Mr Speaker, my reply to this second Forward Singapore budget is in 3 parts. First, I will address the important budget announcements related to Singapore’s long-term future. Thereafter, I will make a few broad comments about the budget. Finally, I will speak on Singapore’s fiscal situation and the Government’s budget marksmanship.
The Big Picture
First, the big picture and our physical infrastructure. At the beginning of this term of government, COVID-19 put the plans for Changi Air Hub on hold. This year, the Finance Minister announced that Terminal 5 will break ground. With its completion, Changi Airport’s capacity will increase by 50%, ensuring that Singapore will remain a critical gateway for global travel and trade. The development of Tuas Port and Singapore’s record highs in vessel arrival, tonnage, container throughput and bunker sales have, in the words of the Finance Minister, reinforced Singapore’s role as a leading maritime hub. These are no mean feats and Singaporeans are proud of the achievements of all who made this happen.
The future is exciting and will herald more changes and transformation.
The advent of nuclear power and the signing of the 1-2-3 agreement on civil nuclear cooperation with the US portends a future in Singapore that comes out of science-fiction. Even the import of electricity from neighbouring countries may be difficult to fathom for some Singaporeans more used to scenarios from not too long ago where acrimony surrounded the purchase of critical resources such as water. It is not out of place for the public to ask important and far-reaching questions on nuclear safety and resource resilience. Equally legitimate are queries on the cost-implications for Singaporean households – what would the impact be on the bills for clean power compared to those for electricity generated by fossil fuels? The Government naturally must address these concerns.
As these and other new vistas open from AI to sustainability and climate change, Singaporeans must be well-prepared by our education and re-training systems to be the ones best-placed to take on jobs in these areas. The Finance Minister has sought to assure the public of the Government’s intentions in this regard and there is significant public interest in seeing Singaporeans compete and succeed in securing jobs created or transformed by these developments.
Budget 2025
Let me move on to more general comments about the budget. Coming on the cusp of general elections, that Budget 2025 would be an election budget, was not a surprise. The PM and Finance Minister and Senior Minister Lee Hsien Loong had set the stage by providing numerous assurances that cost-of-living concerns would be addressed.
The concerns on the ground about cost-of-living are known to all in this House.
We started the first budget of this Government’s term in 2021 with the disbursement of CDC vouchers worth $100. Today, the vouchers are at $800. Cost increases have hurt people from across all segments of society. Beyond the $800 CDC vouchers and $800 SG60 vouchers, more than a few political watchers noticed PAP MPs thumping their armrests in unison when the Finance Minister announced that climate vouchers worth $400 dollars were being extended to private household dwellers too – a relatively small and generally more well-off segment comprising about 15% of our population. Reflecting on the cost-of-living crisis, this enthusiastic gesture was both ironic and telling.
The Finance Minister dished out the broad statistics for 2024 in his speech – 4.4% growth, inflation continuing to ease, wage increases outpacing inflation, median income of resident workers rising by 3.4% above inflation and income inequality being at its lowest since 2000.
But for many, the lived reality of Singaporeans over the last 12-odd months does not correspond with the bright summary revealed by these numbers. Life is very tough for the Singapore that is in the heartland. Concerns over jobs, prices, housing costs, and opportunities continue for many Singaporeans and their households. The numerous vouchers will give us help for a little while, but not for long. After all, no GST offset package lasts forever.
2024 was noteworthy for other reasons. For the first time in our history, our total fertility rate fell below 1. For the first time ever, our total population crossed 6m. The 2019/20 HDB annual report stated that the projected ultimate number of dwelling units in Singapore would be slightly above 1.55m. According to the latest HDB report for 2023/24, this number has gone up by 53,000 dwelling units, even as the earlier number of 1.55m was not intended to be a target to be reached according to the answer to a parliamentary question given to Sengkang GRC MP Louis Chua in 2021. If the ultimate dwelling units number is not a target, on what basis is it moving upwards?
For some, these realities make the Singapore of tomorrow a difficult one to imagine and for others, a difficult one to find affinity with. With finite land, other Singaporeans question, in the interest of their children, how many more does the Government seek to squeeze in? And what cans are we kicking down the road for future generations of Singaporeans who live in a far denser city than today.
