Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [14 February 2023] [3rd Allotted Day]

"That Parliament approves the financial policy of the Government for the financial year 1 April 2023 to 31 March 2024." – [Deputy Prime Minister and Minister for Finance].

Question again proposed.

Mr Deputy Speaker: Miss Rachel Ong.

11.57 am

Miss Rachel Ong (West Coast): Mr Deputy Speaker, may I first thank Deputy Prime Minister Lawrence Wong and his team for setting up a thoughtful Budget 2023, with a focus on honouring both people and sustainable outcomes for Singapore. I am glad to share that many residents affirm the measures, especially those that support young families in making housing more accessible for them.

Budget 2023 also address enhanced employment support for the seniors, the lower-income, persons with disabilities and ex-offenders, which many of us welcome. In line with that, may I respond to the Budget statement by highlighting a need for a specific group of people that we should not miss: employment support for caregivers of people with severe disabilities.

In my brief time serving in the Purple Parade, a movement that supports inclusion and celebrates the abilities of persons with disabilities (PwDs), I have had the joy to meet some of the most inspiring PwDs and their caregivers. One of these outstanding groups are the people at the Rare Disorders Society (Singapore), also known as RDSS.

About 2,500 people are estimated to have a rare disease in Singapore. When we include their immediate family members, we are looking at approximately 7,500 people directly impacted by rare disorders. These members are not large, in light of the many competing needs in Singapore, and yet, for the same reason, it is easy for their real and valid needs to be overlooked.

Many caregivers of people of severe disabilities want to seek employment due to the high and ongoing expenses from their children's or ward's treatment, especially if they stem from rare disorders. The severity of disability means that their wards are not work-capable and need to be cared for consistently.

Due to the rarity of their illness, the cost of treatment can be extremely high. As Minister for Health Ong Ye Kung stated last November, medicines for rare disease patients can exceed $200,000 per patient annually. In the United States, the average annual cost of treatment per patient in 2019 was $42,000, with treatments ranging from $8,000 to $670,000 per year.

While there are various Government schemes and charities that provide generous grants and subsidies that may alleviate some of these costs, the financial burden remains great on the caregivers, especially if one parent has to stop work to become the main caregiver to their child. For these group of Singaporeans, finding work and work presents itself with great challenges.

First, limited reliable caregiving options. Respite care for people with severe disabilities is hard to come by due to the unique medical conditions they have. While there are various daycare centres for PwDs, very few are for people with severe multiple disabilities, such as those of the members of the rare disorders' community. As such, short of having an available grandparent or a helper to care for their child, it will not be possible for both parents to stay at work.

I take heart that the Ministry for Social and Family Development's (MSF) Enabling Masterplan 2030 includes the establishment of Enabling Services Hub, to provide respite care and engage PwDs in the community. On behalf of the caregivers of people with disabilities, I would like to sincerely appeal to the team looking into the service offerings of the hubs, to consider the needs of people with severe disabilities who are not work-capable, and so, expand the provision of respite care that is much needed for the caregivers of this group.

Second, limited flexible work options. Some of these caregivers may require daily visits to hospital for treatments for their ward, while others need to be responsive to sudden accidents and emergencies. As such, jobs with flexible work arrangements (FWAs) are the only viable options for them. These refer to jobs that allow for work-from-home (WFH), provide flexible timing or shift work that allows caregivers to work at night.

At the same time, because of their need for FWAs, caregivers tend to be streamlined to certain job roles that are generally more administrative and many times, as a consequence, jobs that pay less per hour. While many of the caregivers are educated and competent individuals with a range of skills to offer, in order to supplement the family's finances, they accept jobs that under-employ them and pay them significantly less because of the flexibility the jobs afford them.

Even with these lowered job expectations, it is still hard to find work because of the bias that some employees may have of them as being less productive. Amongst the caregivers in RDSS, those who found work that afforded them flexibility needed, opportunities often come through personal networks, rather than the traditional routes of finding employment, even after undergoing skills upgrading. We cannot assume that every caregiver will have access to such personal networks, given the amount of time consumed by caregiving.

Third, limited childcare leave options. For caregiving parents who are in the workforce, childcare leave halts when a child is above 12 years old, because it is assumed that the child should be sufficiently independent by then. This is not true for the parents of children with severe disabilities. The level of care needed does not reduce with age and may, in fact, increase depending on the progression of the disease.

In fact, some caregivers have had to approach employers to ask if they can use their personal medical certificates (MCs), in lieu of childcare leave, for their child who is above 12 years old, given their commitment to stay healthy to care for their children. Each day is a physical, mental and emotional balancing act of spending as much time as they can with their child, not knowing which day would be their child's last. This, while trying to address the increasing cost of long-term medical care, on top of finding ways to secure retirement adequacy for themselves and their wards.

These caregivers are simply looking for a fair opportunity to participate in the workforce, bring value with their competencies to earn a sustainable living and at the same time, show love to their parents while they can.

Mr Deputy Speaker, we have here an under tapped pool of Singaporean workforce embodying the grit and "can-do" fighting spirit that we so often have lauded. I have no doubt that employers that hire these Singaporeans will find for themselves some of the most diligent and resilient individuals, with valuable perspectives because of their unique life journeys.

The question remains: how might we be more intentional and progressive in finding ways to support and integrate caregivers who are fully capable, highly motivated and willing to be employed? Just as we have schemes to encourage companies to hire seniors and PwDs, may we consider putting in place schemes to make our workplaces more inclusive towards caregivers of persons with these severe disabilities? Can we look at how to encourage more companies to consider redesigning their work across job roles, allowing for greater flexibility for those that require it, not as a lifestyle preference, but out of necessity and livelihood?

We can, and must do more for this group of Singaporeans, to strengthen our social compact to build a Singapore Made for Families as Budget 2023 articulates, in all its diversity. Let us remember and support these caregivers and family members of people with severe disabilities, with their employment efforts for sustainable living. With this, Mr Deputy Speaker, I am thankful and I am in full support for Budget 2023.

Mr Deputy Speaker: Mr Alex Yam.

12.06 pm

Mr Alex Yam (Marsiling-Yew Tee): Mr Deputy Speaker, as the last speaker of this debate before the round-up, I had to redraft this speech a number of times, having heard many good ideas and suggestions from Members on both sides of the House, none of which, unfortunately, I can claim as my own now. But I will raise three issues today.

The first, on motherhood and parenthood. I think we can all agree that motherhood is one of the noblest vocations. We often speak of it in glowing terms: nurturing, caring and sacrificing. In reality, it is much more complex and complicated. Ask any mother and words sometimes like mess, stress, distress and tiredness will come up, but it does not take away the intangible joys and rewards of parenthood.

But neither can we gloss over the pressures that the role brings. Motherhood, therefore, to my mind, is the greatest and, yet, most neglected roles in society. We expect mothering to come naturally with motherhood. Unfortunately, it does not; no manual prepares you for it.

Even having more than one child is not a trial run. Jocelyn and I have four children, we know it does not prepare you for the next child when it comes along. However, there is an impression, unintended perhaps, that even as we support parenthood and motherhood in our society, that there are different categories of mothers.

Some people have mentioned that there seems to be an emphasis on the economic value of mothers. Over many speeches during this debate, Members have raised concerns over the Working Mother's Child Relief, which has been adjusted.

But it says much in the title: Working Mother's Child Relief, the operative word being "Working". The Inland Revenue Authority of Singapore (IRAS) website explicitly states the intent of this particular measure to encourage women in Singapore to remain in the workforce after childbirth. Under Early Childhood and Development Agency (ECDA) guidelines for additional childcare subsidy, the emphasis is also on working applicants, even for those seeking special approval, the first priority is those that are looking for a job.

I would like to suggest that, perhaps, we should support our mothers for who they already are, offer subsidies or grants, regardless of employment or economic value, and not just the basic grants. Consider them for the role, an important role that they play in society today, especially a country where our total fertility rate (TFR) is so low.

We are doing a lot already, but we should continue to do more because mothers are mothers, and not because of the economic potential, as I have mentioned. With our low TFR, I would, therefore, like us to consider the merits of adopting the following. These are existing examples that other countries have introduced.

The UK has a 52-week maternity leave system, perhaps to be introduced with Swedish flexibility, to take up the leave up to the age of eight for the child. French maternity health coverage from prenatal to post delivery, German hospital coverage for up to 12 days after birth, Finland's "baby box" system upon childbirth and aspire towards Iceland's 90% take-up rate for paternity leave. Norway has generous subsidies for childcare and daycare. And also, the French have a universal preschool system. Of course, all these are not without challenges, as each example in each country would throw up different varieties of issues.

But, there is more that we can do. And if the Minister for Finance would indulge me as well, even if we do adopt all of these, we should continue with Singapore's very generous Baby Bonus system.

The second issue I would like to raise today has to do with death and taxes. Two Finance Ministers ago, I characterised the Budget 2015, which was announced by then-Senior Minister Tharman at the time, with Beyoncé's lyrics, "to the left, to the left".

Mr Deputy Speaker, I am not about to sing another song, but this Budget has been described by some analysts as, perhaps, the most distributive in recent years. A number of good things have been said about it by residents and friends that I have met since its delivery on 14 February 2023, but there are murmurings of disquiet in some areas, two of which I would raise today.

The first is the tobacco tax. The one announcement that raises the most heckles in our "kopi tiams" is the increased tobacco tax. Based on latest available statistics, smoking prevalence is now around 10%, down from a higher 16% earlier this decade. While increase may help encourage some already intent on quitting to accelerate the move, the impact may be muted. Many of those who are affected by this increase are older, blue-collar workers.

The 2018 price hike, based on surveys, saw no discernable drop in sales. People eventually get used to the price increase. Thus, the increase may drive more towards: one, illicit products such as vaping, less "healthier" choice, I am using inverted commas, like unfiltered rolled cigarettes. And these will have the opposite health outcomes of what we are trying to achieve.

Please do not get me wrong, I would prefer to eradicate tobacco. But I see less sense in increasing taxes for a product with inelastic demand and users that are less likely to change their behaviour. Therefore, we should take a bolder move to undertake a generational break and ban sales to the next cohort of youths, such as adopted by New Zealand. While the current increase will still raise much needed, not-that-high revenue, I do not believe that the current tax increase will change smoker behaviour.

The second issue has to do with property tax increase. While not part of this year's announcement, the impact is being felt this year. Retirees in owner-occupied properties are experiencing increases, with rising house values and increasing rentals prices, many properties purchased decades ago are now seeing much higher Annual Value (AV).

Those we broadly refer to as "asset rich, cash poor" are affected. Some have said they feel it unfair, they worked hard to buy their own home decades ago but have to pick up a higher tab because of economic progress.

True, we could encourage them to sell and monetise, but often, these decisions are not just economic ones, they are emotive ones as well: they have raised a family here, they have grown up here, they have lived here all their lives. So, what can we do to help those who are truly affected by the increase? Will there be a review of this in the future?

Last of all, Mr Deputy Speaker, I would like to turn to the singular focus of why we do what we do in this august Chamber. Our Singapore.

We have had a remarkable journey for close to six decades, one that we hope will continue onwards and upwards. As one people, we have traversed through challenges and much difficulties. Difficulties that could have easily overwhelmed us in our nascent days. From nothingness, our unexpected nation has made tremendous progress from third world to first. Because we have walked as one people, one Singapore, COVID-19, our most recent challenge, has seen us at our best. People coming together to help each other through a crisis like no other. Was it a perfect journey? Certainly not. This is not utopia, after all.

But, we have done well. Our common struggle and heart for each other proves that this is a nation worth fighting for. Challenges will continue to come our way. There is no doubt about that. How we perform will depend on whether we act as one nation, or as a people divided unto ourselves.

We have succeeded and will continue to succeed because we act as one – people and Government together, people and people together. There is no binary Singapore – one versus another. Regardless of our backgrounds or stations in life, the Singaporean way has been one where we all play our part in co-creating a home that we call our own. This is not a tale of two cities. We must not underestimate Singaporeans and our ability to stand united as one, especially in the face of crisis and challenges. This Government stands with Singaporeans, all Singaporeans.

This year's Budget themed as "Charting Our New Way Forward Together" re-emphasises that. The indomitable spirit of Singaporeans has stood the test of time. That same spirit of endeavour, hard work, unity and common aspiration will carry us onwards. That is the Singapore Way. [Applause.]

Mr Deputy Speaker: Deputy Prime Minister Lawrence Wong.

12.16 pm

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

Many suggestions have been raised. I would not be able to respond to all of them in this round-up speech. Some specific issues, for example, on education, energy, healthcare and workplace safety, will be discussed later in the Committee of Supply debates. But I assure you that we have heard every feedback and will study your suggestions carefully.

Sir, putting together this Budget has been a delicate balancing act of finding that sweet spot. We want to get back to a more sustainable fiscal position. But we cannot taper down support too quickly because the economic outlook remains uncertain. We want to help Singaporeans tackle cost-of-living pressures. But we must be careful not to inadvertently generate more demand and worsen inflation.

At the macro level, the 2023 Budget is expansionary, not contractionary – contrary to what Assoc Prof Jamus Lim said yesterday. It is less expansionary than last year's Budget because we are coming off from the high levels of spending and that explains the negative fiscal impulse which he cited.

But the Budget does provide some support for what is likely to be a weaker economy this year, although we are careful not to overdo the spending in order to avoid fuelling inflation; which is something Ms Foo Mee Har also cautioned.

At the same time, it is not possible for the Budget Statement to cover everything. In the end, we have to be clear about our priorities. And in this Budget Statement, we have focused on securing economic competitiveness, supporting families and vulnerable groups and strengthening our resilience.

The questions raised by Members during the debate broadly revolve around three buckets of issues. First, are we taking too much and giving back too little? Second, are we doing enough to stay competitive and help our businesses and workers? Third, are we doing enough to help Singaporeans and households in need?

I will address each in turn and explain how we are updating our strategies for this changed world.

First, is the Government taking too much and giving back too little? Do we have any fiscal slack? The short answer is "no". Mr Leong Mun Wai claimed that we have "excess fiscal resources". The Government had spent $72 billion to fight COVID-19, of which $40 billion came from Past Reserves. So, he inferred that we had $32 billion of spare resources lying around. But that is mistaken.

