Chia, Ms Denise Phua and others. I thank all of you for your suggestions. We will continue to review them, taking into consideration their relevance for our tax regime, costs and benefits and of course consistency with international standards.

Some Members, Mr Liang Eng Hwa, Mr Louis Chua and Mr Pritam Singh, had sought clarifications on the potential revenue impact of the BEPS Pillar Two moves. The OECD's estimates imply that investment hubs could see a Corporate Income Tax revenue gain ranging from about 17% to 38%. This translates to a revenue gain of $5 to $11 billion per year for Singapore. That is based on OECD's estimates. But these estimates have not taken into account how MNEs may respond and the possibility of their activities moving out of Singapore, thereby reducing our tax base.

Possibly for this reason, Hong Kong and Switzerland, which are also investment hubs, have estimated their revenue gains at $1.7 billion to $2.4 billion respectively; much lower than what the OECD has put out. So, these data points are suggestive of what the range for Singapore could be, anywhere from around $2 billion to $11 billion.

But we are really not sure where we will end up because there are so many unknowns. I think no one is sure, to be clear. The OECD has also made very clear these are estimates. No one can be sure what the actual impact will be. What we are doing is to engage the MNEs better to understand how they are likely to respond, especially taking into account some of the moves we have made in this Budget and we will certainly provide our own revenue estimates in due course.

In any case, any revenue impact from the Pillar Two moves will only materialise from FY2027. So, this is not something for this financial year. We have some time. We are making the assessments. We are doing the detailed projections and we will come back with detailed revenue updates.

Of course, the actual amount of revenue gain and how long it will last will depend on how the competitive landscape evolves and also how much we have to re-invest into the economy. Several Members said that the whole point of BEPS is to tilt the playing field in favour of governments and make MNEs pay more taxes. I think Mr Louis Chua and Mr Jamus Lim highlighted that. I agree. That is the intent of BEPS.

But there is theory and there is reality. What is the reality?

The reality is that MNEs have bargaining power and governments around the world are all finding ways to favour them and getting them to invest. And you can read this. They are not even doing this quietly. They are publicly doing it. You can read this for yourself in the media – just a few days ago, Japan said that it would give Taiwan Semiconductor Manufacturing Company (TSMC) up to $6.5 billion more in subsidies for a second plant and that will bring the total subsidies to TSMC to over $9 billion. Earlier this month, the US also announced a $2 billion grant to GlobalFoundries – the largest grant from the CHIPS Act to date.

These are very generous subsidies that the major economies are giving to MNEs. We are not in the same league, but we have to play a smart game so as not to lose ground and to anchor important investments here. That is why we have introduced the Refundable Investment Credit in the Budget to update our investment promotion toolkit and committed to spending more to support new investments, research and innovation activities.

These moves are absolutely necessary – so that we remain in the race for quality investments and create good jobs for Singaporeans. This is not an academic exercise. This is about the lives and livelihoods of Singaporeans and we will do whatever is necessary to safeguard this, especially in a world where competition will only get tougher. So let us not be so naïve to think that the putative gains from BEPS will simply materialise in our favour.

This is why, as I said in my Budget Statement, after taking into account the additional expenditures that we are likely to have to incur, I do not expect the Pillar Two move to generate significant additional net revenues on a sustained basis.

I should also add that the above estimates do not take into account the impact of Pillar One, because all we have been talking about is Pillar Two. But Pillar One has been delayed and if it is implemented, it will clearly be revenue-negative for Singapore.

After taking into account all this, what is our fiscal position? Last year, Ministry of Finance (MOF) published an Occasional Paper on our medium-term fiscal outlook, up to FY2030. We showed in the Paper that our spending needs would grow as a percentage of GDP – to support our ageing population, to expand and strengthen our social system and there would be a funding gap of more than 1% of GDP if we did nothing.

But with the tax measures announced in the last two Budgets – including the Goods and Services Tax (GST) rate increase – we project that we would close the funding gap, provided we manage the pace of spending growth. All that was in the Occasional Paper and, indeed, this is what we have done.

The tax changes have come into effect, although we have not yet experienced the full revenue impact because we have been giving out some rebates. We had also enjoyed some revenue upsides, some of it was due to sentiment-driven revenues, like Stamp Duty and Vehicle Quota Premiums; some of it due to stronger than expected Corporate Income Tax Revenues last year from a strong rebound amongst some companies post-COVID-19.

So overall, we are currently in a sound fiscal position.

And we are putting our resources to good use to address immediate concerns and also upcoming needs. I mean, this is no different from how one would manage your own personal finances. Imagine if you are a homeowner planning for a major renovation in five years' time. What do you do? You start setting aside resources now for the major expenditure that has to be incurred. You do not wait until renovation starts then look for money and hope that it is there somehow.

In the same way, we have set up Funds to meet real commitments and real spending needs. Some of it are for recurring commitments, like the permanent GST Voucher, which we draw on year after year; for new commitments, like the Majulah Package; and for major spending needs that are coming up, like the Future Energy Fund – which will help to decarbonise our energy system.

Some other countries operate differently. There are countries that make major commitments without assurance of funding.

In the US they call this "unfunded mandates" – pass laws for all sorts of provisions but find the money later, "Let us not worry about money now."

That is not how we do things in Singapore. If this Government makes a commitment, we make sure it is properly funded. We make sure we deliver on our promises.

But let us also be clear: the days of structural fiscal surpluses in Singapore are over.

If you look at our economic and fiscal situation, growth will come down. We hope to achieve 2 to 3%. Operating revenues will barely keep up with GDP growth and Net Investment Returns Contribution (NIRC) will also broadly maintain as a share of GDP over the medium-term. Our expected long-term returns are about 4%. This is updated every year. We go through a rigorous process to do so with the Council of Presidential Advisers and the President but we do not expect this to increase given the more challenging investment environment.

So, the expected long-term returns are applied on the reserves – or the net asset base – and we take half of that to generate the NIRC.

If we really had so much surpluses somehow streaming into the reserves, then the net asset base must be growing and the NIRC would be rising significantly as a share of GDP – but it has not and we do not expect it to do so in the coming years as well.

So, operating revenues and NIRC maintaining as a share of GDP, which only means we must manage our expenditures well because only then can we continue running balanced budgets till the end of this decade.

This is also why we do not look at the Budget simply as a one-year plan, but also a multi-year commitment. It is in this spirit that we have provided a preliminary high-level estimate of $40 billion to resource the upcoming Forward Singapore policy moves.

The Forward Singapore report has already outlined the broad range of policy areas we are reviewing and studying.

Some have been announced – details have been given out in this Budget. Others will be fleshed out in due course, as will the detailed fiscal requirements of these subsequent moves. We will also update our medium-term expenditure and revenue projections.

The Occasional Paper that we had published last year may not be so occasional after all. We will keep on updating it from time to time, so that everyone will have a sense of how our fiscal trends are unfolding, not just on a year-to-year basis, but over a five- to 10-year horizon.

