Govt's approach to help is to offer short-term relief and support longer-term restructuring: DPM Lawrence Wong

The $1.5 billion support package has taken into consideration Singapore's latest economic and inflation outlook, said DPM Lawrence Wong. PHOTO: BT FILE

SINGAPORE - In providing financial help, the Government's approach is to provide short-term relief while supporting longer-term economic restructuring, Deputy Prime Minister Lawrence Wong said in Parliament on Monday (July 4).

"That means our fiscal support must continue to ensure the right incentives for businesses to build their capabilities, and become more energy efficient and productive," he said.

Mr Wong said the latest $1.5 billion support package announced last month, combined with measures announced in February during this year's Budget, together provide comprehensive support for both households and firms throughout 2022.

For instance, about 1.5 million lower- to middle-income Singaporeans will each get GST vouchers of up to $700 in August once the various support schemes are tallied up.

The $1.5 billion package has also taken into consideration Singapore's latest economic and inflation outlook, Mr Wong added.

He was responding to MPs' questions on whether the Government will provide additional subsidies and relief to households and businesses here in the light of rising inflation.

The Government had anticipated higher prices earlier this year and rolled out more support for Singaporeans in this year's Budget, which included a Household Support Package and a Recovery Grant for small companies affected by Covid-19 restrictions, said Mr Wong.

This includes another two tranches of Community Development Council vouchers to be disbursed in the next two months, and about five months' worth of utility rebates for households living in four-room HDB flats.

But the challenges ahead are not just about coping with higher prices, stressed Mr Wong.

"We must also adjust to major structural changes in our operating environment, including the threat of climate change as well as greater geopolitical contestation between the major powers," he said.

"All this means that we are entering a more bifurcated, unpredictable and dangerous world."

This means Singapore has to accelerate its efforts to restructure and transform itself in this new environment.

"In particular, we must decarbonise the economy, learn to manage with fewer manpower resources as our population ages, and strive for more inclusive growth in the years ahead," said Mr Wong.

Measures like enhancing the Government's co-funding share for the Progressive Wage Credit Scheme will also secure real wage growth for lower-wage workers while cushioning the cost impact for businesses, said Mr Wong.

The enhanced scheme means that the Government will pay up to 75 per cent of the wage increase of lower-wage workers this year.

Mr Wong noted that the economy is operating at slightly above potential with a tight labour market and an overall unemployment rate that is lower than pre-Covid-19 levels.

"Under such circumstances, we had to consider carefully the size of any additional support measures by the Government - because excessive fiscal injections at this juncture can exacerbate inflationary pressures and become counterproductive," he said.

This is why the latest support package was designed to provide more targeted relief for the lower-income and vulnerable groups who are disproportionately impacted by higher prices.

Responding to Mr Edward Chia's (Holland-Bukit Timah GRC) question on support for parents and caregivers, Mr Wong also noted that apart from the latest support package, some structural support schemes have been updated recently.

For example, a caregivers' grant has been recently enhanced, while healthcare subsidies have also increased as fees have gone up.

"We continue to review and update these subsidies and programmes, including for the Pioneer Generation, for the Merdeka Generation," he said.

"We are also quite aware that there will be groups - the elderly, parents with special needs children - who will be finding it difficult to cope with higher prices."

The way to help these groups is not just through once-off relief, but for the Government to adjust the underlying funding for its various programmes to make sure that it keeps pace with inflation and higher prices.

"This we will continue to do on a regular basis," he said.

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Overall, Singapore has used a combination of monetary, fiscal and other policies to cushion its people from the extremes of global inflation, while targeting help to those who need it most and helping businesses adjust to higher prices for now and the medium term.

Mr Wong said it will be very hard for the Government to shield businesses and workers directly from cost increases that are externally induced.

"But what we will try very hard to do is to provide short-term relief, and in the process of providing that relief we will also want to encourage businesses, families, individuals, wherever possible, to become more energy efficient, for businesses to become more productive," he said.

"So that even as we navigate through the immediate crisis, we will emerge stronger, greener and more productive and therefore better prepared for the challenges before us in a new environment."

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