Let me explain. During the pandemic, our society and economy were in an entirely different state. Projects were deferred and many planned and budgeted activities could not be carried out. So, the Government re-allocated these resources towards the more urgent task of fighting COVID-19. Now that we are in DORSCON Green, these funds have to be channelled back to what they were originally meant for. So, there is no slack here.

Mr Leong also claimed that the $24 billion injected into Funds in FY2022 and FY2023 were "excess resources", as the actual expenditure from these Funds would only occur in the future. Again, this is not accurate. All spending in the Budget, be it direct expenses or top-ups to Funds, are resources we set aside to meet real needs – be it to strengthen safety nets, improve productivity, or build critical infrastructure.

We set up Funds to meet specific funding commitments that are needed today and are stretched out over multiple years. For example, the GST Voucher Fund and Progressive Wage Credit Scheme Fund require top-ups when we enhance the parameters of the underlying schemes, as we have done last year and in this Budget. The monies in these Funds are already being drawn down today and not just in the future.

There are a few Funds where the disbursements are lumpy and not so predictable. For example, the outlays from the Changi Airport Development Fund for the development of Terminal 5 and other aviation facilities will be made in accordance with the progress of the infrastructure projects. For such large and lumpy expenditure items, the responsible thing to do is to set aside some resources whenever we have the means, so that we smoothen out the spending and we do not end up in a crunch when the monies are needed.

From time to time, we do get some revenue upsides. This is what happened in FY2021 and FY2022. Our fiscal position turned out better than initially projected only because we were able to get through the pandemic in much better shape than we had earlier feared. We have put these additional resources to good use, channelling them to support Singaporean households and businesses. This is why, as Ms Foo Mee Har has noted, our expenditure in FY2022, including special transfers, was revised upwards.

More importantly, as Mr Liang Eng Hwa highlighted, the right way to assess our fiscal position is to consider, not the year-to-year changes, but the broader medium-term trend. We have always been upfront and transparent about these fiscal projections and continually review and enhance the information we put out. As part of these efforts, MOF released an Occasional Paper earlier this month, and I am glad many Members referred to it and found it useful.

On the expenditure side, we expect Government spending that is now at 18% of GDP to reach 20% by 2030. In fact, even prior to the publication to the Occasional Paper, I had already highlighted this information. But here, I should emphasise that it is important to look at these fiscal projections as a percentage of GDP and not in nominal dollar terms, which Mr Leong had done. And he had suggested that we had somehow been imprudent in our spending, because our spending now exceeds $100 billion compared to pre-COVID-19 levels of about $85 billion. "What a large increase", he says.

But surely he must understand that nominal spending will increase with inflation and with a growing economy. In fact, between FY2019 and now, our spending remains at about the same proportion of GDP, which is around 18%. But looking ahead, with an ageing population and rising healthcare costs, we expect this to rise to around 20% of GDP by FY2030.

On the revenue side, without the GST increase and other tax moves we have made in last year's and this year's Budgets, the projections clearly indicate that we would not have sufficient revenues to cover the increases in spending. And so, you can see the gap in this chart. [Please refer to Annex 1.]

The revenue situation improves with the GST increase and the other tax changes made in last year's Budget. We have also updated the chart, from what was in the Occasional Paper, to take into consideration the tax changes in this year's Budget. Combined, the revenue moves will help to close the funding gap. [Please refer to Annex 2.]

But this assumes that we are able to keep our spending at 20% of GDP by the end of this decade. In fact, over the past decade, Government spending had risen by about three percentage points of GDP, and you can see it clearly from the chart – from around 15% to 18% today. So, to keep it at 20% of GDP by the end of this decade would already demand some moderation in spending increase, compared to past trends, which we all know is not easy to do.

Furthermore, these projections have not yet taken into account additional spending that may arise from new policy initiatives. There may well be very good reasons for more Government intervention, some of which we are contemplating under the Forward Singapore exercise. And many Members in this House have also suggested good ideas, but all of that means additional spending and the additional spending will then need to be anchored by a fiscal plan that is sound, sustainable and fair.

MOF will continue to monitor these revenue and expenditure trends closely. But the bottom line is that our tight fiscal position is very much a reality over the medium term. That is why we have to proceed with the second step of the increase in GST in 2024 as planned. Deferring this will only store up more problems for the future and will leave us with less resources to take care of our growing number of seniors.

And even as we increase the GST rates, we are also implementing and updating the GSTV, GST vouchers and Assurance package to cushion the impact of the increase.

Incidentally, Assoc Prof Lim said that the increase in the GSTV restores the Government's original promise to offset the GST increase. I find this a rather disingenuous phrase. Because it suggests that somehow, the promise had been broken in the first place, which is factually incorrect. We have been very clear in the Government – consistently saying some Budgets ago when we talked about the GST increase, that the GST comes with the GSTV and the AP. The AP is intended to delay the impact of the GST by five years for the majority of Singaporean households and by 10 years for the lower-income households. The GSTV is a permanent scheme and is targeted at lower-income households and the elderly and it is meant to keep our overall system of taxes and transfers fair and progressive.

All that was stated publicly and I have also consistently said that we will update the parameters of both schemes to make sure that they remain relevant as economic conditions change. So, this is not about restoring promises. This is about delivering on a promise that the Government had made. And this is what the PAP Government has consistently done and will continue to do.

What about other revenue options? We had discussed this extensively in this House. But let me, again, address the various suggestions raised, both in the run-up to the Budget and in the debate.

First, wealth taxes. As many Members noted, we already tax wealth in Singapore through property tax, stamp duty and motor vehicle-related taxes. And the taxes were raised in this and the last Budget.

The net wealth tax, which the Workers' Party had previously suggested, is a specific form of wealth tax that taxes the net wealth of individuals. On paper, it sounds attractive, but in practice, it is very hard to implement effectively. Many jurisdictions have tried, but no one has done it well. This is why many countries have done away with net wealth taxes over the years.

Even in Switzerland, which is often cited as a model, the reality is that the net wealth tax does not only target the very wealthy, who are able to avoid the tax through tax planning. And in the end, it is the middle-income and upper-middle-income groups who end up paying the net wealth tax. The Swiss collect about 2% of GDP in revenues through wealth taxes. This is comparable to what we collect in wealth taxes from property tax and stamp duties.

Second, corporate income tax, which several Members spoke about, including the impact of BEPS. Pillar One of BEPS re-allocates profits from where economic activities are conducted to where consumers are located. So, given our small market size, Singapore will lose revenue under Pillar One of BEPS. I have mentioned this before. That is something to bear in mind. BEPS has two pillars. We will lose revenue under Pillar One.

Pillar Two effectively sets a global minimum effective tax rate. The intent of Pillar Two is for large MNEs to pay more taxes wherever they operate. So, when Pillar Two comes into play and Singapore implements the Domestic Top-Up Tax (DTT), we will get additional revenue, assuming the affected MNEs here do not leave.

But that is a big assumption. Because the reality is, despite the professed intent of BEPS to tax MNEs more, countries are now rolling out vast subsidies to strengthen their competitive advantage over other countries and to re-shore and onshore activities. The US passed the CHIPS and Science Act and the Inflation Reduction Act last year and the EU is now responding with its own scheme – the Green Deal Industrial Plan.

So, competition for global investments will only get tougher. We may not be able to outbid the major powers in spending, but we certainly cannot afford to stand still.

Contrary to what Mr Louis Chua thinks, the MNEs based here are not stuck with us permanently. They are mobile and they have options, and they will certainly have more options when they decide where to locate their next investment project. Within the region, there are many other places where land and electricity are cheaper and wages are lower.

Sir, this is not a hypothetical worry. The MNEs are already making clear to us in our consultation sessions with them. Because of BEPS, they will no longer enjoy the same tax advantages in Singapore. Meanwhile, other countries in the region are cheaper while their home countries are offering very generous incentive packages. So, they ask us: what else can Singapore offer to stay competitive?

So, when Mr Louis Chua and Ms Hazel Poa talk about raising taxes for MNEs, my response is: please be very careful; we cannot afford to price ourselves out of the competition, or else Singapore and Singaporeans will end up the biggest loser. In fact, as we move to align ourselves with the BEPS rules, we will have to review and update our broader suite of economic development schemes to stay competitive as I mentioned in the Budget Statement. That will require more funding resources, and that is why MOF’s assessment is that the net fiscal impact of BEPS is unlikely to be favourable.

Third, land sales revenue. This was discussed last year; and Ms Hazel Poa highlighted it again in her speech. She suggested then and now that we spend from land sales proceeds by treating it as revenue divided over the period of the lease. So, basically under the proposal, the land sales revenues or proceeds will be spread out over the duration of the lease. In other words, if you have a 99-year parcel of land, you will get about 1% of the proceeds each year.

In fact, this alternative is not likely to generate more revenue than what we are already getting today from land sales over a period of time. Currently, when the state sells land, the financial proceeds go into Past Reserves, and they are invested to generate a stream of income into our Budget through the NIRC. The effect is that we will be able to spend more than 1% of the proceeds each year, because the reserves are being prudently invested and they generate long-term returns, half of which we get to spend as revenue. We believe this is a more sustainable way of deriving value from the land we own, through the NIRC that benefits us now and in the future.

I have gone through three alternative revenue options but the fact remains that it is very hard for any of them to replace the GST. And given our growing needs, it is not a matter of choosing between GST and any of these alternatives. Contrary to what the Workers’ Party believes, we will need all of them and a mix of taxes – on income, consumption and assets – to provide sound and stable public finances in Singapore.

Besides having a diversified revenue base, we also pay attention to the overall tax burden. And after factoring the changes in Budgets 2022 and 2023, including the full GST increase, Singapore’s tax-to-GDP ratio is 14%. This is considerably lower than most other advanced economies, as the chart illustrates.

In other words, compared to citizens elsewhere, Singaporeans pay much less in taxes and yet are able to enjoy high-quality public services. At the same time, this low tax burden rewards hard work and enterprise, and allows our people and businesses to keep most of what they earn. [Please refer to Annex 3.]

Aside from a low tax burden, some may ask: is the distribution fair and progressive? And here, our philosophy is that everyone has a part to play in building our nation. Everyone contributes, but those who are better off contribute more. Everyone benefits from Government spending, but those with greater needs benefit more. We believe this is what makes for a fair and inclusive social compact.

The outcomes are evident when you look at the benefits and taxes across different income groups. The top 20% bear the heaviest burden in taxes and receive the least in benefits. In recent years, for every dollar they paid in taxes, they received only about $0.30 in benefits.

Conversely, the bottom 20% paid the least in taxes, and received the most in benefits. For every dollar they paid in taxes, they received around $4 in benefits. [Please refer to Annex 4.]

What about the middle-income groups? Several Members including the Leader of the Opposition Mr Pritam Singh, Mr Xie Yao Quan, Ms Nadia Samdin and many others shared concerns of this group. And I assure you that the Government remains very focused on advancing the well-being of the broad middle of society.

How do we achieve this? First, by ensuring that they continue to enjoy real income growth. In fact, among the advanced economies, we are one of the few where people in the middle have enjoyed significant increases in real incomes in the last 20 years. Growth of median household real income per household member in Singapore over the last decade was more than 3% per annum. It is higher than what the middle-income in the US and most other European societies experienced and well above other Asian societies like Japan and Hong Kong. We will continue to do everything we can to help our broad middle raise their standards of living and support them in meeting their aspirations.

Second, by keeping the tax burden low for this group. I have shared earlier the low overall tax burden for Singapore, that was expressed as a percentage of GDP, as a percentage of our economy. But you can translate that to households and when you look at households in the middle quintile and the total taxes paid – total taxes, not just personal income tax but other indirect taxes as well – the effective tax burden is around 10% of income.

How does this compare to other advanced economies? My team did some estimates for the US, UK and Finland based on publicly available data. Not all the data are complete, we got what we could. But the estimates give a broad sense. And they clearly show that our tax burden is significantly lower than that of these countries.

In his speech, Mr Leong said that the middle-income in Singapore are, I quote, “already over-taxed relative to their income”. I think the facts and figures speak for themselves. What Mr Leong said is an outright falsehood. [Please refer to Annex 5.]

Several Members, including Ms Jessica Tan, Mr Louis Chua, Mr Dennis Tan and Ms Hany Soh were concerned about the impact of the changes to the Working Mother’s Child Relief (WMCR) on the middle-income groups.

And Sir, let me clarify this. When the WMCR was introduced, it was intended to encourage married women, and especially higher-income married women, to have children and continue working. At that time, higher-income married women had fewer children on average. And that is why the incentive was weighted toward this income bracket. But from our experience over the years, young couples in this income group typically base their decisions to have children on other factors and not so much on the WMCR incentive. Furthermore, the situation has now changed. Fertility has been declining across all income segments and we need to encourage couples in all income groups to have more children.

And that is why we decided to change the basis of the WMCR. And with the fixed dollar relief, we focus instead on providing support for children regardless of the mother’s income. And effectively, we are tilting the help towards those with greater needs. Importantly, the WMCR changes should not be seen in isolation because they are part of a package of moves to support marriage and parenthood in this and previous Budgets. And that includes enhancements to the Baby Bonus Scheme, the increase in parental leave provisions, all of which will benefit young couples, including higher-income couples, as they embark on their parenthood journey.

This brings me to the third point about what we do for the middle-income, because we really should not just look at individual schemes and changes to individual schemes, but we should focus on the overall taxes and benefits for the middle-income group. Here, again, it is clear that the middle-income on the whole receive more in benefits than the taxes they pay. In particular, for the middle 20%, the amount of benefits they received was about twice the amount they paid in taxes. This compares favourably with other jurisdictions, like the UK and Finland where the middle quintile received around $1.25 of benefits for every dollar of tax they paid – 1.25:1 – whereas our ratio is 2:1. [Please refer to Annex 6.]

This is for the middle quintile but some say, well, the middle-income group is very broad, but you can look at the slides. Even the upper middle-income groups, those in the 61st to 80th percentile, received about the same or slightly more in benefits compared to what they paid in taxes. They may not get as much in direct cash benefits compared to the lower-income groups, but they enjoy access to affordable housing, healthcare and world-class education.

Of course, in every Budget debate, comparisons will be made about made about why some groups got something and others appear to be left out. For example, over the last two days, we have heard Members like Ms He Ting Ru and Ms Shahira Abdullah asking about benefits for singles and single parents. I understand their concerns but we should not look at the Budget Statement in isolation.

