Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [18 February 2020] [3rd Allotted Day],

"That Parliament approves the financial policy of the Government for the financial year 1 April 2020 to 31 March 2021." – [Deputy Prime Minister and Minister for Finance].

Question again proposed.

Mr Speaker: Mr Pritam Singh.

11.10 am

Mr Pritam Singh (Aljunied): Mr Speaker, we are the tail end of this Government's term. From 2016, all the titles of each Budget emphasised "unity" – partnering for the future, moving forward together, together a better future, building a strong and united Singapore, and finally, this year, advancing as one Singapore.

But unity in the context of a democracy, along with the 4G leadership seeking to engender a Singapore Together movement, must also encounter varied, diverse, edgy and even contradictory views in the effort to find common cause. This is to be encouraged not discouraged. It is that process of embracing diversity and accommodating political differences that give meaning to a democracy of deeds for the 21st century and not for a one-party parliament of decades past.

Mr Speaker, Parliament is an august forum which is one manifestation of Singapore Together. My colleagues in the Workers' Party and I thank all Singaporeans for sharing their views and coming to us to bring up issues to Parliament over this term of government, particularly, those that Government Members of Parliament (MPs) cannot be expected to raise, not out of an inability of their own but because of the nature of politics and political contestation.

WP MPs agree with the Government when we have to, disagree where we must, in the knowledge that we endeavour for the best outcomes for Singapore and for a unity of purpose when politics must take a backseat, like during this current COVID-19 outbreak.

My speech will be divided into three parts. I will first speak of the geopolitical environment and the response of some businesses to the Budget announcements. Next, I will talk about our fiscal position, with some points on our revenue and expenditure position before finally concluding with my views on the enhanced SkillsFuture Credits and the climate change-related announcements.

Sir, the Finance Minister's Budget speeches on the external environment and developments that affect Singapore's geopolitical developments over this term of government have been prescient, illuminating not just upon the challenges but imperatives ahead for Singapore. In his 2018 Budget speech, the Finance Minister outline three major shifts in the coming decade: the shift in global economic weight to Asia; the emergence of new technologies that will change the way we live, work and play; and finally, ageing. Themes which were repeated in the Minister's 2019 Budget speech as well.

Sir, the last few years have witnessed tectonic geopolitical shifts. US Attorney General William Barr's speech at the Department of Justice earlier this month captured the mood of the times ahead, at least from Washington's perspective. In reminiscing about the days of the Cold War, Barr remarked, "Russia wants to conquer the world. We can deal with that. China wants to own the world. That is going to be more challenging to deal with."

American policy towards China is on a very different course and with a bifurcation of the world looking like an almost foregone conclusion, not just a technological decoupling, but with differences in values and norms at the heart of things. More so than before, shaky US-China relations are threatening to force invidious choices upon Singapore, choices which the political leadership not just within the PAP but all political parties and citizens in Singapore would have to negotiate with greater judiciousness and sensibility without compromising an absolute commitment and loyalty to Singapore.

However, this circumspection does not just extend to the superpowers. We must also resist the urge to engage in gloating when our closest economic partners like Malaysia and competitors like Hong Kong negotiate their own unique political circumstances; circumstances which are historically apart, completely different and in many cases take place in a more complex and significantly larger country, many times our population size.

My brief discussions after the Budget was announced with a few members of the various local Chambers of Commerce informed me that there has been a general acknowledgement of the relief provided by the Stabilisation and Support Package in the Budget. Separately, I understand Chamber Members are also continuing the work on longer term efforts at internationalisation and bringing businesses up to speed with new initiatives, particularly training and growth opportunities.

Sir, one specific group of Singaporean businesses and individuals reached out to me in the aftermath of the Budget. They are our private hire bus companies and drivers who are bearing the brunt of cancelled trips and tours arising from the COVID-19 outbreak. These are the bus drivers who bring our residents to Malaysia for durian trips and even National Servicemen around Singapore for local tours or training.

I understand that an industry briefing was held on the 21 February by the Singapore Tourism Board on a relief package for travel agents and tour operators. While the briefing was appreciated, private bus companies feel the Budget support package is not targeted enough, in view of the nature of their business.

I thank Minister Josephine Teo for her speech during the course of the Budget debate, explaining the policy reasons why foreign worker levies were not reduced or waived. Nonetheless, I hope the Government reconsiders this and extends some support by way of a one-month or partial waiver of the levies for companies that have no choice but to hire foreign manpower, on the condition that these companies consciously seek to increase their local headcount, by way of job redesign going forward. Some conditional support and consideration for them in these difficult times, may provide greater impetus on all our companies overly reliant on foreign manpower today to make a greater effort to hire locals – including senior citizens, and even those on a part-time basis – tomorrow.

Mr Speaker, I move on to the second part of my speech on fiscal prudence and sustainability, a subject which is a feature of practically every one of Deputy Prime Minister Heng's Budget speeches. One hard truth that we do not hear in this house, notwithstanding greater demands on expenditure, is that the current Government has had the privilege of far more budgetary elbow room, both political and fiscal, than any previous government in Singapore's history.

Just think about it. After the inclusion of Temasek in the NIRC component of the Budget from 2016, monies for GST offset package can be set aside for the introduction of higher taxes for the next term of Government. Compared to 2015 when the NIRC component of the Government's revenue was about $9 billion dollars, today, the figure is almost double. Separately, the package to support the economy in light of COVID-19 was not funded from a draw on the reserves, unlike the support package during the Global Financial Crisis about a decade ago.

Sir, when the Workers' Party made inquiries on the reserves over the course of a few Budgets in this term of Government, it was to explore and consider different approaches and prospects to improve the lives of our people, particularly the low and middle class. At the last Budget, Finance Minister provided a lengthy reply on why the dollar value of the reserves could not be disclosed. But the answer remains unsatisfactory, particularly when the same argument could apply to the overwhelming majority of other democratic societies, who nonetheless err on the side of fiscal scrutiny and accountability.

At last year's Budget, I brought along a Business Times article that saw Singaporeans calling for a greater discussion on the reserves. These calls for greater transparency are not out of place and they will continue in years to come. They run in parallel with the Singapore Together spirit with Singaporeans taking ownership, exploring fiscal solutions, seeking to co-create not just today's Singapore but a sustainable and equitable tomorrow that future generations of Singaporeans will inherit.

More specifically, in Finance Minister's 2018 speech, the prospect of borrowing by Statutory Boards and Government-owned companies to build infrastructure was first raised to help spread the cost of larger investments over many years. This prospect of borrowing was raised again by Finance Minister in his 2019 Budget speech where the Finance Minister confirmed that the Government is studying the option of using Government debt as part of the financing mix for long-term infrastructure projects.

Mr Speaker, it has been two years since these plans on debt-financing were raised. Can the Government share more details on these plans, as this year's Budget does not communicate the results of the Government studies on the borrowing or debt-financing framework and their fiscal consequences on future Budgets?

This year's Budget also saw the Finance Minister once again making reference to the Base Erosion and Profit Shifting (BEPS) project, an initiative that seeks to ensure companies are taxed where substantive economic activities are performed. The Finance Minister first raised BEPS in his 2017 Budget speech. Then the House was informed that the Government was in consultation with businesses on scheme refinement and implementation of the relevant standards. What has been the results of these consultations from three years ago?

BEPS was raised again in the Finance Minister's speech this year and the Minister shared that there are discussions to revise international tax rules and that Singapore was actively participating in them. However, reference to BEPS this year was in the context of a sub-point of another sentence, which warned there were uncertainties and downside risks to the Government's revenue position – a matter which should be of interest to all Singaporeans.

I have a query with respect to BEPS. Before that, it is useful to recap the Government's argument on proposals by Singaporeans to raise taxes of higher income earners, who do enjoy the safety and security offered by Singapore. The concern was that high net-worth individuals would be able to structure and move their assets to avoid higher tax obligations.

What is the impact of BEPS on this prospect and the Government's assessment of the impact of BEPS' developments on our tax policies? Is there an upside, nonetheless, by way of other taxes on the ultra-rich to maintain our progressive tax system? What are the best and worst case scenarios to the developments in BEPS on our revenue position?

Mr Speaker, the Finance Minister's Budget speech confirmed that GST will not be going up next year. Notwithstanding the offsets announced, the GST is a regressive tax that will hit the low and middle income, retirees, seniors, particularly hard as they would have to manage their expenditures more frugally because offsets do not last forever, particularly for the middle class.

At this year's Budget, the Finance Minister said that the Government put off the rise in GST after considering the state of the economy, but more critically, I quote, "...after reviewing our revenue and expenditure projections". Sir, when the Workers' Party objected to the rise in GST in 2018, amongst other things, it was on account of a lack of information about alternate revenue streams. The Finance Minister's position then was that one did not need to have information on everything to make a decision on anything.

But from the Minister's speech this year and the announcement not to raise GST next year, it is obvious that the Government relies on revenue and expenditure projections to make these decisions.

Would the Government make public these projections so that Singaporeans can critically evaluate the necessity of a GST hike? I believe this openness would contribute to a more substantive conversation and understanding of our fiscal trade-offs. This can only advance and mature conversations that take place in Singapore. Until this clarity is provided, the Workers' Party position has not changed. We cannot support a GST hike, especially since this is to be raised in advance and before the Government's projections have been put to this House.

The third segment of my speech is a short one, Mr Speaker. I refer to the Government's call for special SkillsFuture Credit top-ups for Singaporeans between the ages of 40 and 60. The Workers' Party supports this move, but urges the Government to track the use of these credits for this age group to job and employability related outcomes closely. More generally, while SkillsFuture subsidised courses can range from, in the words of the Finance Minister, "cooking to coding", it does not bode well if taxpayers' money are expended on courses that are under-weighted with regard to real improvements of skills, job prospects and employability of our workers, in view of the workplace disruptions to come.

We know from previous Parliamentary replies that there is an upper limit to certain entrepreneurial prospects in Singapore, such as the opening of cafes. An audit of the courses our people are taking up, particularly younger and middle-aged Singaporeans, must be reviewed every so often in consultation with inputs from the Industry Transformation Map (ITM) stakeholders, so as to evince the best outcomes possible for our workers in the medium term.

Lastly, Mr Speaker, I expected some strong incentives or subsidies in this year's Budget on climate change outcomes, particularly in the aftermath of MEWR's efforts towards greater climate change awareness over the last few years, including designating one year, a year of climate action.

To this end, I would urge the Government to move more decisively to incentivise changing behavioural norms to reduce the overuse of plastic bags. For example, a transitional subsidy amounting to $20 for households to subsidise the purchase of plastic bags at supermarkets could be considered as a bridge for Singaporeans before a charge is levied for every bag by all retailers.

Mr Speaker, incentivising the reduced usage of plastic bags is not just about our over-consumption of plastic bags per se. It is also about the amount of waste we generate and dispose which usually ends up in a plastic bag that is thrown down our bin chutes. A plastic bag charges far from representing mere climate change symbolism. It is a clarion call to us all and to alter social norms to equally, if not more importantly, reduce the amount of waste we generate. This is a pressing issue as there are infrastructural constraints on the amount of space we have to dispose our incinerated waste on Pulau Semakau which is expected to be full by 2035 or thereabouts. That is only a mere 15 years from now.