We must continue to plan ahead, do our sums carefully and be upfront with Singaporeans on the costs of various proposals. This approach of looking and planning ahead is a hallmark of our fiscal policy. It ensures that we are able to meet our collective aspirations and seize every opportunity that comes our way.

Perhaps, the Opposition takes a different view of fiscal management. Certainly, they want the Government to use more of the reserves for current spending. They suggest different ways of doing so – using revenue from land sales, waiving land cost for HDB flats, increasing the percentage of Net Investment Returns (NIR) that can be spent and so on – but in the end, they all come down to the same thing, which is to use more of the reserves today.

What will this mean? Basically, we will end up with less for ourselves in the future and we will also leave less behind for our children and the next generation. Eventually, NIRC will shrink as a percentage of GDP, the funding gap will increase and our children will have to pay more in taxes.

In fact, this is what many governments in the advanced economies are faced with. Their debts are rising; their deficits are rising; and their fiscal systems are at risk of breaking. Many of them have some version of an independent budget office, but it has not helped at all. Basically, no political party in these countries are prepared to dish out the hard truths. So, their policy debates are dominated by what some commentators call "fiscal fantasies".

What are some of these fantasies? They include far-too-optimistic forecasting assumptions. The idea that all the funds can be raised from the rich, with close to zero consequences for the rest of the population. Or they can kick the fiscal can down the road indefinitely – just continue to spend and leave it to their children or to those not yet born to solve the problems.

Let us not indulge in fantasy thinking – not in this House, not in Singapore. Having the resources to pursue a strong economy and a strong society, and to achieve good outcomes, is not a fairy tale. This is very much our Singapore reality, but it requires us to focus on prudence, fairness and sustainability.

What we have is a unique and, certainly, a privileged position of strength.

Many economies pay about 2% of their GDP in debt servicing for debts that have been accumulated. We are so different. We enjoy the benefits from savings from the past. To continue on a sustainable path, we must maintain our commitment to set aside enough, not just for ourselves, but also for the future.

So, I call on everyone in this House. Let us commit to upholding these values – fiscal responsibility, discipline, ensure that our fiscal system meets the needs and aspirations of both current and future generations of Singaporeans.

If the Opposition parties have a different view on this, I invite them to take up the challenge that the Prime Minister issued in this House a few weeks ago: make drawing more from the reserves an election issue. Let us go to the people, ask them for a mandate to change the Constitution – you can ask them to do so; compel the President to let you spend 60%, 75% or even 100% of the NIR.

The PAP will join issue with you. We will present our case to Singaporeans, and ultimately, Singaporeans can decide what is the best fiscal approach to take Singapore forward.

Mr Speaker, Sir, Singapore is at a critical moment of change. We are entering a different world, one that is messier, more dangerous and more unpredictable. There will be more forces that threaten to pull us apart.

This year's Budget is the first step in advancing our Forward Singapore agenda. We want to refresh our social compact to keep our society strong and united in this troubled world. We want to build a better Singapore – not just for a few, but for all Singaporeans.

We want to refresh the Singapore Dream and build a Singapore that is vibrant and inclusive, fair and thriving, resilient and united.

The road ahead to this better Singapore will not be easy. But we are all in this together and we all have a part to play. The Government will do more to provide opportunities and assurances at every stage of life and everyone in society should contribute towards our shared goals and aspirations in our own ways.

I take heart from the nation-building journey we have had so far. As one united people, we have consistently turned our challenges into opportunities and our constraints into strengths. We have done it before, and I am confident we will do it again. Sir, let us build our shared future together. [Applause.]

Mr Speaker: Mr Pritam Singh.

1.07 pm

Mr Pritam Singh (Aljunied): Just a quick clarification for the Deputy Prime Minister. I acknowledge and thank him for stating very clearly that the Government will provide more information in response to some of the interventions that the various MPs have made.

I think this is important. I was trying to link it to the final subject matter that the Deputy Prime Minister covered about usage of reserves and so forth, or suggestions that were made by the Opposition, I think these were in a particular context. It did not come up in this debate, but certainly, in previous debates where we talked about how we can make up for funding gaps vis-à-vis GST and all that.

So, the call for information actually is very much part of how the Opposition tries to understand or tries to work through a mechanism or framework of fiscal prudence as well.

I will give you an example how we do that. The Finance Minister talked about unemployment insurance and I think he made clear at his round-up speech that it will be financed through taxes. The Workers' Party (WP) had proposed a scheme which was actually financed by employer and employee.

So, I would be cautious to suggest that the Opposition essentially just wants to dig into the reserves because we do think about the financial prudence question quite carefully. That was just a clarification for Finance Minister.

The second point is with regard to growth. I think there were Members in the House in the course of the debate who talked about growth. Indeed, growth is important. But I think the key point here is sustainable growth and I think this is the real key going forward in this decade. Because we have seen what happened one decade ago, about 10 years ago, the sort of debates we were having in this House. And the Deputy Prime Minister was there. The Government, basically Ministers, came out to say: we are slowing down growth, we have to, because the situation had changed so dramatically.

Going forward, I think the real question is not so much what I think one Member I heard saying, I make no apologies for growth. I think we have to be careful if we go down that road, but to frame a conversation on sustainable growth. And then, I think there will be support for many policies that the Government proposes.

Mr Lawrence Wong: Mr Speaker, on the second point, I fully agree with Mr Pritam Singh that we are all about sustainable growth. There were instances in the past where, perhaps, infrastructure was not ready, for example. And that is why we have put in place processes, updated our planning processes, made sure that we plan our infrastructure well.

That is why as I highlighted just now, I went through some pains to explain where the increase in foreign workers were coming from, the large part of it are Work Permit holders, especially in construction. And there is a good reason for this. We are ramping up our building programme for public housing. We are undertaking major infrastructure projects. We need these workers to build our infrastructure and homes. These workers certainly do not compete with Singaporeans for jobs and the issue there really is about planning for infrastructure. And that is why I said just now that we are making sure that we get the dormitories ready, making sure that we build more, making sure that we build better recreational centres for them, so that they are housed well and we can take care of their well-being.

So, yes, we want sustainable growth, and we will pursue sustainable growth.

On Mr Singh's earlier points, I thank him for his clarification. Perhaps he could also clarify: because the WP had previously objected to GST and eventually now accepted the GST at 7%, but the debate we had earlier was about the two-percentage points increase in GST, and the options, the alternatives that the WP advocated were: use the reserves, increase the NIR, do this instead of GST.

Now that we have implemented GST, as the WP said, with the 7%, now that it is done, we have accepted it.

Perhaps Mr Singh might clarify, you too, perhaps the WP would accept the 9% as a reality. And would you then also say that the proposals to use more of the reserves by a higher share of NIRC are therefore no longer relevant and the WP is fully consistent with the PAP when it comes to our framework and rules for the use of the reserves?

Mr Pritam Singh: Mr Speaker, I would say that when we make proposals, it is in the context of what is before us at that point in time. I think that is what I would have to respond with.