In fact, the entire Budget itself provides for all groups. There are many existing schemes not highlighted in the statement per se but are in fact part of the Budget which everyone benefits from. And as the charts I have shown demonstrate, our system is fair, inclusive and progressive.

At the same time, we review all our schemes from time to time to ensure they remain relevant. So, we enhanced our parenthood and family-related schemes in this Budget. Next time, we will look at other schemes so everyone will get a chance.

Sir, this is how we have designed our system. It reflects our values and our sense of solidarity as a people. We encourage and support everyone to excel and be the best that they can be. We create and maximise opportunities for all. But we recognise that outcomes in life will not be equal. So, for those who are fortunate enough to do well and be in the top 20%, we hope they will feel that sense of commitment and responsibility to contribute their fair share and help uplift their fellow Singaporeans.

This compact goes beyond monetary support because everyone in Singapore, everyone including the higher-income, benefit from something very precious here in our society. We are a high trust society, stable and harmonious with strong governance and rule of law. This gives all Singaporeans the safety and security to raise our families, build our lives and pursue our dreams.

This sense of solidarity and trust is what makes Singapore exceptional. And that is why through the Forward Singapore exercise, we are refreshing our social compact so that it remains strong and relevant amidst a rapidly changing world.

Let me move on to the second bucket of issues around the economy and whether we are staying competitive and helping businesses and workers sufficiently.

Many Members spoke on this theme, including Mr Liang Eng Hwa, Mr Sitoh Yih Pin, Ms Foo Mee Har, Mr Sharael Taha and Mr Vikram Nair.

Mr Edward Chia and Mr Derrick Goh also highlighted sentiments from the business community where some have wondered, has the Government changed, has the People's Action Party (PAP) Government changed? Have we moved from a '"pro-growth" to a "pro-redistribution" approach?

Let me set the record straight. We remain focused on growing the economic pie, because only then can Singaporeans build better lives for themselves and their families. Only then will we have the resources we need to redistribute, strengthen our social compact, and progress as one people.

Pursuing growth will not be easy amidst a more challenging external environment – I mentioned that just now. Competition and geopolitical tensions will continue to rise as the major powers race for the commanding heights of the global economy.

Singapore has to adapt to this new era. And the good news is that we are moving forward from a position of strength. We are seeing healthy flows of investments, capital and talent into Singapore. And we are seizing these opportunities to build capabilities, strengthen our value proposition, and ultimately, create more jobs and opportunities for Singaporeans.

We must build on our strong foundations and leverage our competitive advantages fully, while managing our inherent and permanent constraints, especially in the areas of manpower, land and energy. We will always be a "little red dot". Manpower resources will always be insufficient, land will always be limited, and we will always be energy constrained. And so, we cannot compete on the basis of cost alone. Instead, we must focus on differentiating ourselves in terms of quality and value.

For example, we are not the lowest-cost seaport in the region, or the world. Yet, shipping companies prefer for their goods to transit and transship through Singapore, because of our good connectivity, robust port infrastructure and comprehensive range of maritime services. Our port is highly efficient, containers do not get lost, shipments are cleared promptly and reliably without shippers having to make any special or informal arrangements. This is just one example of how we differentiate ourselves.

But clearly, given the more challenging external environment, we must redouble our efforts to raise our game. We must build more capabilities. And we certainly cannot score own goals, do moves that will price ourselves out. We must work hard to be more competitive and anchor more quality investments. And that is why we are setting aside additional resources and expanding the scope of the National Productivity Fund.

Because having more high-quality investments here will help to grow our economy and create more jobs for Singaporeans. And this will also benefit our local ecosystem, especially through the transfer of technological know-how and expertise to our SMEs.

Take the example of our medtech sector. We have built this up over the years, anchored by MNEs like Waters Corporation, Illumina and ResMed. These companies have brought cutting-edge capabilities to Singapore through their investments. Over the years, they have sunk roots here and contributed to the growth of our medtech ecosystem. They have developed strong partnerships with local companies like Richport, Nanofilm and Sunningdale, enabling our local enterprises to improve their capabilities and scale up their businesses to reach out to more customers.

At the same time, we are continuing to put in significant resources to nurture and grow our local enterprises, especially our SMEs.

In fact, the amount of support extended to SMEs through capability building grants, like the Productivity Solutions Grant, the Enterprise Development Grant and the Market Readiness Assistance Grant doubled between 2019 and 2022. The number of Singapore enterprises that we supported to build new capabilities, innovate and expand overseas increased by about 60% over this period. The additional schemes introduced in this Budget demonstrate our continued commitment to supporting our SMEs.

Several Members, like Mr Seah Kian Peng and Ms Janet Ang, highlighted the challenges that SMEs face amidst rising business costs. We understand. There are challenges. And in this Budget, we have rolled out some measures to help businesses with some of their immediate cost pressures. This includes the Government taking on a major share, 75%, of the cost of wage increases under the Progressive Wage Credit Scheme.

But the main thrust of our support for SMEs is focused on helping those who are prepared to take steps themselves to restructure their businesses, raise their productivity and venture into new markets and products. Because, as Prof Hoon Hian Teck said, this is the only way for enterprises to survive and thrive on a sustained basis.

We take a sectoral approach through the Industry Transformation Maps to help our economy restructure and transform, because the circumstances, needs and starting points of each industry are very different. And several Members like Mr Pritam Singh and Miss Cheryl Chan spoke about this. Overall, we have made good progress in this transformation journey. In particular, outward-oriented sectors like manufacturing and financial services have achieved strong productivity growth and job creation.

But as Ms Poh Li San and Mr Leon Perera highlighted, the domestically-oriented sectors like construction, retail and F&B face more challenges. This is not unique to Singapore at all. All countries face similar challenges. in these sectors, they will need to adopt structural solutions to increase productivity and grow sustainably. But there are some encouraging signs.

In the construction sector, for example, more firms are moving towards Design for Manufacturing and Assembly, which includes using prefab modules and units. In the F&B sector, we have seen more companies with multiple outlets adopt central kitchens to automate and streamline their operations and take advantage of economies of scale.

These and other strategies will help such sectors raise their productivity and reduce their reliance on manpower.

So, overall, we have made progress, but we still need to go further. And that is why we will press ahead with our work on industry transformation and we also hope to see more companies making full use of the schemes available to restructure and transform.

Even as we press on with productivity improvements, we also have to gear up for the green transition and the decarbonisation of our economy. And several Members, including Ms Carrie Tan, Dr Lim Wee Kiak and Prof Koh Lian Pin spoke passionately about this.

There is clearly much more we will need to do to prepare businesses, workers and our economy for this green transition. I had announced several significant moves in last year's Budget, including our net-zero target and the carbon tax trajectory. Many of these moves are a work in progress, and the Minister for Trade and Industry will be happy to share more, I am sure, at the Committee of Supply.

Mr Derrick Goh and Mr Don Wee also shared that the application process for grants is sometimes cumbersome for SMEs and disbursements can take a long time.

We hear these concerns. Our economic agencies will continue to work closely with companies to support them through the different stages of growth. For example, SMEs can tap on the GoBusiness portal which offers convenient cross-agency access to over 100 Government assistance schemes.

In processing applications and claims, we strive to be as efficient as possible, while ensuring accountability and safeguarding the integrity of the system. So, I hope Members understand this need to balance speed with the need for accountability in the use of public monies. But we certainly welcome further feedback. We will look into your suggestions and our agencies will continue to streamline and improve processes.

As we grow the economy, we will also ensure that the growth translates into better jobs and opportunities for our workers.

In a dynamic and vibrant economy, we must expect a continual refreshing and updating of jobs. Unproductive jobs will become obsolete, and new, better, more productive roles will be created in their place. These new jobs could be within the same companies and sectors as where the unproductive jobs are eliminated. They could also be offered by more successful and expanding employers in the same sector, or in other sectors altogether that grow to take the place of the declining ones.

This churn is an integral part of healthy economic growth. But it does create uncertainties for workers, because workers will need to reskill and upskill to stay relevant and take on new roles, be it in the same company, or in a different company, or even in a different industry altogether. That is why we are investing significantly in skills and human capital, to help our workers progress in their careers and earn better wages.

We started this journey – in fact, it has been an ongoing journey, but we made a further push with the SkillsFuture movement in 2015 and we have made progress since then.

At the individual level, through SkillsFuture, we have empowered individuals to take charge of their own skills development and created a culture of lifelong learning, which is growing.

Amongst our institutes of higher learning (IHLs), we have brought about a major mindset and paradigm change. Our universities, polytechnics and ITE no longer just focus on pre-employment training, but they are now firmly embedded in the continuing education and training space.

At the employer level, we have also made progress. In the past, when you asked employers about the competencies and skills that their workers need, you probably might not get a clear response. Through efforts like NTUC's Company Training Committees, employers and unions are coming together to focus on job redesign and training.

Yesterday, many Labour Members of Parliament spoke passionately about this. And you can hear from the speeches that we have come a long way, but we will do more. The Jobs-Skills Integrators is the next move to strengthen the training and placement ecosystem for our workers. Actually, the role that the integrator plays is not new. We have always recognised the need for such an entity – it could be a training provider, a company or an industry association – but there is always a need for such an entity to act as a coordinator and bring together the various stakeholders in a particular sector. Up to now, this integrator role has been done in, perhaps, a more ad hoc fashion. But we have studied the experience of other countries, like Sweden and Switzerland, which have formalised such a role, and seen some positive outcomes.

And that is why we decided to pilot the Jobs-Skills Integrators in three sectors for a start and we have chosen sectors where there are more SMEs and more mature workers. We hope that with additional Government resourcing for this new formalised role and very clear outcome indicators and KPIs, we can achieve better quality training and job matches.

I appreciate the strong interest in the Jobs-Skills Integrators. We are only at the start of this initiative and there is still much more to be done. The Minister for Education will share more at the Committee of Supply.

Several Members – Mr Patrick Tay, Ms Mariam Jaafar and Assoc Prof Lim – also spoke about the challenges that mature workers will face especially if they are displaced or retrenched, and I agree with them.

Younger workers in their 20s will often be able to get back to work quickly, particularly in the current tight labour market, where there are still high vacancy rates and job openings.

But if you are in your 40s and 50s, and are displaced or retrenched, it is harder to find a job.

At that age, many will also have heavier family responsibilities, to their young children, ageing parents, or both.

So, they find it difficult to go for more extensive training, especially to switch to a new growth area. Instead, many will just take the first job available, even if it is not such a good fit for them.

That is why we are studying how we can better support our displaced and mature workers through these challenging transitions and setbacks.

I hope Members appreciate that we have to think through and design these moves carefully. We have to ensure that whatever we do does not erode the incentive to work.

This is, again, not theoretical because we have seen the results of unemployment benefits offered in other places where displaced workers receive generous benefits, but they then find it more attractive to stay unemployed than to get back into the workforce.

We want to avoid these negative outcomes. So, what we really should be thinking about is more like targeted re-employment support.

We want to provide some cushion while the workers undertake training to upgrade their skills and take on new roles that better fit their abilities and aptitudes.

Ultimately, we want to help Singaporeans bounce back stronger from any setback that they may encounter throughout their careers.

So, we will consider this and other moves to strengthen our SkillsFuture ecosystem and we are, in fact, deliberating and looking at this very carefully because our workers will always be at the heart of our economic strategies. And when workers across the whole economy find their work meaningful, the result will be higher job satisfaction, greater fulfilment and a boost to productivity.

Members in this House, I am sure, will remember that it was not so long ago when the Government was being criticised for pursuing a "growth at all costs" strategy – that we were chasing economic growth at the expense of Singaporeans. I think Ms Carrie Tan and Ms Nadia Samdin, to some extent, echoed some of these sentiments in their speeches, when they talked about adopting different models of success that are not just driven by a single-minded pursuit of growth.

At the same time, now that growth is slower, we are in a different situation. Many Members in this House now are concerned that we are not sufficiently focused on growth. That if we are faced with a shrinking pie, contentious disputes over how to distribute limited resources will be inevitable, which can be very socially divisive, as we have seen in many other countries.

But Sir, in fact, we have always taken a balanced approach in our economic development and strategies. Our focus has always been to grow the economy, not for its own sake, but as a means to improving the well-being and lives of everyone in Singapore.

In all that we do, we work closely with our tripartite partners. As Senior Minister of State Heng Chee How, Minister of State Desmond Tan, the Labour Members of Parliament and Mr Raj Joshua Thomas highlighted, tripartism is the competitive advantage that sets Singapore apart and distinguishes us from other countries. Our model of tripartism has been the bedrock for Singapore's growth and prosperity. And it has been critical in enabling us to rebuild from crises and to emerge stronger.

So, in Singapore, it is not about "pro-business" versus "pro-workers"; neither is it about "pro-growth" versus "pro-redistribution".

It is about all of us – employers, unions and the Government – coming together, working together to advance the well-being of Singaporeans and build a better future for ourselves and our children.

The third broad bucket of issues is about whether we are doing enough to help Singaporeans and households in need. And indeed, many Members spoke up in this area and supported the Government's efforts to help Singaporeans.

Cost-of-living is a key concern for many. And that is why we have provided comprehensive measures to help Singaporeans cope with higher prices.

Our focus is on the lower-income groups. But the help extends to sandwiched and middle-income families too, like those whom Mr Xie Yao Quan, Mr Abdul Samad and Mr Mohd Fahmi Aliman were concerned about. That is why we have designed our packages to provide more help for larger families with young and elderly dependents.

And we will continue to review our social support schemes and their means-testing criteria, taking onboard all your suggestions, including the Annual Value (AV) thresholds, to ensure that Singaporeans in need receive the support that they need.

I am also heartened by the efforts of the Consumers Association of Singapore like Price Kaki which Mr Melvin Yong spoke about and we will consider and look into his suggestions as well, and the fact that companies like NTUC FairPrice and Sheng Siong are doing their part to help cushion the impact of higher prices.

Another topic that many Members spoke about is on housing affordability. We debated this at length earlier this month. I was not going to touch on it originally but since so many of you spoke about this, I thought I should cover it briefly in my remarks.

We are all concerned about the affordability and accessibility of public housing in Singapore. But I think it is important we understand the underlying causes for the challenges we face today. Because failure to diagnose the problem properly can lead to the wrong solutions.