Correct as of Monday, there were 342,304 pledges on the MEWR website to fight climate change. There is a window to move more decisively and we should move fast.

To conclude, Mr Speaker, the Finance Minister is correct to say that many Singaporeans are coming up with and acting on ideas to make Singapore a better place on their own initiative. For the first time in his Budget speech in this term of Government, the Minister has spoken about the democracy of deeds. But whatever deeds our people underwrite, they take place within the context of our democracy, a democracy where alternative views, criticisms and disagreements shape the outcomes that give meaning to the phrase one united people – united in a vision for better and more confident Singapore, no matter what our political beliefs.

It is like that anthem that was referred to in this House, during the course of this Budget debate, "You Will Never Walk Alone". But how many of us know that it is not just the anthem of one club but others too, like Glasgow Celtic, Borussia Dortmund and many others.

Sir, Singapore's diversity is its strength. As long as our people – youth, businesses, individuals – engage the issues of the day civilly in our democracy and treat their fellow Singaporeans and foreigners within our midst with dignity and empathy, and endeavour for a more caring society, the best years of Singapore – a Singapore for all – are ahead of us.

Mr Speaker: Mr Sitoh Yih Pin.

11.25 am

Mr Sitoh Yih Pin (Potong Pasir): Mr Speaker, Sir, I rise to speak on an issue that I have raised before in previous Budget debates – the importance of fiscal sustainability and financial prudence.

Sir, my friends often accuse me of being obsessed with numbers. I tell them it is an occupational hazard because I am a chartered accountant by training. But, I have found over the years in practice that numbers give us the most precise and clearest indication of one's financial position.

Sir, this year's Budget Statement is no different. Overall, we estimate our position to be in deficit of $10.95 billion. Year on year, we hope for increases in our operating revenue amid very challenging global competition. For example, our tax collections can increase if our companies do well and pay more corporate taxes. At the same time, we also hope for more revenue from our Net Investment Returns Contribution (NIRC). Our NIRC only became possible because of the prudence and wise investment decisions made by our earlier generation of leaders. Against this backdrop, our estimated to the expenditure is expected to increase much larger because we need to fund our healthcare needs and infrastructure developments, like our MRT lines, to bring a better life for Singaporeans.

Sir, talking about healthcare amenities, I have for the last many years, been asking for a polyclinic in my constituency of Potong Pasir. I even filed a Parliamentary Question (PQ) for that. [Laughter.]

In my discussions with MOH, they informed me that there is no more space in Potong Pasir estate because it is all built up. That is true. But, MOH is building Kallang polyclinic, which is connected to Kwong Wai Shiu hospital. I see Dr Yaacob had a thumbs-up because that is in his Jalan Besar constituency. So, that is also good for Potong Pasir residents because that is one MRT station away.

However, I think I found some space for MOH. The residents of Bidadari are moving in and I think there should be some space in Bidadari estate to build a polyclinic for our Potong Pasir residents. So, if you can, Sir – please. [Laughter.]

Sir, let me continue with the Budget. A large part of the estimated Budget deficit for 2020, as Deputy Prime Minister Heng have explained in his Budget Statement, it should fund measures to address the impending difficult economic landscape that confront Singapore as a result of the COVID-19 virus outbreak. This includes the $4 billion Stabilisation and Support package for workers and businesses and also the $1.6 billion Care and Support package to help Singaporeans with household expenses.

In the Budget Statement, the sentence that captured my attention the most, was when Deputy Prime Minister Heng announced that there will be no draw on our reserves, no draw on our reserves. For FY2020, we have an expansionary budget with an estimated $10.5 billion deficit, but we need not draw on our reserves. Why? Only because the Government had accumulated sufficient budget surpluses during this term of Government.

As we have read in recent international media of other jurisdictions, similarly announcing support packages in their respective economies, I doubt you will find a jurisdiction that can say that they are able to fund such support packages in the manner that we have. I have not seen any.

During previous Budget debates in this term of Government, I am sure Members of this House will also recollect repeated calls for more spending of the surpluses or the use of more income derived from our reserves. There was even suggestion that the Government had a political agenda behind more prudent spending in the early years of a term of government.

Had the Government done as what was popularly asked – spend more in the good years – then, this year, we could very well have had to dip into our reserves in order to introduce first-instance measures to support Singaporeans as a result of the COVID-19 virus outbreak. I used the term "first-instance" because I worry that we may not have seen the eye of this particular storm. Even as we speak, we continue to see worrying signs of the COVID-19 virus outbreak seriously affecting many countries, such as Japan, South Korea, Italy, Iran and many others. We can anticipate further adverse headwinds against Singapore's globally interconnected economy. We could very well require even further measures from the Government to support and assist Singaporeans in the days ahead.

Sir, in my mind, there is another term for consistent financial prudence in our Budgets and, that is, always be ready and prepared for any eventuality. And I am sure I am not alone when I say that I am glad we did so for the past five years and, indeed, for many terms of Government before.

In the premises, Sir, I would invite our Deputy Prime Minister and Finance Minister to share with us the Government's intentions and plans to further support Singaporeans and businesses in the event that the situation is drawn out over a prolonged period of time.

11.32 am

Mr Teo Ser Luck (Pasir Ris-Punggol): Mr Speaker, Sir, as the Budget Statement was read by Deputy Prime Minister Heng, I felt very privileged to be on both sides of the fence. I had been a part of the team that was trying to figure out some of the schemes and programmes to be rolled out each Budget and I am now on the other side of the fence as a beneficiary of some of the programmes and schemes itself.

When I left the Ministry in the middle of 2017, I had wanted to set up my own ventures and businesses and I chose the most difficult path to do so. I chose businesses and ventures of a B2C nature, which is to create a consumer product, a consumer brand, starting from zero and I wanted to see if I could do it with the environment that Singapore offers, with all the different measures, grants and schemes that the Ministry offers. So, it has been a very good two-and-a-half years, but a lot of grinding and a lot of pain and also a lot of risks taken. It was not easy. But at the same time, I felt assured because I know that Singapore's business environment is one of ease of access as well as one that you could approach and feedback, where you could actually have help and assistance. But, of course, many in the business circle would say, "Well, you had been an officeholder, you were a Member of Parliament. So, you have an advantage." Not so.

On the other hand, I took a lot of measures and also a lot of different ways to hide and not show which companies I owned and how I did it and actually worked behind the scenes really, really hard in order to grow those businesses. So, piece by piece, layer by layer, I built my business and I am very lucky, very blessed that, today, my venture in the consumer product business is profitable. I know many fall by the wayside and, out of 10, probably nine will fail. I am just lucky to be able to do so. I would not deny that some grants and programmes were made available for me or my company to be able to tap on them. But at the same time, it is very much dependent on ourselves as business people to do so, to be able to come up with solutions, with what the market needs and what the consumer wants and we can build a successful business from there.

Sir, the Government grants, schemes and programmes throughout each year are not an end-all and be-all. They cannot be the most critical function or most critical part of the business. I know that many businesses apply for those grants and schemes, hoping for additional cash flow. Yes, they are temporary relief measures, but they are not permanent. At the end of the day, someone must want to buy your product, work with you and believe in your company in order to invest in it in order for it to grow.

Sir, when I went through some of the speeches in the previous two days, I understand that Mr Leon Perera actually mentioned about slowing down some growth of the reserves and maybe putting in more investment into our people to be more creative, entrepreneurial and innovative. I do not disagree with that. But I think slowing down the growth of the reserves is not the way to go because, no matter what, we need to build up the foundation in order to take on the rainy days or challenges to come and deal with COVID-19. It is very clear that we have the facility and resources to handle some of these challenges. But, without which, we will find it a struggle to manage. It is like running the day-to-day business in every other way; you would want to have the reserves in order to handle some of these rainy days.

Sir, more importantly, these reserves and how we use them are extremely important. How the grants are rolled out is extremely important – a smart allocation of these resources and what kind of outcomes that we can get – those are the first things. And those schemes must be targeted to help, to be able to do so. I think more and more of those schemes for businesses are now very targeted. But having too many of those grants and schemes and we risk going into a welfare state for businesses. That, I would not encourage.

Secondly, we must make sure that we define success carefully. What is business success? Some people say, "Raise as much capital as you can if you are a start-up so that you have millions and millions", but you make losses. If you are a unicorn, it is okay to make losses and you raise a lot of money. Well, I do not buy that. I am pretty traditional in some sense, maybe a Teochew businessman type, which is that all businesses still have to be profitable. You can raise a lot of money, you can make a lot of losses, but no end to come, you would not see the tipping point. You will struggle. You will still struggle. So, you will hone your skills in fundraising but not hone your skills in building the business. That is a worry.

So, how do you define success? Is success an exiting of the business when you gain or what? I believe that success in business, to me, is about building a business with a social conscience. The product or services that you provide must have some social impact in order to make it very meaningful. But at the same time, commercially viable. That, to me, is the most important.

Thirdly is to have the environment. So, whatever reserves and schemes we have are to be able to create the environment for some risk-taking, embracing failures, so that our people do not give up. They try and keep trying. I think that is the most difficult part in terms of culture. But you can see our Government is so pro-business. Every which way, when there is a crisis, it will come up with more and more schemes. COVID-19 is a great example. You see a comprehensive slew of schemes and measures. Sometimes, I wonder, so many of them, I am also confused. Right? And I was also a culprit – creating those schemes and programmes as well. But at the end of the day, it is with good intention. The question is whether we are cushioning and detaching businesses from reality. Would they be more competitive when they go overseas? In COVID-19, I faced the same problem. I have both B2B and B2C businesses, especially B2C business dealing with consumers who are facing demand issues because the whole environment has been affected.

So, there are a few things that go through my mind when it comes to COVID-19 – the crisis itself, how it affects businesses. A few points here.

First, when I review my own businesses, all SMEs should ask ourselves whether we have the capital and resources like cash that can last us for the next two to three months if we are in the worst-case scenario – no demand, no revenue or minimal revenue. Can we handle or sustain? If we cannot, well, there are schemes where the Government is taking up a greater risk of the bank loan. So, borrow money, right? You can try. But I also know that, on the ground, sometimes it is difficult because the banks are not changing their risk assessment to let you have access to the capital. So, you have to keep trying. The first thing is to ask ourselves whether we have enough; second, maybe look for big companies. Right? And I am glad that Minister Chan, in one of the dialogues, said that big companies should help small companies. I hope so. But big companies have their own objectives, too. Unless a small company has value for the big companies, it is very hard to have a big company wanting to help a small company. So, what do you look for? Maybe an exit through the big company – let the big company acquire your small company or you just close it down, move on and move along.

Secondly, COVID-19 does offer opportunities, too. For example, I had wanted to recruit this talent for a long time. But because of COVID-19, his company retrenched him. Suddenly, I have him available. Immediately, I recruited him. I would like to pay him the market rate, but I also could not afford it. So, he was willing to lower his salary and, suddenly, I have a great talent for IT in my company today and we are growing. He is glad that he joined a growing company. But he was willing to be able to say "I joined the company. I managed my expectations. Let us grow it together", which was an opportunity.

