Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [18 February 2019],

"That Parliament approves the financial policy of the Government for the financial year 1 April 2019 to 31 March 2020." – [Minister for Finance].

Question again proposed.

11.00 am

Mr Vikram Nair (Sembawang): Mr Speaker, I rise in support of the Budget. This year we celebrate our bicentennial – 200 years from the arrival of Sir Thomas Stamford Raffles – and rather fittingly, the Budget has made provision for this important milestone. Let me start with a snapshot of how the world may have looked from Singapore midway during this period in the 1920s and 1930s.

At the time, the British were probably the most powerful nation in the world, overseeing an empire stretching from North America to Australia, covering vast portions in Asia and Africa. The British Empire, at its peak, held sway over 23% of the world’s population and covered 24% of the Earth’s total land area. It was called the empire on which the sun never set because the sun would literally be shining on some part of British Empire at any given point in time.

Singapore was part of an immense global empire and was a hub for merchants, traders and workers from around the region to make a home. It was around this time that many immigrants came here, including the Chinese, the Indians and the Malays from other parts of the archipelago.

Many of the founding fathers of independent Singapore were born during this period, including Mr Lee Kuan Yew, as were my grandparents. Singapore was the impregnable fortress of the British Empire in the east. At this time, it would have been unthinkable that the British Empire might end, or that anything might happen to Singapore.

Of course, the fall of Singapore in 1942 changed just about every assumption that the people of that era held about the British empire. The atrocities that followed in the Japanese occupation left an indelible mark on that generation on what it feels like to be helpless in the face of aggression and our Pioneer Generation recognised that security was a prerequisite for prosperity and acted accordingly.

Today, Singapore is more prosperous than many of our forefathers would have dared imagine. We have a GDP per capita that is higher than most developed countries, including the old colonial powers, and our people are well educated and enjoy amongst the longest life expectancies in the world. Singaporeans have high expectations, of course, but happily, we have a leadership that is ever ready to try and meet this challenge.

In this year’s Budget, the Minister identified three mega-trends that would shape the coming decade, namely a shift in global economic weight to Asia, the emergence of new technologies and an ageing population in Singapore. These are important trends that provide both challenges and opportunities and this year’s Budget is carefully considered to meet the challenges posed by these trends.

In particular, this Budget focuses on helping people and businesses in a wide variety of targeted areas to better equip our workers and the population for the challenges ahead. For most Singaporeans, the bread and butter economic issues remain of primary importance and this Budget addresses them creatively and effectively.

I am also grateful that this Budget provides generously for our security and defence needs, though this has received less attention in the course of the debate the last two days. As one of the last speakers in this debate, I would like to emphasise that I think it is important for us to remain committed to our security needs and to anticipate and deal with the new threats we face.

Multilateralism is under unprecedented challenge and nationalism is on the rise. In the post-World War II era, institutions such as the UN, the World Bank, the IMF and subsequently, the World Trade Organization were set up to facilitate multilateral cooperation on the most important matters for countries, namely security, trade and financial systems. Regional alliances for security and trade continued to develop during this period and Singapore is involved in many of these alliances. These provided important opportunities for Singaporeans and Singapore businesses to thrive.

However, in recent years, multilateralism is starting to lose its support amongst the developed world who set up these institutions. The US has pulled back from multilateral treaties such as the TPP and is cutting back on its financial support for the UN. The European Union is under threat with Brexit and the pro-Europe leaders such as Chancellor Merkel and President Macron facing unprecedented threats at home. A corollary of this is rising nationalism and nationalist parties are getting increasingly popular.

In the absence of a strong multilateral threat against the use of force, countries may be more inclined to take unilateral action against each other or against non-state actors in another state’s territory, which is a tinderbox. This is a particularly dangerous as more and more nations militarise and even develop nuclear capabilities. One wrong move and damage on an unprecedented scale could be unleashed.

Militarised non-state actors are also becoming an increasing threat. The threat of ISIS is pervasive, not just in the Middle East where it holds territory, but also in our part of the world where it has terror cells, and most worryingly, online. Many countries, including Singapore, has self-radicalised individuals who may plan or take part in terror activities.

The events that have taken place over the past few nights between Pakistan and India – two nuclear powers – show how these dangerous trends may collide. The sequence started when an Indian military base was subject to attack from a terror group Jaish-e-Mohammed operating from within Pakistan and 40 people were killed. India retaliated by carrying out a bombing operation in Pakistan which it claimed was targeted at a Jaish-e-Mohammed training camp. Pakistan denied there was any training camp operating there and has since retaliated. There have been firefights in Kashmir and Indian aeroplanes have also been attacked with one IAF pilot allegedly captured. Matters are clearly escalating quickly. And this is particularly worrying because both are nuclear powers and the consequence of any miscalculation would be dire.

Closer to home, I am grateful that matters seemed to have cooled down with Malaysia. And I think this has been thanks to the hard work of our leadership team at multiple levels, including the Ministries of Foreign Affairs, Transport and Defence. However, the fact remains that there are two Malaysian vessels in our territorial waters and if there is any escalation or threat to our sovereignty or territorial integrity, we have to ask ourselves the uncomfortable question of what we will do.

There are also more insidious threats to our country lurking beneath the surface. The cyber-hacking on SingHealth by a foreign state actor still leaves me with a feeling of unease as it is clear there are sophisticated, well-funded entities out there operating against us.

There is also growing evidence of foreign interference in elections, with particularly startling reports that both during the last US presidential election and UK’s Brexit vote may have been influenced by fake news originating from sources outside both those countries.

For most Singaporeans, these threats are not foremost on their mind – probably the same way none of our forefathers could have imagined how the world may have changed 100 years ago. Yet, I think it will be important for us to imagine these scenarios and to be able to deal with them, both as a Government and as a people. Without security and preparation for the threats of the future, all our prosperity may end up being meaningless.

I am grateful this Budget has provided well for our security needs and look forward to addressing these matters in more detail during the COS.

11.09 am

Mr Christopher de Souza (Holland-Bukit Timah): Sir, fiscal policies are important but I am glad the Minister for Finance also emphasised Singapore’s unique social compact – how the Government is partnering people to build a caring and inclusive society and encouraging people to volunteer and give back to society. Because the social compact of any society impacts how citizens cooperate with each other, within a pluralistic society, people will have different views about what the social compact should be. Politics and debates in this House therefore reflect what those differing views are, and, at the close of the debates, policies impacting society are formalised into law. Therefore, giving voice to different views within a single political party is essential for Singapore – indeed it can be a major advantage.

Why? Because it is important that there continues to be a broad slate of policy options for consideration for Singapore.

Why? Because the world is changing. Geopolitics is being shaken up. Disruptive technology is rapidly advancing. What used to work in the past may not work in the future. But change itself is not new.

Singapore has had to adapt her economic strategies. According to the book Dynamic Governance, in the 1970s, as change was more gradual and predictable, planning and predetermining what needed to be done was important for Singapore’s survival. But when things changed more rapidly because of globalisation and instantaneous communication, Singapore needed to go beyond that to sensing and responding to emerging opportunities. When that happened, the role of the Government shifted from directing and allocating resources to facilitating the exploitation of opportunities.

As a small island city state, Singapore faces unique challenges. What worked in other countries may not be suitable or may need to be adapted before being applied to Singapore. As Mr Lim Siong Guan wrote, “Singapore is unique in its demographics, its small size and its lack of natural resources. We cannot become a first world economy simply by following what others are doing. As we look at the successes elsewhere, the critical questions we continuously have to ask are not what they are doing, or how they are doing it, but why they are doing it and why they are doing it that way.”

Because of the rapidly changing world and our unique challenges, it is critical that we be able to draw from a broad slate of policies and avoid strict adherence to theories. Theories can be assistive but they are just that – theories. Theories have limitations and thus cannot be overly, rigidly adhered to.

Dogmatic adherence to theories or rigid ideology also lacks the ability to capture the multi-faceted complexities of democracies. The Financial Times article entitled,“Capitalism and Democracy: the strain is showing” pointed out tensions between liberal democracy and global capitalism, citing Harvard University Prof Dani Rodrik as stating, “democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three but never have all three simultaneously and in full.”

If he is correct, then balancing the tensions between these concepts – democracy, national sovereignty and global economic integration – cannot be achieved through strict adherence to dogma. Therefore, aiming for theoretical purism is not the goal, rather, aiming to do what is best for Singapore is, drawing from a broad slate of possibilities. I believe that this is what the governing party in Singapore must continue to do.

Besides being able to draw from a broad slate of possibilities, there is value in housing different views within a single political party. Different perspectives make us reflect on things from a different angle. For example, during the recent debate on the National Parks Board (Amendment) Bill, Er Lee Bee Wah raised concerns of safety and that of a hygienic living environment for her residents, citing multiple unsupervised cat feeding episodes as attracting big rats and the need for relevant authorities to be trained in handling snake sightings near residences. Mr Louis Ng took a different view on the matter, suggesting that the removal of snakes which eat rats contributed to the problem of a rising number of rats. Such an exchange is a real plus; a real advantage. Such an exchange sheds light on the same issue through different perspectives, sparking new ideas and increasing the range of possible solutions to be explored.

Coupling the ability to house Members of differing views with the need for cooperation among members of a single party, the policies and directions that come out from the deliberative process is not necessarily one characterised by compromise, but one of possibility through persuasion.

This is a win-win provided of course those involved in the debate want what is best for Singapore. The need to compromise for the sake of political dividend does not necessarily lead to the best policies.

For example, in order to get bipartisan support to pass legislation, the US tax code often contains loopholes due to political bargains that needed to be struck between the Democrats that desire higher rates for richer Americans and Republicans who prefer to reduce taxes for the rich.

The focus, one can argue, is not on the effectiveness or efficiency of the final product but on the political compromise. A New York Times article entitled “A Tax Code of Politics, Not Reason,” says that “This compromise has left us with a loophole-riddled code that isn’t very good at raising money. Compared to other developed countries, the United States does not collect much tax at all. At least that was the state of things in April 2012 – but such is compromise. In my humble view, the better way is to focus on possibilities and persuasion rather than loose compromises.

In order to do this, we should not label a person as “right” or “left”, “liberal” or “conservative”. A person can have different views on different issues and should not be limited to representing the “right” or “left” view. If we label people in this manner, the focus shifts from what is best for Singapore to whether or not a view conforms to a certain ideological view.

