Friday 2 March 2018

Budget 2018 debate in Parliament

Singapore Budget 2018 approved by Parliament, with Workers' Party MPs voting against it

GST hike responsible way to fund spending needs: Finance Minister Heng Swee Keat
WP votes against Budget, the first time in three decades, following heated debate
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 2 Mar 2018

Windfalls and one-off gains - like the ones that led to the unexpected Budget surplus of $9.6 billion in the last financial year - cannot form the basis of prudent fiscal policy, Finance Minister Heng Swee Keat said yesterday.

That is why the goods and services tax (GST), a broad-based tax, has to be raised - to fund expenses in healthcare, education and security long into the future, he said. Given Singapore's ageing population and the need to counter the terror threat, this spending is likely to recur year after year.

"The responsible way for us to fund such spending is to raise taxes. As Dr Lee Bee Wah pithily reminded us, you don't fund recurrent spending needs by hoping to strike 4D," said Mr Heng.

But the GST issue provided unexpected drama, with the Workers' Party (WP) saying it could not support a future hike without more information. For the first time in three decades, it cast its votes against the national Budget.

This came after WP chairman Sylvia Lim (Aljunied GRC) initially said the party intended to support the Budget when the vote was called, but not the announcement of a GST hike to take place some time between 2021 and 2025.

But Mr Heng made it clear that the Budget presented the Government's overall financial policy - both spending and financing options, including the GST increase.

He called on the WP to "square" its position. Mr Heng said: "Do you support all those increased spending? Or are you contradicting all your MPs' position yesterday where everyone spoke about doing more? Where is the money going to come from, and would a 2 percentage point increase help us in some ways?"

Ms Lim responded tersely: "To make it clear, we are unable to support the announcement on the GST hike."

The eight WP MPs present yesterday proceeded to vote "no" when a division - a formal recording of votes - was called.

To MPs who questioned the need for a GST hike despite the large Budget surplus, Mr Heng said it was largely due to one-off, exceptional factors. "We cannot fund our plans to secure Singapore's future on the basis of episodic windfalls," he said.

Instead, the only sustainable way to finance this was to raise taxes, he said. And a broad-based tax like the GST was deemed the most suitable.

Mr Heng reiterated that this hike would not cover expenditure needs, but would only make the fiscal gap more manageable.

On other financing options, he said the wealthy are already being taxed more, as are buyers of more expensive property.

Drawing on the reserves would not be responsible, he said, as these are needed to help Singapore weather economic storms. That left borrowing as a viable option for long-term infrastructure projects, and GST to meet recurrent needs.

Things began heating up in the House when Ms Lim voiced her suspicion that the GST hike might have been among this year's measures if the public had not reacted so negatively when the idea was floated.

"And I rather suspect myself that the Government is stuck with that announcement. Otherwise, perhaps we would be debating a GST hike today," she said.

This triggered a rebuttal from Law and Home Affairs Minister K. Shanmugam, who said Ms Lim was "basically making an accusation that the Government is behaving willy-nilly, dishonestly".

Ms Lim said she did not make any such accusation and was merely raising an "honest suspicion".

To this, Mr Shanmugam said: "Does Ms Lim agree it doesn't accord with the standards of a First World Parliament and honest debate for someone to come here and start talking about (how) 'this is my suspicion. I cannot back it back'?"

Mr Heng stepped back into the debate, noting he and Ms Lim were both former police officers. "Now, I want to present myself as your witness because I have been working on this ever since I became Finance Minister," he said, adding that the GST hike was based on an honest assessment of Singapore's fiscal position.

In a Facebook post last night, Prime Minister Lee Hsien Loong said that with the passing of the Budget, the Government has laid out its mid-to long-term plans clearly.

Heng Swee Keat raps Workers' Party for 'dishonest and irresponsible' stand on GST hike
WP should come clean to the people when making Budget suggestions, says Heng Swee Keat
By Seow Bei Yi, The Straits Times, 2 Mar 2018

It is "dishonest and irresponsible" for the Workers' Party (WP) to fall back on "politically expedient options" that may not solve Singapore's longer-term challenges.

Finance Minister Heng Swee Keat levelled this criticism at the opposition party, adding that it should "come clean to the people", in a speech rounding up the Budget debate yesterday.

He said WP assistant secretary-general Pritam Singh's suggestions to boost revenues were "distractions" and not viable alternatives to the proposed goods and services tax (GST) hike from 7 per cent to 9 per cent, which is expected to kick in some time from 2021 to 2025.

Over the three-day Budget debate this week, MPs, including those from the WP, had suggested alternatives to the GST hike.

Mr Singh (Aljunied GRC) had asked on Tuesday if the Government would consider using land sales to boost revenue and if there could be an increase in the Net Investment Returns Contributions framework spending cap of 50 per cent.