So, the talents are out there. Whilst I know the Government tells us, "Let us train our workers, people and executives". Well, also look out for some of these access to talents. NTUC actually came up with the Job Security Council. Maybe it is something that we can have access to some of the PMEs over there to see where we can do the matching. So, it is not all about retrenchment but about growing, too. So, this COVID-19 is not exactly all gloom and doom for many companies. Some of us are actually growing.

Thirdly is to focus on the demand. Companies should focus on the demand. Is your product really having that demand? Maybe during this time, there are a few things that you have to do. First, lower your price, right? Second, refine your product again. Third, reposition your product. A lot of times, when it comes to this kind of crisis, we will look up to the Government to see what schemes to apply. I was telling my staff and my team this morning I do not think we want to do that. We look for competitiveness. We lower our price and we have to expand our market. Go overseas, go to new markets. Of course, I am already overseas. But where are the newer markets to expand your market and expand your revenue base? Because that is where we can help. And we realised that one of the markets that we are going to used to be 30% higher cost and is now 30% lower cost if I were to launch my product there and I thought "Why not?" That offers an opportunity.

At the end of the day, it is important to know that a lot of these things that we are doing today, we have to change. We may call it "transformation". But I will just say that it is just a transition, it is just a change. If you have been selling your product from a shop, then it is time for you to think about selling it online, without the sunk costs, without additional labour, you sell it online, figuring out how to do the logistics and delivery. I think a lot of people say "We want to do it" but, at the end of the day, they may not do it.

Most importantly is that at the end of COVID-19 or any other crisis or challenge, let us not give up. Let us not give up on what we can do because Singapore is in a much better shape not just in tackling the COVID-19 issues, the virus itself and making sure of healthcare but business-wise as well. I still see vibrancy in our businesses; I still see revenues rising for some of the companies. It is not everybody is doing badly. So, because of that, we can work together, both public and private sectors, as well as all of us in the House, to help bring this economy back up again. [Applause.]

Mr Speaker: Deputy Prime Minister Heng Swee Keat.

11.43 am

The Deputy Prime Minister and Minister for Finance (Mr Heng Swee Keat): Mr Speaker, Sir, I thank Members of this House for the thoughtful debate over the past two days. In particular, I would like to thank the 54 Members of Parliament, including all nine Nominated Members of Parliament, who rose to offer your perspectives and suggestions. I do not have 57 files; just two. I have also learnt many new terms, including Mr Lim Swee Say's H2P2 or Happy and Healthy, Productive and Purposeful; Prof Lim Sun Sun's 3Ms, which is not massively more money, but "mobility, maturity, mentality"; and Mr Ang Hin Kee's "woon woon jiak beehoon" or steadily, we eat the beehoon. My special thanks to Mr Liang Eng Hwa who opened the debate as Chairman of the Government Parliamentary Committee for Finance and Trade and Industry.

Beyond this House, I also appreciate the many helpful, constructive perspectives shared by fellow Singaporeans. They have enriched the national conversation on this Budget and the issues it seeks to address.

This year’s Budget takes place under exceptional circumstances. It is a trying moment for businesses, workers and households, having to deal with both the softening of the global economy and the sudden COVID-19 outbreak.

How we respond to moments of challenge and crisis is a test of our individual resilience and the strength of our character. Even more, it is a test of our social cohesion and solidarity. It is a test of who we are as a people, as a nation. Do we panic and become self-centred or do we stay calm, band together and look after one another?

Since I delivered the Budget statement last week, some have asked why we call it "Our Unity Budget"? My answer is simple. It expresses our confidence that Singaporeans will rally together to meet our challenges head-on. It expresses our conviction that we will emerge from this test, stronger, more resilient and more united than ever before. It expresses the spirit shown by many Singaporeans – of staying united, as one people, through thick and thin.

Beyond fighting the COVID-19 outbreak, our unity will be the foundation for Singaporeans to press forward and write the next chapter of the Singapore Story. United, we can overcome the longer term challenges of ageing, technological disruption, social inequality and climate change. United, we will make sure that the Singapore Story endures and goes from strength to strength.

We should not take our unity for granted. Around the world and closer to home, we have seen societies torn by forces that foment polarisation, communal conflicts and political turmoil. These have weakened their social cohesion and the sense of togetherness that is so essential for societies to meet the complex challenges of the day. We need, as many thoughtful commentators pointed out, a whole-of-society response.

I will round up this Budget debate by addressing Members' contributions along four key themes.

First, how we will overcome our immediate challenges and the COVID-19 outbreak together. Second, how we should manage our finances collectively to provide for our future. Third, how we should tackle the long-term challenge of climate change and turn our constraints into strengths. Finally, how we can create opportunities for all and build better lives for Singaporeans in changing times.

First, let me speak on our present challenges.

Having gone through SARS 17 years ago and other outbreaks like H1N1 since then, we are much better prepared for COVID-19 today. With systematic and long-term planning, we have developed new facilities, like the National Centre for Infectious Diseases, deepened research capabilities in health and biomedical sciences, built up our networks of experts and honed our effectiveness in contact tracing and quarantine. Most importantly, we have well-trained and dedicated people. These capabilities are now deployed to good effect to deal with the COVID-19 outbreak.

Although we have kept the outbreak contained so far, it has already had a significant impact.

In these challenging times, we have acted decisively to protect families and workers through the Care and Support Package and the Stabilisation and Support Package.

I have received a wide range of feedback about the support. Many are relieved that we have a strong and decisive Budget, with both broad-based and targeted support. Many Members of this House have asked if we are doing enough, particularly for businesses in the sectors directly affected and those feeling the knock-on effects. On the other hand, some economists have wondered if we are doing too much.

We must not fight the current war simply based on the lessons of the last war. Every crisis and downturn is different. So, we should, to the best of our ability, make a sound diagnosis of the current challenges and apply a decisive course of action, or as one says in Chinese, "对症下药", fit the remedy to the case.

At the same time, we must bear in mind the caution that Ministers Gan Kim Yong and Lawrence Wong have given – this is a fast-moving, fluid situation. While the evidence is that the impact of the COVID-19 virus is more like H1N1 than SARS, its rapid spread through places like Iran, Italy and South Korea demonstrates the fluidity of the situation.

We must maintain a state of dynamic vigilance and be prepared to adjust course as new information comes in.

Let me address whether we are doing enough and in a timely manner.

The overall size of our spending in Budget 2020 is appropriate for now. We have calibrated it to put sufficient purchasing power back into the economy, while injecting a boost of confidence. In fact, our Budget is higher than what most economists had expected. This took into account the context of the global slowdown and wider uncertainties.

We are applying the support to where it matters most. Our first priority is jobs.

The two biggest items in the Stabilisation and Support Package – the Jobs Support Scheme (JSS) and the Wage Credit Scheme (WCS) – are focused on preserving and enhancing jobs. With greater job assurance, workers are in a better frame of mind to go for training. It will also avoid them having to cut down too much on consumption. SMEs, which employ the bulk of local workers and whose concerns were raised by Ms Denise Phua and Mr Ong Teng Koon, are a key focus of these two schemes. As a percentage of revenue, SMEs will receive payouts that are on average five times as much as the average for all enterprises. This is on top of the help they will also receive through the Corporate Income Tax Rebate and other measures.

Second, we are giving support to those sectors which are most directly impacted by COVID-19.

Our sector-specific measures are calibrated according to the extent to which each sector has been affected. Tourism, accommodation and aviation have been hit hardest and are therefore given additional support. In total, these sectors will receive over $400 million, in addition to the broad-based support that they will get through JSS, WCS and Corporate Income Tax Rebate. This will include enhanced absentee payroll support for workers, an issue that Mr Seah Kian Peng raised. Ministries will announce further details on this.

Third, we have extended support to other groups who have felt the ripple effects, including Self-Employed Persons (SEPs).

We have provided additional measures to support taxi and private hire car drivers, hawkers, tourist guides and operators of F&B and retail outlets. This additional support totals over $200 million and is over and above the support from broad-based measures, which form the bulk of the support for them.

Mr Desmond Choo, Ms Tin Pei Ling and Mr Gan Thiam Poh asked if we could do more to take care of other groups of SEPs and freelancers who are more affected by the outbreak. Mr Pritam Singh raised the issue of bus drivers. The relevant Ministries will announce details for these other groups subsequently.

Fourth, we have designed our measures to be able to reach enterprises as quickly as possible. Mr Saktiandi Supaat, Mr Seah Kian Peng and Mr Gan Thiam Poh asked if we could expedite the flow of the JSS payout to businesses.

The disbursement of the JSS payout is operationally more complex due to the need to check and validate information on workers, employers and payment mode. Hence, we had initially projected for the JSS payout to reach companies by the end of July. In the last few weeks, the agencies involved have redoubled efforts and are now targeting to bring forward the payment for JSS from end-July to end-May. Employers using bank crediting will get the payout about a week earlier. Enhancements to WCS will be provided in the second half of this year. This way, we can also spread out our support for enterprises in a more sustained way.

These measures in the package also come on top of the existing support schemes for firms. For example, there will be a WCS payout of more than $600 million to firms next month, based on the parameters announced in Budget 2018.

We should also look at the measures in the Stabilisation and Support Package in totality. We are providing a Property Tax Rebate to qualifying commercial properties, for which property owners will receive their revised tax bills in April, and refunds of any excess property tax paid by the end of May.

We are also providing rental waivers for Government commercial tenants, the majority of which will apply to March and April rentals.

For the Corporate Income Tax Rebate, companies will receive their revised tax bills by the end of March. These will provide not just financial relief but also help with enterprises' shorter-term cash flow needs.

Many, including Mr Arasu Duraisamy, Ms Denise Phua, Dr Teo Ho Pin, Mr Chong Kee Hiong and Mr Alex Yam have asked if we can do more for businesses and for a longer period of time. We hope that will not be necessary. But if it does, for example, if the outbreak becomes a worldwide pandemic and the global economic impact is deeper and longer, we have the fiscal resources to do so and the will to act. We have the fiscal resources to do so and the will to act.

But, for now, let us go forth and make the fullest use of the support available out there before we review what more needs to be done. As I have said, this is a fluid and fast moving situation.

There are many stories of businesses and workers who are not just making full use of the Government's support, but taking it a step further to help each other and share the burden during this time of fear and uncertainty.

Landlords, including CapitaLand and Frasers Property, have promised to pass on the Property Tax Rebate to affected tenants.

The taxi and private hire car companies have taken steps in partnership with NTUC, the National Taxi Association, National Private Hire Vehicles Association and the Government to care for their drivers in their hour of need, even as they face challenges themselves. I thank Mr Ang Hin Kee for playing a key role in facilitating this.

Many businesses have also responded to the challenge with resilience and foresight, taking the opportunity to accelerate innovation and invest for the future. This is exemplified by PARKROYAL at Kitchener Road. I visited PARKROYAL this Tuesday. I was impressed by the measures they are taking during this downtime to renovate the hotel, redesign processes, retrain their workers and redesign jobs. They are able to do this because even before the COVID-19 outbreak, they had been making plans to transform their operations to cope with manpower constraints. Now, they are accelerating their transformation efforts, fully utilising the support that we are extending to them.

Our Labour Movement has also been hard at work to help workers cope and emerge stronger from this difficult period. I thank Secretary General Ng Chee Meng, Mr Heng Chee How and Dr Koh Poh Koon for NTUC's strong leadership and partnership in this period and all his NTUC colleagues who are here in this House.