Because there is no such pressure to fit or not fit a certain label in Singapore, I feel the freedom to decide based on what I think is the best course for Singapore on the issues that came before this House. In some matters, my view could be categorised as more “right”. For example, my hard stance against recreational drug use because of its harm to society could be characterised as right-leaning. On a different issue, my view could be characterised as being more “left.” For example, advocating for the Prevention of Human Trafficking Bill in order to protect vulnerable workers in Singapore from being exploited in a capitalist market. Therefore, what is important is not whether my views are ideologically right or left, but rather, I have the freedom within the government party to act or voice a view in accordance with what I thought was best for Singapore.

This has strengthened my humble belief that in Singapore, those elected must possess "political ambidexterity" – they must deploy right or left leaning policies in accordance with what Singapore needs for the long term based on a defensible and robust system of values and ethics. A person should not be pigeon-holed left or right.

In the course of the debates, there will be times when we debate morality and our interpretation of it. That is important and we should not shy away from it. Nevertheless, it is important that politics in Singapore does not move into single-issue politics. Yes, the issues are very important. Yes, the issues have wide-ranging impact on many different sectors. But the running of a country cannot be reduced to a single issue.

Worse still, examples from jurisdictions around the world have shown that some of those who push single-issue politics focus on polarising fault lines, exploiting them for a political purpose and deepening divisions in society. For example, some pockets in the political spheres in Germany and the United Kingdom and other countries have stoked inter-racial and inter-religious tensions by running on racial supremacy or anti-religion lines. In Germany, in September 2017, the Alternative für Deutschland (AfD) became the first far-right party to enter Germany’s national parliament since the 1950s. It won 94 seats to become the third strongest party in the Bundestag, Germany’s lower house of Parliament. The AfD quite arguably ran elections on an anti-immigration, anti-Islam ticket.

In UK, the Britain First party ran on an anti-immigration and openly nationalist agenda. In 2016, Jayda Fransen, the deputy leader, was convicted for religiously aggravated harassment. Why do I raise this? The answer is this: Irreconcilable division breeds an environment of politics of extremes. This inevitably creates conflict. Policies become political bargains that compromise on effectiveness. Politicians engage in brinkmanship. I would not want this to happen in Singapore for the sake of our social compact.

In the United States, partisan brinkmanship causes shutdowns of government – this impacts the lives of many. During the 16-day shutdown in 2013, almost $4 billion in tax refunds were delayed, home loans for 8,000 rural families were stalled. According to the Office of Management and Budget, the US lost an estimated $2 billion to $6 billion of economic growth during the 16-day shutdown in 2013.

An October 2018 article in the Asia News Monitor about Bosnia-Herzegovina, reported that the country faced a collapsing healthcare system, struggling public infrastructure, regressing education, catastrophic and accelerating brain drain. A lot to solve. Instead of meaningfully engaging these issues, the political discourse centred in nationalist brinkmanship and paranoia. Main campaign issues among nationalist parties were “either ‘we’re going to kill the other side or we're going to keep you from getting killed by the other side.’”

In Britain, some think that the fear of a disorderly Brexit might be used to squeeze the deal through in Parliament or to help Britain in its negotiations with the European Union. Therefore, Sir, from what the world has shown us, we need, in Singapore, to refrain from the politics of brinkmanship. Further, we need to be able to collect a collage of differing views under the umbrella of a single party, thereby avoiding sole-issue politics. This way, even hard issues and issues touching morality and ethics can be debated in a respectful and productive way. Such an approach has a further advantage. It avoids the need for politics by referendum, since differing views are already represented in the legislature.

BBC Radio recently aired an excellent programme just last weekend, entitled “The Real Story: Are Referendums ever a good idea?”. In that programme a quote on Brexit from the expert being interviewed caught my attention. Caroline Vernaillen from Democracy International explained: “I think what is definitely never a good idea... is putting a general program to a vote if it contains multiple questions... The way Brexit was actually a broad reform program.” As representatives of the constituents we serve, we are entrusted with the mandate to make difficult decisions on policy or morality for our country. Therefore, when we are faced with tough decisions, it is in my view, much better to debate the ideas respectfully and holistically in Parliament, and decide in Parliament what the path to take for Singapore is, rather than passing the buck back to the good people who entrusted us with the decision making duties in the first place.

So, I come back to this central issue of a social compact, which was a major plank in Minister Heng’s speech on Budget 2019 which I support. A valuable ingredient for an effective social compact is to ensure co-operation within society by reflecting and giving voice to differing views in Parliament. This is healthy and avoids the politics of extremes. Undergirding this must be an openness to different views and new evidence, even as one holds strong positions on certain subjects and issues.

As an example, Sir, some fellow Members of this House would know my hard stance against drugs and the need to criminalise the trafficking as well as the consumption of drugs. This is because I humbly remain convinced that drugs are harmful especially to the consumers and the communities around them. However, if objective and "un-agended" data shows that the consuming of illicit drugs is not harmful, then I will review the data and test my conclusions again.

This is because all of us here, in this Chamber, owe it to the Singaporeans we serve to form the most accurate conclusion. For the record, as regards drugs, I am still of the view that we need to criminalise consumption.

Sir, for this year’s debate on the Budget Statement, I decided to focus on social compact, which was one of the foundational points in Minister Heng’s speech. On that topic, I respectfully seek to persuade this House that politics in Singapore should remain about possibilities and persuasion, always with a view on what is best for Singapore long term; it should be carried out under a broad umbrella where differing views can flourish and consensus built on a foundation of ethics, stewardship and values. It should never lead to brinkmanship, single issue politics or hollow short-term compromise. This is a place where policy and societal morality is charted. If we can all do it right, then unity will prevail. If we can all do it right, our social compact – as a people – will be robustly defended and protected. Indeed, it is worth protecting. It is worth defending.

11.25 am

Ms Tin Pei Ling (MacPherson): Speaker, Sir, thank you for the opportunity to speak in this debate. My colleagues have put forth their earnest opinions and excellent ideas covering many aspects of the Budget in the past two days. Hence, as the last backbencher to speak in this debate, I will keep my speech relatively brief, or at least I try to.

The Budget is an important business of Parliament. This House must decide not only how we allocate resources to address immediate needs, but also how we can find resources to invest for the future. The Budget is a means to implement government’s strategies and realise Singaporeans’ collective vision for Singapore. Therefore, what we spend on and how much we spend on are important.

One highlight of this year’s Budget is the Merdeka Generation Package. This package is estimated to cost over $8 billion in present value, and help close to half a million senior Singaporeans. This significant package will make a tangible difference to the lives of the Merdeka Generation. It shows our gratitude to seniors who had given so much of themselves to build the Singapore we are proud of today.

There are many ways the package could have been designed but the Government chose to focus the benefits on healthcare, which is the right priority. The package will clearly address the top-of-mind concern and alleviate the healthcare cost burden on this group of seniors, while encouraging them to age actively.

So far, feedback on the package from my residents has been positive. Seniors who missed out on the Pioneer Generation Package are happy and appreciative. The younger ones, who are children of the Pioneer and Merdeka Generations, are supportive as well. This is because these packages relieve their parents’ medical expenses, indirectly benefiting them. To the others, the fact that there is such a package is an assurance that the Government cares about the more vulnerable and understands what worries our people most.

Taken together with the many other schemes and programmes for our seniors, it is apparent that the Government is working hard to enable Singaporeans to age with dignity. In Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Speaker Sir, one of the highlights of this Budget is the Merdeka Package. This Generation contributed their youth and efforts, and built the Singapore that we are proud of today. This $8 billion package conveys our gratitude and respect for this Generation, and cannot be considered as welfare. It is a concrete manifestation of our sense of gratitude. The package has focused on healthcare and it shows that the Government empathises with the elderly’s concern over healthcare costs. They have, therefore, addressed the problem directly, with the aim of lightening senior citizens’ burden in terms of healthcare costs, so that they can enjoy their golden years and have less to worry about.

Actually, the Government has always looked after the elderly and the disadvantaged. In recent years, our social and public healthcare expenditure have increased significantly. As the youngest MP, I am very grateful that the Government has made these efforts, as policies rolled out by a government that cares for the people would definitely prioritise the long-term interests of the nation. This is a people-centric and compassionate Government.

Of course, besides dealing with current problems, a responsible government with foresight must also plan for the future. So I am glad to see that this Budget continues to prioritise economic transformation and talent development. Faced with ever changing conditions, Singapore must continue to strive relentlessly and strengthen our capabilities both externally and domestically to maintain our position. I hope that the Government will continue to give strong support to manpower training, urban development, building resilient and cohesive communities, and aspirations of our youth.

(In English): Speaker Sir, I fully support the Merdeka Generation package and the other social initiatives announced in this Budget, but it is also important that we strike a balance between spending to benefit the current generation and directing a good part of our financial muscle towards investing in the future. A significant portion of this year’s Budget is dedicated to strengthening our economic competitiveness and building deeper enterprise and people capabilities. These are important investments into the future. But I hope we will also think about the following.

First, making our city better. Through the annual Formula One night race, last year’s Trump-Kim Summit and the movie Crazy Rich Asians, Singapore showcased our beautiful city to the world. But in 10, 20 years to come, when our infrastructure has aged and as other cities catch up, will we still have anything to show and be excited over?

What is the next big attraction after Marina Bay, new financial district and Gardens by the Bay? What is the next iconic public housing project after the Pinnacle and Kampong Admiralty?

It is important that we continually upgrade and rejuvenate our city. It is equally important to find ways to create new “space” where new developments can take place. Of course, we should retain some parts of old Singapore so that our people can remain connected to our heritage, but Singapore should not be an old city. It is important that Singaporeans continue to regard Singapore as a city of possibilities. Our size may be small, but our imagination must be big. Despite our land constraints, we must somehow find ways to reinvent and remake what we have; develop new buildings, new districts and new gardens that delight our citizens and amaze the world.

Second, making our communities stronger. A beautiful Singapore must be underpinned by strong and united communities. Singapore’s community-building efforts have come a long way since our independence. We embrace multi-racialism and multi-religiosity. We have a harmonious society united for progress. Our experience has been admired and emulated by many around the world.

However, our society construct is also exposed to some unique challenges: the advent of social media has the potential to aggravate fractures within our society through fake news and fear mongering – sensational pieces are always more attention-grabbing than run-of-the-mill news pieces; our changing demographics – an ageing society will assert more pressure on the working class; evolving expectations of citizens increase pressure on our Government to deliver better and faster; religious radicalism plants dangerous seeds of antagonism and mistrust which could destroy our social bonds; and, of course, there is a risk of widening wealth and digital gaps.