Mr Heng noted that the WP MP also asked if Singapore could rely on GST on imported services. But Mr Heng said the yield is small, at less than $100 million, and businesses affected are primarily financial institutions and residential property developers which do not get full refunds for GST incurred.

He said Mr Singh "cannot be serious". "He even suggested that through our Smart Nation efforts, we can increase tax collection from self-employed hawkers and taxi drivers," said Mr Heng.

On Mr Singh's suggestion to raise the 50 per cent cap temporarily to fund infrastructure spending, Mr Heng said this would be dipping into the reserves while claiming to put the money back later.

He added that while WP MPs had asked for more to be done, they did not ask to cut back on Budget measures."I think the Workers' Party should come clean to the people," he said. "Do (they) want the Government to increase healthcare or social spending... If yes, how do they propose to pay for the increase?"

Mr Heng also said he was glad that WP leader Low Thia Khiang (Aljunied GRC), who had dedicated the bulk of his 11-minute speech to China's rise, "appreciates our longer-term challenges, and the significance in positioning Singapore as a Global-Asia node".

But he said he was "puzzled" by how Mr Low characterised the GST debate as a "distraction" and said he would rather debate this at election rallies. Mr Heng said he hopes that "when the elections come around, (the WP) will not turn around and use the GST to distract people from the longer-term issues that we face".

Is Budget vote a vote for tax hike?
Parliament yesterday saw one of its most intense Budget debates in recent years, when People's Action Party ministers faced off against Workers' Party MPs. For the first time since 1986, all WP MPs present voted against the Budget. Below are three themes that emerged during the 40-minute exchange.
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 2 Mar 2018

The Workers' Party (WP) had planned to vote to approve this year's Budget, even as it made plain it did not support the planned hike in the goods and services tax (GST).

The two are separate issues, WP chairman Sylvia Lim (Aljunied GRC) argued yesterday.

After all, she said, the GST hike is happening only at an undetermined time between 2021 and 2025 and is not part of this year's Budget measures.

Finance Minister Heng Swee Keat countered, however, that the Budget presented the Government's overall financial policy.

"This debate is a debate on the financial policy of the Government, and I have articulated in this Budget the financial policy of the Government, (which) includes the policy to raise GST in the coming years, between 2021 and 2025," he said.

He then asked for a division - for MPs to vote through a device at their seats instead of by the usual voice vote. The result: 89 MPs said "yes" while eight MPs - all from the WP - said "no".

The WP has nine MPs in Parliament, but secretary-general Low Thia Khiang (Aljunied GRC) was not present during the vote.

It was an unexpected turn of events - probably even for the WP itself.

Ms Lim had said during her exchange with Mr Heng that it was the WP's intention "to support the Budget when the vote is called". However, this should not be mistaken as support for the announcement of some possible GST hike in a later Budget, she added.

She noted that the Government had not yet determined when the GST hike would kick in, as that would depend on economic conditions, spending needs and the buoyancy of Singapore's tax revenues.

"Fair enough," she said. "Similarly, I don't think we will be in a position to take a stand on that until the information is available at the relevant point in time, so I think it is ridiculous for the Government to expect us as a responsible party to support something where all the information is still not available and we don't have a crystal ball."

Mr Heng argued, however, that the WP's stance amounted to one in which it "must know ev-erything" before deciding on anything.

"I think if I had taken that approach, if previous finance ministers had taken that approach, that I must know every item of expenditure before I can support you, before I know how much to raise, we would have been in serious deficit long, long ago."

During the Budget debate on Wednesday, Mr Low had argued that the announcement of the GST hike was premature and "an unnecessary distraction" from the overall vision articulated in the Budget.

Instead of focusing on the important strategies needed to take Singapore into the future, the debate has ended up being more about the GST hike, he said.

Mr Heng yesterday countered in his debate with Ms Lim: "Now, this is a real distraction because if the WP truly believes that all the things that you and your members have advocated - spend more on this, spend more on these groups, spend more on others, you will agree that all these will require new revenue measures."

Shanmugam calls Sylvia Lim dishonest, Lim says she is entitled to make GST trial balloon comment
Dishonesty or honest suspicion?
By Ng Jun Sen, Political Correspondent, The Straits Times, 2 Mar 2018

Things got hot and testy in the House when Law and Home Affairs Minister K. Shanmugam and Workers' Party (WP) chairman Sylvia Lim crossed swords.

Mr Shanmugam accused Ms Lim of dishonesty in implying that the Government's announcement of the impending goods and services tax (GST) hike was "dishonest".

"Can I invite her to agree that that is a thoroughly hypocritical and dishonest statement and typical of the statements she makes in this House?" he said, calling on her to withdraw the comment.

In her rejoinder, the Aljunied GRC MP denied saying the Government had behaved dishonestly.

The comment in question was when she said earlier the Government had floated "test balloons" on a possible tax hike. But the public noted a contradiction with Deputy Prime Minister Tharman Shanmugaratnam's statement that the Government has enough money for the decade.