In 2017, it was announced that Auxiliary Police Officers (APOs) would be hired from Taiwan. And last month, the Ministry of Home Affairs confirmed that it was looking at hiring APOs from China, India, the Philippines, and Myanmar. A few days ago, it was announced that the Singapore Civil Defence Force will be looking to hire foreigners as paramedics. With a growing population and a manpower shortage in many areas, it is inevitable that more of such basic manpower needs of our country will go down a similar path. Alongside these recruitments are fears that Singaporeans may face competition from foreigners who apply for some of these jobs which traditionally were filled by Singaporean men and women.
Integration and a sense of rootedness will continue to be a major issue in Singapore in the years to come and no amount of vouchers can help people feel rooted to Singapore. The Government is aware of this, and it is no surprise to hear government leaders extolling the importance of unity and integration of foreigners into Singapore society. This issue continues to be a soft underbelly of our society, with fault-lines that can be easily exploited. Government policy leaves much to be desired, for example, with democratically-elected opposition MPs being kept away from new citizens during their citizenship ceremonies by design, ostensibly for political expediency and advantage. Creating a sense of unity in Singapore is a work-in-progress that is made tougher by the PAP itself when it hamstrings integration efforts with such small-minded and short-sighted policies.
Businesses found 2024 tough. More than 3000 Food & Beverage businesses closed their doors for good in 2024 citing dwindling business and higher operating costs. That is more than eight F&B businesses shutting every single day - the highest number since 2005. While there are even more newcomers to the scene, a Channel News Asia report earlier this month identified the entry of cash-rich foreign players prepared to pay higher rents and salaries as a reality of the local F&B scene.
2024 was noteworthy for other reasons too. In business circles, the Johor-Singapore SEZ, while on the whole received positively, has also raised concerns about the hollowing out of businesses in Singapore, particularly those that serve the Singaporean middle class.
Arising from the cost-of-living crisis, the increase in the cost of basic goods in Singapore leads many Singaporeans to make regular trips across the border to extract a good 30% or more in savings. Services are cheaper in Johor Bahru too – from seeing a dentist to getting a thorough health check-up at a reputable private medical facility. With the JB-Singapore Rapid Transit System starting operations in 2026, many businesses will have to seriously review how far they can expect Singaporean or other local customers to continue patronising them. It also remains to be seen how long bookstores and cinemas will be able to continue surviving in Singapore, and whether the Government is prepared to offer such businesses a helping hand with grants or by requiring building owners to reserve a portion of their built-up area for such businesses, to ensure that Singaporeans have localised, high-quality, holistic and affordable options within our borders.
In May last year, I asked a Parliamentary question on the Jurong Town Corporation (JTC) and whether it was empowered to lease industrial properties to local SMEs at a discount to the market rate and whether the Ministry has any plans to expand schemes that reduce business costs for local Small & Medium sized Entreprises by way of lower rentals. The Minister for Trade and Industry shared that his Ministry and the Singapore Business Federation had formed an Alliance for Action (AfA) on Business Competitiveness to deep-dive into how businesses can remain competitive amid global uncertainties and structurally higher business costs.
While the Alliance for Action’s Business Competitiveness report released last November covered a range of business-related issues – in the main they addressed matters specific to bigger entreprises. With Government the largest landowner in Singapore, and a not insignificant player in the industrial space, land costs and rentals are something that needs to be looked into more acutely to appreciate the challenges to business and entrepreneurship in the immediate term.
On a separate note, and to assist more SMEs, some measures announced at the budget should be reviewed immediately. For example, the Government should free the second portion of the SG60 vouchers for use anywhere, beyond just participating supermarkets, to include all small businesses and shops located in shopping malls too. Apart from helping SMEs, this will enlarge choice for Singaporeans.
The WP spoke on the cost-of-living crisis in a motion this House debated 18 months ago where we looked beyond voucher relief towards structural changes to address the cost of living, looking at utilities and healthcare, amongst others. To that end, and amongst other subjects, I will revisit the subject of land costs for HDB BTO flats in the Committee of Supply debate.