I say this with some perspective because I was in the Ministry of National Development (MND) during the period when HDB resale prices came tumbling down. They fell for six consecutive years from 2013 to 2019. Mr Desmond Lee is in the hot seat now. I was in the hot seat then for a different reason. And at that time, we used the same methodology to price Build-To-Order (BTO) flats then, as we are doing now. But when resale prices were falling, no one seemed to be unduly concerned about the prices of new flats. On the contrary, there was a great anxiety that there would be a huge overhang of flats and we would end up with a price meltdown.

And that is precisely why the Workers' Party proposed in 2019 to cut back the annual BTO supply to just 9,000 flats. I read the letter published in The Straits Times today. The Workers' Party now says that it was not a proposal. Well, come on. You can call it whatever you want. But it was quite clear in the Working Paper in a section headlined "Calibrating the construction of new BTO estates"; it says very clearly that "around 9,000 or so dwelling units are required annually" based on various population parameters, otherwise HDB will have a vacancy rate problem. Fortunately, HDB did not take their advice. That was up to 2019.

Then how did the situation change so quickly in the last three years? We had a pandemic that disrupted our BTO building programme. And when that supply was disrupted and waiting times became longer, people felt anxious and more started applying for BTO flats earlier. Others decided to get a resale flat instead because waiting time was so long; so that drives up resale demand. So, we had a confluence of both delayed project delivery and increased demand, contributing to the situation that we are in now.

Who could have anticipated and predicted all this? Really? Indeed, if we had adopted the WP proposal – well, never mind, heeded their advice since you do not want to call it a proposal – and if we had done so and cut back the building of new flats and adopted their subsequent proposal to allow singles aged below 35 to buy new flats, we would be facing a much bigger supply-demand imbalance today. So, you know, let us all show some humility in this. What happened could not have been predicted and let us refrain from passing judgment with the benefit of hindsight.

Under the current circumstances, the WP now says that the house price-to-income ratio should be lowered to three. Well, actually, why stop at three? Why not make it two, or even one? Regardless of the number, more funding will be required to make new flats cheaper. No one disputes that. Someone has to pay.

But, I think, the WP does not want to talk about increasing subsidies and making the taxpayer cough out more. So, they have chosen instead to go with what they think is probably a more expedient and seemingly painless option – which is to dip into the reserves by selling the state land to HDB at a lower cost.

But we must remember public housing land is sold directly to HDB at a fair market value determined by the Chief Valuer (CV) using established and accepted valuation principles. What would be the basis for the Government to get the CV to change the valuation method? In fact, it is precisely because we do not want the Government to influence the CV's decision that we have safeguarded the post of the CV in the Constitution and made the appointment and removal of the post subject to the President's veto.

Mr Pritam Singh alluded to, in his question, that there is a discrepancy because State Land sold under the Government Land Sales (GLS) programme can potentially enjoy a 15% discount. But that is a red herring.

The fair market value of State Land sold through an open tender, such as under the GLS programme, is determined through price discovery when developers bid for the land.

We set a reserve price for these tenders. It is at 85% of an estimated market value as determined by the CV. But that is a reserve price, not a discount.

And this reserve price serves as a guidepost for the Government to assess the bids that are received before awarding the tender. For example, if the highest tendered price is below this 85% threshold, we might want to check this against other factors like the prevailing market conditions, the number of independent bids received and the specific circumstances about the site.

So, it is a guidepost for us to do our checks. And if we are convinced that the bids are competitive and reflect actual market conditions because it went through a tender process, then we would still proceed with the highest acceptable bid in the tender because that is the fair market value of the land.

Public housing land is not sold through an open tender like the GLS programme because there is only one developer – the HDB. But HDB flats are purchased and sold all the time in the open market. There is a well-established open market value for the flats, and therefore working backwards, one can calculate the value of the land used to build HDB flats. These transactions provide the CV with up-to-date market data to consider when making his or her independent determination of the fair market value of public housing land. These valuations are based on objective facts; they are not an arbitrary subjective opinion. It is also real, as every HDB homeowner knows who has sold his flat for more than he paid HDB, and used the capital gain to upgrade to a bigger flat, or to put aside for their retirement needs.

The bottom line is you cannot just change the way land is priced to bring down the selling price of flats. And if you were to try to artificially "reset" the housing market in this manner, you will risk destabilising the entire property market.

Actually, Assoc Prof Lim recognised this in his Facebook post two days ago. He said that with the proposal by the Workers' Party to reduce the land price, some homeowners who have bought their flats under current terms and subsequently wish to sell their flat for various reasons, quote, "may go underwater" or, quote, "have to stomach a loss". Is that what the Workers' Party wants to do – to arbitrarily wipe out a significant chunk of the value of Singaporeans' hard-earned properties?

But at least Assoc Prof Lim acknowledged this problem. Because Mr Leong Mun Wai, who similarly wants HDB BTO prices to be drastically reduced, has claimed that his proposal has no impact on the resale market and Singaporeans can have their cake and eat it too – cheap BTO prices, high resale prices, home buyers still enjoying enormous capital gains, and the Government does not have to do anything. It seems like magic, but it is really a raid on the reserves.

Suffice to say, there are no magic solutions to solve the current housing issues. The Government's approach – and what we believe is the right thing to do – is to tackle the root cause of the problem. What is the root cause? It is supply! So, let us ramp up BTO supply; catch up with the delays that had arisen over the COVID-19 period. HDB is doing the best it can, and Ministry of Finance (MOF) is supporting them with the resources to do so and I am confident that we will, through all these efforts, get things back on track soon.

There is also a view being put out by some Members – I think, Ms Hazel Poa and others highlighted – that the Government's policy on land value is driving up public housing prices, that leads to continued increases in subsidies for BTO flats, which may not be sustainable. But now, again, we are looking at this now and the concern arises because of the current cyclical tightness in the public housing market. The situation will be different once the market stabilises or if you have a down market. So, rather than look at the ups and downs, cyclically, the fact is land value will ultimately be based on economic fundamentals.

Meanwhile, because it will take time for the supply to go up, we have made some moves in this Budget to manage demand. In particular, we are giving greater priority to families with children and married couples aged 40 and below, who are buying their first home, and the additional ballot will significantly increase their chances of securing a BTO flat, especially one in a non-mature estate.

And we are increasing the CPF Housing Grant for resale flats, so that eligible first-timer families and singles with more urgent needs can purchase a resale flat.

I know quite a number of Members have highlighted concerns that this increased grant will cause sellers to ask for higher resale prices and may not work. I understand the concerns. And in fact, there will always be a risk like this when we increase the grants. And that is why we considered it very carefully, and we took into account the property cooling measures we had implemented and HDB’s progress in ramping up the BTO supply, before we decided on this move.

Furthermore, not all flat buyers will benefit from the increased grant. Based on the data on resale transactions over the last two years, only about one-third of resale flat buyers received the CPF Housing Grant. So, while the enhanced grant may have some impact on resale prices, overall first-timers should benefit from the grant and pay less when they buy a resale flat. That is the intent. This is a targeted support measure, rather than a broad-based move; and we are confident that it will help first-timer families and singles buying in the resale market, and indirectly also reduce some of the demand for BTO flats.

There is certainly a lot more we can cover on housing. This is not a housing debate: it is a Budget debate. So, I have focused on the key points, especially where it relates to land and reserves matters. But I am sure there will be more to discuss, and the Minister for National Development will address them at the Committee of Supply.

Many Members including Dr Wan Rizal, Mr Desmond Choo, Mr Leon Perera, and Mr Christopher de Souza also spoke about what more we can do to tackle the related issues of inequality and social mobility.

As I highlighted in the Budget Statement, our moves to uplift lower-wage workers through Workfare and Progressive Wages are showing results. Over the past five years, our lower-wage workers have consistently seen higher income growth than those at the median. So, we will continue with our efforts to uplift the incomes of lower-wage workers.

Last September, we expanded the Progressive Wage Model (PWM) to workers in the retail sector. Next month, workers in food services, as well as administrators and drivers will come on board. In July, we will cover workers in waste management. Taken together, our Progressive Wage approach covers the vast majority of lower-wage workers. So, the moves we are making will have a positive impact in uplifting their salaries over the coming years.

Beyond these PWM sectors, we are charting out skills-based career ladders for tradesmen in key essential services like plumbers, electricians and aircon mechanics. Earlier this month, the Labour Movement mooted the Career Progression Model, a new framework which will uplift the work prospects and wages of skilled essential tradesmen and professionalise these trades. The Government will support the Labour Movement in these efforts.

We are also focusing on new entrants to the workforce, especially our ITE graduates, which Mr Desmond Choo and others spoke about. We are equipping them with industry-relevant skills and a strong foundation for future learning. In fact, through programmes like the Work-Study and Technical Diplomas, ITE graduates are seeing better employment outcomes, with median starting salaries that are comparable to those of polytechnic diploma graduates. These are positive indications and we will continue to do more.

The Government will do our part, but we will not be able to narrow wage gaps on our own. As many Members highlighted, to ensure sustainable growth in real wages for our lower-wage workers, Singaporeans need to chip in too.

As consumers, all of us must be prepared to pay more for services delivered by our fellow Singaporeans, be it cleaning of our housing estates, air conditioner servicing, security, or retail. Most importantly, we must treat everyone with dignity and respect, and value everyone for the work they do. That is why we join our brothers and sisters in the NTUC to affirm that “Every Worker Matters”. This is not just a slogan; it is a fundamental tenet undergirding our entire approach of nation building.

Besides dealing with inequality, we must ensure that social mobility remains alive and well in Singapore. We have done better in this aspect than many other advanced economies. But any society which has been stable for a long time tends to stratify. That is why we must collectively lean against this tendency and do more to uplift disadvantaged groups.

Here, support in the early years matters critically. That is why we have been making significant shifts on early childhood over the past few years and we will do more to narrow the preschool enrolment gap between children from lower-income households and their peers.

We are also helping lower-income families tackle the complex and multi-faceted challenges they face holistically and through better coordination. I spoke about this in the Budget.

Today, we have different Government agencies overseeing various schemes – for example, HDB has the Fresh Start Housing Scheme, MOE has its UPLIFT Initiative, and ECDA has KidSTART and so on. But in the end, our approach cannot be scheme-centric; it must be family-centric. That is why we are streamlining common functions such as outreach, befriending and case support under ComLink to serve the 14,000 families with children living in rental housing.

The officers engaging these families take a different approach. They do not just promote specific Government schemes. Their starting point is the needs of the families – to find out their concerns, and what we can do to support them, such as helping them secure a better job, or ensuring that their children attend school regularly or have a conducive environment to study in.

We are seeing many success stories of families being uplifted through this approach. It requires much more work and effort on the part of our officers; it also requires us to work closely with social workers and community partners on the ground. But ultimately, it is the best way to encourage and empower families to achieve success and to sustain their progress.

Tackling inequality and sustaining social mobility is really about making our system of meritocracy work well for all Singaporeans. In fact, we have long recognised the problems with an “unbridled" and "winner takes all" meritocracy, which Mr Leon Perera spoke about. That is why we set out to achieve a more open and inclusive meritocracy over a decade ago. So, I am glad that Mr Leon Perera agrees with and supports the Government’s objectives.

In fact, Members would have seen the many moves we have made towards these objectives over the years – from the earliest years of life to our efforts in schools and the labour market. We are not done yet, and we are actively working on all fronts to minimise social barriers and encourage mobility, because this is what Singapore has always been about and must continue to be. We remain open to all good ideas. We are pragmatic and we are also realistic. This is not about pursuing the latest fashion or fad in policy thinking. We will focus on what works, and what is effective in bringing us closer to our goals.

Another group that we are focusing on is our seniors. Many Members spoke about this, including Ms Jessica Tan, Mr Yip Hon Weng, Mr Dennis Tan, Mr Sharael Taha, Mr Henry Kwek, Mr Saktiandi Supaat, Ms Tin Pei Ling and Ms Ng Ling Ling. They covered many areas, including employment, retirement adequacy and care options. Let me touch on these briefly.

We all know that as our population ages, our healthcare needs and costs will increase. The strains on families and caregivers will grow. That is why we have been making moves in the Budget in recent years to take better care of our seniors. For example, seniors will receive significant benefits under the enhanced Assurance Package and the GST Voucher scheme.

Besides providing near-term support, we want to help our seniors live healthily and independently for as long as possible. I also agree with Members that those who wish to continue working should be well supported to do so. That is why the Government is progressively raising the retirement and re-employment ages and providing substantial employment support for seniors. Over the past five years, we have seen an overall improvement in the employment rate of senior workers and we will continue to push for further improvements working together with our tripartite partners.

As part of the refreshed Action Plan for Successful Ageing, we are also stepping up efforts to help our seniors remain socially active in the community.

And when our seniors retire, we want them to enjoy their silver years. That is why we have been working hard to boost the retirement adequacy of different cohorts and segments. It is the reason why we are progressively raising the CPF monthly salary ceiling. The increase is intended to keep pace with the 80th percentile of monthly resident wages, which crossed $8,000 last year, and to help middle-income Singaporeans save more for retirement.

Some Members have expressed concerns that the increase in the ceiling will add to business costs and reduce the take-home pay of middle-income workers. I understand the concerns, but I also hope Members appreciate that the move will, in fact, benefit workers. Because they will have more CPF savings, which can be used for healthcare and housing. Importantly, they will be able to save more and strengthen their retirement security in the longer term.

We are phasing in this increase over four years because we have consulted our tripartite partners, engaged them and listened to their concerns. And we know that we need to do this over a period of time to give our employers and employees time to adjust. The annual salary ceiling will also remain unchanged at this juncture, which was also part of the considerations after consultations and this will limit the impact on business costs.

Beyond the moves in this Budget, we are undertaking a review of our CPF system parameters and retirement policies, including the Silver Support Scheme. Our aim is to assure all Singaporeans that as long as they work and contribute consistently to their CPF, they will be able to meet their Basic Retirement Sum. And for those who do not have the ability to work, or the runway to work and save through CPF, we will find other ways to ensure their retirement security.

We are also looking at the long-term care arrangements for our seniors, something which many Members spoke about. Many are concerned over the affordability of the care options and the burden of care amongst caregivers. Some have suggested providing more support for caregivers. Indeed, we had earlier announced the enhancement of the Home Caregiving Grant, and the enhanced grant will take effect next month.

We will continue to review, but it is not just about caregiving support alone, because we have to review more broadly our aged care system to see how we can enhance the care and living options for the seniors within our community, while ensuring our long-term care services remain affordable.