She said: "I rather suspect myself that the Government is stuck with that announcement. Otherwise, perhaps we would be debating a GST hike today."

Mr Shanmugam said she was suggesting that the Government backtracked on its intention for an immediate GST increase as a result of the severe public reaction. "Isn't that what you say? And if that is not what you are saying, please say so clearly."

Ms Lim defended her views as her "honest suspicion". She said in response to Mr Shanmugam's accusation: "I can understand why he wants to accuse me of various things because he probably was not happy about past debates where I had disagreed with some of his legislative changes, and he always accuses me of dishonesty, when as far as I am concerned I acted honestly." The duo had previously sparred on numerous occasions, most recently during a debate on a criminal detention law.

Mr Shanmugam said he is not the only one to accuse Ms Lim of dishonesty, quoting a Latin phrase used by High Court Judge Quentin Loh to describe Ms Lim's statement during the Aljunied-Hougang Town Council case - suppressio veri, suggestio falsi (suppression of the truth is equivalent to the suggestion of what is false).

He said past government announcements on tax had been consistent. The possibility of tax hikes to fund social schemes was first flagged in the 2013 National Day Rally and repeated at last year's Budget and in November.

"Does Ms Lim agree it doesn't accord with the standards of a First World Parliament and honest debate for someone to come here and start talking about (how) 'this is my suspicion. I cannot back it back'?"

To this, Ms Lim said the value of Parliament is for all MPs to convey information, even rumours, for the Government to have an opportunity to refute them. "I do not agree with the minister that I am somehow not up to the standard. This is what we as MPs have to do to get better clarity on matters of public interest. The Government can rebut our speeches robustly; that is fine, but I don't think I am disentitled to come to Parliament to advance honestly held beliefs or suspicions," she fired back.

The argument got so heated, with both members leaping out of their seats to respond, that Speaker Tan Chuan-Jin interjected: "If members can wait till I call them?"

Finance Minister Heng Swee Keat later also rose, asking Ms Lim to withdraw her statement. "I believe Ms Lim is a lawyer and a police officer before. So I, too, have been a police officer before.

"The first thing when we have a suspicion is to go out and interview witnesses as part of our investigation. Now, I want to present myself as your witness because I have been working on this ever since I became Finance Minister."

He said DPM Tharman's statement was "an honest assessment of our position which remains accurate till today, and that is why I did not have to do a GST increase now in this Budget. So, it was not a case of floating any trial balloon."

To this, Ms Lim said: "I have listened to the Finance Minister's response. I still feel that there is nothing wrong with what I said, but I have noted his answer."


The Government had consistently said it has enough money for its current term of office, but beyond that, it needed to provide for increased expenditure, especially on healthcare, with increased taxes.

The Prime Minister first mentioned the need for the tax increase in his 2013 National Day Rally speech. The Minister for Finance had reiterated this in his 2017 Budget Statement, and did so again at a constituency function a few months later. The Prime Minister spoke again of the likelihood of a tax increase last November.

Taking all these statements together, two things are clear: One, that there is no need to raise taxes for the current term. But two, there is a need to raise taxes for the future. There were no test balloons.

Significantly, Mr Low Thia Khiang himself had demanded of Mr Heng during the 2017 Committee of Supply debate: 'If the minister is indeed considering an increase in GST before the end of the decade, I hope he can be upfront with Singaporeans now so that they are not blindsided by the Government as they were with the sudden 30 per cent increase in water price.' This is precisely what the Government has now done by announcing the forthcoming GST increase early.


* Heng Swee Keat asks WP's Sylvia Lim if she will apologise, withdraw allegation on timing of GST hike
He cites record to show Govt's stand on need to raise taxes in future has been consistent
By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 3 Mar 2018

Finance Minister Heng Swee Keat has asked Workers' Party chairman Sylvia Lim if she would apologise and withdraw her allegation that the Government deferred the goods and services tax (GST) hike because it was trapped by earlier statements it made about having enough funds.

He said the Government had consistently said it has enough money for its current term of office, but would need to raise revenue beyond that to pay for increased spending, especially on healthcare.

In a statement issued yesterday, he said: "Now that Ms Lim has had an opportunity to check the record, will she withdraw her allegation, as an honourable MP should, and apologise to the House? Or does she still hold she has carte blanche to raise any and every suspicion, rumour or falsehood in Parliament, and continue to insist on them regardless of the facts?"

Ms Lim's claims during the Budget debate on Thursday sparked a heated exchange between her and Home Affairs and Law Minister K. Shanmugam.

This was after she said it was her suspicion that in the run-up to the Budget debate, "there were some test balloons being floated out about the fact that the Government needs to raise revenue".

She added: "The public seized on the fact that DPM Tharman and perhaps other leaders had earlier said that the Government has enough money for the decade. So, the public pointed out that, 'Hey, you know, is this a contradiction?'