The consequences are serious if we do not actively address these challenges. For example, if fake news or radicalism gains momentum, our social fabric, so carefully built and maintained over the past decades, could be torn if people doubt and confront one another over what is true and what they think is true.

Therefore, we need to invest more in public education to inoculate our people from the poison of fake news and radicalism; we need to redistribute resources more to reduce the gaps; we need to create opportunities and empower our people to participate in the community more.

Thirdly, supporting our youths better. Our youths are our future. They will lead Singapore into our next bound. It is important that they see Singapore as the place where they can achieve their dreams, whatever they may be.

Our youths want to make Singapore and the world a better place. They have their own idea of what this means and they are taking steps to do this. Many believe in environmental causes and have mobilised and pushed on various projects, for example, promoting renewable energy sources and getting rid of straws and other one-use plastics. Others believe in building a fairer, more equitable society and they contribute their energy and time to help the poor and vulnerable in society. These are all commendable efforts.

It is important that our Budget set aside enough financial resources annually to go into supporting the priorities and efforts of our youths, as well as in mentoring them and developing their talents so that, in time, they will be able to lead Singapore to a new level. We must remember to invest to benefit Singaporeans of tomorrow, just as we have benefitted from the investments made by our Pioneer and Merdeka generations.

I believe our constant effort to imagine our future, to find the next big thing in Singapore that will excite our people, to strengthen communities for a strong and united nation and to support our young in their development and endeavours will have far reaching effects. These will require our constant attention and consistent investment by our Government.

I would like to end with a reminder that building the future Singapore is the job for all Singaporeans, not just the Government and, certainly, not just the Minister for Finance.

To be sure, the Government plays a critical role in improving the lives of our people. It keeps Singapore secure and the economy humming along. On social issues, only the Government has the resources to mount a major move like the Merdeka Generation Package.

But the Government does not have the sole responsibility or the best ideas all the time. Nor can the Government alone solve all the challenges that we face. We operate in an increasingly complex environment. We face macro-economic uncertainties, geopolitical instability, rapid social change and game-changing technological innovations. Government action alone is inadequate to the task of navigating a safe journey for all Singaporeans into the future. In our daily lives, we see many examples in our community of how different people, different organisations and different parties come together to support our people, our residents, our seniors.

I have a resident called Mdm Aisyah. She is about 66 years old. Recently, her sister passed away and so she is staying alone in a rental flat. But with the help from the Government, monthly financial assistance, as well as support from the Sallim Mattar Mosque where she goes for her Koran studies periodically every week, she is very meaningfully engaged in our community. So, even as she lives alone, there are many helping hands available to help her. The VWOs, the mosque, our grassroots leaders, through our programmes, outreach and befriending, she is now a very happy senior living in Macpherson. There are many other examples as well.

Sometimes, help need not be in a big way. It could be as simple as a neighbour running to a senior's house to help fix that remote control that he or she failed to operate to switch on their favourite TV show. We have so many people, so much resources within the community. If we are all able to come together to work hand-in-hand, we can multiply our efforts and do so much more to make our community and Singapore a better place for everyone. In fact, I would say that regardless of whether it is just the Government working alone or together as a community, regardless of what role we are playing, at the end of the day, it is about the people we feel for. It is about the bonds that we forge, the hearts we touch and the lives we make a difference to.

Therefore, I hope that Singaporeans will see this and Budgets past and future not just as Government or parliamentary business, but as collective, decisive moves to prepare ourselves for the future. I hope Singaporeans will step up and contribute as well with our ideas, voices and energies. Let us, together, ensure that Singapore continues to thrive and be truly inclusive and caring.

With that, I support the Motion.

11.37 am

Mr Speaker: Minister for Finance.

The Minister for Finance (Mr Heng Swee Keat): Mr Speaker, Sir, I thank Members of this House for the views shared during the Budget debate. Over the last two weeks, I have also noted thoughtful views from fellow Singaporeans, academics, journalists and business owners. I am grateful for this feedback – some challenge our current thinking while others help us refine our policies over time.

We all have the same objective. It is to help Singaporeans thrive and build a strong, united Singapore. As we celebrate the bicentennial, let us take a step back to reflect on how we got here today and how we would like to move forward.

Some Members have provided good and useful overviews of the Budget and how they benefit various parties, such as Mr Liang Eng Hwa. Some have delivered vivid speeches during the Budget debates, such as the one about Ah Kong and Ah Seng. My speech will not be as poetic as Senior Parliamentary Secretary Baey Yam Keng’s.

Listening to over 12 hours of your speeches in the last two days and this morning, I realise that it is not possible for me to address each of the points you have raised. My colleagues will engage you in the specifics of policies within their Ministry’s purview. And as Members can see, I, too, have two files like on Budget Day. So, this will be a long speech. So, Mr Speaker, Sir, with your permission, may I use some slides so that it is easier for the Chamber to follow my speech, please?

Mr Speaker: Yes, please. [A slide was shown to hon Members.]

Mr Heng Swee Keat: Sir, in rounding up the debate today, I can value-add by picking up some of the common threads in your speeches, and to reinforce some of the key principles for this Budget and those before, which make up the "Singapore way". So, what is the Singapore way?

First, we put people at the centre of our plans, strategies and programmes.

Second, we plan long term while taking an adaptive approach to respond to changing circumstances and needs.

Third, we do all of this together, working in partnership.

These principles reinforce each other and have allowed us to do more with less. For instance, in the area of education – I showed this slide at last year's debate. We did not spend the most, but you look at the outcome that our students achieved in this PISA score. On healthcare, again, we did not spend the most, but we have the second highest life expectancy, next to Japan. And you can see the OECD countries’ averages on the right-hand side. For policing, good outcomes in policing where, again, with the spending that we have of just slightly above 0.6% of GDP, we are ranked one of the safest in the world. So, these are all very credible outcomes despite spending less than what other countries do. I will now elaborate on each of these principles.

The first principle of the Singapore way is putting Singaporeans at the centre of what we do. We empower people through education, create a good environment for families, help Singaporeans to earn and save more for retirement and support ageing with assurance. As Er Dr Lee Bee Wah put it so eloquently, all that we do "完全是为了你", that is, "It is all for you".

Many Members, including Mr Louis Ng, Ms Jessica Tan and Mr Gan Thiam Poh, have given suggestions on addressing class divisions, inequality and helping all Singaporeans do well, including the less privileged. The question is, how best to do so? As Mr Saktiandi Supaat put it, it cannot just be through a Robin Hood style of social transfers. We believe that the best way to take care of our people is to build capacity, that is:

(a) For our young, we give them a strong foundation in terms of a good education and exposure, so that they have the knowledge, skills and values necessary to chase their dreams.

(b) For our workers, we invest in increasing their capacity through upgrading and re-skilling. Crucially, we also build an economy that provides them with opportunities.

(c) For those who have fallen behind and who need help to access opportunities, we provide stronger support systems. This is with the ultimate objective to give them the confidence and dignity to succeed for themselves as far as possible.

(d) For our seniors, we support them in their desire to age successfully.

We have been providing significant support and will continue to do so. Let me illustrate.

Our young get a high quality education which provides a solid grounding to chase their dreams. We make sure this is available to all our people, regardless of background. We keep education affordable. Parents pay $13 dollars each month per child for Primary school fees. This is possible due to the significant subsidies provided to every child. On average, every child entering Primary 1 in 2018 would have received over $130,000 in education subsidies by the time he or she completes Secondary school. Those who go on to post-Secondary education receive another $15,000 to $22,000 for every year they remain in school.

And beyond just making sure that everyone can afford education, we make sure that there is good quality for everyone, not just the top achievers or better off. In 2018, we provided at least 60% more resourcing for Primary school students with a weaker foundation in literacy and numeracy, through learning support programmes in schools. Our commitment to maximising pathways to success is clear. We have specialised schools catering to the needs of Normal (Technical) students, those with interests in science and technology, or the arts or sports.

Most visitors to our country are very impressed with what we have done for our ITEs, sometimes better designed and resourced than their universities. I think several Members in this House and myself have been bringing visitors to ITE and they have been surprised to see what we have in the ITE.

MOE will elaborate more on our plans to UPLIFT our students at the Committee of Supply.

What we do is not necessarily the case worldwide. In the US, public funding per student varies widely across states and within states. For example, within the state of New York, one school district can get three times that of another school district, based on how well-off each school district is. I agree with what Prof Lim Sun Sun said about the need to help our students develop cross-cultural, digital and ethical, or CDE competencies. This is on top of the ABCs and 123s we teach them. Prof Fatimah Lateef also called on Singaporeans to develop strong networks to thrive in an age of change and disruption.

Our schools provide this holistic education by making available co-curricular activities, Applied Learning Programmes and Learning for Life Programmes, all of which are heavily funded by MOE. When I was an Education Minister, I visited many school systems around the world. And what struck me in many of the school systems was that, when I asked, "If your child or your student wants to learn Arts, Music, Dance, Sports, what do they do?" And in many of the school systems, the answer was, "Well, they have to join outside classes." And I asked, "How do you pay for it?" They said, "Well, we as parents pay for it." Whereas in our school system, co-curricular activities to develop our students' interest and to develop them in diverse ways, are part of the schools' system and funded by the Government.

The Edusave Award for Achievement, Good Leadership and Service (EAGLES) and the Edusave Skills Award are just some of the ways we recognise students who demonstrate excellence for achievements, beyond academic. And you never know where the path will lead you. Take the example of Mr Wong Kah Chun whom PM spoke about at the National Day Rally last year. He grew up in a Chinese-speaking family, but through his school band, discovered a love for Western classical music and is now the first Singaporean to conduct the New York Philharmonic Orchestra.

We also support our young people to build their cross-cultural competencies. In this and the last two Budgets, I set out plans that will help our tertiary students, young workers, and aspiring leaders to build friendships with peoples and understand our region better. These include the Global Innovation Alliance, the Leadership Development Initiative, and the Global Ready Talent Programme.

I was at the groundbreaking ceremony of Razer last week. I was excited that with Razer's expansion, we will be able to have many more opportunities for young Singaporeans, both here and overseas. We will continue to do more for our young. We have been investing more in pre-school – to make pre-school education better, more accessible, and affordable especially for the lower income. This will help our children build a solid foundation from an even younger age.

Let me move on to how we build capacity in our workers, to help them pursue their career goals. I agree with NTUC Secretary General Ng Chee Meng and Mr Seah Kian Peng that for the Fourth Industrial Revolution, or Industry 4.0, to work for us, we need Worker 4.0 as well. Meaning, we need our workers to transform, and build capacity in tandem.