Fiscal Situation
Sir, let me now speak on the fiscal situation and the Government’s budget marksmanship. Apart from the goodies that were expected in this Budget, it was the fiscal position at the end of the term which raised many eyebrows. The Government’s exceedingly healthy fiscal position has led many Singaporeans to question why the GST rate had to be raised in 2023 and 2024.
A fiscal surplus of $6.8b is projected for the financial year 2025. As for 2024, even after the latest CDC and SG60 voucher program, 2024’s fiscal surplus, originally estimated at an already healthy $778 million dollars, has been revised massively upwards to $6.4b. And if one casts their memory back earlier in this term, it was estimated by the Government that 2021 and 2022 would see deficits. However, these turned out to be surpluses instead. The overall surplus for fiscal years 2021 to 2025 or this term of government is set to hit $14.3b.
Sir, even as the international scene remains in flux with all eyes on the relationship between the US and China, Singapore has been able to leverage its unique value propositions for investment. Some years ago I spoke of how the chill felt by some Multi-National Entreprises (MNEs) in Hong Kong could result in an advantage for Singapore as these businesses relocated to other jurisdictions. The increase in Corporate Income Tax collection, overtaking even NIRC, has been attributed to a change in the investment decisions of multinational enterprises. The Government has also reviewed its position on BEPS, and is anticipating even higher Corporate Income Tax revenue from FY2027 provided Singapore remains attractive to MNEs. With another $3b devoted to the National Productivity Fund in addition to the $2b last year, all things being equal, it is hard to see how Singapore would suddenly turn unattractive despite the US withdrawal from BEPS. The fiscal situation appears healthy, notwithstanding the absence of financial medium-term projections which other jurisdictions publish. This naturally has led many to question the necessity of raising GST.
The WP has raised this matter on numerous occasions in this House, even participating actively to consider alternative levers of revenue in the budget debate of 2023. Even as imported inflation contributes to price rises locally, there was no need for the PAP Government to add fuel to the fire and fan the flames of inflation further with a GST rise. Even if a decision was made to raise it in 2023, there was ample policy space to delay the second increase in 2024 when the country was in the thick of inflation.
Why the PAP went headlong and headstrong into raising GST, and thereby turbo-charging inflation further, is something only the PAP itself can answer to Singaporeans for. As every Singaporean knows, a 1% rise in GST does not lead to a 1% rise in the cost of a cup of coffee. Increases are incremental, as we have experienced in how purchases from the local shop or weekly supermarket trip have cost a good 30 to 40% more for Singaporeans since GST was hiked in an inflationary environment never seen before in decades.
The decision to go ahead with a GST hike when inflation was raging, was poor. We have seen Assurance packages and CDC vouchers dished out to cushion the GST blow for many Singaporeans but when these handouts stop, as they eventually will, the 9% GST will remain – until any subsequent increase the PAP Government sees fit to impose. It would not be out of place by then to ask, how many Singaporeans would believe the accuracy of a PAP Government’s projections about the immediate need for future expenditures?
The Government has shown poor fiscal marksmanship in trying to match Singapore’s expenditure needs with revenue. In fairness, at last year’s budget, I recounted the reflections of economists quoted by the Straits Times who commented that it was getting very hard to project Government revenue because budgeting accuracy in specific tax collections could vary between 17 and 27%, and that gone are the days when budget marksmanship of 2% was the norm.
Sir, if this continues, it will be difficult to support future tax increases, or even accept policy moves meant to equalize the costs of owning a car such as by introducing new taxes or charges on EV car drivers announced in this budget. Singaporeans would not be out of place to ask – why is there a need to collect so much money when the Government’s fiscal projections are so unpredictable but somehow always so healthy when elections have to be called?
While I am sure the fiscal headroom is politically attractive and even desired by the PAP at the end of the term, notwithstanding its constitutional obligations, it should not underestimate the correlation between this poor marksmanship and potential public cynicism in future when taxes must be increased for legitimate reasons.