"I rather suspect myself that the Government is stuck with that announcement. Otherwise, you know, if their announcement had not been made, perhaps we would be debating a GST hike today," she said in Parliament.

She was referring to a statement by Deputy Prime Minister Tharman Shanmugaratnam, who said in 2015 when he was finance minister that the revenue measures the Government had already undertaken would provide sufficiently for increased spending planned until the end of the decade.

Rebutting Ms Lim on Thursday, Mr Shanmugam set out the timeline of comments from government leaders on the need to increase taxes, to show they had been consistent on the matter. As early as 2013, they flagged the need to raise taxes in the future, even though there was no need for more revenue in the current term of government.

Mr Heng took up this point in his statement. He said that Prime Minister Lee Hsien Loong mentioned the need for a tax increase during the National Day Rally in 2013.

After this, Mr Heng himself spoke of the likelihood of a tax increase at the 2017 Budget debate and a constituency event a few months later.

Then last November, PM Lee reiterated the need for taxes to rise.

Mr Heng said: "Taking all these statements together, two things are clear: One, that there is no need to raise taxes for the current term. But two, there is a need to raise taxes for the future. There were no test balloons."

He added that Ms Lim was "in effect accusing the Government of being untruthful when it says that it had planned ahead, and that its proposal to raise the GST between 2021 and 2025 was the result of such planning".

Noting that Ms Lim had said in Parliament that her statement was based on "suspicion", Mr Heng said the facts on the issue were public.

The Ministry of Finance had set out the facts in a letter to The Straits Times' Forum Page on Wednesday, he said, adding that he and Mr Shanmugam had also now done so.

Mr Heng said: "The Government had consistently said it has enough money for its current term of office, but beyond that, it needed to provide for increased expenditure, especially on healthcare, with increased taxes."

He said MPs were "entitled to raise suspicions in Parliament, if they honestly believed them, but honest belief requires factual basis".

"And when clear factual replies have been given, an honourable MP should either refute them with further facts, or acknowledge them and withdraw their allegations, especially if the allegations had insinuated lack of candour or wrongdoing on the part of the Government."

He also pointed out that WP chief Low Thia Khiang asked the Government to be upfront with Singaporeans if it was planning a GST hike.

During the 2017 debate on the spending plans of ministries, Mr Low had said: "If the minister is indeed considering an increase in GST before the end of the decade, I hope he can be upfront with Singaporeans now so that they are not blindsided by the Government as they were with the sudden 30 per cent increase in water price."

Referring to Mr Low's remarks, Mr Heng said: "This is precisely what the Government has now done by announcing the forthcoming GST increase early."

Mr Heng said in his Feb 19 Budget Statement that GST would go up by 2 percentage points to 9 per cent some time between 2021 and 2025. WP MPs voted against the Budget on Thursday, saying they did so solely because they could not support the GST increase.

Budget 2018: Heated debate over GST hike between Government and Workers' Party
Intense exchanges reflect increasingly robust debate between PAP and opposition
By Elgin Toh, Deputy Political Editor, The Straits Times, 2 Mar 2018

For the first time in over 30 years, the opposition yesterday formally voted against the Budget statement - after the Government called for a vote to be recorded, on a day of high drama in the House.

The Workers' Party (WP) said at the start of the Budget debate on Tuesday that it was "unable to support", at this point, a planned goods and services tax (GST) hike from 7 per cent to 9 per cent, which Finance Minister Heng Swee Keat announced in his Budget statement last week.

WP chairman Sylvia Lim (Aljunied GRC) clarified yesterday that her party intended to vote "yes" on the Budget, but added that this "should not be mistaken" for support of the tax hike, which, she argued, is a future measure and not part of the current Budget.

Questioning this position, Mr Heng noted that the issue before the House was whether to approve the Government's financial policy - which includes the GST hike.

He called for a "division", where the vote of each MP is recorded via electronic voting. Of the 97 MPs present during the division, 89 voted "yes" - including all People's Action Party MPs as well as eight Nominated MPs. The eight WP MPs in the chamber voted "no".

WP secretary-general Low Thia Khiang, who Ms Lim said was rushing to Parliament after attending to family matters, did not get there in time to vote.

The vote capped a tense exchange of words by the parties, the fiercest in recent memory, with accusations and counter-accusations flying across the aisle.

Rounding up three days of debate on the Budget statement, Mr Heng severely rebuked the WP. The party's position - laid out by WP MP Pritam Singh (Aljunied GRC) - of taking a "wait-and-see" approach to supporting the GST hike was "dishonest and irresponsible", he said, and was not "a principled stand".

"I think the WP should come clean to the people. Do they want the Government to increase healthcare or social spending?... If yes, how does the WP propose to pay for the increase?" he asked.

Responding forcefully, Ms Lim argued that the Government itself did not have enough information - hence the lack of a precise date for the GST hike, which would happen some time between 2021 and 2025, depending on prevailing conditions at the time. "So, it is ridiculous for the Government to expect us, as a responsible party, to support something where all the information is still not available and we don't have a crystal ball."