Earlier on in this debate, we had a bit of a back and forth. I think Member Mr Murali Pillai and my colleague Assoc Prof Jamus Lim, engaged in an exchange about the information that we have to put together, policies, Budgets, to understand whether whatever we do going forward is going to be sustainable. I put the question to Mr Murali Pillay about what the $40 billion that has been committed by the Minister for Finance, is going to go towards.

Now, we have no insight on those sort of matters.

So, I cannot make any promise here that we are reneging or stepping back on a commitment to look for revenues to fund some of these policy objectives; because we do not have an insight into those things.

By and large, I think the vision, or whatever it is, before the WP in particular – I cannot speak for the entire Opposition – but we will have to work with the information that we have. We are not in Government. If it means that we have to look at all options, we will look at all options.

Mr Lawrence Wong: Mr Speaker, as I mentioned just now, MOF will certainly continue to provide more information, where it is necessary, where we are able to. We have been putting out more information already and we will continue to do so.

If there is specific information that Members would like, we will be happy to reveal. If there is no security or difficulties, we will certainly want to put them up. That is our commitment.

But the basic point I was getting at is whether or not there is a difference in our fundamental fiscal philosophy. I think that is important because there was a time when there was alignment in this House between the PAP and the WP. There was a time under Mr Low Thia Khiang where it was very clear the ethos of fiscal responsibility was the same, across both sides of the House.

It seemed to me that this had changed under Mr Pritam Singh, that the position had changed under Mr Pritam Singh. The WP, of course, is free to change its position, but I think it should be clear if this is so.

As far as the PAP is concerned, our position is quite clear. It does not mean that policies cannot change. Of course, we review, when circumstances change, we update our policies.

But when it comes to certain fundamental principles and values like fiscal responsibility, a basic orientation, not just to look at today but for the future. This must never be compromised; this must never change. These principles were put in place by our founding leaders. They have continued under successive leaders of the PAP, and they will certainly continue under my watch. [Applause.]

Mr Speaker: Mr Singh.

Mr Pritam Singh: Thank you, Mr Speaker. I think I have heard this before in this House. The point again I would make in response to that is, indeed, I have to agree with the Finance Minister. Policies change. A People's Action Party Government yesterday would return the money that it has used from the Reserves as a matter of principle. But today, a People's Action Party Government may not return the money it uses from the Reserves. That is my response.

Mr Speaker: Before I call the next Member, I just want to remind all Members. By all means, feel free to seek clarifications but do not make mini speeches. Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Thank you, Sir. I just want to bring up this point about the pre-funding of some of the major expenditures the Government committed. I do agree with the Deputy Prime Minister that we should pre-fund some of these major commitments that we have. It just demonstrates our prudence and our fiscal sustainability that the longer-term policy commitments are responsibly funded.

However, it may also limit the overall fiscal impulse of a current Budget. So, I want to ask the Deputy Prime Minister: can he share whether the Government do take into consideration the utilisation of the earlier-funded packages to determine the total spending injection into the economy, so as to better calibrate the level of fiscal impulse to be injected in each Budget? So, that is my first clarification.

My second clarification is related to the NIRC, which the Deputy Prime Minister also mentioned. I do note that the NIRC for FY2023 has been revised down to $22.92 billion; and the NIRC for FY2024 is $23.5 billion. So, it suggests a flattish growth in our NIRC for these two years. Just wanted to ask the Deputy Prime Minister: given that we continue to grow the base of the Reserves with half the contribution of NIRC, why is the incremental increase not as high as the previous years? Just wanted a short clarification.

Mr Lawrence Wong: Sir, on the first question, the short answer is yes. We take into consideration many factors when formulating the Budget. The fiscal impulse is just one of the many factors. But in thinking about the fiscal impulse, we do not look at the fund top-ups because these do not, as Mr Liang said, contribute to injections to the economy. When we calculate the fiscal impulse, we specifically look at injections into the economy; we look at the state of the economy and we assess what would an appropriate fiscal impulse be for the Budget.

But aside from the fiscal impulse, there are many other factors that we need to take into consideration too – how much fiscal space we have, what kind of fiscal commitments do we have to make, what are the needs of businesses and households during this period and then how do we allocate our resources to build a Singapore that we all desire? So, these different considerations come together and we have to balance them in order to put together the Budget.

On NIRC, I have explained just now how this is calculated. The broad strokes are: there is an expected long-term return, it is assessed and then we apply it on the net asset base. In order to get a figure, we take half of it for the NIRC. Generally, the NIRC flow is stable but there will be fluctuations from time to time, because we have to update the expected long-term returns every year. And obviously, markets will move up and down then there will be impact on the net asset base. But what is important – rather than look at the year-to-year fluctuations – I think, is the recognition that the NIRC flow is not going to rise as a share of GDP as we have been trying to explain. It provides us a good stable source of revenue – it is stable as a share of GDP – we should appreciate it, but we cannot on current settings, assume or presume that this will rise as a share of GDP because it would not.

Mr Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Sir, to piggyback on Member Mr Liang Eng Hwa's question on pre-funding, can I ask the Deputy Prime Minister two questions?

One is that there are many questions raised during the debate on the endowment and trust funds. Another Member who has raised quite a number of questions – which I am interested – was Ms Foo Mee Har. Can I seek clarifications from the Deputy Prime Minister on the following questions: one, what is the rate of drawdown of the various endowment and trust funds and what happened to the undrawn amounts, which I have discussed and sought answers during the Public Finance Motion; two, how the Government determines whether expenditures should be paid out of endowment funds and trust funds or the operating Budget.

My second question is: it was also observed that there is a fair amount of volatility in the overall Budget position, which was also pointed out by Ms Foo Mee Har. So, may I know what steps the Government is taking to increase so-called "Budget marksmanship" this year?

Maybe I should go through some of the numbers to substantiate my question. One is that – first of all, the Budget for 2022 – the original estimate was a negative $5.3 billion. It was revised to $4.2 billion and then finally, the actual was a deficit of only $0.4 billion. And for 2023, the original estimate was $3.6 billion and then revised to $6.8 billion. We do not have the actual amount yet, but this revision of having a bigger deficit is on the back of what I have said yesterday; that in 2023, actually we have an unexpectedly large operating revenue in excess of our estimate, which is about $8 billion. So, despite that, the revised overall budget deficit for 2023 actually is a bigger deficit. So, I must say that that is puzzling and we seek clarification from the Deputy Prime Minister.

Mr Lawrence Wong: Sir, let me take the questions in turn. On the rate of drawdown: well, first of all, I should explain. There are Endowment Funds. There are a few of them but the bulk of our Funds are drawdown Funds. That means we are actually drawing down on the Funds for specific spending needs. On the rate of drawdown for these Funds, well, it will vary from Fund to Fund. For example, GST Voucher Fund, almost two or three years we will need a top-up, because it is being drawn down and we are using it every year to fund the Permanent GST Vouchers.

Majulah Package Fund will be different because it is really meant to support the Majulah Package. It will be drawn down in the first instance, but then it will continue for some time because there will be people who are young seniors who will continue to benefit from such a Fund.

