GE2025: Proposals 3 parties in Parliament have put up to deal with cost-of-living pressures

Global inflation rose sharply in 2022 following the outbreak of the war in Ukraine, and remained high after that due to energy, food and supply chain disruptions. Like many other countries, Singapore felt the impact, Prime Minister Lawrence Wong said in his Budget 2025 speech on Feb 18.

While inflation came down in 2024 and is expected to ease further in 2025, Singaporeans are still adjusting to the new price realities and tightening their belts, added PM Wong, who is also Finance Minister.

In Budget 2025, the PAP government

assembled a slew of measures

to help Singaporeans with immediate cost concerns.

They included a $1.9 billion enhancement to the Assurance Package to offset the effects of inflation for lower-income households, an additional

$800 in CDC vouchers

in total for every Singaporean household to be disbursed in May 2025 and January 2026, and Utilities-Save (U-Save) rebates to help eligible households cope with their utility bills.

On the back of higher-than-expected revenues, particularly from corporate income tax receipts, the Government also announced that all Singaporeans aged between 21 and 59 in 2025

will get a one-time $600 handout,

in conjunction with the Republic’s 60th year of independence.

Seniors get another $200, while children aged one to 12 will receive $500 in LifeSG credits and those aged 13 to 20 will receive top-ups to their Edusave or Post-Secondary Education Account.

Families with young children and lower-income individuals and households also received additional help in the form of credits, rebates or higher payments.

The Budget also set aside resources for longer-term measures that the Government said were more sustainable solutions to dealing with the rising cost of living.

They include training workers so they can find better-paying jobs and firing up the engines of economic growth, such as in technology and innovation.

For instance, Budget 2024 gave Singaporeans an additional $4,000 in SkillsFuture credits, and a training allowance of up to $3,000 to support those on certain full-time courses. This was

extended in 2025 to part-time training,

allowing workers to claim $300 a month to defray their expenses.

PM Wong said the Government will continue to provide support for as long as people need it, but this is not enough.

“The more durable, the most sustainable way to tackle cost of living is to ensure that Singaporeans enjoy higher real incomes, and that must be supported by a strong economy and productivity gains. That remains the key thrust of our approach,” he said.

Debate over pricing of utilities, public transport

As for utilities, the PAP’s approach has been to price water and electricity fully but provide targeted rebates through

the U-Save scheme,

with larger rebates given to lower-income households.

More than 950,000 Singaporean households benefit from these offsets, alongside rebates for their monthly service and conservancy charges, which are part of the permanent GST Voucher scheme and the enhanced Assurance Package.

The WP’s position is that the Government should relook its policies, such as on utilities pricing, to help Singaporeans cope with rising costs.

In 2023, the Workers’ Party tabled a motion that

proposed changes to water and electricity pricing

here that it said would help manage costs and encourage conservation.

On water, Leader of the Opposition Pritam Singh suggested a five-tier pricing system, which he said would better align the water tariff to actual consumption by households.

He also suggested a graduated water conservation tax so that households that consume more water cross-subsidise those that use less.

Broad-based subsidies such as GST U-Save vouchers can then be reduced so that only the most deserving receive them, he added.

On electricity, WP chairwoman Sylvia Lim suggested tiered pricing and differential charges during off-peak hours so that households that consume electricity below a certain threshold would be charged a lower rate, while those that use more will be charged a higher rate.

To address increases in public transport fares, Aljunied GRC MP Gerald Giam suggested setting up a National Transport Corporation (NTC) to oversee the planning and operation of all MRT, LRT and trunk bus services in Singapore.

Under this model, Mr Giam said the “substantial” profits that currently accrue to the public transport operators and their shareholders can instead be redirected to benefit commuters.

Fares will be set just high enough to ensure the NTC’s fiscal sustainability, without over-burdening commuters, and the corporation will also ensure more uniform service standards, among other things.

The PSP, represented in Parliament by Non-Constituency MPs Leong Mun Wai and Hazel Poa, takes the position that the PAP’s budgetary approach and policies around taxes, reserves and property prices are the main drivers of the high cost of living in Singapore.

Speaking on Budget 2025, PSP’s Mr Leong argued that the Government was setting aside too much of its budgetary resources for future spending and not using enough of it to address current economic challenges.

Ms Poa also called for cost-of-living issues here to be addressed through structural policy changes rather than the “Band-Aid approach of ad-hoc gifts and handouts”.

She proposed unwinding the GST from 9 per cent to 7 per cent, a suggestion the PSP had previously made that it said would dampen inflationary pressures and provide financial relief to Singaporeans.

Any additional revenue required for higher social expenditures can be raised from reforming the corporate income tax, said Ms Poa.

During the debate on Budget 2025, Mr Leong also proposed a gross minimum living wage of $2,250 a month and said PSP supports progressive wage increments up to the median wage of $4,500.

PSP had earlier called on the Government to pay the MediShield and CareShield premiums for all Singapore citizens so that MediSave funds can be left untouched to accrue compound interest.

Most support is structural, not temporary: PM Wong

In his Budget 2025 round-up speech, PM Wong said the WP and PSP had suggested that the Government was relying solely on vouchers to help Singaporeans with the cost of living.