Mr Heng disagreed with Ms Lim's stand, which he described as being: "I must know everything, before I can decide on anything."

Even though not all is known, the information available now justifies the hike, he said, noting that the revenue from the two-point GST rise would not even pay for impending increases in healthcare spending alone, expected at about 0.8 per cent of gross domestic product by the next decade.

A second, intense exchange was between Ms Lim and Home Affairs and Law Minister K. Shanmugam.

This was after she said that she "suspected" the Government intended to raise GST this year and floated a trial balloon - but delayed the hike only after it became clear the public was against it.

Mr Shanmugam said Ms Lim implied the Government behaved "willy-nilly" and "dishonestly", and demanded she withdraw her allegations. "Can I invite her to agree that that is a thoroughly hypocritical and dishonest statement and typical of the statements she makes in this House?" he said.

Refusing to take back her words, Ms Lim cited parliamentary privilege, and said she was merely voicing a suspicion and did not intend to accuse the Government of dishonesty. She also suggested that Mr Shanmugam bore a grudge from an earlier debate over changes to the Criminal Law (Temporary Provisions) Act (CLTPA) , where the two had vigorous exchanges.

"In typical fashion, he always accuses me of dishonesty when, as far as I am concerned, I acted honestly," she said.

Mr Shanmugam insisted it was improper of her to voice her suspicion without checking the facts - behaviour unbecoming of a "First World Parliament", he said, referring to an election slogan the WP had used previously.

The sitting was remarkable for two reasons. One, it was the first time the opposition has voted against the Budget statement since 1986, when then WP leader J.B. Jeyaretnam called for a division and voted nay. The question now is whether the WP will vote against the Supply Bill at the end of the debate on ministries' budgets next week.

The second reason: The sitting reflected how debate between the WP and the PAP has grown increasingly robust in recent times.

The Government has, on a few occasions, moved to force the WP to state its stand explicitly on issues and legislation, and has resorted to calling for divisions to do so.

At the debate on the motion to set up a parliamentary committee on the issue of fake news, for instance, Mr Shanmugam sought a vote after the WP opted not to speak - although the party ultimately voted "yes" to setting up the committee.

The WP, on its part, also resorts to seeking a division when it wants to make its opposition clear, such as on recent changes to the CLTPA.

If yesterday's proceedings are anything to go by, the political fight over the GST increase is far from over. On Wednesday, Mr Low warned that the GST issue will be raised at election rallies. With a general election due between now and the actual implementation of the hike, more heated debates can be expected as both sides try to persuade Singaporeans to buy into their points of view.

Reserves cannot be further tapped for healthcare: PM Lee Hsien Loong
Drawing more from nest egg will quickly deplete precious nest egg as spending will keep rising, he says
By Yuen Sin, The Straits Times, 5 Mar 2018

Singapore cannot draw more from its reserves to fund healthcare spending in the future, as this will quickly deplete its nest egg, said Prime Minister Lee Hsien Loong.

The needs of an ageing society are beyond those of "a rainy day", he said. "It is an 'everyday need money' day. We will need to spend more on healthcare every year, year after year, for many years to come.

"If we use the reserves for something (which requires) money every day, soon you will find that the reserves are going down, depleted."

Speaking at a Chinese New Year dinner last night in Ang Mo Kio GRC, where he is an MP, PM Lee said the Government carefully considered its options before deciding to raise the goods and services tax (GST) from 7 per cent to 9 per cent some time between 2021 and 2025. This is to fund increased spending, especially in healthcare.

PM Lee said the Government decided against tapping more of its reserves as they are Singapore's "precious nest egg". Otherwise, "when the rain comes and the children and grandchildren need the money, really truly, they will find it's gone".

PM Lee's comments - his lengthiest on the Budget to date - came after some MPs suggested during the Budget debate last week that Singapore can consider using more of its reserves to fund additional spending, instead of increasing the GST.

Outside the House, some have also called on the Government to relax its rules on how much of the reserves it can tap.

On Thursday, 89 MPs in Parliament voted in support of the Budget, while eight MPs from the Workers' Party voted against it.

In his speech yesterday, PM Lee said that his government has done the responsible thing by not just listing out "all the good things" it will do, but also how these will be paid for and what taxes need to go up.

He called on Singaporeans to support its plans - both the increased healthcare spending for seniors and the GST hike to pay for it - just as previous generations supported the Government's long-term policies.

"This is a prudent, responsible, long-term approach," he said.

"We are the stewards of Singapore. We are responsible not just for making it work for ourselves, but also for making it work for the next generations, beyond our working lives, beyond our lifetime."

PM Lee said it is the responsibility of all Singaporeans to think like this. "Our children may not be voting yet, our grandchildren may not yet be born. But their lives and future depend on us acting on their behalf... making wise and far-sighted decisions that protect their interests."