As Mr Desmond Choo mentioned, learning, and building capacity, does not stop after formal education. Learning takes place anywhere, anytime, from anyone. The workplace is a good place for our workers to learn. As Mr Patrick Tay has mentioned, we provide support for our workers to reskill and upskill, to seize opportunities and do well for themselves.

The SkillsFuture movement provides support for our workers to develop skills and pursue lifelong learning. For those who are displaced, we help them find a new job, and reskill where necessary, through programmes such as Adapt and Grow. The Labour Movement plays a key role in this.

I would like to thank the Labour Members of Parliament for all speaking on a common theme of "Every Worker Matters", and sharing their thoughtful views on what we should do to better support our workers. Senior Minister of State Heng Chee How spoke on putting workers at the heart of all we do. And I am glad that they recognise, in Mr Zainal Sapari and Mr Ang Hin Kee's words, that this year's Budget is pro-worker.

The Labour Members of Parliament and Ms Sylvia Lim have spoken about various segments of our workforce – young workers, older workers, mid-career professionals, low-income workers, self-employed workers and those with care-giving responsibilities. MOM and MOE will address some of their suggestions in greater detail during the Committee of Supply.

A common thread in the comments, as Mr Arasu Duraisamy has noted, was how employers have a key role to play in helping their workers upgrade. Mr Melvin Yong commented that workers who go for training need to pull "double shifts" – training in the day, working at night. This is not easy to do. As workers put in the effort to train, I urge all employers to give them full support.

I would also like to explain how we support our low-wage workers, in line with concerns raised by Dr Intan Mokhtar and others. Where possible, we want them to build capacity through upskilling, so that they can move up the wage ladder. This is why we give Workfare, not welfare. We have the Workfare Training Support scheme to encourage skills upgrading, and the Workfare Income Supplement, which I announced enhancements to this year. Through Workfare and the Progressive Wage Model, we help lower income workers upskill and reskill, earn more and save more.

I am heartened to hear that Singaporeans, both within and outside the House are concerned about whether families of lower wage workers can make ends meet. Some, like Mr Mohamed Irshad, have suggested that the way to address this is to allow younger Singaporeans to be given the Workfare Income Supplement. At this point, I would like to explain the design of Workfare and why we provide more support to older lower-income workers.

Much as we wish to help those who earn less, how we do it is important. Permanently increasing their capacity to earn more is the most sustainable way to improving their lot in life and helping them support their family members. This is best done by upgrading their skills and improving their chances of getting better paying jobs. What they learn today will be useful for many years down the road, and build a foundation for further learning. In the meantime, we help them take care of their families' needs, such as bursaries for their children or MediFund for their parents' hospitalisation bills. Where there are challenges with accessing skills training, I am confident that NTUC and our unions can come in to support.

Education and employment support are part of the comprehensive system of social support which benefit our less well-off. On the whole, our broad-based schemes are designed to provide them with more support.

We help our workers save for retirement through the CPF, which provides a risk-free return, with extra 1% interest on the first $60,000 of CPF balances. Those who are aged 55 and above receive an additional 1% for the first $30,000 of balances. This structure tilts the benefits in support of members with lower balances. It is in the spirit of what Mr Saktiandi Supaat mentioned, of helping small savers grow their income.

We also help Singaporeans own their homes, with more housing subsidies for the lower income.

There are few countries where young couples buy a home before they get married. In fact, in many cities, there is a huge gulf between those who can own properties, and those who do not. We continually rejuvenate our estates and upgrade our flats, so that they remain vibrant and liveable homes for our people. These flats could also provide an additional source of income in retirement.

At the same time, we provide other targeted support for those from less advantaged backgrounds, in different forms. Miss Cheryl Chan spoke about the need to uplift these groups. We have put in place schemes such as KidSTART and the Fresh Start Housing Scheme, which help the lower income get back on their feet. For those in their old age, Silver Support provides a supplement for those who had low incomes through life and little family support. ComCare is available for those with greater needs.

There is always room to do even better, as many Members of Parliament have mentioned. But overall, it is a good system, which gives Singaporeans a good foundation in life. That we still find the occasional cases which fall through the cracks does not behove us to knock down the system. It gives us – policymakers, public officers, social workers, community volunteers – the motivation to do better, through action.

Let me now turn to our seniors. Singapore is ageing quickly, quicker than many other developed countries. We made the transition from an aging to aged society in an exceptionally short span of 19 years. In comparison, Japan – the world's most aged country – took 26 years. Other countries like France took more than a century – 115 years – and Sweden took 85! Furthermore, by 2025, Singapore will become a super-aged country, with 21% of our citizen population aged 65 years and older.

But this should not be viewed in a negative light. Singaporeans can redefine ageing. We are already doing so. Our $3 billion Action Plan for Successful Ageing was launched in 2016, taking in feedback from thousands of Singaporeans, both young and old, on what they saw successful ageing to be.

Compare the title of this latest action plan with the title of the first committee on ageing we set up in 1982 – the Committee on the Problems of the Aged. Things have changed. And learning from the many seniors I have met who inspire me, let me share how they are redefining ageing, by staying active, staying healthy and staying connected. If we help all our seniors to make the transition, it will benefit them, it will also inspire all our younger generations.

Our seniors want to stay active, be it through work, volunteering, learning something new, or keeping up with their grandchildren. And we want to support them in doing so. Opportunities to learn, grow and achieve do not stop at the retirement age.

In fact, the National Silver Academy, which was part of the Action Plan for Successful Ageing, came about because our seniors told us that they wanted to keep learning and contributing to society. The Academy now provides a range of courses for senior learners, and supports inter-generational learning programmes. I am glad that we have support for this on both sides of the House. Assoc Prof Daniel Goh and Mr Faisal Manap have also made a strong pitch for our seniors to be active, and continue to be the best they can be.

Our seniors also want to stay healthy. Having the second highest healthy life expectancy in the world, we are in a good place. I recently met Ms Peng Lee Er, one of our Merdeka Generation or MG, at a TV forum. She told me that she appreciated the Merdeka Generation Package (MGP) benefits as they provided assurance that her healthcare expenses would be taken care of. Even better, the benefits would be there but not used or what she called "备而不用"; meaning that it was best if she could stay healthy, and do not have to seek treatment in the first instance. I agree very much with her. The intention is for our seniors to focus on staying well. The MGP is there as an added assurance. So, I am glad to hear Ms Joan Pereira and Ms Irene Quay expressing support for this.

I am always very happy to see groups of seniors coming together regularly in parks, or other public spaces, to exercise – doing line dancing or Zumba Gold together. In fact, I understand that many of our seniors are exercising regularly in over 400 locations across the island. This is a good sign, and I hope there will be even more of such groups in the years to come.

And last but not least, our seniors want to stay connected with one another, and with those around them.

I am encouraged by the progress made through the Community Networks for Seniors, which brings together government agencies and community partners to help us have the "ABCs" where seniors stay active, and befriend and care for one another.

Some 1,500 seniors have come forward as volunteers to befriend and help other seniors. Take the example of Mr Bernard Lai, who is a member of our Merdeka Generation. Besides juggling his work commitments, he is an active grassroots leader, a member of various sports clubs and a Silver Generation Ambassador!

At the MG tribute event hosted by the Prime Minister early this month, Dick Lee, Jacintha Abisheganaden, Mel Ferdinands and Rahimah Rahim – all MGs – gave a spirited rendition of Merdeka Sayang, I quote, "With our silver hair, we still contribute", and another quote "we work hard, but still young at heart". Indeed, these lyrics reflect the spirit with which we approach ageing. So, "Fried Rice Paradise" just got better with age!

Our Pioneers were the first generation of Singaporeans who were living and working in Singapore after we became independent. Our Merdeka Generation is the next younger generation, better educated and healthier. So, we look to you to redefine ageing and forge a new path on what it means to be the independence generation.

I have spoken of how we take care of our people. In essence, it is through building capacity in everyone – our young, working adults, seniors, – to be the best that they can be, while giving those who need help, even more support and help in a targeted way.

Members of Parliament have also brought up other important issues. Ms Joan Pereira and Ms Anthea Ong spoke of the importance of support for those with mental health conditions. This will be taken up at the MOH COS.

Ms Joan Pereira, Associate Professor Daniel Goh and Ms Rahayu Mahzam have also spoken on how to better support women, especially those who are caregivers. As Minister Josephine Teo shared, many of our existing schemes do benefit women more. In particular, the CPF top-up in this year’s Bicentennial Bonus will support women who did not work and therefore had low CPF savings for retirement. It is a fitting recognition of their contribution.

We build capacity and adopt a long-term orientation in our planning. This is the second principle of the Singapore way. We plan for the long term, because we plan for Singapore to be here in the long term. We look ahead, often tapping on the knowledge of experts here and overseas, so that we can prepare for the future. Ageing, climate change, and changing economic trends are just some of the issues that we have been preparing for.

As I mentioned earlier, the first committee on ageing was set up in 1982, when the proportion of Singaporeans aged 65 and above was only 5%.

We are looking at various infrastructural plans to protect us from rising sea levels due to climate change, the effects of which are projected to hit us sometime between 2050 and 2100.

Given the long-term horizon, it is difficult to project these spending needs now. Nonetheless, we are planning early, seeing what we can do, and will work out the resourcing accordingly.

Our plans span many years – putting in place the right infrastructure, charting the course of our economy, and steadily building up our capabilities. Given the long gestation of these projects, such as the airport and port projects, it is inevitable that they are subject to risks and uncertainties in the operating environment. So, I share Mr Dennis Tan’s concerns on this issue. However, these uncertainties should not prevent us from making "exciting investments". Rather, they are impetus for bold but deliberate planning.

Operating in challenging environments has always been our lot in life, which has taught us to plan carefully. Back in the 1980s, when we were building Changi Terminal 2, we also faced regional and economic uncertainties. But we persevered and overcame these challenges.

We do not shy away from making difficult decisions if they are necessary for the long run. That is why we have been pushing hard on economic restructuring, and have taken further steps this year to drive deeper restructuring.

As Mr Darryl David and Ms Jessica Tan pointed out, there are significant shifts in the global economy, which means that we will be stuck if we stick to business as usual.

We are fortunate to be in Asia, where the growth is. However, the rapid growth of Asian economies will result in shifting comparative and competitive advantages in the region, which we will need to adapt in order to benefit from this growth.

Supply chains are shifting. This is driven by new technologies, the shift of global demand to emerging markets, and the consolidation of supply chains within manufacturing powerhouses in the region.