The Future Energy Fund is a different Fund because, there, it is not something we will draw immediately but it is not also something that we will need only 20 or 30 years from now. We envisaged spending this, say, within a five- to 10-year time frame. That is why we are setting aside resources now and massive resources are needed. We have resources today – we set aside now to cover the spending.

So, the rate of drawdown will differ but the point is, all of the Fund information are published. Members can look at them and see the rate of drawdown – what happens to the Funds, how they are used and if there are any undrawn amounts left behind, they will be co-mingled back with Government funds. I mean, that is the rest of Government Funds. So, there is no issue there. I mean, this is how we will — But for most of the drawdown Funds, I would say, by and large, we expect almost all of them to be fully drawn down. So, we do not think there will be an issue with any undrawn amounts.

Endowment Funds are different. Endowment Funds are set up not to be drawn down but only to use the returns and they are set up with a very specific purpose, which is that whether in good times or bad times, whether the Government has money or no money, we want to ensure that through an endowment, we are able to generate the resources for specific groups of people. And that is why Edusave is set up as an Endowment Fund rather than a drawdown fund. So, it is not contingent on whether there are Government resources or whether there are surpluses or whether there are additional monies. But students can be assured, in good years or bad years, that Edusave monies will always flow. So, these are the considerations behind the different types of Funds.

On volatility, actually before COVID-19, our fiscal marksmanship was not too bad. It was within a range of within 4% to 5% of accuracy and that is comparable with many jurisdictions that we compare against. The COVID-19 years, threw many of our assumptions off, but it is not just in Singapore. I mean, name me a forecaster who can predict turning points and get the timings right of these turning points. It is inherently difficult.

We are not making excuses. We know that this has happened. The recent years of COVID-19 our forecast accuracy was not as good as we would like it to be but there is a reason for it. It is because of the discontinuities, the disruptions, the sudden changes brought about by COVID-19 and we are determined to keep on doing better.

Mr Speaker: Mr Sitoh Yih Pin.

Mr Sitoh Yih Pin (Potong Pasir): Thank you, sir. Deputy Prime Minister Wong mentioned just now that our NIRC, as a contribution to our GDP, is going to probably remain constant over the years. I agree with him. Three weeks ago, when I spoke in Parliament, I had said that I wish that within 10 years, our corporate income tax collections will outstrip our NIRC. But within a month, I am pleasantly surprised that it has already happened because our corporate income tax collection for this year is budgeted at $28 billion; NIRC is $23 billion – 20% more. I would like to ask Deputy Prime Minister whether we expect this trend to continue.

Sir, I have a clarification for the Leader of the Opposition too. He mentioned that the current People's Action Party Government does not return Reserves to its people, whereas the past PAP Government does so. I do not understand him because, are not returns from NIRC a way of returning money to the people – unless he is talking about a drawdown on Reserves?

Mr Lawrence Wong: Sir, yes, corporate income tax revenue has exceeded NIRC. It is not clear-cut to us whether this will continue. It also depends on the revenue impact from BEPS – which as I said just now, is so uncertain. There was a boost to corporate income tax revenue in these recent times, because we have seen a strong rebound among some companies; particularly in a post-COVID-19 environment – tourism, hospitality – some companies really just rebounded very strongly and that is why it has caused the revenue upsides and brought about the revenue upsides in corporate income tax revenue. It is too early to tell whether this can be sustained, so we will continue to monitor.

Mr Speaker: Mr Singh.

Mr Pritam Singh: Thank you, Mr Speaker. To Mr Sitoh Yih Pin, the response that I gave to Deputy Prime Minister is a point of fact. It was in response to what Deputy Prime Minister said about Mr Low having a certain position on the Reserves and that it had changed under me. I think this must be the third time he has mentioned it in this House and I have responded to it before and I responded to it the last time as well.

Global financial crisis – Government draws down, returns the money and I think there were some statements made about why it was doing that. This time round, Reserves are used for another emergency and they are not returned – just a simple statement of fact. Positions change.

Mr Speaker: Mr Sitoh.

Mr Sitoh Yih Pin: Thank you, Sir. So, is the Leader of the Opposition suggesting that the Government has to top-up the Reserve it drew during COVID-19 because that will be a massive amount and how are we going to fund it then?

Mr Pritam Singh: Thank you very much, Mr Sitoh Yih Pin. You have just made the case that I was making: in one situation, you can; another situation, you cannot. You have to look at the statements made when the money was returned, and then you see in a different situation a different context, there is a different explanation.

Mr Speaker: Mr Louis Chua.

Mr Chua Kheng Wee Louis (Sengkang): Thank you, Mr Speaker. Just two areas of clarification for the Deputy Prime Minister. The first is on CPF. Does he believe that it is adequate to plan for retirement adequacy via risk-free returns instead of taking reasonable risks via a diversified, well-managed portfolio for the long term? So, in other words, if our investment entities are good enough for our collective reserves, why is it not good enough for individual Singaporeans' retirement reserves?

The second is in relation to LRIS, which I mentioned during my speech as well. Again, as the Deputy Prime Minister is now Deputy Prime Minister and soon to be Prime Minister, does he intend to still follow through on the Government's acceptance of the recommendation in 2016 on LRIS? If so, when and, if not, why not?

Mr Lawrence Wong: Sir, the returns may be risk-free from the CPF members' perspective, but they are certainly not risk-free rates at all. I mean, if you want risk-free rates, then they will be much lower. The reason why we are able to provide such higher rates, compared to market risk-free rates, is because there is Government support behind the CPF system and we are providing additional interests up to 6% for those with lower balances. We are designing a system that will ensure that all Singaporeans who work consistently, contribute to their CPF, will be able to have their basic retirement needs met. That is our objective.

Going beyond that, can we improve it? As I said, we will continue to study. There are complexities in this and it includes the LRIS that was highlighted. It is not so straightforward because once you introduce a new element of risk in the hope of getting better returns, you have the issue of what happens when seniors retire in a bad year. Then how do you smoothen that out? Once you smoothen that out – Mr Louis Chua is from finance – insurance does not come free, who pays for the insurance? It has to come through the returns. Then, are you able to provide a better product than what is the current CPF rate? Those are the considerations and we will continue to study. We are not saying never but we will continue to work on making the system better.

Mr Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song (Aljunied): Sir, I have some clarifications for the Deputy Prime Minister regarding the jobseeker support. I understand that it is going to be funded by taxpayers and it is not an insurance scheme like what the Workers' Party has been proposing since 2006. So, I am a bit concerned now about the fiscal impact and the sustainability of the scheme. What is the quantum that is going to be given to the jobseekers and what is the duration of support that is going to be provided? I believe Parliament needs to know because we are being asked to approve the Budget for this year.

Mr Lawrence Wong: Sir, the scheme is not being rolled out this year. It does not impact FY2024 Budget. We will put up, provide details of the scheme, including the detailed fiscal impact and, at that time, there will be a full debate on the parameters and the fiscal requirements and whether it is sustainable.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): In an MAS macroeconomic review paper published in October 2022, a breakdown of the sources of inflation here attributed between a third to as much as three-fifths to domestic drivers, depending on the sector.