On why the GST hike was announced so far in advance, PM Lee said it was so people can plan ahead for the tax increase and understand why it is necessary. "We do not need the money yet, but we can see the way things are going very clearly, and we know that by the next decade, in three or four or five years' time, we will need the money."

His government has announced its intentions "as early as possible" so that people "will not be suddenly surprised when it happens", he said.

Separately, Finance Minister Heng Swee Keat told residents at an event in Tampines GRC, where he is an MP, that the Budget he delivered last month includes long-term plans for Singapore's needs. "And our biggest need is to better take care of our seniors," he said.

Additional reporting by Audrey Tan

GST hike will come with more help for low and middle income
GST Voucher scheme to be expanded, transitional offset package to be launched when GST is hiked
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 2 Mar 2018

Lower-and middle-income families as well as elderly people in need will receive additional help when the goods and services tax (GST) is raised, Finance Minister Heng Swee Keat promised yesterday.

Wrapping up an at-times contentious Budget debate in Parliament, he said the permanent GST Voucher Scheme to cushion the impact of the tax will be enhanced and a transitional offset package favouring those of lower and middle incomes will also be launched when the GST is increased to 9 per cent.

This is expected some time between 2021 and 2025.

The voucher scheme currently offers annual utility rebates of up to $390 to Housing Board flat dwellers, cash of up to $300 for adults with less income and Medisave top-ups of up to $450 for the elderly poor.

"Let me assure everyone that we are mindful of the impact of tax changes on households, particularly the lower-income, and will help them to adjust while maintaining a fair and progressive system of taxes and transfers," Mr Heng said.

He noted that MPs Lim Biow Chuan (Mountbatten) and Lee Bee Wah (Nee Soon GRC) had asked about setting up a Committee Against Profiteering to combat any illegal overcharging.

The Government is prepared to do so to ensure businesses do not use the GST hike as an excuse to raise prices beyond the increased tax, he said.

He also addressed concerns raised by MPs such as Mr Chong Kee Hiong (Bishan-Toa Payoh GRC), Ms Foo Mee Har (West Coast GRC) and Dr Intan Azura Mokhtar (Ang Mo Kio GRC) over the need to raise GST, and who had offered alternatives to the hike.

A broad-based tax like the GST is required to fund Singapore's broad-based spending needs, such as healthcare, security and education, Mr Heng said.

"Each generation should strive to pay for its own spending through sustainable means, instead of drawing down more than is prudent from the reserves or by borrowing and passing on the cost of current spending to future generations."

On the timing of the increase, Mr Heng said the Government had determined the need for it would arise some time between 2021 and 2025 by studying major trends and how they might affect Singaporeans. It then assessed what it had to do in response to these trends, and how it should find the resources to support these plans.

By announcing the GST increase early, he said the Government is being honest and upfront about the nation's needs, and what has to be done. "We are giving ample notice to citizens and businesses that we will need to raise GST," he said.

"I hope that it helps everyone to understand our shared challenges in coming years," he added.

In fact, Mr Heng noted, the 2 percentage-point GST increase will not fully cover Singapore's expenditure needs, but only make the fiscal gap more manageable.

The GST hike is expected to raise revenues worth about 0.7 per cent of gross domestic product each year. But future spending needs on healthcare, security and pre-schools already exceed this amount, he said.

Budget lays out Govt's mid-to long-term plans: PM Lee Hsien Loong
By Ng Jun Sen, Political Correspondent, The Straits Times, 2 Mar 2018

Budget 2018, passed yesterday, clearly sets out the Government's mid-to long-term plans for Singapore, Prime Minister Lee Hsien Loong said in a Facebook post last night.

He also noted a key point Finance Minister Heng Swee Keat made in his wrap-up speech - that spending will increase because of Singapore's ageing society, growing security threats, investment in pre-schools and major infrastructure projects like Changi Airport's Terminal 5.

The planned increase in the goods and services tax (GST) was the "responsible way to fund recurrent spending instead of drawing down our reserves or borrowing and saddling future generations with debt". GST is set to go up by two percentage points to 9 per cent between 2021 and 2025.

His comments came after a robust debate in Parliament. He noted that 89 members of the House voted in support of the Budget, while eight Workers' Party MPs voted against it.

Mr Lee said: "Raising taxes is never easy, but we are announcing this raise well in advance to give everyone ample notice of what is to come."

He also commented on the need to push on to transform the economy, drive innovation, increase productivity and develop deeper capabilities in workers.

Why not use land sale proceeds?
Constitution protects land & proceeds from its sale as past reserves: Swee Keat
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 2 Mar 2018

Most land parcels in Singapore are sold on leases - and would return to the Government after a spell.

Why then would it be imprudent to use proceeds from their sale to fund Singapore's spending?