This is a time for all of us do our part. As Mr Vikram Nair put it, the entire population needs to come together to weather the storm.

People from all walks of life have come together to help others, at a time when it is tempting to just look out for oneself. Some are pooling their money. Young leaders from six business families in the Singapore Business Federation, Young Business Leaders Network has set up a $5 million fund called the "Helping our promising enterprises" or SBFYBL and Hope Fund, to provide financing help for local enterprises hit by COVID-19. In another example, Maturity Trust, a charity, is raising $500,000 under the Singapore Strong Fund to fund ground-up projects that help the community stay strong amid the COVID-19 outbreak.

Many are also pooling that time. Mr Delane Lim started the initiative Ops Hands-On to provide free masks and hand sanitisers to seniors and vulnerable residents in neighbourhoods across Singapore in collaboration with local residents' committees and community clubs. Even our children are doing their part. Students and staff from Wellington Primary School and several other schools made personalised cards to show support and appreciation for our frontline health workers.

Several Members of this House have shared heartwarming stories of how the community has banded together to cheer on our frontline workers as it combats the COVID-19 outbreak.

Mr Alex Yam talked about how volunteers in Yew Tee baked cookies for our frontline heroes. Ms Tin Pei Ling talked about Singaporeans who wrote messages and prepared gifts to express their support and cheer them on.

Our frontline health workers deserve our fullest support and encouragement.

Indeed, our frontline workers, especially healthcare workers in the restructured hospitals have shown outstanding courage and dedication. They are out there making daily sacrifices to fight this war against the unknowns. As Mr Seah Kian Peng put it, they act not because they have no fear but in spite of it.

Senior Staff Manager, Ziadah Zainudin, has worked more than 12-hour days at Singapore General Hospital's Isolation Ward. Despite missing her birthday celebration with her family, she did not let COVID-19 stop her from doing her job.

Dr Melissa Tien responded to NCID's call for volunteers at its 24-hour Screening Centre, even though it meant sleeping in a different room from her husband and forgoing time with their two children.

Dr Margaret Soon, the Director of nursing at NCID and a veteran of SARS cancelled the family trip to work at the frontline. But her family understood and supported her, including her daughter whom she was pregnant with during SARS 17 years ago.

The selflessness and commitment of our healthcare workers have shone through as they bravely care for those affected and tirelessly work to contain the spread of the virus. They are an inspiration to all of us and their spirit of excellence has been recognised around the world. [Applause.]

While we cannot thank them enough, we can show our appreciation and support in a tangible way. The Government will award public officers on the frontline who are directly battling with the COVID-19 disease up to one additional month of special bonus. [Applause.]

This will include many healthcare officers in MOH and the restructured hospitals and some officers in other frontline agencies who have been directly involved. Other public officers who have contributed significantly will be recognised in appropriate ways.

We will also make a one-off COVID-19 grant to the Public Health Preparedness Clinics to support them in their active role caring for patients with respiratory symptoms.

This gesture plus the many words of encouragement and acts of consideration and kindness is our way to express to you we salute you. [Applause.]

We will win this war over the virus by fighting as One United People. Our citizens and institutions all play a part. Enterprises and senior management standing with unions and our workers, landlords supporting tenants, neighbours looking out for one another, political leaders working hand-in-hand with Public Service and the people to do everything that will help. They will help us see these problems through together.

Singapore has been able to respond strongly and effectively to COVID-19 because there is strong trust between the people and the Government, and the sense that we are all in this together.

The Government can make decisions quickly and carry them out effectively because Singaporeans have confidence that those responsible know what they are doing, care about their health and safety and share their worries and concerns.

We do not hide bad news. We do not flinch from doing the right thing. We will go the extra mile to help everyone of us come through this together. That is why people comply with stringent quarantine orders, people accept reassurances about masks, people feel safe and carry on with their lives.

The fundamental basis for this is trust and solidarity between the Government and the people.

The political leadership will do our part. To show solidarity with fellow Singaporeans. All political office holders will take a one-month cut in their salary. All Members of Parliament will also take a one-month cut in their allowance. [Applause.]

The President has informed me that she will join in to take a similar one-month pay cut. [Applause.]

Senior Public Service officers will take a half-month pay cut.

In the weeks and months to come, we will need to draw deeply on Singapore's reserves of resilience, trust and solidarity. This unity of purpose across our whole society is what will see us through these challenging times. If we conduct ourselves well in this crisis, we will replenish those reserves and strengthen our resilience and unity for another generation. As Er Dr Lee Bee Wah said said yesterday, in Singapore, "You Will Never Walk Alone".

Budget 2020 provides critical support to Singaporeans and businesses in this hour of need. We are able to do so because we have managed our finances prudently and planned ahead to make sure that we always have enough to meet our people's needs.

COVID-19 will not be the last challenge that we will face. When this passes, we will continue to face the longer term structural challenges of an ageing population, technological disruption, social inequality and climate change. We will continue to face sudden and unexpected situations, be it new virus outbreaks, threats to our security or financial crisis.

A responsible government must ensure that the nation has the resources to meet these challenges and unexpected events, so that present and future generations of Singaporeans have the wherewithal to survive and thrive. As Mr Sitoh Yih Pin put it so well, we must always be ready. We must always provide for our future.

Two years ago, I announced that we will need to raise the GST some time from 2021 to 2025. Various parties have questioned this plan. Some have called for the GST rate increase to be delayed or dropped completely after I announced that it would not take effect in 2021 and that we have prepared a $6 billion Assurance Package. In place of the GST rate increases, some have suggested alternatives including raising income and wealth taxes as well as spending our reserves and more of its investment returns.

Which path we choose and how we decide to share the burden of providing public services and building our collective future will define us. Will Singaporean stand together to share the responsibility of providing for our collective future? Or will we pass the cost to our children and grandchildren?

In many societies, such tensions have divided communities and created fault lines between millennials and baby boomers. So, it is critical that we make a collective and informed decision to share the efforts and cost fairly, with citizens appreciating the reasons and values behind this decision.

Many have been advocating that I give up more sweets, more M&Ms, more and more, be a generous "财神爷" or God of Fortune. It will be easier if I could deliver every Budget with just more good news, more spending on everything, more subsidies, more universal handouts and keep quiet about how we will pay for all of this. But this will be irresponsible. It has never been the Singapore way and I hope will never be. Because Singaporeans deserve better.

So, I will spend some time explaining the rationale and the hard choices and trade-offs that we have to make. I hope that you will understand and appreciate the care and concerns behind the careful planning. If we did not care as much for our collective future, we would not have thought so long and hard, and expended so much political capital.

Let me speak on two sets of issues in turn. First, I will explain why raising GST remains the responsible way for all of us to meet our society's future needs. Second, I will explain why we should continue to steward our reserves well, to safeguard the interests of future generations of Singaporeans.

First, let me reiterate why we need to raise taxes. Nobody likes taxes, not even Ministers for Finance.

As a Government, our approach is to tax lightly, so that people can keep most of what they earn and so that they can decide how best to spend it for themselves, for their families or to donate it. But there are many critical national needs that are better met by government provision through taxes.

These include building up healthcare facilities and services, and providing subsidies to ensure that our healthcare needs are well taken care of.

These include important priorities like mental health which Ms Anthea Ong spoke about passionately, and which will be discussed further during the Committee of Supply. I agree with her that good mental health is a foundation for well-being and resilience and we have already started including this as part of our work on human potential that we have added to our national R&D budgets.

These include developing good and affordable pre-school services and education to give all children including our children with special needs a good start in life and the best chance for success, regardless of background.

These include building up the SAF and Home Team to support our way of life in an era of emerging external, digital and terrorist threats.

These are all issues that many of us in this House care deeply about and made eloquent pitches for the Government to spend more on.

There must be a role for the Government to redistribute resources in the right way, so that everyone shares in the fruits of progress. Our way to do this is through schemes that enhance the capability of our people – through investments in education, healthcare and the provision of housing, as well as schemes to mitigate inequality like Workfare and Silver Support.

Mr Singh asked earlier whether I could provide more details about our expenditure. In fact, I noticed that several Members of Parliament have gone through my Budget Annexes and looked at how much spending has increased for various Ministries. So, let me just take this occasion to cover one important area, an important area because the big shift in public expenditure in the next decade will be in healthcare spending. It will grow significantly as our population ages and as medical technology improves.

Now, let me show you a chart that shows Singapore's and other countries' public health expenditure as a percentage of GDP against the share of the total population that is over 65 years old. On the x-axis is the percentage of total population is more than 65 years old; and on the vertical axis is public health expenditure as a percentage of GDP. The triangle shows the year 2000 and the circle the year 2015. So, in other words a period of 15 years.

When you look at the green line, South Korea; the purple line, USA; New Zealand, Germany the blue line; and Japan, the yellow line, you can see how they have all gone up sharply as population ages and as technology improves. As a percentage of GDP, the USA is at the highest at almost 14%, Germany at about 9% and Japan at also about 8% or 9%. In Singapore, it has also risen.

The dotted line represents the future, projections by the OECD. The OECD had made similar projections for others. So, we did a similar projection to look at what would Singapore's numbers be, if we used MOH's projections. And that is the bottom, the lower dotted line. And then the upper dotted line is if we were to use OECD's methodology or OECD's trends.

As the share of seniors increases over time, public health expenditure has simply increased. And as I said, medical technologies will continue to improve. This trend has been played out in Singapore and all the other countries, as shown in this chart.

Over the past two decades, our healthcare expenditure has grown rapidly. In 2000, Government spending on healthcare was about 0.7% of our GDP. By 2015, it had tripled to about 2.1% of our GDP. This additional spending has gone towards significant improvements in healthcare accessibility and affordability.

We have introduced new schemes such as MediShield Life and expanded CHAS to cover all Singaporeans for many chronic conditions. Since 2010, we have opened or expanded eight hospitals. We have built two new polyclinics and redeveloped three existing ones.

Now, do not get me wrong. The spending is not just on the infrastructure. For every hospital that you build, the capital expenditure or capex that we put in, the operating expenditure or opex, is even more. So, it just tells you the trend that we are heading towards.

And healthcare spending is not just about treating the sick. It is also about giving our seniors a better quality of life.

The number of cataract operations per year on seniors increased from around 10,000 in the year 2000 to almost 30,000 last year. Such procedures were less common in the past because people did not live as long as they do today to need them. And because of advances in medical sciences, previously incurable diseases, like cancer, can be better managed, and patients can continue to live for more years with good quality of life. The number of citizens aged 80 and above has almost doubled, from 63,000 in 2009 to 112,000 in 2019, and will increase further.

Going forward, healthcare spending will continue to grow significantly. So, while this is a very good thing that our people are living longer, we must be prepared that we will have to spend more on healthcare. So, we expect public healthcare spending to grow by around 1%-point of GDP over the 15 years from 2015 to 2030. This is, in fact, as I mentioned to you earlier, less than the average increases projected in the OECD countries, partly because of our efforts to keep healthcare costs sustainable and because Singaporeans have increasingly adopted healthier lifestyles.