At the same time, global value chains are becoming more knowledge-intensive, with research and development, software, design, and other intangibles forming a greater share of value created.

We are well placed to ride on these changes. As a regional hub in many areas, such as finance, professional services and logistics, we are well-positioned as a base for businesses to capture the growing regional demand for such services. We also continue to have a strong manufacturing base, despite increasing competition from other economies.

We must push ahead to strengthen Singapore’s position as a Global-Asia node of technology, innovation and enterprise. We will continue investing in research, innovation and enterprise development, and support our entrepreneurs and businesses to boldly venture into new markets. This will bring new opportunities to our people and firms.

However, the window to achieve deeper economic restructuring, to help more of our firms capitalise on this opportunity, is narrow.

We have achieved strong macroeconomic fundamentals through policies introduced over the years. What we need now is to double-down on improving productivity and innovation at the industry and firm level. In particular, through a targeted, tailored approach to get firms of different types to adapt and transform.

We have made the difficult but necessary move of cutting the DRC levels for the Services sector. Several Members, including Mr Chong Kee Hiong, gave feedback that some firms from the services sector find it difficult to automate their processes. But the reality, as Senior Minister of State Heng Chee How pointed out, is that our resident labour force growth will continue to slow. If we do not move decisively on improving productivity and building up a skilled Singaporean core in industries which are currently lagging, firms will find it harder to adjust in the future. As Senior Minister of State Chee Hong Tat described it, the DRC cuts are like 苦口良药, bitter medicine that makes us better off in the long run. Even as we cut DRC levels, we will help our firms in the transition, as Minister of State Zaqy Mohamad has outlined.

As we take a long-term view in our planning, we must also consistently review our policies to take into account new trends, new feedback and new evidence. As Mr Christopher de Souza just mentioned, because of the rapidly changing world and our unique challenges, it is critical that we be able to draw from a broad slate of policies and avoid strict adherence to theories.

We must be prepared to experiment and take calculated risks. If we do not succeed at first, we learn from our experience and try again. This is how we become better, as a people, and as a country.

I encourage all Ministries to adopt this entrepreneurial mindset, and to continue to keep trying out different solutions for the issues that we face. We must be focused on exploring what works, discard what does not, and execute effectively, so as to achieve better outcomes for Singapore and Singaporeans.

Hence, we adjust and calibrate our approach as we go along, to take in feedback and learn from outcomes, to make our schemes more useful and effective for firms and workers.

For example, a common feedback from SMEs was that it was difficult to navigate government schemes and get support for business transformation. To help firms identify the support available to them, we launched one-stop portals like the Business Grants Portal and Startup SG. To reduce the number of schemes for firms to navigate, we rationalised grants that served similar objectives under the Productivity Solutions Grant (PSG), Enterprise Development Grant (EDG) and PACT programme. This year, we will streamline eight financing schemes into a single Enterprise Financing Scheme (EFS).

Our policies have been gradually adapted to help Singaporeans better prepare for retirement as we live longer. CPF LIFE, Silver Support and the Lease Buyback Scheme were introduced to boost the retirement savings of our seniors.

MediShield Life, which started as MediShield, and CareShield Life, which will replace ElderShield for younger cohorts, will provide universal and lifetime coverage for healthcare needs. Later this year, we will expand CHAS subsidies to provide universal coverage for chronic illnesses. This last move, as Ms Rahayu Mahzam noted, shows the willingness of the Government to make changes when necessary. In fact, as Dr Lim Wee Kiak said, "we do have a universal healthcare system".

As a pre-funding scheme, MediSave too has to evolve as medical technology advances, as more options become available, and as the population ages. We will remain flexible and adaptive to deliver the best outcomes for our people.

There have been questions, in and outside of this House, on whether we will or should have packages like the Pioneer Generation Package or Merdeka Generation Package for future generations. Some have even suggested names. Some asked in anticipation; others asked because they were worried about who pays.

Policy-making in real life does not assume that we start with perfection. My earlier examples show that we do not let the perfect be the enemy of the good. We do what is good, learn by doing, and adapt and improve continually.

During Singapore’s journey from Third World to First, our Merdeka Generation, and our Pioneers especially, did not benefit from the social safety nets we have today and the investments we can now make. They had fewer or no educational opportunities. They earned less. The CPF contribution rates started out very much lower. So, a cohort-based approach to support them in their silver years is appropriate. You can say that we custom-made the packages to better meet their needs, and to honour them for what they have done for Singapore.

For the younger cohorts, they too will have needs, but they are not of the same nature as the Pioneers or MGs.

Today, more than nine in 10 Singaporean youths can expect to go on to a post-secondary education – nine in 10. This is compared to less than two in 10 among our youngest MGs, and about one in 10 for our Pioneers when they were at the same age.

The schemes we have put in place over the years – MediSave, MediShield Life, CareShield Life – enjoyed over their full working lives, will make sure that, by the time they reach retirement, they will be in a much better position than the Pioneers or MGs to look after their own healthcare needs. Of course, some among us will still need more help. The Government will look at the needs of each group, and tailor our policies and programmes in the future.

Senior Minister of State Chee Hong Tat has summarised this well. The Merdeka Generation Package is not linked to the election cycle, nor is it linked to the unexpected surpluses this term. It is a plan that has been carefully studied over a significant period of time. Not many countries in the world had gone through a similarly compressed period of accelerated growth, leading to relatively wide divergences between the older and younger generations. Building on our substantial base of permanent healthcare schemes, a calibrated cohort-based approach is fair to different generations.

If we continue to take a responsible and long-term approach to planning, younger Singaporeans need not fear that they will end up with a disproportionate share of the cost. But if we lose this discipline and make rash promises, like universal benefits regardless of circumstances, I would worry for our future generations.

I have outlined two aspects of the Singapore way – putting people at the centre of what we do and planning long term.

The third principle of the Singapore way that I would like to highlight is partnership. We have consistently been advocating this partnership for years. As Mr Murali Pillai pointed out, it is not just this Budget, but also past Budgets which had partnership as a key element. In Budget 2016, our theme was "Partnering for the future". In 2017, it was "Moving forward together", and in 2018, it was "Together a Better Future".

Previous Finance Ministers have had different ways of titling their Budget speeches, but partnership – working together – has always been key to our policies.

As Prof Fatimah Lateef put it, "Partnerships to Prosper" involves partnerships at all levels – globally, regionally, and in Singapore, in our businesses, and in the community. Partnerships are also important for the arts community, as Mr Terence Ho shared.

We seek to be friends to all, and build strong international partnerships for mutually beneficial outcomes and we have been steadily strengthening our partnerships.

Free Trade Agreements allow our businessmen access to other markets, and this is particularly important in this period where there is significant trade tensions. Defence agreements allow militaries to build mutual understanding. Collaborations between officials and businesses build good will and better people-to-people connections. Examples are Suzhou, Kendal, the Chongqing Connectivity Initiative, Iskandar Malaysia and the new state capital city of Andhra Pradesh.

But of all the partnerships that we build, the most foundational ones are the partnerships within Singapore. A strong and united Singapore enables us, both Government and our people, to build strong partnerships elsewhere. A strong and united Singapore assures our partners around the world, that we can be taken at our word, and will not cycle back on our commitments due to domestic divisions. A strong and united Singapore also sends a clear signal of our will and resolve to defend our sovereignty and safeguard our vital interests.

One key partnership within Singapore is our tripartite arrangement, which is a unique strength for Singapore. We must build on this, and strengthen partnerships between the Government, firms and unions.

Firms must build deeper capabilities together with their workers. The workers benefit from better jobs and better pay. A skilled, committed workforce gives firms a competitive edge, and this is the smart thing to do. We will continue to provide support to firms, which more directly link their companies' growth and transformation with capability building for their workers, such as in changes we made to the Enterprise Development Grant and the Productivity Solutions Grant.

I am glad to hear about SNEF's efforts to help employers implement responsible employment practices as a means to enhance competitiveness and sustain business growth.

I was pleased to hear NTUC's Secretary-General Mr Ng Chee Meng and Senior Minister of State Koh Poh Koon talk about NTUC's plans, such as the setting up of training committees and partner companies to build worker capabilities. Our unions are not just into advocacy. Our unions take concrete and meaningful action which makes a difference to our firms and workers. And we will continue to support our unions in this effort.

One example of how tripartite partnership can lead to positive outcomes is PSA. When I visited PSA earlier this month, on the first day of Chinese New Year, together with Senior Minister of State Koh Poh Koon, I was glad to see them adopting new technologies, such as the automated crane system.

PSA has reskilled and upskilled over 1,300 workers who transitioned from city terminals, to use the new technology at the Pasir Panjang Terminals over the past few years. PSA has worked closely with the Singapore Port Workers Union and Port Officers' Union in engaging and facilitating the change for the large pool of staff involved in this transition.

Some of the crane operators I met had worked with PSA for over 20 years and commented that the changes led to better working conditions as they could work from a remote air-conditioned office, rather than in the crane cabin, high on top of the crane.

Another example is ST Engineering's aerospace sector, which I visited earlier this week. To ride on the wave of Industry 4.0, ST Engineering has been investing in smart maintenance, repair and operations (MRO) initiatives at its hangars, to adopt data analytics, additive manufacturing and automation.

I was encouraged to hear that its union-management Training Council worked closely with NTUC Learning Hub to customise the SkillsFuture Digital Workplace course for her workers, to familiarise her workers with digital technologies, new work processes and automation. Over 200 staff attended the course in 2018, with another 600 staff expected to attend the course in 2019. So, I am glad to see ST Engineering building enterprise capabilities and deepening worker skill sets in tandem.

This is the type of positive outcomes for workers, businesses and the Government, which we all strive to achieve.

Our Trade Associations and Chambers, as representatives of firms, have an important role to play in this effort. So, I am glad to see more stepping up over the last few years. For example, through its networks with the global water community, the Singapore Water Association (SWA) introduced Imagine H2O, a leading water innovation accelerator in San Francisco to local industry players. And this led to exchanges of ideas on commercialising innovative water technologies between our firms and Imagine H2O's start-ups. This Association is also worked with ESG to immerse Imagine H2O into the local water ecosystem. As an outcome from this exchange, Imagine H2O has assessed Singapore to be a strategic location to set up its presence for the Asian market, and it is in the midst of establishing presence here.