Workers' Party chairman Sylvia Lim (Aljunied GRC) raised this question yesterday, following on a suggestion mooted by fellow party MP Pritam Singh on Tuesday to use land sale proceeds to boost revenue, up to a cap, such as 20 per cent of land sales for that year.

All land sale proceeds currently go to the national reserves.

In response, Finance Minister Heng Swee Keat noted that most land parcels are sold on long leases of 30 to 99 years.

This means it could take up to 100 years for a parcel of land to return to the Government.

"So, if you are rigorous about it, you really ought to be spending no more than 1 per cent of that land sale proceeds (each year), even if you want to use land sale proceeds, because that is what the land is worth for a year."

Mr Singh had also proposed temporarily tweaking the net investment returns contribution (NIRC) framework so the Government could spend, say, 60 per cent or 70 per cent of the expected returns generated by the Monetary Authority of Singapore (MAS), Temasek Holdings and GIC, the three entities that manage and invest the reserves.

This, he suggested, could help fund large infrastructure projects. The NIRC spending cap could then be lowered back down to the current 50 per cent and revenues from the projects returned to the reserves.

Mr Heng argued that the Government's plan of issuing bonds for these projects was better, as it would allow investors to "scrutinise those numbers". The reserves could be used to guarantee the borrowings. "And so you are using the strengths of the reserves strategically but without touching the reserves, so the reserves can continue to be invested for long-term gains," he said.

Yesterday, Mr Heng underscored the importance of Singapore's reserves, saying they help to defend the Singapore dollar against speculators in times of crisis.

Mr Singh wanted to know how the Government determines how much of the reserves are needed to maintain the strength of the Singapore dollar.

Mr Heng said: "Speculators know that should they try to attack the Singdollar, it is not just our official reserves that they have to contend with, we also have reserves that are invested in longer-term assets and that we will be able to mobilise if we need to."

This was one reason why speculators largely left the Singdollar alone during the Asian financial crisis of 1997, even as they sold down other regional currencies, sometimes to the point of collapse. In relating his experiences during the crisis, Mr Heng painted a picture of how important it was to be a responsible steward of the reserves.

Wading into the exchange, Nominated MP Kuik Shiao-Yin asked about the feasibility of a suggestion by OCBC economist Selena Ling to split the reserves into two parts: One, to generate the NIRC, whose amount could be publicly disclosed, and another to be kept secret, to deter currency speculators. This would increase transparency and encourage more meaningful public discussions, she said.

Mr Heng said he had considered it, but did not think it a sound move as there would still be speculations over the secret portion.

Furthermore, MAS' official foreign reserves are already public data and it would not be wise to reveal more, as it could attract currency speculators whose profit motive, as seen during the Asian financial crisis, "can destroy countries", he said.

Ill-disciplined and unwise to amend rules on reserves as first resort, says Heng Swee Keat
By Yuen Sin, The Straits Times, 1 Mar 2018

It will be " ill-disciplined and unwise" to amend the rules on reserves as a first resort, said Finance Minister Heng Swee Keat in Parliament on Thursday (March 1).

This will defeat the purpose of enshrining the rules in the Constitution, which have been debated and agreed in the House, said Mr Heng in his speech rounding up the Budget debate.

It is also the surest way to change Singapore's basic orientation of saving and building for the future to one of "living for today and letting tomorrow look after itself", he added.

In response to several MPs who have asked if the Net Investment Returns Contribution (NIRC) framework could be amended, or if a portion of land sale proceeds could be used for recurrent social spending, Mr Heng said it is not the right thing to do.

This was even though such solutions appearing to be "relatively painless to do so compared to raising taxes", he added.

Currently, the NIRC framework allows the Government to spend half of the long-term expected real returns generated by the Monetary Authority of Singapore, Temasek Holdings and GIC, the three entities that manage and invest the reserves.

"We deliberately introduced rules on land sales and the 50 per cent NIRC cap so that we do not succumb to the temptation to draw more from our reserves to fund current expenditure or eat into the principal sum...We must not give in to the temptation to chip away at our strategic national asset."

Mr Heng said Singapore should not over-rely on the NIRC, which is already the largest source of our revenues.

"An over-reliance will hurt our ability to respond to changing circumstances in the future".

And the volatility and uncertainty of such circumstances is set to grow, said Mr Heng.

The last century alone saw two World Wars, the Great Depression, the Vietnam War and the Asian financial crisis. As Singapore enters the 21st century, it is also being swept along " moving from a unipolar world to a multipolar one, with growing tensions between major countries and concerns about global and regional stability".

Mr Heng said that in the aftermath of a financial or geopolitical crisis, it can take years for economic performance to bounce back to pre-crisis levels. It took a decade for employment rates in the United States to recover after the 2008 Global Financial Crisis, for example, while unemployment rates in some European Union countries have not recovered.

He added that government revenues are in turn likely to decrease at the very moment when Singapore most needs resources to support its people and the economy, as Nominated MP Randolph Tan has pointed out.

