Battle lines drawn over cost pressures as MPs debate Budget 2025

SINGAPORE - How Singapore helps its people cope with cost pressures – and, by extension, how the Government manages its finances – featured prominently over the past two days of the Budget debate.

The opposition took aim at the Government’s “fiscal marksmanship”, alleging poor financial planning and an overreliance on short-term handouts to paper over cost pressures.

People’s Action Party MPs, meanwhile, defended the Government’s approach. They argued that balancing public spending with long-term reserves is what sets Singapore apart, and advocated the fine-tuning of existing policies.

The speeches from the more than 40 MPs, lasting more than 13 hours, reflect how the battle lines have been drawn over these issues that are set to become key points of contention at the upcoming general election.

What is clear is that concerns over the cost of living and fiscal management are top of mind for MPs – because they are top of mind for voters too.

Leader of the Opposition and Workers’ Party (WP) chief Pritam Singh fired the first salvo on Feb 26, saying the Government had shown “poor fiscal marksmanship” when it projected deficits in 2021 and 2022, but ended up with a surplus instead. The surplus for 2024, originally estimated at $778 million, was revised to $6.4 billion, he noted.

Mr Singh (Aljunied GRC) questioned why, given Singapore’s good economic performance, there was a need to raise the goods and services tax (GST) and consequentially make things more expensive.

WP chairwoman Sylvia Lim (Aljunied GRC) called the Ministry of Finance’s budget forecasting “notably inaccurate”, and questioned why the lower projections were reaffirmed as recently as last September.

She pointed out that much of the extra revenue came from certificate of entitlement premiums and GST – signs, she argued, of the financial pressures on households.

Both WP MPs argued that vouchers and handouts merely provide temporary relief rather than tackle structural cost issues, a sentiment echoed by Progress Singapore Party Non-Constituency MP Leong Mun Wai.

Mr Leong questioned whether what he described as the Government’s increasing reliance on regular handouts was a sustainable approach for Singapore.

PAP MPs, meanwhile, said surpluses accrued should not be seen as a sign of overcollection, but proof of the Government’s consistency and commitment to fiscal prudence.

Mr Xie Yao Quan (Jurong GRC) stressed that having financial buffers should give Singaporeans confidence, not concern.

He noted that the Government allocated about 5 per cent of the Budget to cost-of-living support measures and the SG60 package, and left “on the table” a surplus of about $13 billion – for the 2024 and 2025 financial years.

This allows the Government to achieve a more or less balanced fiscal position over its entire term, he said.

Mr Derrick Goh (Nee Soon GRC) said criticising the GST hike based on recent surpluses was a narrow view, as the tax system is designed to provide revenue to fund long-term expenditures.

He framed the Government’s approach as one of responsible stewardship, that it was spending within its means while maintaining a prudent fiscal stance.

MPs also pointed to international comparisons to make their case. They highlighted how Hong Kong’s reliance on land sales for revenue left it vulnerable when the property market weakened. Deficits soared, forcing difficult trade-offs.

In contrast, Singapore’s ability to sustain public spending while saving for the future is the result of years of deliberate adjustments to its tax system. Many governments struggle to achieve this balance, said MPs such as Mr Liang Eng Hwa (Bukit Panjang).

Some PAP MPs called for tweaks to ease the rising cost of living and everyday challenges, rather than overhauling existing policies.

The strain on larger families balancing care for both children and elderly parents was a concern. For this group, Mr Gan Thiam Poh (Ang Mo Kio GRC) proposed enhanced grants and higher priority for selecting bigger HDB flats, with the amount scaled to their number of children.

As daily expenses climb and economic uncertainties persist, the anxieties over cost of living and financial management will not fade after the Budget is passed.

They will shape public sentiment in the months ahead, influencing how Singaporeans spend, save, and plan for the future.

With

an election on the horizon,

it is clear these issues will be raised again on the campaign trail.

More immediately, they will resurface on Feb 28, when Prime Minister Lawrence Wong delivers a speech to respond to MPs and round up the Budget debate.