What might some of these domestic drivers be? I would contend that the decision to hike GST would likely have contributed to domestic inflation. To be clear, the data used in the MAS study predates the GST hikes, but we have plenty of examples globally that VAT hikes do, indeed, spark inflation. So, my first question to Deputy Prime Minister Wong is whether he still believes that the timing of raising GST was justified or if at least a postponement – especially given how the country has bumper tax receipts from other sources in recent years – may instead have been wise.

As an aside, I would state that the Workers' Party categorically objects to the insinuation that we are less fiscally responsible, not least because while it is true that it is Deputy Prime Minister Wong's prerogative to think that the alternative levers of revenue that the Workers' Party has suggested are untenable, but is not true that we do not think about fiscal balances.

My second question has to do with what Deputy Prime Minister Wong said about keeping Singapore competitive in the face of BEPS. Unlike what he said, I have no illusions, in fact, about the practicality. Indeed, the design of BEPS took into account the practicality of a race to the bottom and grants countries the right to apply a countervailing top-up tax if they believe that countries have not played by the rules or at least the spirit. So, my fully non-theoretical question that I have for Deputy Prime Minister Wong is: what will the Government do if other countries choose to apply this tax top-up in response to a belief that our RIC contravenes the spirit of the refundable tax credit scheme?

Mr Lawrence Wong: Sir, on GST, does it impact on inflation? Yes, it does impact on prices, but the impact is once-off. It is not permanent. We have made that point clear. MAS has made that point clear. If you look at the overall impact on inflation, actually, we have seen the impact on that monthly inflation when GST went up. But if you look at the subsequent trends down the rest of the month, inflation continues to moderate as it has in other advanced economies.

You can look at the situation last year and we are quite clear that it is very likely to continue this year as well. So, the impact of GST is not the key driver behind our inflation spike. I have explained what the key drivers were and neither will it cause us to have inflation remaining high because disinflation trend is happening globally, we are seeing similar trends in Singapore and our inflation rates are also coming down.

So, that is on the first point. And to be very clear, even with the GST in place, we have deferred the impact of GST on the lower-income groups with the Assurance Package by more than five years for the vast majority of Singaporeans, and it is not even a temporary relief because, for the lower-income groups, we have enhanced the permanent GST Vouchers so that GST does not hurt the poor in Singapore. We have gone through these debates extensively and I think we are in a good position to explain why the GST was needed and why, in fact, the additional revenues are needed because we can already see the rising expenditure trends very rapidly. It will happen in the next few years. If we had not done it at the time we did, when will be a good time to do it? And if we were to do it this year or next year, will the Opposition therefore support it? I seriously doubt so.

So, I think our approach is, let us do it correctly. Let us do it in good time, put in place, make sure that our fiscal system remains sound and always ensure that we have sufficient revenues to cover our spending. That is what we have done.

On BEPS, the RIC is compliant with BEPS. This is something that was discussed as part of the BEPS conversations. These sorts of refundable tax credits are allowed under BEPS rules. That is why we are doing it. And that is why we need to understand the realities of the world. Governments all are doing it.

Mr Speaker: Dr Tan Wu Meng.

Dr Tan Wu Meng (Jurong): I thank the Deputy Prime Minister for his round-up speech. I have two clarifications to ask. One regarding the future of our fiscal reserves, the second regarding the social reserves, which I mentioned during the Budget Debate.

On our fiscal reserves, Mr Speaker, we know the world ahead is dreadfully uncertain but there may also be opportunities which allow Singapore, if luck and good policy favour us, to have possibly some exceptionally good years in future. Can I ask the Deputy Prime Minister, in the event of a run of exceptionally good years, better than our predictions, would there be the possibility of putting back some of what we drew down from the Reserves during COVID-19, putting some of that back if we happen to have an exceptionally good run in the future, better than expected?

Secondly, on our social reserves, Mr Speaker, I had spoken about how we need to give attention to our social trusts, social mixing, social togetherness. Can I ask the Deputy Prime Minister regarding the idea of the SG Togetherness office, which could be under the PMO Strategy Group, will the Government give consideration to that, so that with that togetherness in our society, we will be better placed to ride the challenges and perhaps have some of those exceptionally good opportunities in future?

Mr Lawrence Wong: Sir, our immediate instincts naturally, when you look at what we had drawn from our Reserves for COVID-19, would be to say, "Look, we would also like to put it back into the Reserves as we had done in the last round". So, hypothetically speaking, if there is indeed such a bumper year, maybe it will happen, we will consider it. But in reality, if you look at the facts and if you look at what is going to happen, this will not happen. I mean, I cannot imagine that we will be able to produce surpluses that we used to have like in the past. That was what I was trying to say.

Where will the surplus come from? Even if GDP grows, revenue will likely grow at the same rate of GDP; so will NIRC. So, always think in terms of a share of GDP, do not just think in absolute terms. Is expenditure maintaining as a share of GDP? Hardly so. So many programmes are being spent on all the things that we think are important.

So, how do we then generate surpluses, as we used to in the 1980s or 1990s? It is not going to be the same. So, I think we just have to be realistic. Those days of structural surpluses are over. We are in a different environment and we will do well just to be able to maintain balanced Budgets on our current settings.

On the SG Togetherness office, there have been various proposals from Members – whether it was mental health, whether it is SG Togetherness – to keep on setting up offices in PMO, I think if we do that more and more, we will have many many offices in PMO and I am not sure that PMO will be equipped to handle all of these different functions. So, I think the point is, they do not all need to be centralised within PMO. There are many things we want to achieve: mental health and well-being, togetherness, social mixing. The Ministries will be tasked to do this important work and we will continue to make sure we achieve good outcomes and, in the end, we will track and monitor these outcomes and publish them.

Mr Speaker: Ms Hazel Poa.

Ms Hazel Poa: I have two questions for the Deputy Prime Minister. But before I ask the two questions, I would like to first respond to what the Deputy Prime Minister said earlier about the Opposition asking to spend the Reserves. I wish to clarify that PSP is not asking for past Reserves to be spent. At the recent debate on public finances earlier this month, we have made it very clear that we are not asking for spending past Reserves. What has been accumulated stays there, but we are asking for a slowdown in the further accumulation of that Reserve. I just want to clarify that point.

My first question is: the Deputy Prime Minister has said that MOF has done its five-year, 10-year fiscal projection; so, based on the Government's assessment, is there any need to raise GST further from now until 2030 to fund higher expenditures?

My second question relates to the chart that the Deputy Prime Minister showed earlier, showing that the income growth of the bottom 20% is much higher than that for the top 20%. Can the Deputy Prime Minister clarify whether the income that is used here in this chart includes investment income like dividends and rental income as well as capital appreciation?

Mr Lawrence Wong: Sir, on the three points. First, Ms Hazel Poa clarified that the PSP has not advocated using Past Reserves. But the PSP has talked about using land proceeds. So, when we talk about Past Reserves, you may have a different definition, but the Constitution defines what Past Reserves is; and clearly, some of your proposals will require constitutional change and will require changes in our framework and using of Past Reserves as it is currently defined.