I was glad to hear Mr Douglas Foo's affirmation that the Trade Associations and Chambers remain committed to enhancing the business community’s capabilities, and collaborating with member firms, the Government, and the Labour Movement. And I support his call for, I quote, "TACs to further break down individual walls, and work with one another to accelerate our common national interests". The enhancements to LEAD, which I announced this Budget, will further strengthen the role that TACs play.

We invest in building an environment to help firms with the capabilities thrive, through steady investments in R&D, and strengthening economic linkages to the region. This builds on our comparative advantages to help us, as an economy, to excel. To do so in a way which works for each sector, we bring relevant stakeholders together to drive transformation through ITMs and ITM cluster strategies.

We also take an enterprise-centric approach, which focuses on issues faced by firms at each stage of growth. This tailored and targeted approach allows our economic schemes to yield better results.

For firms which are ready to scale up and compete on a global scale, we provide more customised support. This is to help them identify and overcome the unique challenges they face, and scale their businesses quickly. I announced the Scale-up SG programme and the pilot Innovation Agents programme this Budget, which will help in this area.

Mr Liang Eng Hwa asked if the customised approach of the Scale-up SG programme meant that the Government is picking winners. This is not the case. The customised support that we provide is available to companies that show ambition and are willing to take the effort to transform themselves to scale up quickly. This support comes on top of many schemes which are accessible to firms, small or micro, for example, schemes which help firms adopt digital technology solutions, such as Start Digital Pack under SMEs Go Digital. And where there are market gaps, we provide support, such as through the Enterprise Financing Scheme, to provide financing for younger and smaller firms.

These schemes, together with a wide range of schemes under the Startup SG branding, provide a strong base of support for start-ups, which Ms Denise Phua asked about.

As pointed out by Ms Rahayu Mahzam, many Singaporeans and businesses have demonstrated their care and concern for fellow Singaporeans through their good work over the years.

TSMP Law Corporation is one such example. In addition to providing pro-bono legal services for the disadvantaged, the firm also regularly partners VWOs to contribute time and dollar to a broad range of causes and activities.

VWOs, like AMK FSC, SPD and Empower Ageing, have also done an excellent job in serving a broad range of needs in the community. And as Ms Denise Phua said, their reach extends beyond what the Government can do. So I thank them for their efforts, their hard work, and more importantly, heart work, in reaching out.

To help them to continue deepening their capability, and increase the impact of the good work they do, for instance, we started the VWO-Charities Capability Fund in 2002 to help VWOs train their staff, expand their reach and serve people better. In 2017, we set aside $100 million for the fourth tranche of the VWO-Charities Capability Fund (VCF).

The 250% tax deduction that we offer today on qualifying donations is also one of the most generous tax deduction schemes worldwide. Jurisdictions like Hong Kong, the US and Australia provide only 100% tax deductions for corporate and individual donations.

Matching grant schemes like the new Bicentennial Community Fund which I announced will also catalyse more funding to our IPCs. Together with the 250% tax deduction, effectively, every dollar donated can draw a Government contribution of up to $3.50.

The Minister for Culture, Community and Youth will elaborate on our efforts to support philanthropy and volunteerism at the COS.

We will keep Singapore safe and secure together. That is another important part of our partnership. So I am heartened that Members of Parliament, like Mr Henry Kwek, Mr Darryl David, Mr Dennis Tan, Mr Mohamed Irshad and Mr Vikram Nair appreciate the geopolitical situation that Singapore is in, and support our commitment to make sustained investments in our security and defence capabilities.

We have good men and women in our security forces and diplomatic corps. But they cannot be everywhere, or protect every flank.

Every Singaporean has a part to play through national movements like SGSecure. We must stay alert, stay united, and stay strong against threats, be it terrorism or cyber warfare. Everyone must play a part in Total Defence.

And we will find the best way forward together. But no one – not you, not me, not the Government, has all the answers.

Today, we consult, engage, and partner relevant stakeholders when formulating policy. So, I am glad Assoc Prof Walter Theseira and Mr Ang Wei Neng have spoken on the importance of feedback for more inclusive policy-making for the better of our society.

There is always room for improvement, and Mr Ang has given robust feedback, which our agencies will take seriously. But we must not stop at just making criticism, but reach out to one another, recognise that we may have different views, but we can work together and find the middle ground, find the right way. We will tackle our challenges and construct better solutions, together.

And as Mr Christoper de Souza has just reminded us, our political dialogues must not degenerate into political brinkmanship, as we are seeing in many developed countries.

I have spoken about the Singapore way – our way – with people at the heart of our policies, planning for the long-term while adapting to near-term circumstances, and doing it together, working in partnership. Our Budget reflects these principles, not just in the way we spend, as I had explained, but also in the way we fund our spending.

Many Members of Parliament in this House have called for more M&Ms, not the sweet chocolate candy, but "more and more". I, too, like M&Ms but our resources are finite, but our needs are growing and diverse. To square the circle, we need to use the right tools for the right needs, with these principles in mind. And we need all of these tools, to balance our Budget in the medium term. Let me talk about each of them in turn.

First, taxes. As individuals, we can all accept that we should pay for what we use. Similarly, each generation should pay for their own needs. We had debated this at last year’s Budget, and I am glad that many of you agreed with this. Nevertheless, there have been some reservations raised over the approach and timing of our plans to raise taxes going forward.

Ms Foo Mee Har urged the Government to postpone the GST hike for as long as possible. She suggested that the funds that we have set aside this term for various future expenditures like the MGP and the use of borrowing for future infrastructure expenditures could provide sufficient fiscal space to postpone the GST increase.

I appreciate Ms Foo’s suggestion to delay this. Let me assure her and Members of this House that the decision to raise GST was not made lightly. As the Government, it is our responsibility to anticipate, and plan ahead for future needs. While doing so, we also need to distinguish between one-off factors, and underlying structural increases.

The GST increase is needed to support structural increases in healthcare spending, among other important needs like pre-school education and security. Such healthcare spending is of a completely different scale and nature from the cohort-based package set aside for the Merdeka Generation or the Pioneer Generation. As mentioned earlier, the Government has systematically laid the foundation of a broad-based healthcare system that supports not only seniors, but all Singaporeans, regardless of their age and income. They support not only seniors but all Singaporeans, regardless of their age and income.

We now provide significant subsidies in all care settings – up to 80% in our public hospitals and for long-term care services, up to 70% for specialist outpatient services, and up to 75% for polyclinics. MOH expects to spend $6.1 billion in 2019 alone to subsidise patient bills through existing permanent schemes that all Singaporeans enjoy. This does not even include spending to enhance our healthcare facilities, and to research more effective treatments.

As our population ages, spending on permanent healthcare schemes and other parts of the healthcare system will continue to increase structurally. Funding this requires a structural increase in our operating revenues. In other words, the base of our healthcare spending is rising. Over and above this rising base, we have special packages set aside for our Pioneer and Merdeka Generations. Every ageing society faces similar structural spending pressures. A recent OECD paper highlighted that in the median OECD country, public health expenditure is projected to increase by almost five percentage points of GDP between 2018 and 2060. Five percentage points. The OECD’s recommended approach is no different from ours. To address the growing fiscal burden from higher healthcare spending and demographic change, without further ballooning of public debt, there is a need for these governments to raise primary revenues. The median OECD government is estimated to require additional revenues of 6.5 percentage points of GDP by 2060. 6.5 percentage point. What does 6.5 percentage points of GDP mean? To put it in perspective, we expect to raise about 0.7 percentage points of GDP with the planned 2 percentage point GST increase. So you compare 6.5 percentage points to the 0.7 percentage point of GDP that we have, and you see the scale of the issues in many places.

We have yet to decide on the exact timing of the GST increase and we will exercise care when doing so. We will continue to monitor the prevailing economic conditions, trends in expenditure, and buoyancy of our revenues carefully. And as I said in the Budget speech, we have also be preparing a transitional package when this comes in.

Next, related to the issue that Ms Foo Mee Har and other Members raised, I should also put into perspective the surpluses accumulated so far in this term of Government.

Forecasting is an inherently difficult exercise. Some revenue items are volatile, especially those dependent on sentiment-driven markets, such as Stamp Duty or Vehicle Quota Premiums. For instance, in FY2018, we had estimated that Stamp Duty collections would be lower because of property market cooling measures. But the property market defied our expectations. There can also be surprises on the expenditure side. The two-year suspension of the KL-Singapore High Speed Rail Project is a case in point. The unexpected surpluses over the last few years are not due to the introduction of Temasek into the NIR framework, as suggested by Mr Pritam Singh. The volatilities and uncertainties in revenues and expenditures, as I had just explained, account for most of this surplus. While the Government’s approach is to look ahead, plan ahead, and prepare for the unexpected, it seems that Mr Singh would prefer to look backwards to find unexpected revenue surprises, and count on them to keep happening. I am afraid such an approach of hoping for the best is not how we will secure Singapore’s future.

While there is room for improvement, the accuracy of our revenue and expenditure projections has been reasonable, and respectable by international standards. Actual revenue and expenditure figures have generally been within +/- 4% of our original estimates. The Ministry of Finance is constantly looking for ways to improve our forecasts. But the experience of other countries also shows that this is not easy to do. Japan’s revenue estimates, for example, had a margin of error of about 11% over the past five years. Hong Kong, a small open economy like us, averaged slightly better, at 8%. Nonetheless, we will see how we can continue to improve.

Mr Liang Eng Hwa also asked how the Government intends to use the accumulated surplus. First, let me clarify that any surpluses we have do not simply “disappear” at the end of the term. They become part of our reserves which are invested to generate returns, part of which will form Net Investment Returns Contribution (NIRC). As Mr Murali Pillai explained, when our economy grows, we have an obligation to contribute to the reserves to be used for the uncertainties of the future. We should also bear in mind that the business cycle can turn, and having some surpluses on hand can allow us to provide targeted support to segments that need help to tide over the downturn. For a major crisis, we can turn to the past reserves.

During the Global Financial Crisis in 2008 our accumulated savings allowed us to fund $15.6 billion, or three-quarters of the $20.5 billion Resilience Package, with the remainder being funded from past reserves. So, $15.6 billion, out of $20.5 billion, were from current reserves. In 2017, to support the construction industry to tide over a period of cyclical weakness, the Government brought forward about $1.4 billion of public sector infrastructure projects to start in FY2017 and FY2018. In planning for FY2019, we were also faced with the global economic outlook being downgraded by the IMF, as global trade tensions grew.

More fundamentally, we should not have the mentality of trying to spend everything that we have, before the end of each term of Government. As part of our long-term approach, we continue to review our plans for the long term and will deploy financial resources where necessary.

