Highlights: Budget 2025 debate in Parliament
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SINGAPORE - Prime Minister Lawrence Wong rounded up the debate on Budget 2025 on Feb 28.
He addressed questions and suggestions from around 50 MPs raised over three days.
These include questions from opposition MPs on the timing of the goods and services tax hike
PM Wong had on Feb 18 unveiled a record $143.1 billion Budget proposal
A new economic reality
The entire global system is changing, with countries turning towards zero-sum competition rather than win-win cooperation, PM Wong said.
Major powers say they do not want conflict, but are preparing for conflict, and realise that a strong industrial base is needed for any war effort, he noted.
Singapore needs to be prepared for tougher competition and do what it can to stay in the game, he said.
There will also be increased scrutiny of high-tech activities done out of Singapore, he said. He noted that countries who are key sources of technology are now concerned about leakage and want to keep proprietary technologies tightly controlled.
While Singapore does not enforce the unilateral export controls imposed by any single country, it will make efforts to address these concerns and provide assistance where appropriate. This is to ensure that the country remains a reliable and trusted trade partner, PM Wong said.
PM Wong noted that several MPs had raised concerns over the high cost of doing business.
He said the Government will keep an eye on cost competitiveness. Companies will get short-term help where needed, without blunting their incentive to restructure, he added.
He urged retailers to adapt and rethink their business models, giving the example of baking supplies firm Phoon Huat, which started out in 1947 as a single shop. Today, it has its own production facility, a distribution centre and 20 retail stores. It also has an e-commerce platform which allows it to sell to customers overseas, he noted.
He also acknowledged concerns MPs had raised about jobs, especially with disruption that comes about with technological advances.
“But we have to understand the underlying reasons and avoid pinning the blame on foreigners,” he said, noting that this is what has happened elsewhere.
“We can see this happening in so many other countries, where foreigners are blamed and the public discourse ends up spiraling into very negative, very toxic and xenophobic directions. That’s not what we stand for in Singapore.”
On foreign workers, he said they are welcome to work here, but their entry into the country is managed in a controlled manner and intended complement Singaporeans.
The system of controls in Singapore has also been fine-tuned - for instance, with measures such as workplace fairness legislation.
He assured Singaporeans that they will get support to adapt to the changes in its economy.
PM Wong also stressed the importance of developing local talent, especially through the various SkillsFuture schemes targeted at mid-career workers and those who are involuntarily unemployed.
More money will be put into strengthening the SkillsFuture system in the coming years, he said.
“We cannot save every job, but we will support every worker in Singapore. We will create even more opportunities, and better jobs for all Singaporeans.”
Cost of living
Inflation in Singapore was driven mainly by global factors, which were already driving prices up before the Goods and Services Tax (GST) increases, PM Wong said.
He was responding to Leader of the Opposition Pritam Singh, had earlier said the GST hike was a poor decision that “turbocharged” inflation.
The impact of the GST increase on inflation in January 2023 and January 2024 was “transitory”, he added.
In 2022, consumer price index (CPI) inflation was 6.1 per cent,
“Where is the turbocharging? Look, I know elections are approaching, but this chamber is not an election rally. Let’s not get carried away by hyperbole and have a debate based on facts,” PM Wong said.
He said the Workers’ Party and Progress Singapore Party seem to be suggesting that the Government is relying only on vouchers to help Singaporeans with the cost of living.
This is not so, PM Wong said. He added that these are temporary measures, not long-term solutions.
Measures to help Singaporeans deal with the cost of living, as well as the SG60 vouchers,
“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,” PM Wong said.
PM Wong acknowledged that even with a strong and growing economy, the day-to-day lived realities for Singaporeans may be different. MPs on both sides of the House had raised concerns about how living in Singapore can be competitive and stressful.
This is why the country has been strengthening its social support system, including with moves under Forward Singapore,
PM Wong also spoke on concerns about the price of housing and high resale prices, saying that Singapore is confident that HDB prices will remain affordable in the longer term.
“Why? Because only Singaporeans can buy HDB flats,” he said. “And we can, and will build enough housing for every Singaporean household.”
He also addressed calls for the Government to make bolder moves on social policies.
In doing so, he pointed to social support arrangements around the world that started with good intentions but ended up burdening their societies.
This is why it is important to make sure the system is fiscally sound and sustainable, he said.
At a time when many pension systems are struggling with sustainability, the CPF scheme continues to provide assurance for Singaporeans to retire adquately and in a sustainable manner, he said.
PM Wong also acknowledged the sacrifices that caregivers make, saying that the Government will study how it can strengthen support for this group.
Social spending will continue to grow in the coming years - driven by the ageing population and rising healthcare costs, but also because of efforts under Forward Singapore to strengthen the social compact, PM Wong said.
A strong social support system should not be reliant on the Government alone, but complemented by efforts from individuals and the community, he added.
Fiscal marksmanship
While the GST increase was a difficult choice, it was the right one, PM Wong said.
He was responding to questions from MPs on both sides, who had asked if the tax hike was necessary given the impact it had on the cost of living.
If not for the GST increase and unexpectedly large corporate income tax collections, Singapore would have run a Budget deficit in both the 2024 and 2025 financial years, and ended up in a much weaker position, PM Wong said.
This would mean less funding for essential services, support for those who need help and less to invest in the future, he said.
And GST revenues are mostly from those who are better off and foreigners, he added.
The Government did not only raise the GST, but also rolled out an Assurance Package
Opposition MPs had over the past two days of the Budget debate also questioned the Government’s fiscal marksmanship.
“Ultimately, a Budget is a projection. It is based on the best available information at that point in time, we have to plan ahead,” PM Wong said. “We have to make assumptions, and we have to decide how we deal with uncertainties. In a crisis when there is greater volatility in the economy, it is inherently more difficult to predict the turning points.”
But setting aside unexpected crises like the Covid-19 pandemic, operating revenue projections have generally not been off the mark, PM Wong said. He added that the average deviation over the 10 year period from the 2010 to 2019 financial years was within a reasonable range of 5 per cent.
For the last two financial years in 2023, 2024 the deviation was around 7% which is comparable to other jurisdictions like the UK and the Netherlands.
In most other countries, poor budget marksmanship is when a government severely overestimates the revenue it will collect and underestimates its expenditure, PM Wong said. Such governments make promises they cannot keep and leave behind a burden for the next generation.
“But this is not the case in Singapore, where we practise responsible and prudent budgeting,” he said. “The WP and the PSP may think that we are being overly cautious in our projections, but this Government will never take risks with Singaporeans’ lives and futures.”
He said surpluses are never squandered but help fund future needs and provide support for Singaporeans, with the fruits of progress shared with everyone.
Singapore’s fiscal strength is a competitive advantage in turbulent times, allowing it to respond swiftly to shocks and protect Singaporeans.
He said the current system has enabled Singapore to achieve good and equitable outcomes, and that the Government will continue to focus on accountability, ensuring value for money in its spending.
“At the end of the day, on something as fundamental as this, Singaporeans will decide. Would they prefer a government that underestimates our needs, spends more from our hard-earned reserves and leaves us weaker?” he said.
“Or will Singaporeans prefer a government that steadfastly upholds fiscal responsibility and discipline, and ensures we have enough resources for current and future generations to handle unexpected challenges?”