Number two, what was the second question again?

Mr Speaker: Ms Poa.

Ms Hazel Poa: The GST increase.

Mr Lawrence Wong: Yes, whether there will be a need for GST increases up to 2030. Sir, we have published our forecast up to 2030. We have closed the funding gap up to 2030. The GST increase that we announced was intended for this, so we are okay up to 2030. We do not need further GST increases, up to 2030. This was made clear in our Occasional Paper too, but as I said, this is up to 2030. We will continue to update this on a rolling basis, not just at every year's Budget, but from time to time, we will update the projections of our medium-term fiscal needs.

So, post-2030, we will have to see what the picture is. And beyond that, we will have to see if, indeed, there is a funding gap, if there are increased expenditures and whether or not, additional revenues or tax changes are needed to close those funding gaps. But as of now, up to 2030, we are in a sound position.

On income and whether the figures I showed just now included investment income, I have to confirm it. I do not think it is all inclusive, particularly, capital appreciation, wealth-generated income. Not likely to. It was also a point that Ms He mentioned just now in the debate regarding the Gini coefficient and the measure of Gini coefficient looks at income from work and does not include all sources of income.

The Department of Statistics (DOS) is aware of this, and DOS is working on getting better income statistics, so that we can update our figures.

Mr Speaker: Mr Xie Yao Quan.

Mr Xie Yao Quan (Jurong): Mr Speaker, Sir, the hon Member, Ms Hazel Poa, sought clarification from me earlier, specifically on the ITE Progression Award. With your indulgence, Sir, may I address Ms Poa's points, please?

Mr Speaker: Please go ahead.

Mr Xie Yao Quan: Thank you, Mr Speaker. First, on whether there is really a wage gap between diploma graduates and ITE graduates who then go on to attain a diploma, I think it is not difficult to see that there is a real wage gap here.

Let us compare like for like and let us consider this baseline scenario. One student who enrols in polytechnic after secondary school, spends three years, graduates with a diploma, starts work at the average starting pay for a diploma graduate and then, works for, say, five years, so a total of eight years, as a comparison period.

In the same eight-year period, consider another student who goes through ITE, gets a direct higher NITEC in three years, for example, and then starts work at the average starting pay for ITE graduates for two years, and then enrols in polytechnic, graduates in three years with a diploma at the end of the same eight-year period.

The cumulative wage gap between these two students, in this very simple baseline example, is quite clear. And we can look at variations to the baseline example, for example, a work-study diploma scenario, but any which way you look, there is a wage gap. The wage gap manifests from the start of our young graduates' working lives and it accumulates over time. And so, I hope I have provided that clarification.

I would add that the policy design that is announced in this Budget to focus on ITE graduates when they are young, before they reach 30 years old, is an extremely important feature, because it is about intervening early in our young graduates' working lives, giving them the support as early as possible, try to close the gap as early as possible. So, this is a very significant feature.

On the wage gap between polytechnic and university graduates. Yes, there is a gap, and it is an issue that has been discussed in this House – and, I am sure, will continue to be discussed in this House.

The Government has already taken some steps to address the issue, for example, increasing the cohort university participation rate quite significantly so that more Singaporeans have the opportunity to meet their aspirations to get a degree. The Government is also working closely with industry, to leverage market forces, to uplift the wages of diploma graduates and close the gap.

I know that behind the scenes, there is a lot of work that is going into this.

Should we do more? My position as a backbencher is: I certainly hope so, but we cannot boil the ocean. The move in this Budget is a huge step in the right direction. Focus first on the gap between ITE and polytechnic graduates, and I hope in time, we can extend the same basic policy intent to further address the gap between polytechnic and university graduates.

But it will require resources, so we need to consider carefully, prudently and, most importantly, I think, if and when that time comes, it will require the whole of society to support such a policy direction. I hope I have provided the clarifications to Ms Poa.

Mr Speaker: Ms Poa.

Ms Hazel Poa: Sir, I would like to clarify that my understanding is correct. What Mr Xie is saying is that the wage gap is not so much that after they become diploma holders, they get lower salary, but that because they took a longer time to reach the point where they get the diploma and that, therefore, in terms of lifetime earnings, there is a gap. Is that correct?

Mr Xie Yao Quan: Mr Speaker, Sir, the short answer is yes. And I think that is the policy intent.

Mr Speaker: Ms Poa.

Ms Hazel Poa: In that case, Mr Speaker, I would like to follow up and ask Mr Xie if he thinks that, for any reason, any student has a delay in his studies and he ends up with a degree or whatever qualification and it is later than others, is it Mr Xie's position that Government ought to compensate for that difference in wages?

Mr Xie Yao Quan: Mr Speaker, Sir, the answer is no. I have never said that, so please do not put words in my mouth. There can be any infinite number of permutations and scenarios, but I think that the job of Government is to look at structural issues and find the best way forward to address structural issues.

The starting point of this policy is that there is a structural gap between ITE graduates' starting pay and polytechnic graduates' starting pay. I have said that in my speech as well, if Ms Poa had listened to that, that is the starting point of my position, that I laid out in my speech. So, I think that is abundantly clear.

Mr Speaker: Mr Sitoh Yih Pin.

Mr Sitoh Yih Pin: Thank you, Sir. I thank the Leader of Opposition for his patience, but I think this is too important a matter to just let it go.

I did a quick check. The last time we topped up our reserves after we drew them was in 2009, $4 billion after the Global Financial Crisis, and the economy recovered very fast, and as a result, the Government was able to top it up.

In COVID-19, it was more than $40 billion. I know the Leader of the Opposition said he is not in Government, and I also said some months ago, we cannot assume it is a PAP Government forever. I hope it is forever, but we cannot assume. So, I think, just for the next five minutes, can the WP teach me, assuming that you are in Government now, how do you top up $40 billion?

Mr Speaker: Mr Singh.

Mr Pritam Singh: Mr Speaker, I do not mean to belabour this, because we are going to get into a hypothetical argument here. But the Government announced a 24-month instalment for property tax in this Budget. You can pay by instalments, can you not? Perhaps, that could be a way.

Mr Speaker: Mr Sitoh.

Mr Sitoh Yih Pin: Mr Speaker, Sir, three weeks ago when I stood here, I stated that the days of large fiscal surpluses are over. And Deputy Prime Minister also just mentioned that point. I think, surely, if we can get a $40 billion surplus over the next X number of years, sure, it is a happy problem, but teach me how you are going to do that.

Mr Pritam Singh: Mr Speaker, I think I do not need to prolong this. The Member has not answered the point on instalments.

Mr Speaker: Mr Sitoh.

Mr Sitoh Yih Pin: Sir, I also do not want to prolong this, but as I said, if there can be a surplus of $40 billion over X number of years, sure, everybody is happy to top it up.

But on another point, I heard the hon Member Assoc Prof Jamus Lim as he spoke just now. Not too long ago, he was talking in this House about pawning your assets and borrowing when interest rates were very low. Had we followed that advice, we would be in trouble today, because subsequently, interest rates rose. So, let us be very careful and let us be very conservative in our fiscal policies.

