Managing costs & resources for all
Mr Speaker, I wish to focus on managing costs and resources for all. I will address three critical areas: budget marksmanship, the concept of affordability, and the challenges faced by some vulnerable Singaporeans.
Budget marksmanship
As highlighted by fellow Members, the Ministry of Finance's budget forecasting for this year has been notably inaccurate.
In the previous Budget Statement, the government projected a modest surplus of $0.78 billion for FY 2024. However, revised figures reveal an $8 billion increase in total operating revenues, rising from the estimated $108.6 billion to $116.6 billion. To put this into perspective, $8 billion equates to $8,000 million—a substantial underestimation.
Prime Minister Lawrence Wong attributed this unexpected revenue surge primarily to higher corporate income tax (CIT) collections, which only accounts for less than $3 billion of the increase. The remaining $5 billion-plus over-collections includes significant rises in vehicle quota premiums (COEs) at nearly $1.9 billion more, and goods and services tax (GST) at $1.2 billion more. Additional increased contributions came from statutory boards, stamp duties, and personal income taxes.
In September last year, midway through the fiscal year, PM Wong responded to a Parliamentary Question from Workers' Party MP Louis Chua, reiterating the projected surplus of $0.78 billion. This raises questions: Was there an awareness at that point of the significant deviation from projections? If so, should an updated estimate have been provided? If not, why was this discrepancy not identified earlier?
The higher-than-expected COE and GST collections reflect the financial pressures Singaporean families have endured recently. Escalating costs of essential items, such as food, are particularly concerning. The Prime Minister aptly noted: “Singaporeans are still adjusting to these new price realities. Some have had to tighten their belts, rethink spending habits, or make difficult trade-offs to manage their expenses.” While external factors contribute to inflation, it's important to recognize that COE and GST are outcomes of domestic policies. Offering ad hoc vouchers and handouts in response to the cost of living may come across as missing the wood for the trees.
Defining affordability
The government's approach to easing cost-of-living pressures and ensuring public housing affordability warrants scrutiny. Current measures suggest that Singaporeans can only manage expenses with the aid of vouchers, subsidies, and grants. For instance:
- Utilities and household essentials: Reliance on rebates and vouchers indicates that, without such assistance, basic necessities may be out of reach for many.
- Public housing: The necessity of substantial housing grants, which were further increased in 2023 and again in 2024. This implies that, without them, most citizens would struggle to afford HDB flats.
- Childcare and education: The dependence on subsidies and fee caps suggests that, without these interventions, these services might be unaffordable for the average family.
In 2023, then DPM Wong noted that the Singapore Dream was no longer about the "5Cs"—cash, car, credit card, condominium, and country club, but about fulfillment, meaning, and purpose in life. Could it be that the 5Cs simply hold no relevance today as they are no longer attainable to many? Specifically, the growing dependence on housing grants prompts questions about future affordability. Parents today are understandably anxious about the housing prospects for their children.
Such reliance on government transfers raises concerns about the sustainability of such support. In a Straits Times opinion piece on 24 February, Professors Linda Lim and Pang Eng Fong query this approach for the long term. They observe that “the persistent need for subsidies for basic goods and services—like food, accommodation, and utilities—in one of the world’s richest countries indicates that prices are too high and wages too low to enable a substantial segment of Singaporeans to make ends meet.”
Such a concern is not confined to this House nor to economists. Earlier this week, a member of the public named Joe called into a Channel News Asia TV programme to pose a most pertinent question to the government: “Can the Minister reassure us that the government is looking into the rising cost of living and not just providing handouts?”
Looking ahead, I also wonder how much more the government will collect from Singaporeans every year in taxes to fund these handouts. Will there be an endless upward spiral in prices and increased handouts, in the name of "affordability"?
Supporting vulnerable homemakers
As we commemorate 60 years of Singapore's independence, it's timely to reflect on the challenges faced by certain groups, particularly homemakers, whose financial security requires attention.
Currently, CPF members have the autonomy to nominate beneficiaries for their CPF savings upon death, even to the exclusion of immediate family members. This poses a potential risk to non-working spouses—typically wives—who have dedicated themselves to managing the household and, consequently, have limited CPF savings of their own.
For families with fewer resources, CPF savings constitute a significant portion of liquid assets upon a member's death. According to a DBS Bank study released this month on two million of its customers, retirees aged 65 and above were found to rely on CPF funds to cover 55% of their median expenses. This highlights the importance of CPF savings in retirement planning. In situations where a CPF member nominates non-family beneficiaries, a surviving spouse and any children could be left without a financial safety net.
Notably, during divorce proceedings, CPF monies accumulated during the marriage are considered matrimonial assets and are subject to division. Courts are empowered to award a non-working spouse a significant share of the working spouse’s CPF balances. The principle here is that the working spouse was only able to concentrate on work because the other spouse focused on attending to the family at home. Therefore, if a spouse’s position is recognized in a divorce, it is all the more justified to consider protections for non-working spouses who remain in the marriage until their partner's death.
To safeguard these vulnerable spouses, I propose a policy change: require spousal consent for any CPF nomination that excludes them. This could be implemented by mandating the spouse as a necessary witness to such a nomination. Such a measure would acknowledge CPF funds as shared assets within a marriage and ensure that both parties are aware of and agree to the distribution plans. In cases where consent is not obtained, a default provision could allocate 50% of the CPF balances to the spouse, with the member's nomination applying to the remaining half.
I intend to raise this issue during the Committee of Supply debates for the Manpower Ministry. I hope the Ministry will give this proposal some consideration during that debate.
Conclusion
This Budget, being a prelude to the General Election, offers benefits across the spectrum, ensuring that both affluent and less privileged Singaporeans receive some support. These measures will help households for now, but the issue is how sustainable such an approach is.
I believe it is vital to seriously look at the three areas I have highlighted: doing better in budget marksmanship, managing the cost of living other than through handouts, and protecting vulnerable segments of society who risk being overlooked in our nation's progress.