But the cost-of-living support measures and SG60 vouchers account for only 5 per cent of the Budget, with a far larger part of spending going towards structural programmes to empower Singaporeans through education, skills upgrading and job training, he said.

“All this will ensure Singaporeans do not just receive help but are able to stand on their own feet and seize better opportunities for themselves and thrive in a rapidly changing world.”

Responding to WP proposals on tiered pricing for utilities, then Acting Minister for Transport Chee Hong Tat, who was also Senior Minister of State for Finance, said water is priced to recover the cost of its supply and production, and to reflect the cost of producing the next drop of water.

Having additional pricing tiers would result in all households, whether rich or poor, paying a water price lower than its scarcity value for the first block of consumption, akin to providing a broad-based subsidy that would benefit the wealthy, he added.

The Government’s approach is to price water fully, then provide targeted and tiered support though U-Save rebates to those who need it most, he said, adding that the same rationale applies to electricity.

He said the idea of pricing electricity based on the time of use was something the Government had already announced that it is exploring, noting that it is an accurate reflection of the actual cost of producing electricity during different periods of the day.

Mr Chee said the water conservation tax, too, is factored into pricing water correctly, and varying it could also lead to distortion.

Nationalising the transport system and taking away the profit element does not guarantee better outcomes for commuters, he added. He noted that the profits made by the transport operators such as SBS Transit and SMRT are at a group level. Rail services, for instance, were either making losses or very minimal profit.

Redistributive approach that tilts towards those with less

Observers said there is broad consensus among the parties that the cost of living is a key concern for residents and the external environment adds to the pressure.

Where they differ is what they see as the more effective solutions to the problem, said Singapore Management University assistant professor of sociology (education) George Wong.

For instance, the PAP has a suite of measures to alleviate the cost of living for the short term. For the longer term, it sees raising productivity and human capital gains in terms of better jobs and wages as a means to address the rising cost of living.

The WP and PSP, however, argue that the government of the day can do more to tweak the direct cost drivers, for instance by controlling utility prices or nationalising public services, he added.

Dr Gillian Koh, senior research fellow at the Institute of Policy Studies, said the Government’s approach to its fiscal resources and social policy has been highly redistributive, with the balance tilting towards those who have less.

“So much of the basics in life for Singaporeans and their children – healthcare, housing, education, transportation – both in terms of infrastructural development and ongoing delivery of services are heavily subsidised by the Government, with more going to the bottom than to the top,” she said.

Emeritus Professor of Sociology Chua Beng Huat at the National University of Singapore, who is also a visiting fellow at SMU School of Social Sciences, said the WP’s multi-tiered pricing system may potentially be hard to execute, given variations across millions of households.

On its call to nationalise the public transport system by establishing the NTC – which it has mooted several times since 2006 – he said the Government is, in fact, subsidising public transport at a very high rate.

Associate Professor Walter Theseira from the Singapore University of Social Sciences said fare levels in Singapore are set by policy and not profitability.

In setting public transport fares, the Public Transport Council (PTC), a statutory board under the Ministry of Transport, uses a fare formula that reflects the cost drivers of providing public transport service such as core inflation, national wage growth and energy prices.

This means fares are adjusted in tandem with changes in these cost drivers rather than changes in operators’ actual costs, said Mr Chee in 2023.

In recent years, PTC had been deferring portions of the fare hike to moderate the impact on commuters, he added, with the Government stepping in to cover the funding gap, which is in addition to the $2 billion in annual subsidies to fund bus and train services.

Independent political observer Felix Tan said there are no guarantees having an NTC would necessarily ensure lower fares for commuters or eliminate profit-making.

He added that while PSP’s call for reducing the GST may sound good, it is no guard against long-term global economic downturns and inflation.

“After all, with the economic instability and the rising protectionism that we are seeing around the world, the costs of basic necessities will increase – with or without GST hikes,” he said.

Blanket subsidies likely to distort prices

Prof Theseira said the Government’s decision to use vouchers and lump-sum transfers instead of blanket subsidies, as well as GST vouchers instead of GST exemptions, is generally considered by economists to be more efficient.

Subsidisation may be distortionary, for instance, by encouraging the continued consumption of goods whose actual prices have risen. He cited Malaysia’s policies of subsidisation and price controls, which benefit Singaporeans who travel there to shop rather than their intended recipients.

The Republic’s approach of using transfers minimises the leakage of subsidies to the wrong targets, such as tourists and higher-income Singaporeans, he added.

At the same time, the PAP’s philosophy has been to design a socio-economic system that tries to avoid distorting prices or skewing incentives while being efficient, said Professor Terence Ho, adjunct associate professor in practice at the Lee Kuan Yew School of Public Policy in NUS.

It also uses a multi-pronged approach – besides short-term relief measures, permanent social transfers and moves to address supply-demand factors, there is also a push to keep wages growing, he added.

Given the broad agreement that subsidies, vouchers and efficiency improvements in public spending will only go so far in keeping down the cost of living, Prof Theseira said the issue boils down to whether policies can deliver wage growth that outpaces inflation.

“The longer-term issue is whether there will be sustained real wage growth, which is the most sustainable way of supporting improvements in living standards,” he said.