On this note, let me briefly reiterate the role of our reserves.

Today, the Net Investment Returns Contribution, or NIRC, is already the largest single contributor of our revenues – larger than any category of the taxes we collect. If we did not have the NIR framework, we would have had to double our personal income tax collection or our GST collection to raise the same amount of revenues. In fact, we would not even be able to raise the same amount of revenue because it is now the largest category and doubling all the rest does not give you that same amount.

Our reserves are our strategic asset. We are a small country, exposed to global forces beyond our control. Our reserves will allow us to tide over a crisis, without being reliant on others. We should not under-estimate the need for a rainy-day fund. Singapore faces particular vulnerabilities, given our lack of natural resources. With an economy worth nearly $500 billion a year, we should set aside enough to protect it and our people’s livelihoods and future.

So, let us stay disciplined. Today, we take up to 50% of the expected returns for spending, and plough back at least 50% to grow the principal and generate more returns. In this way, both the current and future generations benefit from the reserves, and we can be confident of our future.

Mr Pritam Singh referred to a Business Times article and asked for more data on our reserves so that I quote “that Singaporeans can crunch the numbers themselves, and better understand budget policy trade-offs”.

He has also filed a cut on transparency on GIC’s performance, which will be answered at MOF’s Committee of Supply.

But let me explain why he is misinformed. Our reserves comprise assets invested by MAS, GIC and Temasek. The size of MAS’ and Temasek’s assets is public information. Only the GIC portion is not disclosed, and that is because with the GIC figure, you get the complete picture of our reserves.

I was running the Monetary Authority of Singapore during the Global Financial Crisis, with Emeritus Senior Minister Goh Chok Tong as our Chairman. Let me tell you that in a crisis where the most powerful Central Banks in the world, and even some of the biggest financial institutions, were taken completely by surprise by the speed and scale of the turn in the markets and the global economy. Many things could have gone wrong. We not only rode through the crisis well, but emerged stronger. Having our reserves as a strategic asset played a key role in this. So, let us not squander this strategic advantage that we have.

Our reserves also serve as a strategic defence, to deter parties who wish to undermine the interests of Singapore and Singaporeans. Such moves go beyond currency speculation attacks, to other types of threats. As Mr Mohamed Irshad noted, we live in a VUCA world – volatile, uncertain, complex and ambiguous.

Our reserves, like our investments in defence and security, give us the confidence to plan long term, knowing that we will have the ability to take care of our people and to defend our sovereignty.

Lastly, let me talk about borrowing.

Over the next decade, we are making significant investments in our infrastructure to enhance connectivity and create new growth opportunities for tomorrow. As I mentioned in the Budget Statement, the Government is studying the option of borrowing carefully as a tool to finance major, long-term infrastructure, and will announce our plans in due course.

In my Round-Up Speech last year, I mentioned a number of infrastructure projects which our Statutory Boards and Government-owned companies are looking to borrow to finance. This included the Integrated Waste Management Facility by NEA, and the JB-Singapore Rapid Transit System Link, by LTA.

In this year’s Budget Speech, I mentioned our long term infrastructure needs. And as Ms Tin Pei Ling has noted, we also have to plan ahead for our ageing infrastructure. All these are long-term needs that have to be studied carefully. When ready, we will share more.

As these projects have lumpy upfront costs and benefits that span many generations, borrowing can be a fair and efficient tool to finance and spread out these costs, instead of raising taxes sharply to fund them. In this regard, there is a simple answer to Mr Pritam Singh’s question about how borrowing will impact revenues available for future recurrent spending. Mr Pritam asked how borrowing would impact revenues available for future recurrent spending. It does not. Borrowing does not create new revenues for recurrent spending. It merely converts a concentrated lump of spending in a few years into a smoother stream of loan repayment with interest .And we must have every intention to pay back what we borrow.

In fact, it is irresponsible for a Government to borrow to spend on recurrent needs such as healthcare and security. Such borrowing shifts the burden of paying for today’s needs onto future generations. This goes against the same principles of inter-generational equity that Mr Pritam Singh said he stands for. Mr Sitoh Yih Pin has rightfully cautioned against this, and has called for further safeguards to prevent excessive borrowing.

I share Mr Sitoh Yih Pin's views. If we proceed to use Government debt, we will make sure it is done in a disciplined and prudent manner.

Safeguards will be put in place to ensure that the debt, its interest and repayment are sustainable, and in line with the Reserves Protection Framework. Borrowing or not, it does not change the fact that all Government projects should be cost-efficient, well-managed and must yield economic or social benefits.

What do we have to show in 10, 20 years’ time? An important question – raised by Ms Tin Pei Ling. Borrowing is a financing tool. If used sustainably, it allows us to build a better living environment for our people, and to make Singapore a dynamic and liveable city. This is not just a question about growth, but also one of sustainability, as emphasised by Dr Teo Ho Pin.

Mr Pritam Singh asked if building Singapore will come at the expense of our green spaces. He should not take the word “building” so literally, not just in bricks and mortars. We have always incorporated greenery in our urban plans. It is not only part of our climate change resilience efforts, it is part of Singapore’s identity – a City in a Garden. MND will share more details on their greening efforts as part of their Committee of Supply.

As we calibrate our fiscal tools, the ultimate goal is three-fold – to remain pro-growth; ensure that our overall system of taxes and transfers remain fair and equitable; and keep the tax burden on the middle income low. There have been calls for the Government to do more in redistribution through the tax system, to address income and wealth inequality.

Mr Saktiandi Supaat suggested if we could tier GST for different goods, to lower the tax burden on the lower income. This has been raised multiple times in Budget Debates over the years, but let me briefly reiterate the key arguments why a multi-rate GST is a less efficient way to help the lower income.

First, it is difficult to define a “necessity”. Take bread, for example. There are the white, and wholemeal loaves that you can find at supermarkets, but there are also loaves sold at artisan bakeries. On top of that, there are so many other types of bread – floss buns, baguettes, kaya toast at your coffeeshop. Where do we draw the line?

Second, better-off households tend to spend more in absolute terms, and thus benefit more from these reduced GST rates.

Finally, the experience of many countries and relevant studies also show that a multi-rate GST system raises businesses' compliance and administrative costs significantly, which are then passed on to consumers.

Our approach is to have a flat GST rate, while providing structural offsets through the GST Voucher scheme. This is a permanent scheme to provide more help to lower income households and seniors. It is also more targeted, as those who need help most get it most directly. This is in addition to other schemes and programmes to help the less well-off.

Mr Yee Chia Hsing spoke about whether car ownership can be taken into account when means-testing, while Ms Jessica Tan and Mr Lim Biow Chuan asked if the Annual Value (AV) criteria can be removed

No criterion is perfect, but if we put all our different schemes together, we have a system that is progressive and, as Mr Yee Chia Hsing said, fair. If we use vehicle ownership, for example, should we distinguish among the make and model, and what the vehicle is used for?

The Government will continue to regularly review the eligibility criteria to ensure our schemes benefit the intended groups, whilst being practical to implement. For those who have specific needs, the best approach is to appeal to the relevant authorities which will consider each appeal based on its own merits.

Miss Cheryl Chan has argued for a number of other measures to address growing wealth inequality, such as the introduction of a net-wealth tax, or an inheritance tax. I spoke briefly about this during the Budget Debates last year.

There are many types of wealth taxes. What works best depends on the country’s overall tax system, and broader economic and social circumstances. Our approach has been to tax fixed assets, which as the name suggests, are fixed and less mobile. Indeed, a large portion of total Singapore household wealth is held in the form of housing assets.

We have two types of taxes on property – the Stamp Duty and Property Tax. We have been making them more progressive over the years. Owner-occupied properties enjoy a concessionary property tax rate, with the rate being higher for higher-end homes. The property tax rates are also higher for non-owner-occupied residential properties, such as those left vacant or rented out. In last year’s Budget, I introduced a new tier for the Buyer’s Stamp Duty, for value of properties in excess of a million dollars. We will continue to monitor developments in this space.

At this point, let me address the concerns arising from the increase in diesel tax. Mr Dennis Tan acknowledged that the increase in diesel tax makes our environment more resilient, but asked if this is worth the price of potentially higher business costs. We must go beyond framing this as a simple trade-off, to a broader understanding of the longer-term approach we are taking to address the increasingly urgent issue of vehicular emissions.

Diesel exhaust contains substantial amounts of particulate matter and nitrogen oxides, which are associated with an increased risk of lung cancer and respiratory infection. The long-term impact of excessive diesel use on the health of our family and children is significant. It is thus necessary to use a price signal to nudge diesel users towards cleaner and more sustainable alternatives.

Diesel tax is only one part of a larger roadmap to discourage diesel consumption. In 2013, we introduced the Early Turnover Scheme (ETS) which has helped more than 40,000 commercial goods vehicles switch to cleaner and more fuel efficient diesel vehicles. In 2018, we introduced the Vehicular Emissions Scheme (VES) to further incentivise the purchase of cleaner vehicles, and discourage the purchase of pollutive vehicles. It is encouraging to note that there were no new diesel taxis registered in 2018. The number of diesel taxis has also decreased by more than 30% from 23,700 in 2016 to 15,100 in 2018, as taxi companies switch to electric and electric-hybrid taxis.

Mr Gan Thiam Poh suggested exempting vehicles and machinery from diesel tax if there are currently no non-diesel alternatives. But this works against what we are trying to do. The increase in diesel tax will help nudge businesses which are heavy diesel users, towards greater efficiency. For example, companies can consider adopting consolidated logistics and use better routing applications to optimise their deliveries. In the interim, we have provided a transitionary offset package to cushion the cost impact till 2022, as businesses adapt to reduce their diesel consumption.

Mr Ang Hin Kee, Er Dr Lee Bee Wah, spoke about the impact of diesel duty on taxi drivers. We recognise the cost impact faced by taxi drivers. As Senior Parliamentary Secretary Baey Yam Keng said, all taxi companies have pledged to step forward to pass the entire savings from the Special Tax reductions to their drivers. There are also incentives being offered to encourage taxi drivers to switch to petrol hybrid taxis, as we strive for lower emissions.

This year, I had several good conversations with people about this Budget at various forums. Some asked me, “What about me? There did not seem to be anything in this Budget for me”. Even if there is nothing new for you this year, you and your family have certainly benefited from every one of our Budgets. As I said, we must not look at the Budget in isolation. One Budget builds on another.

So, let me outline how this Budget benefits different groups. Our young people have benefited from stronger support in education, housing and parenthood. They also benefit from the opportunities that a vibrant economy brings, as I explained earlier.