Mr Speaker: Assoc Porf Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): Mr Speaker, perhaps it is worth clarifying, when I spoke in the context of locking in the interest rates at the time, it was in the context of SINGA bonds. In particular, I said that had we locked it in at that time, we would be able to lock in a low interest rate, which actually, if anything, I would argue circumstances have proven to be the case, because interest rates have since risen and we did not lock it in at the time.

Mr Speaker: Mr Sitoh.

Mr Sitoh Yih Pin: Sir, I have got that video in my phone, but never mind that. It is not like that.

I read a speech recently. In 1977, then-Foreign Minister, Mr S Rajaratnam, said about pawning our assets. When I had that debate with Assoc Prof Lim, I hesitated using the word "pawning". I think I used the word "mortgage". But since Mr Rajaratnam used it in 1977, I think I can use it.

What he said was interest rates are low, go and pawn your assets and go and reinvest. I said then, he was in a stage of euphoria. He is assuming that tomorrow will always be better than today. If we had used that approach, Singaporeans may be waking up thinking that today will be bleaker than yesterday and tomorrow darker than today. That is the point I am making.

Mr Speaker: Assoc Prof Lim.

Assoc Prof Jamus Jerome Lim: Mr Speaker, just a quick point. I am afraid I cannot speak for Mr Rajaratnam. My point was very clear.

Mr Speaker: Mr Leong Man Wai.

1.58 pm

Mr Leong Mun Wai (Non-Constituency Member): Sir, running the risk of prolonging this debate that Member Sitoh Yih Pin as started, I would like to remind the House that I have mentioned many times in this House, that during the COVID-19 period, although we have spent $40 billion, we have raised more than $250 billion with a new mechanism called the Reserve Management Securities (RMGS).

In a way, we do not need to replenish the reserves anymore, because we have actually accumulated more during the COVID-19 from the normal way that we are accumulating our reserves. Maybe the Deputy Prime Minister can confirm that, please.

Mr Lawrence Wong: Sir, monies raised from RMGS are encumbered and do not add to our net asset base.

Mr Speaker: Ms Mariam Jaafar.

Ms Mariam Jaafar: I thank Deputy Prime Minister for both a really good Budget Statement as well as a really good Budget round-out speech. I am sure people worked really hard on it.

So, in the context of the hard work and the request for more things to come under the Prime Minister's Office (PMO), I would like to reiterate that there are some issues that are really cross-cutting, despite the work that it entails, it really deserves to be sited within the PMO. I would like to repeat my suggestion in my speech where I asked if the AI, in particular, can be something that is taken under the wings of the PMO. I think the other similar thing would be climate change, another cross-cutting issue, which has a National Climate Change Secretariat within the PMO.

Mr Lawrence Wong: Sir, we do have the Smart Nation Office, which does look at many AI-related initiatives. The Ministry of Communications and Information also drives our national AI strategy.

So, again, I just want to appeal to Members, there is a desire for many things to be centralised. I am not sure, in fact, that more centralisation is always the best answer. Over time, if we have a bigger and bigger portfolio, all residing within one Ministry, there will definitely be bandwidth issues.

Basically, the Government must work as a team, the Ministries must all work together. There are clear goals we want to achieve and we will work together as a team to achieve them.

Mr Speaker: I heard many Members reminding yourselves not to prolong this Budget debate. Mr Leong Mun Wai, you still have clarifications? Okay. One last one.

Mr Leong Mun Wai: Thank you, Sir. I thought we are scheduled to end at 3.00 pm?

Mr Speaker: We are, we are. But you yourself reminded everyone not to prolong it as well. So, I repeating everyone's reminderm.

Mr Leong Mun Wai: Okay, okay. Anyway, if there are questions to be asked, I think we should take the debate seriously.

Mr Speaker: Which is why I gave you the floor.

Mr Leong Mun Wai: Thank you. Thank you, Sir. First of all, I would like to take what Deputy Prime Minister had said just now about the drawdown rate for the endowment and trust funds. I would like to give a little bit more information of what I know about those funds, based on the financial data published by the Ministry of Finance. And I hope Deputy Prime Minister can clarify that.

I think Deputy Prime Minister is right to say that various funds have got various drawdown rates. But by and large, I think we need to tell Singaporeans that for all the endowment and some of the trust funds, they are for social purposes. The average drawdown, according to what I have calculated from the financial data, is about 5%. That 5% is based on payout divided by the asset balance.

However, the trust funds that are for economic purposes, like what the Deputy Prime Minister has said, like National Research Fund, GST Voucher, public transport funds – generally, these funds have got drawdown rates of between 20% and 30%.

In other words, funds that are for social purposes, for the benefit of Singaporeans, the drawdown may potentially last for 20 years. Five percent. Five percent means 20 years, the fund. And the funds for economic purposes, yes, it is less than five years. So, that is the data I got. And I think that is a more accurate answer. But, of course, I need the Deputy Prime Minister to confirm that.

Mr Lawrence Wong: Sir, as I clarified just now, there are Endowment Funds and there are drawdown Funds. Endowment Funds are not drawn down.

So, we should look at Endowment Funds separately. Endowment Funds are created for a specific purpose so that whether good year or bad year, surplus or deficits, we do not have to worry. There will always be a continued flow that will allow spending for that particular purpose, whether it is Edusave or other types of endowments.

But for the most part, and certainly many of the Funds we have created more recently, are largely drawdown Funds and they are not limited to economic purposes. The GST Voucher Fund is a very clear-cut case. It is for the permanent GST Voucher Scheme and that is drawn down very quickly and topped up repeatedly, so that we can continue to fund the GST vouchers.

And there will be other examples too. So, all of these drawdown Funds are drawn down, as Mr Leong himself highlighted, well within a reasonable period. So, the monies are all given back to Singaporeans in different ways.

Mr Speaker: Ms Poa

Ms Hazel Poa: I have two clarifications to seek.

First, on the support scheme for the involuntarily unemployed. Can I clarify whether this scheme will be for all workers, or would it be only limited to lower- and medium-income workers?

And secondly, Deputy Prime Minister mentioned about how they have been helping to ensure that there are more Singaporeans in senior positions in the financial sector. I think that these senior executives in the financial sector earn higher salaries than in other industries and they are not the group that we are most concerned about. So, are there other sectors where lower- and middle-income Singaporeans are facing competition from foreigners that the Government is also paying the same level of attention to?

Mr Lawrence Wong: Sir, I explained just now that we are looking at the support for the involuntarily unemployed for lower- and middle-income workers. What is the definition of middle? How far we go? I think, as I said, the parameters, the details will be released in due course.

On supporting Singaporeans in leadership positions, I gave Finance only as an example. We are certainly planning to grow the leadership pipeline across all fields, which I also stated in my speech, and not just in Finance.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Thank you, Speaker, Sir. I still have a few more questions. First of all, I think one of the most important takeaways for this Budget debate is to have an accurate assessment of the cost-of-living crisis Singaporeans are facing today.