But our healthcare spending may rise by more than this 1%-point if medical costs rise throughout the world and we do not bring problems like obesity and diabetes under control.

As Mr Lim Biow Chuan said, Singaporeans must understand that increased spending on healthcare must come from somewhere. Some have wondered if we can spend less or spend more efficiently. Indeed, it is not just about how much we spend but how well we spend. Today, we achieve good outcomes at a lower cost than many other countries.

In health, we have the highest life expectancy in the world – almost 85 years – but still spend less of our GDP compared to other countries, as Members can see in this chart, our life expectancy compared against public health expenditure as a percentage of GDP of various countries. In fact, former World Bank President Jim Yong Kim said that it was "stunning" that Singapore had achieved its current outcomes despite relatively low spending. So, I will thank our people and our healthcare workers for taking care of their own health and for doing such a good job.

Similarly, for education, our 15-year-olds do well in international indices of educational attainment like the PISA test despite Singapore spending less than other countries.

We are able to achieve this only because of a whole-of-society effort.

On the Government’s part, we have carefully designed our education and healthcare systems to deliver good services in a cost-effective manner. We have dedicated and passionate educators who believe in developing every child to their fullest potential. We have committed healthcare professionals who believe in delivering the best care to all Singaporeans. There is strong support for Singaporean families from community groups and social service agencies. And Singaporeans themselves play an important role in taking responsibility for their own learning and health.

We are always looking for ways to improve outcomes in a cost-effective manner. Minister Lawrence Wong will elaborate on some of these efforts during MOF's Committee of Supply (COS).

But efficiency savings will never be enough to fully offset the growth in healthcare spending as the population ages and medical sciences improve. Efficiency savings can only mitigate it. To believe otherwise is wishful thinking.

Ms Foo Mee Har shared that some Singaporeans have questioned the need to raise revenues to meet the expenditures I mentioned, pointing at surpluses seen in this term of Government. But our healthcare spending needs are not one-off needs. They are recurrent needs – meaning that these needs will be there year after year. In fact, growing year after year. So, we need to fund them using recurrent revenues, not one-off surpluses seen in this term of Government, which arose from the unexpected rally in global financial markets and the unexpected buoyancy in the property market.

We cannot hope to keep on being so pleasantly surprised. Things can very quickly swing in the opposite direction, as we have seen from the COVID-19 outbreak. The outbreak reminds us why we need to plan ahead to raise revenues. We must ensure that we have enough resources to meet our people’s needs, driven by structural factors. Otherwise, we will find ourselves short and have to raise taxes or cut spending in difficult times, precisely when businesses and people need a boost.

Planning ahead entails being honest with ourselves and with citizens, and having the discipline to raise revenues in a timely manner.

Yet even among those who agree in principle on the need to raise taxes, some have asked, "Why GST?"

As I have explained before, a broad-based tax like GST is an appropriate and responsible way to pay for major societal needs like healthcare spending. Such spending benefits all Singaporeans and so it is fair for everyone to bear some part of the cost. This is about all of us taking shared responsibility to pay for our needs and our society’s needs and sharing in the effort to provide for them. It is at the same time a Singapore-style GST that comes with offsets to ensure that those with lower incomes pay much less than those who are well-off.

In fact, at the individual level, many Singaporeans are willing to chip in to meet these needs. In my conversations with my constituents, I have asked if they would be willing to contribute just 20 cents more out of $10 that they spend a day, if this would help to ensure that their healthcare needs and those of their parents were adequately taken care of. Many were willing to accept this small cost for peace of mind. The compact does not change when we project it to the national level. This is ultimately about us collectively chipping in to look after the healthcare needs of our families. Each generation must pay for its own spending.

Ms Foo Mee Har and some others have asked if we should raise income and wealth taxes instead of GST. In fact, we have been doing so in recent years.

In 2010, we made our property tax regime progressive by introducing higher tax rates on owner-occupied residential properties with higher Annual Values. We enhanced the progressivity of our property tax system in 2013, with higher property tax rates for homes and non-owner-occupied residential properties. In 2015, we raised the top marginal personal income tax rate from 20% to 22%. The following year, we introduced a cap on the personal income tax relief to make our regime more progressive. In 2018, we raised the Buyer’s Stamp Duty for residential properties in excess of $1 million in value.

In all this time, when we were raising income and wealth taxes to support the country’s growing expenditure, the GST rate remained at 7%. The last time we raised it was in 2007, more than 10 years ago.

But we should bear in mind that there is a limit to raising income taxes. If we keep raising income taxes, it will eventually hurt middle-class Singaporeans, who presently pay very light income taxes. It will also risk losing our ability to attract talent and keep our own talents. As Ms Tin Pei Ling said, "Talents beget talents. There is a virtuous cycle to this." It is important to have a critical mass of talent in Singapore to create jobs and economic vibrancy, which will benefit Singaporeans.

That said, as important as raising the GST is, it is only one way to meet our revenue needs. An increase of 2%-points in the GST rate will provide us with additional revenue of almost 0.7% of GDP per year. But the increase in annual Government healthcare spending alone that I mentioned already exceeds the amount of additional revenue. So, we will continue to adjust our income and wealth taxes to raise revenue in a progressive and fair manner.

We should keep international tax developments in mind as we review these taxes – both personal income tax as well as corporate income tax.

As Mr Cedric Foo and Mr Henry Kwek noted, there are on-going international discussions to revise tax rules under the Base Erosion and Profit Shifting (BEPS) project. Hub economies with small markets like Singapore stand to lose corporate income tax revenue if the new rules are adopted. This is because the new rules allocate taxes to where the customers are rather than where the underlying economic activity is conducted.

Businesses are highly mobile in today’s global economy. Companies, especially multinationals, have the flexibility to relocate their businesses out of Singapore to elsewhere. Singaporeans may lose their jobs. So, Mr Pritam Singh asked me earlier about the status of BEPS. Well, in fact, I am glad that MOF officials have been very involved in this international discussion. Some of these discussions are confidential in nature. Some of them have been made public. But I assure Mr Pritam Singh that hub economies will have to bear some negative in this exercise for the reasons I mentioned – where you tax the activity. Is it where the consumers are or where the underlying economic activities are? That change in principle alone, you can work out what the effects will be for us as a hub economy.

We therefore need to strike a fine balance between our corporate income tax rate and economic competitiveness.

Ultimately, how much we spend depends on how much we collectively have to pay in the form of taxes. This chart shows the standard GST or value-added tax rates that other jurisdictions adopt, compared with our future rate of 9%. Among the Nordics, for example, the value-added tax rates are as high as 25%. They also have top personal income tax rates as high as over 50%. They have accepted higher taxes as the price for their higher social spending.

Even as we seek to keep the GST rate low, we have to make trade-offs as we increase our spending for our healthcare and other needs. After raising the GST to 9%, it will still be lower than the average rate in Asia and less than half of the average rate in OECD countries today. Many countries in the region and elsewhere have standard GST rates that exceed 9%. Even Saudi Arabia, a country with huge oil reserves, is carefully planning ahead and introduced a 5% value-added tax from 2018. Do we have oil? No.

So, let me address concerns raised about the impact of the GST hike on the lower income and the impact on cost of living.

In designing our fiscal system, we have always sought to achieve a fair and progressive balance where the better-off contribute more and the lower income receive more support. This overall philosophy is a key consideration in how we design the GST and how we will implement the GST hike.

This is why I have announced an Assurance Package to cushion the increase for all Singaporeans when the revised GST rate kicks in by 2025. This provides a bigger and thicker cushion to the lower and middle income, including many seniors.

The package effectively delays the impact of the GST increase for the majority of Singaporean households for at least five years. For lower income Singaporeans, the offset will be even higher and hence, there is effectively no increase for them for 10 years.

There have been questions over the logic of raising GST and providing a $6 billion Assurance Package for GST, and whether we can just delay or not even increase the GST rate at all. Delaying the GST increase is not the same as raising the GST and providing offsets. This is because of the design of our system and the resulting incidence of the GST burden.

Today, we flow part of the GST revenue back in the form of a GST Voucher that gives more to those who need it most, particularly the lower income and retiree households. This is a permanent part of our system and will be enhanced when the GST hike takes place.

The GST Voucher reduces the net GST borne by lower and middle income households. Net GST is the amount of GST borne by each household, after accounting for the GST Voucher they receive. With the GST Voucher, the bottom 40% of resident households are estimated to account for less than 10% of the net GST borne by all households and individuals. On the other hand, a significant part of the net GST is borne by foreigners and higher income households.

Mr Liang Eng Hwa asked what proportion of the GST is borne by this group. Foreigners residing in Singapore, tourists and the top 20% of resident households are estimated to account for over 60% of the net GST borne by all households and individuals. This is after taking into account GST refunded under the Tourist Refund Scheme for goods bought here for consumption abroad. This is partly because foreigners do not benefit from the GST Voucher and offsets, which are available only to Singaporean households.

When we eventually increase the GST rate to 9%, foreigners pay the higher rate immediately. In contrast, Singaporeans receive offsets to cushion the impact, through both the permanent GST Voucher and the Assurance Package. And as I said, for some households it is equivalent to not having the GST increase for five years, and for some even 10 years.

All in, the GST increase, implemented together with the Assurance Package will achieve several different objectives.

Most importantly, we delay the impact of the increase on most Singaporeans, by five years or more, and even longer for the lower income. We can start collecting revenue from foreigners residing in Singapore and tourists, and our businesses make the changes to their IT systems only once.

The GST is only one part of our fiscal system. When you look at the system of taxes and benefits as a whole, it is a progressive one. Those who are better off, contribute more. The top 10% of taxpayers pay about 80% of our personal income tax revenue. As shown in this chart, lower and middle income households receive proportionately more benefits than the taxes they pay, whereas higher income groups contribute a far higher share of taxes than the share of benefits they receive. So, as you can see, the top 20% pay 55% of the taxes and receive 12% of the benefit. The bottom 20% pay 9% of the taxes and receive 28% of the benefits.

So, let me summarise what I have explained in three points.

First, we care for fellow Singaporeans and want to support them, especially in healthcare. To fund this spending, we need to raise the GST.

Second, we will take collective responsibility to look after one another. Raising the GST, a broad-based tax, to meet a broad-based need is a sustainable approach.

Third, we ensure that we are fair when the GST is raised. Through the Assurance Package, we will effectively delay the increase for almost all Singaporeans by at least five years; and over and above the transitional support, the permanent GST Voucher will further help the lower and middle income.

Let me address questions that have been raised over the use of our reserves and suggestions that it should be used to fund our needs instead of GST.

The reserves are our nest egg, borne of hard work and discipline. During the earlier years of economic catch-up, Singapore experienced fast growth and had a young working population. Our founding fathers made the decision to save the country’s surpluses and invest it for the long term to build up Singapore’s nest egg. They could have just spent it to gain immediate political advantage. But they were principled and had the long-term interests of our people and our nation at heart.

In FY2019, our Net Investment Returns Contribution (NIRC) was $17 billion, or 3.3% of GDP, the largest single contributor to the Budget. This is a highly unusual and a very fortunate position. Most advanced countries, shown in the lower half of this chart, pay about 2% of their GDP in debt servicing of accumulated debt. They collect taxes to pay off the debts of previous generations. As you can see from that graph, the red line is the US and the green line on top is France and Germany, in between at about 2%.