We are looking at various things, including how we can develop more senior living options in our housing estates, how we can best deploy and operate our Active Ageing Centres, something I spoke about in the Budget Statement.

And beyond the hardware and infrastructure, how we can provide a more seamless continuum of care for our seniors, with easily accessible and integrated services across all neighbourhoods.

It is challenging, as the aged care sector is complex and fragmented. So, we will need to think through our plans carefully and consider how best to deploy limited resources – both land and manpower – in efficient and sensible ways.

This has always been our approach to providing assurance for our people. We review our policies carefully, we ensure that any long-term or permanent programmes are sustainable and reinforce the ethos of self-reliance and mutual support. That is how we have progressively strengthened our social security system and safety nets, and implemented schemes like Workfare, CPF LIFE and Silver Support.

Mr Deputy Speaker, I have covered a few key areas where we are doing more to uplift vulnerable groups and support our seniors. But as I said in the Budget speech, the moves in this Budget are part of a broader review to strengthen our social compact. And many Members gave very good suggestions in this debate.

Ms Yeo Wan Ling talked about how we can better support gig and self-employed workers. Dr Wan Rizal, Ms Nadia Samdin and Mr Melvin Yong spoke about those with mental health needs or conditions. Miss Cheng Li Hui, Mr Darryl David and Mr Eric Chua spoke about how we can make Singapore more family-friendly. Mr Don Wee, Dr Shahira Abdullah, Ms He Ting Ru, Mr Louis Ng and Ms Rachel Ong have highlighted other groups who need help, including persons with disabilities and their caregivers, students with special needs, healthcare workers and single parents. We are reviewing all these and many other areas as part of Forward Singapore. In the coming months, we will study the various suggestions provided and partner Singaporeans to develop new strategies and impactful solutions.

Sir, taking care of one another is not just about meeting the needs of today. It is about looking after our children, grandchildren and future generations to come. We must do what is right for today and for tomorrow.

That is the approach our forefathers took.

In the earlier decades when our economy took off and grew rapidly, they did not just spend all the surpluses without any regard for the future. Instead, they painstakingly built up the reserves and they introduced the Elected Presidency to safeguard and protect our reserves.

These values of discipline, prudence and the willingness to sacrifice for the next generation are the very essence of what undergirds our framework for the reserves.

Looking after future generations does not mean that we are neglecting the current generation – far from it. Sometimes, we talk about the future as though it is some distant thing, many years away. But, in fact, the so-called "future generations" are really not very far away. Many in this Chamber will still be alive 20 or 30 years from now. Prof Koh shared his hopes to be in Singapore in 2050 as a retired professor looking at how green Singapore will be. I certainly hope to be there at that time too.

Our children will certainly be growing up in that timeframe and will be directly impacted by what we do today. So, the future is not something abstract, something that is not linked to us. It is us and our children.

In any case, all of us today are currently benefiting from the reserves. Our reserves are our endowment fund and our rainy-day fund. As our endowment fund, the returns from our reserves have enabled us to keep overall tax burden light, as I have shown just now. Out of every dollar we spend in our Budget, 20 cents come from the NIRC.

It is our rainy-day fund. We saw both during the Global Financial Crisis and over the past three years how our reserves helped us to weather crises without having to incur debt that future generations will have to pay.

So, what we enjoy today must never be taken for granted. Many Members highlighted this, including Ms Foo Mee Har, Dr Lim Wee Kiak, Ms Poh Li San, Ms Joan Pereira and Mr Shawn Huang. As they highlighted, we will have to brace ourselves for all sorts of possible disruptions and shocks in this new world and we have to do more to strengthen our national resilience.

Take pandemics as an example. We had SARS in 2003 and then COVID-19 almost 20 years later in 2020. We may not need to wait another 20 years before we face the prospect of another deadly and devastating pandemic in the world.

We face global warming and the growing threat of climate-related disasters. Climate risks can lead to other risks. It can disrupt global food supplies. It can facilitate the spread of more illnesses and pandemics.

We now have superpower rivalry between China and the US and potential flashpoints in the region. The superpowers are now thinking in terms of "spheres of influence". So, smaller countries like Singapore will come under growing pressure.

We have enjoyed peace and stability in the region for close to 50 years since the end of the Vietnam War. It is hard for us to imagine how things could be different. But look at Ukraine and Europe and how the situation changed so quickly.

With growing geopolitical tensions, can we be sure that our region will be able to avoid conflict in the coming decades? If there were to be a conflict or a hot war in this part of the world, how will that impact Singapore?

These are major risks that we will have to consider and take seriously.

And given these plausible scenarios of the future, what should our response be? To blithely spend more from the reserves as the Opposition proposes because we are just slowing down the growth rate as they claim? Or to husband our reserves and uphold the principles that underpin the protection of our reserves that have served us well all these years?

To me, the answer is clear.

In fact, I would say that there appeared to be a time when the Workers' Party seemed to me, to share the Government's perspective on the reserves.

Because in 2009, when this Parliament debated whether to draw $4.9 billion of Past Reserves that year to help Singaporeans tide over the Global Financial Crisis, Mr Low Thia Khiang then from the Workers' Party expressed surprise at the need to do so. He said, and I quote, "Past Reserves are a strategic asset meant for use in times of need, especially when the Government faces financial constraints due to unprecedented circumstances which require the Government to respond in the interest of the nation."

I could not have said it better.

Later in 2011, after we recovered well from the crisis, we were able to put back into Past Reserves what we had drawn earlier.

And Mr Low applauded this move. He said in his speech in Parliament that this was "one thing right" that the Government had done in the Budget that year. Many things were not right, but that one thing was done right.

This time, I explained in the Budget Statement that we are highly unlikely to put back the $40 billion drawn from Past Reserves.

Several PAP Members of Parliament – Mr Liang Eng Hwa, Mr Zhulkarnain Abdul Rahim and Ms Tin Pei Ling – have over this and recent Budgets emphasised the importance of fiscal discipline and urged the Government to try to put back the money into the Past Reserves should our fiscal position improve.

But the Workers' Party has been completely silent on this. Instead, their repeated calls have been for the Government to spend more from the reserves – to slow down the growth of the reserves, increase the 50% NIRC formula, change the reserves rules. Different options and different suggestions dressed up in multiple ways but it boils down to the same consistent ask. And it sounds to me that the Workers' Party has shifted its position since the days of Mr Low.

But in the end, Singaporeans will have to judge what is the more responsible approach to manage our finances and to take Singapore forward. I say, let us uphold the values of our forefathers and do what is right by past, present and future generations of Singaporeans. Let us maintain a strong fiscal foundation so that Singapore can continue to prosper and thrive for many more years to come in this troubled world.

To conclude, Mr Deputy Speaker, the Budget is not just about dollars and cents. Neither is it about winners and losers or about pitting the well off against the rest of society. Instead, it reflects our values as a people and our unwavering commitment to build a fairer, more inclusive and ever more just society.

In his opening remarks, Mr Pritam Singh gave an impassioned speech – that we must not allow "two Singapores" to emerge. This has in fact been the People's Action Party Government's steadfast approach all these years, so I thank him for agreeing with what we are doing.

But I must say that I find it a bit odd how Mr Pritam Singh characterises the "two Singapores". In particular, he suggested that if you are unable to upgrade to a condominium or a landed property or own a car, you will be in the second Singapore.

But the test of social mobility cannot be about owning a landed property or purchasing a car. Let us not perpetuate such narrow definitions of success. The fact is everyone will have their own aspirations and passions to pursue.

Ultimately, we aim to value and celebrate every individual for who they are and to provide them with opportunities to do better throughout their lives. That is how we will refresh and strengthen our social compact.

I also agree with Mr Pritam Singh's remarks that fiscal redistribution should not be about pitting one group against another. And I am very glad that the Workers' Party supports the Budget this year even though it includes the second step of the GST rate increase.

But the irony is this. The Workers' Party shares the Government's view that those who earn more should pay more in taxes, yet it consistently refuses to acknowledge the unique way the People's Action Party Government has implemented our GST system, which requires the well off to contribute more and does not hurt the poor.

And I cannot help but feel that it is because the Workers' Party thinks that there is political mileage, perhaps, in pushing for ideas to soak the rich and, maybe, political advantage to reject the GST despite everything we have done to implement it in a way that is fair and that does not hurt the poor.

Sir, governing Singapore cannot just be about scoring political points or doing what is politically convenient or expedient. We have to do what is right for Singapore and Singaporeans.

And when tough calls like raising the GST have to be made, we have to be upfront, explain our position and persuade Singaporeans why such painful decisions are necessary but will ultimately benefit everyone. This is what the PAP Government and successive People's Action Party Ministers for Finance have done.

In the end, I have faith in Singapore and Singaporeans. We are a rugged and resilient people. We know what it means to live within our means, earn our own keep and stand on our own feet with dignity and pride.

We are a caring and big-hearted people. We care for the people around us. We care about our children and grandchildren and our future generations yet to be born.

We rally together through thick and thin and we move forward as one people.

We will never mortgage the future of our children in the next generation but we will do everything we can to give them a better start in their lifetimes.

Sir, our solidarity and our values are our deepest strength. They are what make Singapore work. They have kept Singapore going through good years and bad. And they will enable us to secure our prospects and build a brighter future together – as one united people and as one Singapore. [Applause.]

Mr Deputy Speaker: We have had 55 speakers over the last three days. Therefore, we will allocate time for clarifications. The Leader of the Opposition.

1.42 pm

Mr Pritam Singh (Aljunied): Thank you, Mr Deputy Speaker. I thank the Finance Minister for his round-up speech. I have a number of clarifications in view of the interventions the Finance Minister made on the Workers' Party's participation in this debate.

I will start with the first and this pertains to the tax burden on the middle class. I think the Finance Minister put up some charts. They set out what the Government has shared in the past about the burden insofar as how much a certain percentile of Singaporeans pay vis-a-vis taxes and the benefits they accrue in return. I think this has been something that the Government has done consistently.

On this note, in 2018, my colleague Mr Leon Perera asked the Government to consider measuring the consumer price index (CPI), which tracks inflation for specific demographic groups like young couples, parents with children and retirees. The Government would say it would do this when it was ready. Five years on, we are still waiting.

I think we saw the headlines this morning about CPI and how it continues to go up. I am raising this now vis-a-vis those charts that the Finance Minister provided because you have to assess the pain points of the middle class from various perspectives. I think the CPI, when you look at certain specific categories and classes of Singaporeans, you may get a different picture compared to what the Finance Minister raised.

We obviously need a better resolution on that. My first clarification is whether the Finance Minister would consider providing information from that perspective – specific groups of Singaporeans which we know are in the sandwiched middle class.

The second clarification has to deal with the strategy that the Finance Minister laid out. The Government keeps the tax burden low and it aims to keep the tax burden on Singaporeans low. In the course of the debate, of course, I listened to various PAP Members of Parliament (MPs). I heard proposals for more intermediate- and long-term care subsidies, checking the rental rate of Government-owned and managed properties, even a call for a windfall tax.

Many of these proposals were made in the WP manifesto and by WP Members in this House. So, for a minute, I thought that the PAP had become "WP-lite".

Be that as it may, what none of the PAP MPs who raised these proposals did, was to tell us where this money was going to come from, something that the WP did in the last debate. We put it out there. The Finance Minister referred to the debate we had at the last Budget debate. What then are the main strategies then that the Government has for keeping the tax burden on Singaporeans low?

This leads me to my third clarification and that pertains to the Housing and Development Board (HDB) issue. I will be brief on this because I am sure some of the other WP MPs will come in and seek further clarifications from the Finance Minister.

On this topic and the Minister's iteration of this back and forth that is currently going on in The Straits Times Forum between the PAP and the WP, I am reminded of what the Government Whip said many, many years ago in this House, "Sometimes it is not just what you say but what you do not say that also matters."

And what the Government is not saying, of course, is the context of the WP housing paper was in response to Voluntary Early Redevelopment Scheme (VERS), a Government proposal which was not very clear and it was looking into the future. So, naturally, the housing paper looks at a longer-range forecast of the housing sector. And that was the context which I have not heard any PAP MP speak about. And in fact, they seem to be quite silent about it.

And, on this note, of course, I have to then come to the irresistible conclusion that it is a convenient distraction because if indeed the point that was raised in the housing paper was critical, then the PAP would have raised it last year when the WP called for more HDB housing for singles.

So, it was a response to the housing debate, I think the PAP recognised that accessibility and affordability of HDB flats is a serious issue, but I will leave it at that on the point of context.

The second sub-point, however, I would like to make is an issue that the Finance Minister suggested that we do not want to deal with the difficult problem of subsidies and grants and how much this may cost the taxpayer. Completely untrue, because we raised it in this House. Again that the fact of the matter is more and more money, more and more fiscal resources are being diverted to the Home Ownership Programme – $1 billion in the past, touching $4 billion now. And given the approach that we are taking, this is only going to increase.

So, when the Finance Minister says, when we ask questions about pricing of land and so forth, and he says that this is red herring, I respectfully disagree because we have to try and understand how we can make the Budget balanced, and how much is actually being devoted for a programme which the way we see it is just going to keep going up and up and up.

The Finance Minister did not, of course, clarify some of the specific queries that I raised in my speech about this insofar as whether the Government will reveal the subsidies for each Build-To-Order (BTO) programme because it shows that, actually, there is a point of inequity that I think needs to be worked on. But I will leave it at that. The other WP MPs will come in with more clarifications.

My fourth point has to do with —

Mr Deputy Speaker: Mr Singh, may I invite you to be more succinct in your clarifications because we would have to go through quite a number of Members seeking clarifications of the Minister for Finance.

Mr Pritam Singh: I will do my best, Deputy Speaker. I just have two more clarifications.

Mr Deputy Speaker: If you can keep it succinct, it would be appreciated.

Mr Pritam Singh: I will do my best.

Mr Deputy Speaker: You have gone through four clarifications.

Mr Pritam Singh: The fourth clarification is pertaining to the Industry Transformation Maps (ITMs) which the Finance Minister did pick up. The Finance Minister shared that overall, there was good progress. But, of course, there are some domestic sectors where there are issues.

I would like to bring to the Finance Minister's attention to the Second Report of the Estimates Committee that was presented to Parliament on the 15 November 2017. And paragraph 29 says that the Committee, this being the Estimates Committee, expressed the need for robust KPI setting, monitoring and accountability of the various initiatives under CFE including ITMs.