So, to that end, can I ask the Deputy Prime Minister to confirm whether he agrees with our points of view.

One, part of our inflation problem is self-inflicted – due to the GST, which he had explained is a one-off thing, and other tax increases. But there is also the thing of escalating property prices, which has been an ongoing policies and also external environment-created phenomenon.

And two, Singaporeans have very little savings to cope with the crisis because, in our opinion, the schemes that the Government has put in in the past had not allowed the Singaporeans to build up their savings. So, as a result, this is a good opportunity when we are looking at how we restart and how we promote a new social compact, to think of new ways of doing things. What the PSP has proposed is that do pay attention to more permanent schemes, rather than temporary handouts. So, this is the first question I wish the Deputy Prime Minister can confirm and opine on.

The next question is, can I ask the Deputy Prime Minister whether the Government has a planning target for a minimum income for an individual and for a low-income family, and has the Progressive Wage Supplement help all workers and their families to attain their minimum income? Even if you say you do not want to put up a minimum income as an official thing, that the public know, do you actually, as part of your planning, have something to reference to? What is the minimum level of income you want Singaporeans to have in order to survive?

Mr Speaker: Mr Leong, are these all your clarifications? Because I would prefer you raise all the clarifications at one go.

Mr Leong Mun Wai: Sir, thank you. I think that would be a bit confusing. I think I have two more questions.

Mr Speaker: I would rather you raise them all now.

Mr Leong Mun Wai: Can I leave it afterwards?

Mr Speaker: No, I would rather you raise them now.

Mr Leong Mun Wai: Now?

Mr Speaker: Just the clarifications, yes.

Mr Leong Mun Wai: Yes, Sir. I have two last questions on retirement. The first question is, how much more the Government is currently paying to the Special Account (SAs), because of the difference in interest rates between the SA and the Ordinary Account (OA)? And second question, will the Government consider grandfathering the SA for Singaporeans who are above 55 years old now, going forward?

Mr Lawrence Wong: Sir, let me take the CPF questions first. I do not have the specifics on the additional amount that the Government is paying. I think these can be addressed at the Ministry of Manpower Committee of Supply (COS) later on.

But on the closure of the SA, we have made very clear why we do think it is necessary – because after 55, Singaporeans also have a Retirement Account (RA). The RA also enjoys and benefits from the same interest rate as the SA. So, almost everyone can transfer their monies from the SA to the RA, get the same interest rate because they can transfer up to the Enhanced Retirement Sum (ERS) because we have raised the ERS and they can get the same interest rate. And eventually, when they retire, they will benefit from higher retirement payouts through CPF LIFE. Many commentators out there recognise that CPF LIFE is the best annuity product that anyone in Singapore can get today.

On the cost-of-living crisis, whether it is self-inflicted – I thought I addressed that. The whole point of me going through some charts and addressing that, is to show this. If it were indeed self-inflicted and because of unique Singapore moves, then we would be standing out.

But it is not the case. Look at everywhere around the world. We are not the only country facing inflation, higher prices. In fact, we have been managing it better than many other places. And on top of that, as inflation has been coming down now, our inflation trends are also coming down. So, I think we should take it in that context to understand what are the key drivers of inflation.

Of course, domestic moves can contribute to inflation too. I accept that. For example, raising wages for lower-wage workers. That will contribute to inflation too. More demand for domestic services, wage pressures – that contributes to inflation.

But if you look at the big picture and where the big drivers of global inflation are, I think I have set them up quite clearly. It is not self-inflicted at all.

On minimum income, whether we have a target, our aim is to continue to push up, uplift lower-wage workers, but do so in a way that is sustainable and in a way where the increase in income is matched with increase in skills and productivity. And that is the basis of our progressive wage approach. It has worked. It has shown results. And we will continue moving in this direction.

There have been suggestions from Labour MPs and Members to expand the progressive wage to new sectors. We will study all these suggestions and we will continue to work on this.

Finally, on permanent schemes and the preference for permanent schemes versus handouts. Mr Leong seems to suggest that handouts breed dependencies, but permanent schemes do not breed dependencies.

But a poorly designed permanent scheme will breed dependencies permanently, forever. Is that not worse?

So, we do not look at this or that, either one or the other. We do both. We have temporary relief measures where necessary, particularly, when inflation was higher in the last two years and in this Budget we are doing a little bit more as well. That is temporary for good reason. I think Singaporeans understand why that is needed.

We also have structural schemes and in the structural schemes, these are not temporary at all. We continue to fine-tune them, make sure that they are designed well, so that we are providing all the support and assurance we need while also upholding our key ethos of individual responsibility and self-reliance, and avoiding dependency and entitlement – something which Mr Leong himself cautioned against.

Mr Speaker: Dr Tan See Leng. Minister.

2.14 pm

The Minister for Manpower (Dr Tan See Leng): Mr Speaker, Sir, with your permission, I would like to respond to Mr Leong's point on the closure of the SA.

Mr Speaker: Yes, go ahead.

Dr Tan See Leng: I think it is important, Members of the House, to understand that the closure of the SA is not aimed at saving interest monies. I will provide a fuller explanation and clarification at the Committee of Supply speech on Monday. I would urge Members to stay in the House and listen to that part of that speech, in particular.

I want to put this in perspective. First and foremost, we are going to expand the ERS to four times of BRS. With that, the migration and the right-siting of the SA monies in excess of whatever they have beyond their FRS today, can then go over to the enlarged ERS and that should cover more than 99% of members.

We have many, many esteemed financial experts in this House. I do not think that there is any system in the world, any financial institution in the world, any banks in the world that will pay a long-term, assured interest rate and allow you the flexibility to withdraw like an ATM machine.

I think it is one of those policy moves that we are now doing to ensure that the monies that are meant for long-term savings be sited in a long-term retirement account. And for those members who want the flexibility after 55, they can always have the option to leave it in the OA.

For the many people who feel that they have that ability to invest the monies wisely, they still have the option to invest their OA monies, whether it is in T-bills, in more secure investments. I think it is the option given back to them.

So, this is not about saving money. It is not about locking up money. In fact, if anything at all, at age 70, CPF Board does not have any option for members to continue to retain monies indefinitely. If there is such a word, by 70, everyone has to decumulate. I hope that clarifies.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Sir, I thank the Minister for Manpower for clarifying on that issue. What, I think, we gather from this is that the change in the Special Account is not because of the Government wanting to save money on the interest paid, but it is a matter of financial management principles. I want to clarify that that is correct.

Secondly, and that is my final point, is that I totally agree with Deputy Prime Minister's point that any scheme, whether it is a permanent scheme or a handout scheme, it has to be properly designed in order to achieve its objectives. But generally, we still hold the opinion that the handout scheme has got a short-term nature and because it comes so often, it does create more dependency than a permanent scheme.

2.18 pm

Mr Speaker: Order. We have completed the debate on the Budget Statement.

I propose to take a break now and we will resume the Sitting at 2.45 pm. I have revised the commencement time of the Committee of Supply — Yes, let me first put the question. My apologies.

Question put, agreed to.

Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2024 to 31 March 2025."