In Singapore, as shown in the top half of the chart, it is the opposite. Our reserves generate substantial returns, which help to keep our taxes low. In other words, in most advanced countries, citizens today pay for the spending of the past generations. In Singapore, it is the reverse. citizens today enjoy the benefits of the savings from the past. Thanks to the foresight and policies of our founding generation of leaders and people.

You can work out the sums simply. Today, NIRC at $17 billion is more than personal income tax at $12 billion and GST collections at $11 billion. So if we did not have the NIRC, even doubling personal income tax, or doubling the GST rate to 14%, would still not be enough. Tell me – in which other country are citizens able to reap the benefits of past savings in this way? So, let us never forget that what we have inherited is very unusual and very precious. Let us be responsible and steward this properly for our future generations.

Mr Leon Perera asked if we can slow the rate of growth of our reserves and release more funds to invest in our people and companies. I am sure he is aware that in 2008, we introduced the Net Investment Returns framework, and in 2015, we passed a constitutional amendment to add Temasek in the framework. This has resulted in a significant increase in NIRC that has gone towards various spending, including investments in our capabilities to generate future growth. Put it in another way, today at $17 billion, the NIRC is able to cover almost the combined budget of MOE and MTI.

More importantly, our reserves give us the confidence – as a small country with no natural resources of any kind – to deal with the ups and downs in the world. This is why we have a robust set of rules to safeguard and manage the use of reserves. The President plays a critical role in guarding against profligate spending and to ensure proper use of our past reserves to safeguard Singapore’s interest when needed.

During the Global Financial Crisis more than a decade ago, with global financial markets in turmoil and governments around the world scrambling to protect bank deposits, then-President S R Nathan approved the provision of $150 billion from our past reserves to guarantee bank deposits in Singapore, from October 2008 to December 2010. That calmed our depositors.

I was the Managing Director of MAS at that point. And I can tell you that our officers in MAS worked day and night to safeguard the stability of the banking system, and totally conscious that we were using our past reserves as a guarantee, but we were also confident that the guarantee will be put to good use because it is to stabilise the confidence of depositors. So, throughout that period, we had a very difficult time but towards the end of it, we did not have a single bank run. And the $150 billion remained untouched. It went back to our past reserves. Singaporeans’ money was safe.

In 2009, then-President Nathan approved a draw of $4.9 billion from our past reserves to fund the Resilience Package to help us overcome the Global Financial Crisis. A year later, after the economy rebounded sharply, the Government decided to return the money used to our past reserves. It did not have to, but did so, to maintain the discipline that has allowed this unusual move in the first place.

This year, we have not had to tap our past reserves. But it was the same spirit of prudence that allowed us to have enough surplus this term to provide the fiscal support for our economy and our people. But if the situation deteriorates significantly and calls for us to tap on our past reserves, I will make a case to the President to seek her approval to do so.

We can do the easy thing and avoid the pain for ourselves today. We can decide not to raise GST to pay for our own spending, but to tap on our reserves and its investment returns instead. But by doing so, we will soon deprive future generations of the benefits that we enjoy today. What would that, then, say about us?

During a Parliamentary hearing in 2001 on the Bill to allow the Government to use part of the returns of investment from our reserves, our founding Prime Minister Mr Lee Kuan Yew said, “What is the deepest obligation of any government? It is not to the present, and certainly not the past, but to the future.” Let me repeat that: "What is the deepest obligation of any government? It is not to the present, and certainly not the past, but to the future".

We have a duty not just to those who make their views known today, but also to the young and the future Singaporeans. They are not here today to represent their interests – because they are not born yet! But we have a responsibility to them, and to take decisions which are difficult for us but which will safeguard their interests. Let us continue to keep the discipline and keep the faith and promise to future generations of Singaporeans, by stewarding our reserves well in our time. [Applause.]

Climate change is another area where we may not live to reap the benefits of our decisions but our children will. In this Budget, I have set aside $5 billion for a Coastal and Flood Protection Fund. I could have chosen instead to spend it on more "hong baos" or red packets, to make myself more popular. But by making the commitment today, these resources will go towards pumps, tidal gates and infrastructure that will keep our children and their children, safe from rising sea levels in decades to come.

Climate change threatens our very existence, as a small, low-lying island state. But Singapore has always risen to the challenge in the face of adversity. We have never accepted our fate or our starting circumstances meekly – instead, we adapt, innovate, mitigate and overcome. We turn constraints into opportunities and strengths. Dealing with our water and land constraints has made us leaders in water technology and urban planning.

Our manpower constraints constantly push us to automate, digitalise and be more productive. Now, we have a plan to address our carbon and energy constraints.

We are meeting the challenge head-on, with an ambitious plan to tackle climate change. We are not only securing our coasts but also transforming our sources of food and water and remaking our entire economy and city for a green and sustainable future.

Several agencies are working in concert to execute this, coordinated by the National Climate Change Secretariat.

This year, we will update our commitment to the Paris Agreement and submit our Long-Term Low Emissions Development Strategy to contribute efforts to mitigate climate change.

MTI and MEWR will prepare our economy and society for the low-carbon transition by working with various stakeholders and partners to reduce our greenhouse gas emissions and seize opportunities in the circular economy.

Just as it had done with water, MEWR is embarking on ambitious plans to develop our own food production capabilities, with its "30 by 30" target. MOT is working on our vision to phase out internal combustion engine vehicles and have all vehicles run on cleaner energy by 2040. MND is making efforts to make our towns greener and more sustainable, and transform Singapore into a City in Nature.

These are ambitious plans and we are bringing our R&D investments in urban solutions and sustainability to bear to realise this vision. The respective Ministers will speak more on these efforts and, in fact, Senior Minister Teo Chee Hean will speak on this in the COS.

I hope their explanations will give Mr Dennis Tan a fuller picture of all that we are doing to tackle this serious challenge. He and Mr Yee Chia Hsing, Mr Ang Wei Neng and Mr Murali Pillai gave their perspectives on the adoption of Electric Vehicles (EVs).

The Government is playing our part. We already have the Vehicular Emissions Scheme and in this Budget, I announced the EV Early Adoption Incentive. This will help to close the cost premiums between EVs and internal combustion engine vehicles. Over time, as technology improves, we expect the cost differential to close further.

However, while we want to encourage drivers to replace their internal combustion engine vehicles with EVs, we should bear in mind that the cleanest and most efficient mode of transport remains public transport. A car-lite vision that Mr Khaw Boon Wan has articulated, continues to be the main focus of our transport policy. And MOT will provide further comments later.

This is a whole-of-society, multi-generational effort and its success will depend on all Singaporeans taking action. I am very happy that many young Singaporeans are passionate about this cause and want to be part of the solution.

We are in for the long haul and our journey to tackle climate change will span 50, even 100 years. It is, as one commentator pointed out, a big audacious goal. But if we do not have the courage and determination to tackle challenges that threaten our very existence, what is our ambition for? Such long-term investments, together with our reserves, represent our commitment to future generations of Singaporeans.

If we take the long-term view and each generation plays its part, Singapore can face the future with confidence – confidence that we will always have the capacity to overcome every challenge – be it a virus outbreak, recession or rising sea levels; confidence that we will be able to provide for our families and community; and confidence that our children will have the best chance of a better life, come what may. [Applause.]

I have not finished. I told you I have two files.

Now, let me touch on how we will strengthen the social compact and continue to fulfil the promise of opportunities for all in changing times. Ms Denise Phua, Assoc Prof Walter Theseira and others spoke on the need to tackle inequality and preserve social mobility.

Singapore was founded on a vision of a "just and equal society" – broad-based prosperity and equal opportunities for all – a society where every Singaporean, regardless of background and starting point, has a good chance to do better.

Today, this remains this Government's mission to enable all Singaporeans to enjoy the fruits of growth.

Over the years, we have made good progress in fulfilling this goal. But we will confront complex new challenges ahead, including the pressures of technological and demographic change and the growing inequality of starting points, as our society matures.

Our response to these challenges will define us.

A growing number of societies have responded by turning inwards from the world, even as they grow more polarised and divided within.

For Singapore to stay successful, we must have the courage to take a different path. We must continue to anticipate and respond to change, plan for the long term, and find practical solutions to create better lives for Singaporeans. We must continue to stay open and connected to the world. A Singapore turned inwards cannot survive. We must continue to foster trust in society, a point which Prof Yaacob Ibrahim spoke yesterday. Above all, we must stay united as one people. Our unity is what makes Singapore's story exceptional.

Mr Lim Swee Say, in his trademark pithy way, said we need "Glocalisation" – both a globally competitive economy and a locally cohesive society. This calls for us to do three thing: to transform our economy to be globally competitive, to develop our people to seize these opportunities and to strengthen our social compact by ensuring that all benefit from the fruits of progress and no one is left behind.

This will require us to put in place synergistic fiscal, monetary and structural policies. With sensible and prudent fiscal policies that promote growth and social equity, appropriate monetary policy to promote macroeconomic stability to maintain price stability and promotes steady growth, and structural policies that expand the capacity of our firms and labour force for growth.

Let me touch on the actions that we are taking in our structural policies, starting with how we will transform our economy to keep it globally competitive.

The global economy is undergoing tectonic shifts today and many countries face a new economic landscape. Singapore must move fast to secure growth and jobs in the next bound, or face irrelevance.

We have, therefore, embarked on an urgent journey to transform Singapore's economy. We started our work four years ago, in 2016, when the Committee on the Future Economy was formed.

First, we are moving quickly to secure our external economic space, to create new opportunities and room for manoeuver in an increasingly fragmented economic order.

To ride on Asia’s growth, we are working to position Singapore as a Global-Asia Node of Technology, Innovation and Enterprise, as a trusted and valuable part of the network of global cities that are driving innovation and growth globally. We have enhanced our economic connectivity through our network of trade agreements and avoidance of double taxation agreements. We have also created new linkages with other economies through digital agreements and new platforms and networks, such as the Networked Trade Platform and Global Innovation Alliance. These moves diversify our markets and supply chains and have made us more resilient in times of rising protectionism.

Second, we are increasing the capacity of our enterprises and industries to innovate, grow and transform.

As Mr Ong Teng Koon pointed out, building up strong local capabilities and eco-systems for innovation is critical to our economic success and resilience. We are, therefore, helping enterprises to deepen their capabilities at every stage of their growth. So, I am very happy to hear Mr Teo Ser Luck sharing his personal entrepreneurship journey by making use of the grant but cautioning that not to overdo it or you will destroy the spirit of enterprise.

To strengthen our competitive advantages, we have expanded our R&D investments into new areas and technologies. Through these investments, we are harnessing the latest technologies to transform our manufacturing and services sectors and creating new growth clusters in areas such as urban solutions and sustainability, health and human potential and agri-food tech. We have brought industry and the research community together to experiment and collaborate with the Government in test-bedding solutions in areas like urban mobility.

Third, we are mobilising and partnering our industries and enterprises to take ownership of their own economic transformation.

We have brought industry stakeholders together via Industry Transformation Maps across 23 sectors. But the success of each ITM comes down to the strength of leadership in our enterprises. Business leaders must have the mental agility and dynamism to experiment and the resourcefulness to overcome constraints.