I raised this point in my Budget speech last year as well. Can the Finance Minister share some of this information with us? Because in the spirit of fiscal prudence, $4.5 billion dollars was allocated to the ITMs in 2016. I think we do need a report card.

The final clarification pertains to the point the Finance Minister made about Mr Low and his responses to the drawdown of the reserves during the Global Financial Crisis. The simple answer to that is the position of the Workers' Party has evolved because circumstances have evolved significantly.

And we can see it also, in terms of the contribution of the NIRC and the Government's own attitude to the NII framework post-Global Financial Crisis. You have Temasek being included in the NIRC formula. Why? Because we were told there were more needs, healthcare needs, ageing population. These are perfectly, eminently reasonable explanations as to why Temasek tap was included in the NIRC framework.

I do not see this as a particularly problematic issue to deal with because naturally, as circumstances evolve, PAP also will change its position and the Workers' Party, of course, will be entitled to do the same.

I will leave those clarifications out there for the moment and I will step in with more if I have to.

Mr Deputy Speaker: Thank you, Mr Singh. Deputy Prime Minister Lawrence Wong.

Mr Lawrence Wong: Thank you, Sir. Let me take these issues in turn.

On the tax burden on different, middle-income and sandwiched groups and the CPI for these specific segments, we do the best we can. We continue to monitor all the different groups. Where data is available, we will publish and where it is useful, we will put it out for information. We are tracking not only inflation, but as we have repeatedly said, how real incomes evolve for all these different segments, because at the end of the day, we want to ensure that real incomes grow not just for the top end, but for the middle and, in particular and especially for the lower-income groups.

We, already, in fact, put out CPI data by income groups. The Leader of the Opposition has asked for even more granular data for specific segments, different archetypes. We will continue to review and see what more can be done. Here, we share the same interest. There is nothing to hide. We are all concerned about the same thing and we will continue to do more and do better.

On the strategy for keeping tax burden low and who has given more ideas. No one has a monopoly of ideas. In this House, Members across different parties will put out ideas. From the Government's point of view, we welcome all ideas. We will study them. We will look at them. Where they are good ideas, regardless of where these ideas come from, we embrace them. If the ideas may not be so effective, we will highlight and say that these are not ideas that we think are sound.

In that light, we will continue to look at how we can manage growing spending needs, while keeping our finances stable and sustainable. There may be a need for additional revenues. And, if so, we will make sure that any form of additional revenues raised or taxes raised, are done in a way that keeps our overall system of taxes and benefits fair and progressive. That is our commitment.

We could also look at meeting increased spending needs, not only through increased revenues and taxes, but we could also do it through re-allocation. So, there will also be a continual exercise to examine what are some areas that we can do less of, what are some things we might want to discontinue so that expenditure and funding can be re-allocated to new priority areas.

And here, my appeal to everyone in the House, everyone in the House, across all parties is, as Finance Minister, you hear a lot more proposals to do more, but you very rarely hear proposals to stop doing something. I think it would be nice for a change to hear Members talk about some things we might stop doing, do less of. And then, we may have more ideas to think about how we can manage both expenditure and revenues, and ensure sustainable finances.

Third, on housing and what the Workers' Party said in its Working Paper in 2019 and the context which, according to Mr Singh was not said. Actually, I thought I said it in the speech. I fully appreciate the context, because I was there in the Ministry of National Development (MND). The context was the concern about decay of leases, declining values. But the context was also in the midst of falling resale prices for consecutive years.

And the Workers' Party is not alone in highlighting that, under such an environment, we better consider how many new flats we are putting out. Many experts shared similar concerns. I was under tremendous pressure to cut back BTO flats. There is no shame in acknowledging that you got that wrong because many people did. Why not just acknowledge it, that, yes, it may not have been a specific proposal or whatever you want to call it, but it was very clearly stated. We do not have to go through it. It is right there. I read the Working Paper, from cover to cover, in MND. I know what was said. And what was said at that time reflected the context of that time – a concern with overhang of supply, too many flats. If you build more flats, this is what will happen.

So, why not just acknowledge that you got that wrong? Like I said, no shame in it. Many experts thought it was the right thing to do at that time too. And we are not here to pass judgement because, with the benefit of hindsight it is, of course, very easy to say. No one would have predicted that you would have a COVID-19 crisis and what has happened in the last three years. No one could have predicted that. We did not; neither did the Workers' Party. No one did.

So, let us acknowledge, like I said, with some humility, what happened, and let us not rush to judge the current situation with the benefit of hindsight. Let us acknowledge that the current situation was created by a set of very unusual and exceptional circumstances. And the root of the problem is building more supply. And that is what we are doing. We are doing our best to try and fix the problem – not created by bad policies, by sacred cows which we are loath to slay, but by something that was exceptional. And we are doing our best to address it.

Fourthly, ITMs and what was said in the Estimates Committee about robust KPI setting, outcomes and publishing of what we have achieved through the ITMs.

Sir, I completely agree with what needs to be done. We need clear KPIs, outcomes for every ITM and they had been published, not all, but a lot of them have very clear outcomes reported. In the financial services sector which I launched, for example, we set out very clearly what we wanted to deliver, what was achieved and the next milestone, what we hope to do with the next version.

Sector-by-sector, these ITMs, the sectoral agencies in charge of them, will put out the reports, more information, clearer outcomes. It is a continuing journey which we will continue to walk on and help each sector restructure and transform.

Then, on the shift in the Workers' Party's position on the putting back of reserves, I am glad that Mr Singh has acknowledged that it is a change in the Workers' Party's position. But I would respectfully disagree with his comparing that with how we have updated our position on the involvement of Temasek in the Net Investment Returns framework. Because we have made it very clear when we embarked on this that we did want Temasek to come in it. But it was a matter that needed more time to study and therefore, the implementation was staged.

More importantly, our underlying philosophy, our intent, our principles, have never changed and will never change. It is about fiscal prudence, discipline, responsibility, stewardship. That is consistent and has not changed and will not change, whereas, it seems to me, on that part, the Workers' Party has shifted. [Applause.]

Mr Deputy Speaker: Mr Leon Perera.

Mr Leon Perera (Aljunied): Thank you, Mr Deputy Speaker. I wish to respond to the point in the HDB paper and then I have two clarifications to put to the Deputy Prime Minister.

And to some extent time, I am repeating what Mr Louis Chua said on the point about the HDB paper when it was first made, but I think it needs some treatment in a bit more granularity than what the Leader of the Opposition had time to do just now. Because the People's Action Party seems to be doubling down on this incorrect assertion, using its tremendous PR and communicative machinery to repeat this assertion about the Workers’ Party HDB paper again and again, on social media, in letters to The Straits Times, Zaobao.

So, let me go back to that and we can read out those two paragraphs. I am glad the Deputy Prime Minister read our paper. We worked on it.

The first paragraph contains observations and poses a question that does not amount to a call to action. The second paragraph is the call to action. The first paragraph makes observations about the risk of vacancies in the context of a paper on longer-term housing dynamics; that resale prices will inevitably come under pressure at some point.

And I think the Government has acknowledged that. I refer to the exchange between Senior Minister of State Sim Ann and Assoc Prof Jamus Lim, my colleague. So, it is in that context that those observations were made in the questions posed.

But the call to action comes in the second paragraph which says BTO projects should continue. I repeat, BTO projects should continue. It does not say BTO projects should continue at a reduced rate; it does not say BTO projects should stop.

You laugh, you laugh. Let me continue.

It does not say BTO projects should continue but at 9,000 rather than 17,000. It says, BTO projects should continue and then it goes on to say that you can taper that down in the longer term when our USB proposal kicks in, which would yield flats that could be repurposed as Sale of Balance flats (SBF) or for expanded public rental scheme. But that only starts to kick in in about 12 years’ time.

So, I think it is very important to have debates on our real positions and not mischaracterise one another's positions. We did not put out a proposal in 2019 that you cut BTO construction. If we had wanted to, we would have set that out clearly in plain language.

My other two clarifications to the Deputy Prime Minister. Firstly, about —

Mr Deputy Speaker: Mr Perera, if I could ask you to keep them short and concise.

Mr Leon Perera: Yes, Mr Deputy Speaker. I will try to do that. The first clarification on the HPI. The Deputy Prime Minister asked, why does Workers' Party say a HPI of three, why not a HPI of two or lower?

There is an organisation called Demographia and the Government in its Parliamentary Question (PQ) replies have referred to the research of this particular organisation. I do not think the Government would have done that if it is not an organisation that does not do credible work.

Demographia regards anything above five for HPI as extremely or critically unaffordable; three to five as moderately unaffordable in some way; and three and below is affordable. So, there is some basis in the research and the science around this to say that that figure of three is a good affordability target.

So, I would like to ask the Deputy Prime Minister for what the People's Action Party seems to be saying, that anything below five is fine. What is the basis for saying that?

And the last clarification, I will keep it brief – in response to the Leader of the Opposition, the Deputy Prime Minister has set out a worldview that reducing the rate of growth of reserves is taking away from past generations. We have debated this many times. In 2008, the PAP did just that – when it created the Net Investments Return (NIR) Framework, slowed it even more, in 2015 with adding Temasek. So, why is that not irresponsible and not taking money away from future generations? But when the Workers’ Party says it, then is irresponsible! Is it seeking political mileage that it is okay when you do it but it is not okay when we call for it? [Applause.]

Mr Lawrence Wong: Sir, let me again respond to all three points.

First, on the housing Working Paper and what the Workers’ Party said. I think, Mr Perera now is sort of alluding to the fact that the assessment that they had put out was pertaining more to a longer-term concern about a supply overhang. But that is very clearly not what the write-up says.

The write-up says and I read, “that private vacancies in the private sector have only started to inch down but there are still around 12,000 private units completing up to 2022." So, with that, comparing now, HDB, "will the HDB have a vacancy rate problem compounded by a still steady stream of 6,000 to 17,000 BTO units in the last few years, which will continue to increase supply up to 2022.”

The assessment was very clear. There was a concern about short-term overhang; in the short term, too many supply of new flats.

Like I said, I experienced it. It is not just you who was highlighting this concern. You can check the Hansard. I probably think some PAP MPs must have asked me the same question. I was under a lot of pressure to cut back BTO new flats, the building of new flats –precisely because of the short-term concern. It was not a longer-term assessment. It was a short-term assessment. It was very clear what was written; and arising from this assessment therefore, that there was the concern that you have to calibrate your building programme.

To me, as somebody who was looking at the Working Paper then, on the receiving end in MND, I think it was as clear as daylight what the Workers’ Party wanted to do. You were not the only one. There were similar concerns expressed by others.

So, all we are highlighting is let us be upfront and honest that the assessment made at that time was not right. Like I said, many people did not get it right. No one would have predicted what happened with COVID-19, but there is no shame in that. Let us now focus, look forward on coming together to tackle what the root cause of the problem is, which is what the PAP Government is indeed doing.

On affordability benchmarks, yes, there are a range of benchmarks out there. We do not deny that, but we have made clear what the affordability benchmarks are. Our pricing of new flats have not changed at all these years from then till now. And our affordability benchmarks are not just expressed in home price to income ratio. We also look at the mortgage servicing ratio which is 25%.

So, we have put all of that out. I can appreciate why anyone looking at it from an opposition point of view will say, "well, that is very good but let us make it cheaper, let us make it more affordable".

And obviously, in this current time when the resale prices are high, whatever you say on that front will have more traction. People will feel the pain and they will say "yes, of course cheaper is better".

But remember, at the time when prices came down, this was not so much of an issue.

So, all I am highlighting is let us have some perspective on this. The market moves up and down in cycles. Let us not react to these cycles. Let us understand the root cause of what causes the cycles and let us continue with a certain consistency in policy and address the root cause of the problem.

Then, on the NIR framework and why if the PAP Government were to make a change, it is okay; but if the Workers’ Party were to propose something, we say it is not okay.

I think we have been through this debate too in this House. And I have explained, from the Government's point of view, we put in place a framework, we staged out the implementation over a period of time. We always had the intention for Temasek to be there but we put in place a framework that will provide discipline for the Government to use the reserves as an endowment fund. It was meant to be a set of fiscal rules that we live by, not to change at the time when we need money, which is what the Workers’ Party is proposing.

So, yes, at the time when we put in place this set of fiscal rules, this framework for us to use the reserves as an endowment fund in a disciplined, responsible manner, I think the Workers' Party agreed to the framework. But what we are highlighting is, so soon after this framework was finalised, at the first sign of needing money, why the attitude of then going back to change the rules? Should we not live by the rules that we have set for ourselves and agree and put in place? And maybe down the road, years later, after the benefit of lots of experience, yes, we can come together to review this again because I have said that nothing is cast in stone. We should review but not so soon after we have finalised a framework and at the first sign of needing money. We do not think that is sound nor does that reflect the values that we want to uphold in our fiscal system and in our society.

Mr Deputy Speaker: Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Thank you, Mr Deputy Speaker. Sir, two questions, two clarifications for the Finance Minister.

Firstly, on the Occasional Paper which I find very useful to get a forward view of the fiscal trend going forward. So, I would like to ask the Finance Minister will he make this Occasional Paper less occasional going forward? [Laughter.]

The second question is in his Budget Statement speech, he talked about this contingency funds where we are going to reduce the balance from $16 billion to $6 billion. It used to be from $3 billion to $16 billion; and then now we are going to $6 billion.

I want to hear from the Finance Minister the rationale for doing that. Would we not want to keep more contingency funds in this environment where it is more disruptive and uncertain?

Mr Lawrence Wong: Sir, if there is new information, we will certainly put out another Occasional Paper. I mean these medium-term projections do not change so quickly because we are not tracking year-to-year. We are tracking over a long period of time. And I do not think you will have very sudden changes in the projections. But over a period of time, as there is new information, maybe new revenue items, maybe new expenditure items, then obviously there may be some changes to the longer-term outlook.

And yes, if that were to happen, we will either put out more information on the website, in the form of an Occasional Paper, or we will even update it in the speech. Because in fact, if you look at the Occasional Paper, a lot of the facts there, are not entirely new because we have put it out previously in various Budget Statements before.

So, we are committed to updating, providing information as and when necessary, and being upfront and transparent about our fiscal outlook.