I anticipate the Finance Minister to reply that all the increases were either down to one-off abnormalities or upsides that could not be anticipated.
Even if we accept this, the Government’s poor fiscal marksmanship raises and strengthens a different argument, and that is, that the money already set aside for spending can certainly be accounted for in a more institutionalized fashion for greater public scrutiny. The WP brought up the idea of an independent Parliamentary Budget Office at the beginning of the term. This was roundly rejected by the former Finance Minister, with the Leader of the House positing that it would only benefit the opposition.
My colleagues and I beg to differ and perhaps in light of the unpredictable projections, such an institution would also benefit the Government. Compared to 10 years ago, total public expenditure has close to doubled in nominal terms. The age-old question of greater fiscal accountability and the introduction of institutions that track and account for public expenditure in a dedicated manner are ideas whose time has come.
To this end, and in the throes of COVID, the Government committed $25b to fund its Research Innovation and Enterprise 2025 plans. In the name of fiscal prudence, is it out of place to ask how well these monies have been spent? Have the plans proved to be value for money? The public has a right to know because while expenditures can be tracked, tracking returns is a different matter altogether.
In the same vein, it would be important for the government to issue a report card on initiatives that have come to an end. For example, when the Capability Transfer Program was first mooted at Budget 2017, the aim of the program was to improve local-foreigner workforce complementarity by facilitating transfer of capabilities from foreigners to locals with the goal of ensuring that there is a sufficient supply of Singaporeans with the requisite skills. A number of MPs including myself have spoken or asked questions about the program during this term of government.
I hope to see Ministry of Finance occasional papers reporting on the outcomes of such initiatives, complete with an impact assessment on jobs and opportunities for Singaporeans. Only then can better alternatives be promulgated and advanced not just by the opposition, but by ordinary Singaporeans who care about their country and the direction in which it is headed.
As I have said so previously, the new social compact, between citizen and state – as flagged by Forward Singapore – demands it. Our social compact would be strengthened by such accountability for public expenditures and programs. This scrutiny would represent a different approach to governance but it is one that the WP would opine is the expectation of a participatory society and of the Singapore that is imagined by the Forward Singapore report.
Conclusion
In conclusion Mr Speaker, I began my speech by talking of the infrastructural developments that are taking shape in Singapore in a section titled the big picture. They stand to change Singapore for the better. However, there is a bigger picture whose focus has changed even more sharply since the inauguration of the Trump administration.
The comments of the Defence Minister at the Munich Security Conference less than a fortnight ago, of the US now behaving like a “landlord seeking rent” and no longer being the “force of moral legitimacy” that it used to be, portend a world that may not be changing for the better and a security architecture that may have to be reconfigured. Much international media attention was focussed on the phrase “landlord seeking rent”.
However, I found the question the Defence Minister put to his audience at the end of the speech more significant. The question was - “who, if anyone, any one country or region or bloc, can step in if US declines to protect the global commons and how effective, and against what resistance?” This is even as the 2024 Asian Barometer Survey believes that China far outstrips the US in influence over Asia, and this gap will only widen going forward - this is the perspective of Singaporeans who were surveyed.
Only two days prior to the Minister’s speech, the new US Defence Secretary at Ukraine Defense Contact Group said, in the context of pivoting away from Europe, and I quote, “we also face a peer competitor in the communist Chinese with the capability and intent to threaten our core national interests in the Indo-Pacific. The US is prioritising deterring war with China in the Pacific, recognising the reality of scarcity, and making the resourcing trade-offs to ensure deterrence does not fail.”
To this end Sir and my last budget speech, I devoted the final section on a call to strengthen our national unity – a multi-racial national unity - in an uncertain world. The wider strategic atmospherics lead me to reiterate that our national unity – a subject I mentioned in my speech - in these unpredictable times is actually vital. This outlook reinforces the importance of the Singapore Armed Forces (SAF), the Home Team agencies and the importance of National Service. The security they provide is an important source of strength for Singapore, and all Singaporeans must give our men and women in uniform our full support.
Mr Speaker, the Workers’ Party supports the budget.