That is why, in this Budget, we are supporting business leaders through the Enterprise Leadership for Transformation (ELT) programme. Our Institutes of Higher Learning, such as SMU, have joined hands with Enterprise Singapore to support this effort. Enterprise Singapore will bring more partners on board the ELT programme in the coming months.

And at the industry level, partnership among businesses is key. So, even as businesses compete with one another and seek to differentiate themselves, cooperation can help them do better, such as by forming alliances to capture opportunities overseas or collaborating to test-bed sector-wide solutions. And this is exemplified by the Singapore Manufacturing Federation, which, under Mr Douglas Foo's leadership, is making a concerted effort to transform the manufacturing sector.

The Singapore Poultry Hub is another example. A joint venture between five poultry producers and processors, the Hub's smart factory will deploy emerging technologies to increase productivity by 26% and production capacity by 70%. By working together, these poultry producers were able to achieve the scale needed to transform a labour-intensive process. So, though they remain competitors, they certainly did not chicken out from working together!

As Minister Josephine Teo reminded us, economic transformation is not painless. Businesses must be willing to bear the transitional pains, to be creative and resourceful, and to seize opportunities where others see challenges.

Encouragingly, we are starting to see the fruits of our moves to transform the economy.

Productivity has grown in the last three years and our enterprises are entering new markets. We are also seeing continued confidence and investment in Singapore despite economic headwinds. Investment commitments attracted by EDB in 2019 amounted to $15.2 billion in Fixed Asset Investments and $9 billion in Total Business Expenditure per year. These show that we are taking steps in the right direction.

Most importantly, our efforts are creating more and better jobs for all.

Over the last 10 years, local employment has grown steadily, adding more than 41,000 jobs each year on average. Local unemployment has stayed low, at about 3.2% of resident labour force in December 2019, on a seasonally-adjusted basis.

Above all, locals are benefiting from the jobs created. Earnings have increased.

Since 2010, real incomes have risen by about 3% each year for the median full-time employed local worker. And more locals are employed in higher paying jobs.

In 2010, 37% of full-time employed local workers earned a gross monthly income, excluding employer CPF, of at least $4,000 in today's dollars, adjusting for inflation. In 2019, 51% of local workers earned at least $4,000. So, 51% in 2019 compared to 37% in 2010.

At its heart, economic transformation involves the courage to brave transitional pains as we change the way we do things. And if we can all move forward with this can-do spirit of initiative and partnership that we have shown in the past weeks, I am confident that we will build strong firms that can grow and compete in the global arena and create good jobs for all Singaporeans.

As our economy undergoes structural changes, our labour market is also facing profound structural changes.

As our population ages, our resident workforce will shrink rapidly, tightening our labour market. People are living longer and expect to have longer, even multiple, careers. And rapid advances in technology and business models will bring more frequent and disruptive changes to skills required at jobs.

As Prof Lim Sun Sun and Mr Christopher de Souza put it, change is the only constant and we cannot run away from it. Our collective mentality towards up-skilling must change from nice-to-have to must-do, a point that Mr Teo Ser Luck also mentioned earlier.

We are responding to these changes by taking a three-prong tripartite approach with the Government, workers and enterprises working in close concert to deal with these structural changes in our labour market.

The first prong is for the Government to invest in critical enablers of skills upgrading and in career support.

We have shifted our approach to education to one that enables learning throughout life. We are investing heavily in Institutes of Higher Learning, or IHLs, to build up a future-ready eco-system. Together with other training providers, our IHLs offer a large suite of Continuing Education and Training (CET) courses, many of which are industry-relevant. And together with those provided by other training providers, our IHLs' CET courses provide a key pathway for individuals to gain skills and confidence to make career transitions and to realise their aspirations. The Government subsidises these courses heavily, with subsidy rates as high as 90% of course fees.

Beyond education, we are enhancing our support to help workers make the transitions smoothly, and this is especially important for mid-career workers. Ms Sylvia Lim spoke about their anxieties. We must turn these anxieties into actions that improve lives.

Our Adapt and Grow initiative helps workers find opportunities, refresh their skills and transition to new roles faster. Professional Conversion Programmes or PCPs, help workers take on new jobs roles and our career coaches give career guidance and help job seekers secure new jobs.

When I visited Workforce Singapore's (WSG) Careers Connect last September, I met Mr Lam Kong Chai, 58 years old. Mr Lam had been job hunting for two years. With WSG's help, he was hired as Finance Director at Asia-Europe Foundation. His hiring manager herself had previously received career advice from WSG and approached WSG to fill the role that Mr Lam took on. In turn, Mr Lam worked with WSG to fill a vacancy in his team. So, all three individuals ended up getting jobs.

The outcomes of our Adapt and Grow initiative are encouraging. About nine in 10 of those who went through our PCPs remained in employment 24 months after placement. And about seven in 10 also earned higher wages after starting their new jobs. Our coaches work with about 27,000 jobseekers every year. In 2018, they managed to place about seven in 10 jobseekers into new jobs within six months.

In this Budget, we have built on these initiatives, paying special attention to the needs of mid-career workers in their 40s and 50s by introducing the SkillsFuture Mid-Career Support Package. We are also increasing the capacity of our re-skilling programmes by providing a hiring incentive to employers and providing a special SkillsFuture Credit top-up of $500 to every Singaporean aged 40 to 60 in 2020.

I would like to thank Mr Patrick Tay, Mr Melvin Yong and Mr Liang Eng Hwa for their suggestions on how we can help our mid-career workers and improve SkillsFuture. These will be discussed further during the COS.

The second prong of this approach is to enable our workers to take ownership of their own learning and growth through the SkillsFuture movement.

Initiatives such as the SkillsFuture Credit encourage each individual to take charge of their learning throughout life. Together with Government subsidies for CET courses, our workers can access quality programmes with low or zero out-of-pocket payment.

Take, for example, a Big Data Engineering for Analytics course which costs about $4,500 before Government subsidies at a SkillsFuture Singapore-appointed CET centre. A Singaporean worker aged 40 or older enjoys a 90% course subsidy. The remaining $450 can be fully met from the worker's existing SkillsFuture Credit or the top-up that this worker will get in this Budget. So, the SkillsFuture Credit works in conjunction with the broader CET eco-system of support that we have built up.

I hope this assures members like Mr Arasu Duraisamy and Ms Irene Quay, who raised queries on the credit and concerns about whether it can really make a difference.

Our Labour Movement is innovating and exercising collective leadership to strengthen individual workers' efforts, for example, the Job Security Council initiated by Secretary-General Ng Chee Meng as well as the Company Training Committees.

The third prong of our tripartite approach is to get our enterprises to step up their own enterprise transformation and in tandem to re-design jobs and upgrade their workers. With this synergy, we can achieve more. As Ms Jessica Tan pointed out, leadership must come from employers.

The Next Bound of SkillsFuture announced in this Budget therefore mobilises businesses to up-skill their workers and re-design jobs through the SkillsFuture Enterprise Credit and the expansion of the Productivity Solutions Grant for job re-design consultancy services. Enterprises who hire local workers aged 40 and above, with no upper age limit, through re-skilling programmes will also get hiring incentives.

Mr Ong Teng Koon was concerned that it may be hard for SMEs to take workers away from the day-to-day business needs. In fact, there is no better time than now to do so. Many businesses are already use this downtime to accelerate change.

This three-prong approach, building on our tripartite framework, is our structural response to the structural changes in the labour market. We are able to do this because we have been investing significantly in our education upstream, to build a strong foundation to enable our people's success.

Investing upstream means supporting every child to reach their fullest potential.

Today, over 90% of the total cost of educating our children from Primary to pre-University level is subsidised by the Government. In all, by the time a Singaporean child reaches 16, he or she would have received more than $180,000 in education subsidies, including pre-school subsidies. Then, when they go on to an Institute of Higher Learning, which most students do, they get an additional $15,000 to $22,000 in subsidies per year.

Students from lower and middle income households receive additional bursaries and subsidies on top of this, which I have enhanced in this Budget.

We are now investing significantly more in affordable, quality pre-school education while giving low-income families additional support for early childhood development through KidSTART.

We are also equipping young Singaporeans with skills they need for the new economy, including cross-cultural skills. In this Budget, I announced our "70-70" target, Asia-Ready Exposure Programme and enhancements to the Global Ready Talent Programme.

Another key area where we invest upstream is housing, so that everyone has a home.

We provide generous housing subsidies to keep HDB flats affordable. New HDB flats are sold at prices below their market rate. Over and above subsidies, we provide substantial housing grants depending on the income of the buyers. Eligible first-time buyers who buy resale flats get grants of up to $160,000.

Today, a resale flat can cost less than five times the annual salary of a median-income household. This is much lower than international cities like Hong Kong, Sydney, London or New York. This chart compares the median house price as a ratio of the median household income in major cities before accounting for grants. The ratio will be lower with grants. You can see the numbers yourself.

By intervening upstream in these areas, we provide a foundation of broad-based opportunities that enable everyone to earn their own success.

As a result, Singaporeans have been able to enjoy the fruits of progress.

Now, I will show you another chart that shows resident-employed households have experienced sustained real income growth at the median, growing by 3.7% per year over the last decade. You can see the numbers for yourself versus other developed economies.

While the data are not perfectly comparable internationally, the growth that we have experienced is higher than that of many advanced economies. In short, our approach in these changing times is to take structural measures to strengthen opportunity at every stage of life, with all – individuals, employers, unions – doing their part.

For this to succeed, the change must come from within. For all the programmes that the Government puts in place, each individual will have to take responsibility for their own growth and learning. If we can all take on a mindset of growth and a spirit of resilience, we can be assured that we will emerge stronger and better to face the future ahead.

I have spoken on our first two strategies of transforming our economy and developing our people to enable opportunities for all. But for all our efforts to maximise opportunities for everyone, there will be some who will continue to face difficulties. So, our third strategy is to strengthen our social compact by ensuring that all benefit from the fruits of progress.

This Budget provides further support for those who may face greater pressures.

First, some face difficulties with employment and ensuring that growth in their income keeps pace with inflation, despite their best efforts. Assoc Prof Walter Theseira, Mr Zainal Sapari and Mr Png Eng Huat have spoken on the vulnerabilities of low-wage workers.

The Care and Support Package, which includes Grocery Vouchers to provide help with daily necessities, will help them and their families. It builds on our efforts in recent years to strengthen social support and safety nets for low-income workers and their families through enhancements to Workfare, the Progressive Wage Model, and ComCare.

The mayors and the five Community Development Councils (CDCs) have local assistance schemes to support the heartlands, as pointed out by Mayor Low Yen Ling. These local efforts, done in partnership with community partners, local merchants and many others, bring warmth and support from fellow Singaporeans and business owners who are also our neighbours.

Second, there are retired seniors who had lower incomes in their working years, with little or no family support. We have announced substantial enhancements to Silver Support to benefit 100,000 more seniors and raised payouts by 20%. These enhancements go beyond inflation growth to provide stronger support.

Third, Mr Melvin Yong and Mr Saktiandi Sapaat spoke about the stresses faced by middle-class families that are "sandwiched" financially because they have to care for both their children and their elderly parents. Mr Louis Ng, Ms Yip Pin Xiu, Mr Desmond Choo and Mr Darryl David also pointed out that they may face pressures in terms of time from balancing their care-giving responsibilities and work.