On contingencies, it was $3 billion before. We raised it to $16 billion during the pandemic because of the emergency situation we were facing. You needed to be able to tap on funding quickly and you did not know where the needs might emerge from and there was therefore a need to do so.

But now that that emergency period has passed, so to speak, we are in DORSCON Green, we felt that there was a need to go back to fundamentals and go back to that discipline that we have in budgeting and planning our resources, setting aside Ministry by Ministry, how much we have to spend. You will still need a contingency, but that contingency does not have to be so large.

But we thought given the new environment, the shocks and disruptions we may face, we could make it a bit bigger than what it used to be, but not at $16 billion. Hence, the proposal to come down to $6 billion. But because we need a constitutional amendment to effect this, we will have to table a Bill in this House very soon.

Mr Deputy Speaker: Mr Seah Kian Peng.

Mr Seah Kian Peng (Marine Parade): I just wanted to ask the Deputy Prime Minister. We all know that the NIRC contributes towards half of our Budget —

Yes, the point I want to make is that what is very clear is that returns from investments are uncertain and yet our needs will always increase – be it for healthcare, education, defence. Given this too, in a scenario where the returns are coming down, could Finance Minister Deputy Prime Minister share with us how can we ensure that our spending and the programmes that we have are kept on an even keel?

Mr Lawrence Wong: Sir, it is precisely for that reason and the concerns that Mr Seah highlighted that we should not change our NIR framework. Because there are headwinds to our investment returns and you can never be sure that you can continue to get the kind of returns we had in the past, given such an uncertain environment.

But all the more we say, stick to the framework that we have. The ups and downs in the market cycles, we take care of, because we have smoothening formulas for that. And we apply an expected return, remember, in our NIRC, not actual return.

So, we take care of the ups and downs in the markets with some smoothening formulas, but the broader point that this may come under pressure is a real one. That is why we have consistently said to the debate or to the question that Mr Perera asked earlier as well, let us stick to the framework, let us abide by it. And then, over time, we will see what our needs are. And we will have to think very hard if our needs were to continue to grow, how best to raise finances to cover these growing needs.

Mr Deputy Speaker: Ms Hazel Poa.

Ms Hazel Poa (Non-Constituency Member): Thank you, Deputy Speaker. I wish to respond to what the Deputy Prime Minister said earlier about my proposal for land sales proceeds to be taken as revenue divided over the period of the lease.

He said that under the current arrangement, where the land sale proceeds go into reserves and we get NIRC, it generates higher returns or we get more revenue from that because we can get more than 1%.

I wish to refute that by pointing out two facts.

One, if 1% of the land sale proceeds goes into revenue, the other 99% still goes into reserves and continue to earn investment returns. So, the drop in NIRC is only with respect to the 1% that did not go into reserves. Mathematically speaking, there is no way the investment returns on that 1% can be higher revenue than the entire 1% itself, unless we are getting investment returns of 200% per annum from our reserves.

Secondly, if we were to recognising land sales proceeds as revenue, in the first year, indeed, it will be 1% of land sales revenue, but in the second year, it will be 1% of current year plus 1% of the previous year, and in the third year, 1% of current plus 1% of previous and 1% of the year before, and so on. So, again, you will not have higher revenue under the current arrangement.

So, that misunderstanding having been cleared up, will the Deputy Prime Minister reconsider?

Mr Lawrence Wong: Sir, we did look at Ms Hazel Poa's proposal. I think she is right, if you work out mathematically, if you use her method. In the initial years, maybe you can get more. But we are not looking at just a "sugar rush" from an immediate injection of funds. We are looking in the longer term – what is the sustainable and what is the best approach.

When we look over a longer period of time, frankly from our assessments, the revenue generated is not very different. And we believe what we are doing is a better, more sustainable method, because the proceeds are kept in the reserves, we generate returns from the reserves and the returns benefit both today and on an ongoing basis.

Mr Deputy Speaker: Mr Edward Chia.

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Thank you, Mr Deputy Speaker. I would like to first thank the Deputy Prime Minister for affirming that the Government is not going away from being pro-enterprise or pro-growth and not leaning towards pro-redistribution.

I would just like to seek further clarification in terms of the consultations with employers. To what extent is it not just about what Government can do for employers, but also about what the employers can also share in the social compact renewal, especially for all the Forward SG conversations and our SMEs consulted in depth in their role in this renewed social compact?

Mr Lawrence Wong: Sir, the employers certainly have a big part to play in our refreshed social compact. So, we are continuing our engagements and our conversations with them. Given the current pressures that many SMEs face, unfortunately, when you talk about their responsibilities as part of a new social compact, they sometimes look at these as additional obligations and burdens, which may therefore explain why they see a shift in Government thinking. And we have to continually explain to them, that this is not about a shift from pro-growth, to pro-redistribution. This is about how all stakeholders in society – employers, unions, workers, Government – all of us have a part to play and we do think that there are many things that employers can do. For example, in terms of HR – which many Members did speak about and I think the Member himself, did highlight – better HR, skills, training, fair progression, career progression, fair hiring, many roles that employers can play as part of our renewed compact.

Mr Deputy Speaker: Mr Louis Chua.

Mr Chua Kheng Wee Louis (Sengkang): Thank you, Mr Deputy Speaker. Just three very quick clarifications. The first is around the Working Mother's Child Relief, which several Members of Parliament have spoken about. My question is, what percentage of mothers will benefit from this change? As Deputy Prime Minister said in the opening speech as well as the round-up speech, it is supposed to benefit lower- to middle- income mothers. But based on my calculations on just one child alone, it seems that the lower-income mothers will not benefit and a very narrow base of working mothers will. And if you have more children, I am just not sure what is the number of mothers who would actually benefit from this change.

Second, is in relation to the CPF annual salary ceiling. I do recognise that the higher monthly salary ceiling will be raised over the next four years, but I think in this House you have spoken a lot about giving businesses visibility, certainty. And so, in that regard, what is stopping the Government from giving that visibility as to the in tandem moves with the annual salary ceiling?

Third, I spoke about the reintroduction of the NAV tax on higher-end and secondary properties, which I think during the Global Financial Crisis, Senior Minister Tharman, then as Finance Minister, abolished. What are the concerns by the Government on this, since I did not quite hear about that in the round-up speech?

Mr Lawrence Wong: Sir, I do not have the figures on the percentage of mothers who will benefit, but I tried to explain the reason why we are changing our thinking on this. There was a reason why at that time when this scheme started – we wanted to address concerns and encourage higher-income married women to have more children at that time. The experience has shown that they do not really base their decisions on the incentive alone; there are many other factors.

Since then, as I said, fertility has come down across all income groups.

So, it is not just about who benefits, calculating that marginal difference, but it is really a change of philosophy. That we want to make sure that the support is directed at the children, regardless of the mothers' incomes. I think it is the right thing to do, given the current circumstances and we have explained the rationale for the change.

On the CPF salary ceiling, we are changing the monthly salary ceiling but there is no plan now to update the annual ceiling. So, there is no need to talk about what might happen or to give any advance notification to employers on this regard. Because we think at the monthly level, there is a need to update to the 80th percentile. But at the annual level, the current ceiling still remains relevant.

On the annual value tax that Mr Chua highlighted, this was indeed removed back then. But Mr Chua may not have picked this up – when we removed this at the time of removal, we had a not so progressive property tax schedule. So, the removal of this annual value tax on owner-occupied properties was done in the same time, as we really updated our property tax rate schedule to be much more progressive. And therefore, this is what we have now, not a separate tax on an annual value, but a property tax, which is a progressive wealth tax on everyone in Singapore.

Mr Deputy Speaker: Ms Foo Mee Har.

Ms Foo Mee Har (West Coast): Thank you, Deputy Speaker. I have one clarification for Deputy Prime Minister. Whilst we cheer the Government Budget this round, with the generous support to household. And I think we all support and cheer. I did mention in my Budget speech that some economists have cautioned that the Government handouts, such as the GST vouchers and cost of living support may actually stoke inflation pressures, as we have seen in other countries.

I think Deputy Prime Minister has acknowledged that in his speech. I think there are a lot of economists wanting to hear your view about whether our inflation pressure is under control. So, if you could just share, in planning the support, that we will still have inflation under control.

Mr Lawrence Wong: Sir, there will always be some trade-offs when we provide more support that it may inadvertently fuel demand and add to inflationary pressures. That is why we have to manage and calibrate this carefully. And that is why in rolling out or designing the package, we have not made it a broad-based support scheme. We have targeted the lower-income groups, we have given some to the middle-incomes as well. But based on the design of the package, we believe that the impact on inflation will be manageable.

Mr Deputy Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): Thank you, Mr Deputy Speaker. Two clarifications. The first is the reason why economists actually use a simple difference between revenue and expenditure to evaluate the fiscal stance is simply because every dollar received by the Government is one less dollar in private sector. Hence, I accept the Government has different justification for its accounting standards. But I think we should not confuse an accounting approach with the actual net impact of the Government on the economy. So, to that effect, the IMF's Article 4, issued in July 2022, did state that the gross operating balance was projected to be positive 2.7% of GDP, and net lending and borrowing at 1.4% of GDP. And this was indeed the basis of my claim.

So, I wonder if I may ask the Minister, if this has changed, if MOF can confirm that our gross operating surplus or net lending is indeed negative for FY2022. I will, of course, happily retract, my original claim of a contractionary fiscal policy.

My second clarification has to do with a redundancy insurance. I take the Minister's point that there are concerns about staying longer in unemployment than necessary and his suggestion that support will be tied to retraining. I do not find this objectionable per se, but only stress that of course, bills and financial commitments do not take a breather when one is made redundant.

And yet, it does take time for an individual to be matched to retraining and reskilling. So, if I may seek the Minister's assurance that should a retraining contingent unemployment support scheme be implemented that payouts would not be unduly delayed at the point of redundancy?

Mr Lawrence Wong: Sir, I do not intend to get into a technical discussion. I am sure Assoc Prof Lim is well familiar with the difference between the fiscal impulse and the fiscal multiplier. So, when we talk about whether a budget is expansionary or contractionary, we run it through our models, we assess what the impact will be. And as I said, our assessment is that, there will be a slight expansionary support for the economy. We think it is appropriate, given the weakness of the economy, but we cannot overdo the support because it will then lead to additional inflation.

The fiscal impulse is really an accounting measure. It is quite simple to calculate. It gives you a rough proxy but it is not a full assessment of the impact that a budget or fiscal measure has on the economy which we work through our economic models.

On the redundancy insurance or the support that we are thinking about for displaced workers, it is something we will continue to study. And we will take into consideration what Assoc Prof Lim has suggested.

Mr Deputy Speaker: Mr Patrick Tay.

Mr Patrick Tay Teck Guan (Pioneer): I would like to thank Deputy Prime Minister for emphasising and reiterating that every worker matters, in response to the calls of the fellow labour MPs, in particular, the big focus on training, skills upgrading and development. I thought that I just wanted to seek clarifications on two points or should I say two suggestions.

Firstly, thanks for the great support of the NTUC-SNEF PME Taskforce as well as the rallying calls to better support mature PMEs in trying to re-enter and re-employ back into decent jobs. But at the same time also, we noticed a gap, as several of us have highlighted on career advisory and coaching and support services, particularly strong at the early career guidance level when they are still in school, particularly strong when they are unemployed, retrenched and laid off but a big gap where new entrants into the workforce as well as those who are in between or in employment. I thought this part we will make some rallying calls. We hope for Deputy Prime Minister and team to support the Labour Movement as we want to endeavour into this space.

Mr Lawrence Wong: Sir, we agree with Mr Tay and the Labour Movement in your observations of the areas that can be strengthened in terms of career advisory and counselling, particularly for new entrants to the workforce and even for some mid-careers. We do want to see how we can empower individuals to take charge of their own careers. Very much as how we talk about Healthier SG as a movement where we can empower individuals to take charge of their own health. I think we need a similar way of reaching out, engaging and empowering individuals to start thinking and planning ahead for their own careers. So, the Ministry of Manpower has some ideas in this regard and I am sure they will be happy to share more, maybe in their Committee of Supply, or certainly in due course when they are ready.

Mr Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Thank you, Mr Deputy Speaker. The Deputy Prime Minister said that I have said an outright falsehood. I categorically reject that and I will ask him a few questions to demonstrate that he has been trying to pull wool over our eyes.

Firstly, the first question I want to ask, the Deputy Prime Minister said that the middle-class Singaporeans are not over-taxed and showed the benefit tax ratio as a proof.

Can I ask whether the Deputy Prime Minister has factored in BTO subsidies and land cost in the equation? If the land cost is not considered a tax, but the subsidies given to BTO is considered a benefit, it is no wonder that the benefit tax ratio turns out to be very favourable for middle-class Singaporeans. But that does not reflect the true picture.

The second question I want to ask: The Deputy Prime Minister has always said that the Net Investment Returns Contribution (NIRC) is money that we can spend as revenue. After having gotten us agree to not touching the reserves and ploughing back 50% of the net investment return to the reserves. Then if the NIRC now is not spent when most of it is being tucked away in endowment and trust fund each year, how can you say that that money is being spent because it will only be spent very slowly into the future?

Can the Deputy Prime Minister share with us how much NIRC has been tucked away in total to-date and what percentage of that we spent every year? It is even more insidious when the Government, on one hand, tucked away all these revenues and then tell Singaporeans that we have not enough fiscal resources as a result "I need to raise GST and other taxes".

Third question, the Deputy Prime Minister said that the total revenue – the total expenditure in 2023 cannot come down, it has to stay at $100 billion because, and that is despite the end of the pandemic, because of the effect of nominal GDP growth which I think that is what his chart shows. Can I confirm with the Deputy Prime Minister that nominal GDP growth had indeed increased by 33% from 2019 to 2023, which is exactly that increase in expenditure from 2019 to 2023, from $75 billion to $100, that is 33%. Has our nominal GDP growth by that amount over the last three years?

And also, if what the Deputy Prime Minister said is correct, then I would expect the $25 billion increase in expenditure to be spread uniformly across the Ministries, but you look at the $25 billion difference, between 2019 and 2023 actually the increases were lumped up in mainly three ministries – Ministry of Health, Ministry of National Development and Ministry of Defence. Can the Deputy Prime Minister explain that?

Lastly, last question: In his obsession with the reserves, this Government has actually lost its bearing.