We provide up to $80,000 in grants for new BTO flats, and $120,000 for resale flats, and invest even more later on when estates undergo upgrading.

Parents can receive a maximum of between $18,000 and $32,000 in marriage and parenthood benefits for each eligible child, on top of paid maternity and paternity leave, tax benefits and pre-school subsidies.

Our middle income families, especially those feeling 'sandwiched' supporting retiree parents and school-going children would benefit from many schemes. For example, their children receive significant education subsidies. Without these subsidies, families would have to pay more than 60 times the current fees for their children in school. University fees would also be four times what Singaporean students currently pay. And this is for a world-class education.

The Pioneer and Merdeka Generation packages ease healthcare costs for their parents, and in so doing, help with their families’ overall expenses. This year, many will receive a number of top-ups, such as to their children’s Edusave or Post-Secondary Education Accounts (PSEA) accounts, and their parents’ CPF. All who pay personal income tax will receive a rebate.

Some middle income and upper income families also commented that the tax rebate of $200 is insignificant, and of not much benefit to them. But we must not forget that overall, income taxes are kept low, so that they can keep a large part of what they earn. This is, as Mr Ong Teng Koon mentioned, one of the key things that help with keeping expenses manageable.

I should share a story of a recent encounter with a Singaporean, who came back from a very developed country. And he told me, "Mr Heng, I am very happy to be back in Singapore. First, I am very happy to be back with my parents and family. But I am also very happy that I got a 32% pay rise." I said, "Wow! Your new employer has been most generous." He said, "No. My employer who sent me back from the headquarters kept my salary at the same salary. But when I added up all the taxes that I have paid in that country – at the city level, at the state level, at the federal level – it added up to 32% of my pay."

So, I thought that was a very powerful story. You can look up the tax rates of many of the countries that have extremely generous welfare system but, as some of you shared, the moment you take your paycheck, more than half has gone. So, let us not forget this point.

As Miss Cheryl Chan put it, we must not see the Budget as simply a "bag of benefits that serves some people in one year or the other". It is our strategic financial plan for the future. And because we take a long-term approach, we cannot see each year's Budget in isolation. Our Budget builds on the foundation of earlier Budgets. We have a multi-year plan, which tackles the priorities as systemically as we can. We plan ahead by setting out the strategy for mitigating and adapting the impacts of climate change. We look at the needs of different groups of people, as needs evolve and grow. We invest in growing our economy and in our people so that we have the resources to do more for our people and their children, and their children later.

So, I am glad that many Members have asked the question, "What is in it for us, for Singapore?", rather than "What is in it for me?"

Budget 2019, and our previous Budgets, are to build a better Singapore for all of us. All of us benefit from a Singapore which is strong and united. With a strong defence, to protect our way of life; a clean and green environment, a liveable city and endearing home; a vibrant economy, where opportunities abound; and a strong community, where no one is left behind.

My colleagues will share more on what the Government will be doing along these lines, during the Committee of Supply.

As Prof Yaacob Ibrahim, Mr Darryl David and Ms Cheng Li Hui have mentioned, our bicentennial is an opportune time for us to reflect on how we have come so far. On what we have built together, and what more we can do, as individuals and in our organisations, to strengthen our society. I look forward to our VWOs, clan associations and religious groups continuing to step forward – regardless of race, language, or religion – to uplift the disadvantaged amongst us. I look forward to more people – academics, professionals, and indeed all citizens – providing constructive suggestions on how best to tackle critical issues confronting Singapore, as Mr Christopher de Souza mentioned, on strengthening our social compact.

The bicentennial is also a good time to reflect on what being an independent, sovereign state means. It means fiercely protecting the precious freedom that we have to chart our own destiny, even as our relationships with our neighbours and the world change. It means appreciating that we have our own unique way of solving our problems – the Singapore way – and indeed not to be pressured to conform to theories which sound fashionable but do not work for us. It means committing to give our best, building on what past generations have done. Together, we can advance, and make this little red dot shine even more brightly. So, let us work together, to build a strong and united Singapore. [Applause]

1.05 pm

Mr Low Thia Khiang (Aljunied): Sir, I have a clarification.

Mr Speaker: Carry on.

Mr Low Thia Khiang: Thank you, Mr Speaker. I have a clarification for the Minister for Finance. I would like to know how long does the Government expect the increase in structural expenditure in healthcare to last? And at what speed it will increase? I understand that the increase is largely due to the ageing population. The biggest ageing generation is my generation – the Merdeka Generation. I would expect that we will diminish in number over time. So, how much exactly is the projection and expenditure?

Mr Heng Swee Keat: Mr Speaker, Sir, I thank Mr Low Thia Kiang for his question. I am glad that he is in the Merdeka Generation. And as I said in my speech, I hope that our Merdeka Generation will redefine ageing and that he continues to stay healthy, stay active and stay connected and live longer.

So, as to his question on how long will this structural increase in our healthcare expenditure last, in my speech, I mentioned what we have been doing, for instance studying the OECD's experience. I mentioned about the experience of a number of countries. Last year, I was in Japan to look at what they were doing to deal with the problem of an ageing population. And I must say that there are many variables that go into the long-term care costs and the long-term support that is needed.

In fact, the one Minister that I spent a lot of time with is Minister Gan Kim Yong because each time I see him, he comes out with a higher set of figures. So, if you ask me how long will this last, I would not want to mislead this House. We are continuing to study this very carefully. All I can say is, it is going to last for quite a number of years. As I said, there are many variables which are not certain; for instance, how will our lifespan change and what is the extent to which our seniors will continue to be healthy? How will medical advances change? And how would new drugs, new treatment methods change the cost structure and change the life expectancy?

There are many doctors in this House. And I think even if you ask all our doctors here, they would not be able to give you a definitive answer because there is a wide range of uncertainty. So, we must plan on the long-term basis. And we are not just having an ageing population, we are also having ageing infrastructure, as Ms Tin Pei Ling reminded us. As I said in my Budget speech, we are also looking all of these long-term needs very carefully and we will share this when ready.

Mr Speaker: Mr Pritam Singh.

Mr Pritam Singh (Aljunied): Thank you, Mr Speaker. I would like to thank the Minister for Finance for his round-up speech and addressing some of the issues that were raised in my speech. I want to revisit this idea of, not a cohort-based health benefits scheme for our seniors but something more permanent. My point really comes back to some of the other issues that were raised by Senior Minister of State Chee Hong Tat and some of the other Members. The argument really is, the Government will not know how much its surplus would be through the course of the term before it decides how much it can give out for these packages. So, you have to earn your keep before spending, so to speak.

But if you look at one of the Budget Annexes on the Analysis of Revenue and Expenditure, based on the NIRC component which includes both NII and NIR, for the last four years, it has come up to $62 billion. And based on the trending, it would probably to be about $80 billion over the course of one Government's term, provided it runs for its full five years. Be that as it may, I would like to make a quick reference to the Singapore Perspectives background paper which was released in 2018. This was an IPS survey that was carried out. I have an extra copy if I may, Mr Speaker, can I just pass it to the Minister of Finance?

Mr Speaker: Yes, please.

Mr Pritam Singh: Sir, on page 14 of the paper, which a Lee Kuan Yew School of Public Policy paper, there are two questions that are asked: first question is: would you be comfortable paying for higher social spending on the elderly through higher taxation instead of tapping on the national reserves? The second question is: should Net Investment Returns used to fund social expenditure for the current generation be increased and the amount reserved for future generations likewise decreased?

There is a response on page 13. The response is, slightly more than 40% respondents disagree to paying higher taxes to fund increased social spending on the elderly. The survey notes that while there were more neutral responses with the question on using a larger share of the returns from investing national reserves to finance higher social spending, more respondents agreed to the statement than disagreed with it. To a large extend, it is not surprising – people would react emotionally to issues of taxation, how it is funded and so forth.

But I think what was interesting was the final analysis from the IPS researchers which was, for both questions, respondents aged 45 to 64 years – and I am assuming Ah Seng and Ah Kong are part of this – respondents aged 45 to 64 years old were more likely to disagree to pay higher taxes rather than tapping on national reserves and to agree to using a larger share of the Net Investment Returns to finance current social spending for the elderly. This is the interesting part: this age group experiences the highest tax burden and may be feeling the greatest uncertainty about financing their own post-retirement living expenses.

So, with that as a gauge, I have to put the issue again about NIRC for which NII is a component. If you look at the Merdeka package about $6.1 billion, $8 billion with interest, and other components coming in, it is still a small percentage of the overall NIRC revenue that the Government is constitutionally allocated. In that context, is it possible to still consider moving away from cohort-based packages to something more permanent and universal, but with, of course, the additional MediSave top-ups and other issues which I raised in my speech as optional items, so to speak.

That is my first clarification and I apologise if I went too long. My next one is much shorter.

Sir, at the last Budget debate, the Workers' Party made a point that we support the Budget but because of the announcement on the GST, we voted against the Budget. Similarly for this year, we support the Budget, but our position on the GST has not changed. I just want to put that down for the record.

Mr Heng Swee Keat: Mr Speaker, Sir, Mr Pritam Singh asked about whether we should have a more permanent scheme. But if you have heard me carefully during the round-up, MOH already have many, many permanent schemes, many permanent subsidies. The $6.1 billion that it is spending on this alone will give you an idea of that. As I said earlier, we already have many structural subsidies which are already built into our healthcare system so the Merdeka Generation Package and the Pioneer Generation Package build on top of what we already have. This is a subsidy on a subsidised rate.

Sir, I think it is important for us to appreciate the care that went into designing this very complex system. We spent a lot of time thinking about how best we can do this in a sustainable way.

Second, the Member was citing the IPS survey and so on, as you can see in the IPS survey, respondents vary in their comments whether they should be funding current, they should be funding future and so on. We must not confuse the Merdeka Generation Package and the Pioneer Generation Package that has been set aside to fund these long-term care with the use of the NIRC. The NIRC comes into as a big pot, and that helps us to fund a number of other things.

The packages that we have, specifically target that group and the funds come from what we have today in current reserves. We have not touched the past reserves. As I said earlier, the reserves are a strategic asset for Singapore. You do not know how the global situation will develop and it is important for us to have that strategic asset for the long term. That is why my whole Budget round-up speech is about planning for the long term, while you address and adapt for changes for short-term developments.

Mr Speaker: Any other further clarifications?

Question put, and agreed to.

Resolved. "That Parliament approves the financial policy of the Government for the financial year 1 April 2019 to 31 March 2020."