Financially, we have given additional help for such families in this Budget by providing those with young or school-going children with an extra $100 cash payout per parent, more GST Voucher – U-Save rebates for larger households and PAssion Card top-ups for their parents. Last year, we also announced measures to support parenthood and care-giving, including enhancements to pre-school subsidies, and the Home Caregiving Grant under MOH's Caregiver Support Action Plan.

Supporting and strengthening families will always be a priority for us and we will continue to look at how we can do so effectively. I thank Members for their suggestions. These issues will be discussed further at the COS.

These measures come on top of the extensive subsidies that I mentioned earlier in education, healthcare and public housing. These benefit all Singaporeans, including the middle class. Middle income households – those in the middle 20% by household income – benefit substantially from this system. In 2019, they received $2 in benefits for every $1 in tax paid.

Overall measures that we have put in place over the past decade to provide good jobs for our people, develop them at all stages of life and support the vulnerable, have made a decisive impact in narrowing the income gap.

The Gini co-efficient after taxes and transfers fell to 0.398 last year, the lowest since 2001. This is encouraging, but our work is not done. We will always continue to look at practical, effective moves to tackle inequality and ensure that all Singaporeans progress together.

Critically, business and community have growing roles to play. A caring and cohesive society begins with everyday acts of kindness, of philanthropy and volunteerism. These are better antidotes to inequality than the politics of class warfare that we have seen around the world.

As Miss Cheng Li Hui put it, graciousness and kindness are indeed part of our Singapore spirit. There is much we can do to build an inclusive society for all, including those with special needs and persons with disabilities. Miss Cheryl Chan, Dr Intan Azura Mokhtar and Mdm Rahayu Mahzam reminded us.

This is why it has been my priority to support, enable and amplify the efforts of citizens and businesses to help those in need, through Singapore Together. These efforts are growing. In 2018, individuals collectively donated $2.1 billion through registered organisations, more than double the $960 million donated in 2008. Each donor gave on average about $660, which is more than twice the amount in 2008. In addition, one in two businesses in Singapore gives back through philanthropy and volunteering.

Our social service agencies have been doing good work for the community. They too have been going through their own transformation journeys, building up technological capabilities to be more effective in helping those in need. For example, the Cerebral Palsy Alliance Singapore has invested in an anti-gravity treadmill, so that clients can practise moving and walking in a fall-free environment. Going forward, we will partner the community to support more of such capability-development efforts, through the Community Capability Trust that I announced in this Budget. Such investments and partnerships will help Social Service agencies to overcome the manpower constraints that Ms Joan Pereira spoke on.

This good work is not just confined to organised sectors. Our democracy of deeds permeates every level. Many MPs have also shared stories embodying the spirit of Singapore Together.

Mr Liang Eng Hwa and many others shared about the spontaneous and thoughtful acts in many housing estates, such as fellow residents coming together to bottle hand sanitisers and placing them at lifts for residents to use. Mdm Rahayu Mahzam shared about the passion among young people for a more inclusive, more compassionate society and reminded us of the importance of engaging young people as we build this nation. I thank Mr Pritam Singh for his support for the Singapore Together movement in his comment about MPs giving diverse views in this House. And I would say that we can go a step further, that the democracy of deeds means each of us taking action to realise the good.

It is also very inspiring to hear how several Members of this House are taking the lead to serve our community in their own, diverse ways. Let me just highlight some of our Nominated Members of Parliament. Assoc Prof Walter Theseira, an economist, has been doing a lot of work on the labour market. Mr Douglas Foo leading the SMF effort. Mr Terence Ho, using the arts to enable and empower individuals from underprivileged backgrounds. Ms Anthea Ong, fighting to raise awareness of mental illness among us and to promote mental wellness; Ms Irene Quay, who has served the public passionately in healthcare, volunteering in a hospice despite her many commitments. Ms Yip Pin Xiu, who is inspiring young athletes and showing Singaporeans and the world what it truly means. Mr Mohamed Irshad, who is fostering religious harmony and helping to build a more caring society. Prof Lim Sun Sun for her work on the need to educate our young even better. This embodies the spirit of Singapore Together. And as Ms Denise Phua said, there are so many other areas that we can work together, to take action to build a better society and improve lives. She herself has taken so much action and devoted so much effort in uplifting people with special needs.

This is how we should rise to the challenge of inequality in this day and age – by coming together as one people to uplift the less privileged amongst us, with the state providing strong foundations of opportunity and support.

I do apologise that this is longer than what everyone had been expecting. But there have been so many good stories, I thought it is bears telling. So, thank you all for your patience in this Singapore Together effort. You sit together to listen to my long speech.

Mr Speaker, Sir, let me say a few words in Mandarin before I conclude in English.

(In Mandarin): [Please refer to Vernacular Speech.] There is a Chinese saying, "前人种树，后人乘凉", which means that the current generation plants the seeds which eventually grow into trees that provide shade for the next generation. Our reserves are akin to a tree planted by our earlier generations. Today, this tree is well-grown and we are able to take shelter under it, benefiting from the stable income that it generates for our country.

The Net Investment Returns Contribution (NIRC) is already the largest source of revenue for our country, more than the revenue collected from corporate income tax, personal income tax or GST. Without the NIRC, even doubling the GST rate to 14% would not be enough to meet our expenditures.

To draw on the reserves or become overly reliant on the NIRC to meet recurrent expenditure is akin to damaging or even cutting down the tree.

Our recurrent expenditure, especially on healthcare, is increasing. We need to continue developing healthcare facilities and providing healthcare services to ensure that elderly Singaporeans are well taken care of.

Such spending benefits all Singaporeans. Therefore, it is fair for everyone to bear some part of the cost. I have announced that the GST rate will remain at 7% in 2021. But the Government will still have to raise GST by 2025. Not only does this allow us to increase revenue in a sustainable and effective manner, it also reflects our value of collective responsibility.

As we raise the GST rate, we will ensure that our taxes remain fair. The permanent GST Voucher Scheme mitigates the impact of GST on lower and middle income Singaporeans. In addition, the Assurance Package for GST will offset at least five years' worth of additional GST expenses incurred for most Singaporean households. For lower income Singaporeans, the Package can offset about 10 years of the additional GST expenses.

When we eventually increase the GST rate, tourists and foreigners residing in Singapore will pay the 9% GST immediately. In fact, a significant part of net GST is borne by foreigners and higher income households. Foreigners and higher income households are estimated to account for over 60% of the net GST borne by all households and individuals.

In addition, we are also committed to ensuring that our future generations continue to enjoy a sustainable living environment. This is our commitment to Singaporeans. The risks brought about by climate change are one of the challenges that we must tackle. As an island nation, Singapore is highly susceptible to the impact brought about by rising sea levels and floods. Besides managing the impact of climate change, we must continue to build a liveable, caring and vibrant home for ourselves.

The 2020 Budget is a Unity Budget. In the face of the COVID-19 outbreak, we must unite as one people.

I would like to especially thank our frontline workers for their selfless contribution and for carrying out their duties steadfastly with professionalism. To express our respect and gratitude, the Government will be providing up to one additional month of special bonus for frontline healthcare workers and public servants who are directly battling with the COVID-19 disease and facing higher risks. In addition, we will provide a one-off grant for Public Health Preparedness Clinics.

During this difficult period, our Government leaders will stand in solidarity will all Singaporeans. This year, all political office holders will take a one-month cut in their salary, and all Members of Parliament will take a one-month cut in their allowance. President Halimah Yaacob is also supportive of the move and has volunteered to take a one-month pay cut. Senior public service officers will similarly take a half-month pay cut.

As we progress, we will meet many challenges. Some will be for the longer term, while some will be more immediate. I can understand that Singaporeans are worried about the impact of the COVID-19 outbreak. However, as we tackle the immediate challenges, we must also set our sights on the future.

Zaobao commentator Giam Meng Tuck aptly described this Budget as three prescriptions, namely "定心丸" (assurance pill), "润肺散" (lung moisturising powder, to ameliorate ill-effects) and "提神三味汤"(three-flavoured soup to invigorate the spirit).

The Assurance Package for GST, Stabilisation and Support Package, Care and Support Package and Transformation and Growth Strategy constitute the multi-pronged approach that ensures that Singapore does not lose sight of the direction that we are heading towards, as we tackle immediate challenges. These measures will also allow Singaporeans and companies to prepare for the economic recovery during this period of economic slowdown.

We are able to do this because we have been prudent in managing our finances over the years, preparing for rainy days and setting aside sufficient funds. At the same time, we have been using our reserves in a responsible manner.

The values conveyed by the Chinese saying, "前人种树，后人乘凉", remains a cornerstone of Singapore's long-term fiscal planning. We have to continue protecting and nurturing the tree planted by earlier generations, to take care of our future generations and ensure that generations of Singaporeans after us will have enough resources to face future challenges, seize opportunities and build a better Singapore.

(In English): Mr Speaker, Sir, I will now conclude in English. Mr Speaker, Sir, I have spoken on the vision and mission of this Government, on the shifts we need to make to thrive in the world ahead and how we need to work together to reach our goals. We began our journey as a nation with a mission – seeking the welfare and happiness of Singaporeans, in a more just and equal society. Through rain or shine, we have never wavered from this mission. We live in a time of change and uncertainty today. But it is precisely in such times that our strength and resolve as a nation shines most brightly.

Let us not be paralysed and divided by anxiety and fear, but let us be energised and united by optimism and a common vision for tomorrow. Let us rise to the occasion and overcome the COVID-19 outbreak together, stepping up to take care of one another in these trying times. Let us share the effort to build our future and nation together. Let us build a sustainable Singapore, where we and our children can live our best lives in a safe, green and livable environment, for all time and seasons to come.

Let us grow as a city of possibilities – an open, globally-connected city, where each Singaporean can live to the fullest, and bring our aspirations, hopes and potential to life. Let us continue to build a society of opportunity for all – where we have the freedom to determine our own destiny, based not on our starting points, but through our own choices and efforts. And let us continue to foster a caring and cohesive community, living as equals, uplifting the most vulnerable among us and taking care of our fellow men and women.

All of this is within our reach, if we work as One Singapore. With collective action and leadership at all levels of society and with our diverse strengths and passions combined, we can build a society that we can all be proud of. This is the spirit of Singapore Together, and it is alive today, as shown by many Singaporeans, including Members of this House, who are leading change in diverse ways.

Above all, let us never stop thinking for tomorrow. In the long and never-ending journey of nation building, each generation of Singaporeans are relay runners. May we always take good care of what we have inherited, run our best race and pass on a better future to those who come after us.

This Budget is about one step in this long race, building upon the sweat and toil of generations who have run the race before us. It seeks to do right by Singaporeans, both present and future, through the financial plans and provisions that we make today.

I thank all Members of this House for your support for this Budget. Let us unite and forge ahead as One Singapore, to build a better Singapore for tomorrow. "Singapore Together, Majulah Forever!" [Applause.]

Mr Speaker: Any clarifications?

Question put, and agreed to.

Resolved. "That Parliament approves the financial policy of the Government for the financial year 1 April 2020 to 31 March 2021."