Can I ask the Deputy Prime Minister how can the affordable home scheme as proposed by Progress Singapore Party (PSP) which guarantees every Singaporean of each generation an affordable HDB flat because he only paid the construction cost, how can that be less equitable to the current BTO system, where future generations of Singaporeans will have to worry about how high the BTO prices will go?

Given that we have not exhausted debating about the two schemes – BTO scheme and the affordable home scheme – in the sake of time, I will not go too much into that, but I hope the Government will consider our proposals carefully because they are overwhelming advantages in the affordable home scheme versus the BTO scheme.

Mr Deputy Speaker: Deputy Prime Minister Wong.

Mr Lawrence Wong: Sir, on the burden of the middle class and why I had said Mr Leong's remarks that the middle class were over-taxed was an outright falsehood. I did not rely on tax and benefits per se. I highlighted if you look at the tax on the middle-income household, 10% of income, total taxes that they paid. How is that more? And then if you say well, 10% is more, then let us look at other countries and I showed the chart. So, I rest my case. I do not want to elaborate further or get into a to-ing and fro-ing with Mr Leong. The facts and figures, as I said, in my speech, speak amply for themselves.

On the Net Investment Returns Contribution (NIRC) and whether there is excess NIRC, never mind the argument that we have made before that it is not about NIRC, it is about revenues all coming together in a Consolidated Fund. But Mr Leong insists on not taking – recognising this, so he specifically says that there is excess NIRC because of Fund top-ups. I, actually, had a whole treatment on that in my remarks. Maybe Mr Leong was not paying attention. So, again, I should not belabour the point because I have already said in my remarks that Fund top-ups are not all spent in the future, considerable number of them are drawdown Funds, Funds for which the monies are needed today and on an ongoing basis. So, there is no slack there either.

On Government's expenditure rising and in nominal terms, how far it has gone again, the facts are straightforward. You can look at where we are today as a share of GDP. By all means, go to Department of Statistics (DOS)'s website, check where the nominal GDP figures are, match expenditures today and expenditures in 2019. Expenditures have risen but as a share of GDP, they have not. Why have expenditures risen? It is not just because of a growing GDP, it is inflation. Nominal spending goes up. Salaries have to cost more. So, that is quite obvious, is it not? If you were to keep spending constant in real terms, how do you pay more for salaries, how do you pay more for projects, all of which cost more money. But what is important is to track spending as a share of GDP and, as I mentioned, it has maintained at the same ratio over 2019 and today.

On public housing, I really do not want to get into a debate on that because we have gone through that extensively before. As I mentioned in the exchanges just now, the Government welcomes all ideas. We look at them seriously. We study them. We studied Mr Leong's and the PSP's proposal on affordable housing. Our assessment is that this is clearly a raid on the reserves. It will not be good for Singapore and Singaporeans and that is our conclusion. In the end, Singaporeans can judge for themselves.

Mr Deputy Speaker: Mr Desmond Choo.

Mr Desmond Choo (Tampines): Thank you, Mr Deputy Speaker. First, I want to thank the Deputy Prime Minister for a budget that would help workers navigate through very challenging times.

Two points of clarification. It is very reassuring that Deputy Prime Minister said that those who work consistently will be able to meet their basic retirement needs. Would the Government also look at those who are nearing retirement and have a limited runway left to build up their retirement savings? And how about those self-employed persons which are actually growing in size? What is Government's direction towards helping such groups of people?

Second, how can we help the NITEC and Higher NITEC Diploma holders to make career switches, perhaps earlier in life so as to be more resilient in their whole career journey and also to close the gap with degree holders?

Mr Lawrence Wong: Sir, on the CPF system and retirement adequacy, we are studying this. Our starting point is look at the CPF system first, review the parameters.

I note that in this debate Mr Pritam Singh and a few others have talked about, for example, the proportion between OA and SA contributions. Others have asked about other parameters. So, we are reviewing all that with a view that younger workers can work, contribute to CPF consistently and through that meet their basic retirement needs. That must be the assurance we give. So, that is something that we are studying.

Older workers will not have the runway to accumulate savings through the CPF system. So, we have to help them separately. It could be through the Silver Support Scheme. It could be through other schemes but we are looking at that as a separate group to support.

And then, of course, we have a third group which are self-employed persons who are not part of the CPF system. We have made one move for gig workers in working in platform companies to contribute to their CPF. So, we have taken care of that group of younger workers, but we will have to study more broadly what we could do for self-employed persons, recognising that not all of them want to be on the CPF system. Some of them may choose the flexibility not to, and how do we respect their wishes, give them the flexibility that they desire but, at the same time, find ways to make sure that they are able to save adequately for their future retirement. So, these are things that we are, indeed, studying.

Did you have a second question? Ah, ITE. ITE students and how we might help them after they graduate? It is something that is on our minds, because we must ensure that ITE students not only graduate with skills that will get them a good job. But we want to make sure that we are able to help them upgrade, reskill and continue in their careers, whatever they are. So, that must mean a very good system of support for an ITE graduate, maybe comes out ITE with a higher NITEC but, eventually, can get a work-study diploma, a technical diploma or even a polytechnic diploma, or maybe even a degree and there must be that system to encourage and support them in their continuous pursuit of new skills. So, it is certainly something on our minds.

Mr Deputy Speaker: Mr Leon Perera. I will take another two to three more clarifications because we breached over an hour of clarifications. I saw two more hands and I will call both.

Mr Leon Perera (Aljunied): Thank you, Mr Deputy Speaker. I think Leader of the Opposition has a clarification as well. But I just wanted to make one point in response to the Deputy Prime Minister again on our 2019 housing paper. He read out this sentence, "Would the HDB have a vacancy rate problem compounded by a still steady stream of 16,000 to 17,000 BTO units in the last few years which will continue to increase supply up to 2022."

If you look at the sentence, what the sentence is saying is not that there is an imminent risk of vacancies, not that there is going to be vacancies in 2022. It is saying that there will be, there is a risk of vacancies if you continue to build following this kind of pattern. So, there is no time frame attached to that and I would remind the Deputy Prime Minister again that the whole context of our argument or focus on this paper is longer term housing dynamic trends.

More importantly, I would remind the Deputy Prime Minister again, that this first paragraph does not amount to a call to action, to a proposal, to a suggestion. We go on to say "BTO projects should continue". If we had meant to say "BTO projects should be cut back", we would have said that.

So, I really hope the Peoples' Action Party will stop propagating this falsehood that our 2019 paper called for a cutback to BTO supply in 2019. And if it does not do that, I would really question if the PAP has become a party that propagates falsehoods to gain political mileage.

The second clarification, on the exchange with the hon Member Ms Hazel Poa, I think initially the Deputy Prime Minister mentioned that based on his economic modelling, Ms Poa's proposal would not yield more revenue. But later on, when questioned by Ms Poa, he, to my mind, unless I misheard him, the argument changed to one of a "sugar rush". So, I just wanted to ask if, based on the Deputy Prime Minister's original response that the economic modelling shows that her proposal would not generate any revenue, could that model be shared so that economists and the public can scrutinise it?

Mr Lawrence Wong: Sir, on the first point, let us not belabour this anymore. We might as well publish exactly verbatim whatever the Workers' Party has said in the Working Paper in 2019 and in the end, Singaporeans will be the judge of the matter. I think we have said enough on this point.

The reality, as I have described it from my perspective at that time, was a very different reality. And do not talk about cutting; no one at that time even thought about building more flats. It would have been unthinkable. Everyone was asking cut back, cut back, cut back; no one said build more flats.

With the benefit of hindsight now, it is so easy to say build more. But I just want to have some perspective here, that during that time, when resale prices were coming down, it was a very different context, it was a very different circumstance. And we can just put out what the Workers' Party said and everyone can be the judge of it.

On Ms Hazel Poa's suggestion, when I talked about it not yielding more revenue than our current system, I was referring to it from a broader perspective and not just from a year-to-year perspective. So, it can generate more revenue in the near term, perhaps, but it really depends on the assumptions. You do not need to be a rocket scientist to work out the assumptions. Just put it in a spreadsheet, do your sums and anyone can figure out that; actually, it is not very different from what we have today.

Mr Deputy Speaker: Last two clarifications – Ms Carrie Tan and then we will close off with Mr Pritam Singh. Could I invite both Members to please keep their clarifications concise and short?

Ms Carrie Tan (Nee Soon): Thank you, Deputy Speaker. I think what I have just experienced in this House reinforces the point I would like to make, which is to clarify that — Thank you, first of all, Deputy Prime Minister, for addressing the point that I and Ms Nadia Samdin made about slowing down.

I would like to clarify that the proposal that I made is not to make a slowdown so that we will not have growth in our economy, but that perhaps slowing down is the approach to help us achieve better growth in our economy. I think many in this House and also many of our Singaporeans can attest that when we are all overworked, spending too many hours in too many meetings, what happens is our brains – and science supports this – our brains go into what we call 钻牛角尖 mode. 分明讲的清清楚楚听起来糊里糊涂.

In the end, we end up in very unproductive, unconstructive meetings – like this very, very protracted housing debate, for example.

So, I would like to ask the Deputy Prime Minister to consider and invite him in his already very stretched bandwidth, whether in this tripartism that we have, that is such a beautiful and unique way of managing Singapore, whether we can approach productivity in a slightly different way with a commitment and a focus on our people's wellness.

I think if we just slow down a little bit, we may be able to harness more clarity, more creativity in our people when we are less stressed. So, that is only thing I am asking. Can we consider the possibility that taking a slowdown can actually help us to boost the creative potential that we have as a people?

Mr Lawrence Wong: I thought you were going to take two questions at a time.

Answer is yes, for sure. As I mentioned in my remarks, we are not pursuing growth for its own sake. We want to pursue growth as a means to an end and that end must be to uplift the lives of Singaporeans to advance the well-being of Singaporeans. And if indeed there are segments in our society who are feeling stressed out, burnt out, then that is not something we want to see either.

So, we should look at it holistically and certainly we welcome suggestions from Ms Carrie Tan and we will continue to work with her and Members in this House and other stakeholders, and also with our tripartite partners, to continually advance the well-being of all Singaporeans.

Mr Deputy Speaker: Mr Pritam Singh.

Mr Pritam Singh: Thank you for the indulgence, Mr Deputy Speaker. Just two quick points. First one, again, I also do not want to belabour the issue of the point about the WP's housing proposal. The Deputy Prime Minister was saying we will have it published. It is already published. It is already publicly available for people to read. And the key point in there is the context that Minister speaks of in terms of his experience in MND is actually a subset of the larger context that WP was talking about, which was the announcement of VERS.

The Finance Minister said there is no embarrassment in just changing your position and view – I agree with him. In fact, in 2018, it was Minister Lawrence Wong himself who identified a particular infographic, I believe, that the Workers' Party had put out on the capital reserves in PUB. And indeed, we took a look at it and our representation was incorrect; and so we corrected it. So, I do not think there is any difficulty that the WP faces in trying to correct something which is inaccurate. But I do not think the PAP has dealt with the housing paper in an even-handed way. Hence, the position that we are taking. No genuflection and we certainly do not intend to keel over when we feel that a relevant point has to be made. That is the first response. It does not require a response from the Finance Minister. But that is my response.

The second issue was the fifth clarification I put to the Finance Minister pertaining to the reserves. The Finance Minister said he respectfully disagrees with my characterisation of the move made in 2015 to include Temasek and that this actually was a plan that the Government already had in the works for some time.

So, I took the opportunity to pull out then Finance Minister Tharman Shanmugaratnam's Second Reading speech on the Constitution of the Republic of Singapore (Amendment) Bill, which effected this change. This is what was said: "We had deferred Temasek's inclusion when the NIR framework was first introduced and indicated that we would review this some years after implementation". So, that is correct. But the other thing that the Finance Minister did not say was including Temasek in the NIR framework, will provide the Government with additional fiscal resources in the years to come.

So, that is the point that I pegged my response to, and I think I have made the representation in this House before, that the position in 2015 resulted in more fiscal resources, more reserves being employed by the Government. That is the point that the Minister did not state in his response to clarification number five.

And just to set it out here, three reasons why these additional revenues were required: one, healthcare; two, human capability training, SkillsFuture, all this would be required, strengthening education; three, transport infrastructure, Changi Airport Terminal 5, Tuas Sea Port.

These were the reasons why the tap was opened. There would be additional fiscal resources and because there is a need. The need for the hour calls for it. And that is the perspective that the WP are bringing when we speak of looking at the reserves differently.

Mr Lawrence Wong: Sir, I thank the Leader of the Opposition for the first clarification. We will leave it at that. Let us not dwell on this further.

On the second point, on the inclusion of Temasek in the NIR. The intention was clear from the outset. The only reason why we wanted to stage it was because of the complexity of having to incorporate Temasek into the framework because Temasek is quite different from GIC. It does not invest in public markets. It is largely in the private equity space and therefore we had to take some time to work out how Temasek could be part of this framework.

We always knew that there was going to be additional resources. I mean, that is to be expected, right? Once you put Temasek into the framework, obviously there would be additional resources.

So, the intent was made clear from the outset. The reasons why we had to take time was because of complexity more than anything else. And in recognising that, yes, we have growing needs, this additional resource will be helpful.

But the point remains, having finalised the framework, with Temasek in as we had originally intended, let us stick to the rules and let us keep that system going for now. Maybe many, many years down the road, we will have a rethink, a review, we will have new information, circumstances will change, and we will all have another discussion with maybe a different Finance Minister.

But for now, the rules are sound. Let us stick to this. And if the Workers' Party agrees with that, then, hopefully, we can channel all our energies productively in thinking about how best to manage our rising expenditure needs without having to come back to the same old points about using more reserves.

Mr Leong Mun Wai: Point of order, Sir, point of order. I am not asking new questions but the Deputy Prime Minister did not answer any of my four questions. Can I just request that he answer two questions? I will take care of the other two, at the Committee of Supply.

2.57 pm

Mr Deputy Speaker: Mr Leong, I listened to your clarifications quite carefully. I think they amounted to four or five. We have ended with the Leader of the Opposition and we have gone for more than an hour of clarifications. It is the decision of the chair that the question will be put to the House.

Question put, agreed to.

Resolved, "That Parliament approves the financial policy of the Government for the financial year 1 April 2023 to 31 March 2024."

Mr Deputy Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 3.20 pm.

Sitting accordingly suspended

at 2.58 pm until 3.20 pm.