"This is why our reserves are critical to help us overcome such challenges, especially since we have no natural resources," said Mr Heng.

He also responded to Nominated MP Kuik Shiao-Yin, who raised the International Monetary Fund's (IMF) general guidance on Singapore's reserves adequacy in her speech on Wednesday. The IMF's assessment is that Singapore is excessively prudent, said Ms Kuik, and it is of the opinion that a good enough amount of reserves would be 27 per cent of Singapore's GDP or $113 billion.

Mr Heng clarified that the IMF's guidance is meant specifically to address capital flight risk, which is the risk that Singapore dollar deposit holders will switch out into foreign currency because of loss of confidence in Singapore's currency.

"That is but one of many scenarios which our reserves have to deal with. We need to be prepared for crises that go beyond that," he said.

Said Mr Heng: "We must have the humility to recognise that we can never predict what will happen in our lifetime, much less our children's lifetimes. So we must do our best to give them the best chance of a better life, whichever way the winds of change blow.

"What we have inherited from the past, we also owe to the future. That is our moral obligation."

'Netflix tax' will bring in $90 million a year
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 2 Mar 2018

The introduction of the goods and services tax (GST) on imported services will bring in revenue of about $90 million a year, Finance Minister Heng Swee Keat said yesterday.

However, he added in his Budget debate round-up speech: "Let us be clear that this is a move to defend our current revenue base from being eroded as more transactions move online."

Mr Heng's remarks were in response to Workers' Party MP Pritam Singh (Aljunied GRC), who asked if the so-called "Netflix tax" would generate additional revenue. The tax, to take effect in 2020, will require foreign suppliers that have a global turnover of more than $1 million, and which sell digital services to Singapore consumers that exceed $100,000, to register to pay GST.

Mr Heng also sought to allay concerns raised by Nominated MP Thomas Chua that the move would hurt many local firms.

Mr Chua noted in the debate that Singapore imported almost $225 billion worth of services in 2016, according to Department of Statistics data. This is a significant figure, and once GST is levied, many purchasers will face pressure arising from an increase in operating cost, he said.

Mr Heng said this figure "vastly overstates" the imported services which will attract GST. "Our move to levy GST on imported services will not affect most businesses," he added. "This is because most businesses can claim full refund of the GST they incur on inputs they procure for their businesses, including imported services."

Firms affected by GST on imported business-to-business services will mainly be financial institutions and residential property developers, which would not get full refunds, he added.

'Grow Singapore economic pie so all, including poor, benefit'
Singapore will move in opposite direction if it raises income taxes, says Heng Swee Keat
By Ng Jun Sen, Political Correspondent and Yuen Sin, The Straits Times, 2 Mar 2018

Grow Singapore's economy and everyone benefits, including the poor, Finance Minister Heng Swee Keat said yesterday.

"Rather than focus on how the pie is divided, we should grow the pie so that all can enjoy a larger slice," he said in response to MPs' concerns about social inequality during the Budget debate.

The Government was not raising income tax on the highest earners, as to do so would be to move in the opposite direction of world trends, he said, reminding the House that all jurisdictions were in competition for talent.

In response to Dr Intan Azura Mokhtar (Ang Mo Kio GRC), who on Wednesday had suggested there was scope for such a tax increase, Mr Heng noted that Hong Kong, which has a maximum tax rate of 17 per cent on incomes above $33,000, announced a reduction in personal income taxes in its Budget on Wednesday.

Currently, about half of Singapore's workers do not pay personal income tax. Among those who do, the top 10 per cent contribute about 80 per cent of the total personal income tax revenue.

Mr Heng also noted that the United States has reduced its headline corporate income tax rate from 35 per cent to 21 per cent, with further changes to keep US firms within the country. This may spur cuts in corporate income tax rates around the world, he said.

"Singapore must remain sensitive to these global trends that impact us. We are a small and open economy, subject to the full forces of competition in a globalised economy," said Mr Heng.

Singapore's economic strategy is "inextricably linked" to the opportunity for all to do well, regardless of background, and diversified and broad-based growth creates the opportunities for all Singaporeans to pursue their aspirations.

The topic of social inequality received a thorough thrashing on Wednesday, with MPs like Nominated MP Kok Heng Leun and Ms Jessica Tan (East Coast GRC) expressing concerns about the growing class divide. Mr Heng acknowledged that Singapore must "redouble its efforts" to provide opportunities for all to move up in life.

The approach to bridge the class divide and ensure social mobility includes education, skills training and opportunities in social mixing.

In education, for instance, the Government is investing significantly in the early childhood sector and SkillsFuture.

He noted that a Programme for International Student Assessment study found that half of 15-year-old students from the lowest quarter by socio-economic status here performed in the top quarter of students in all countries, after accounting for socio-economic status.

Said Mr Heng: "In other words, our system has enabled them to surpass their international peers in a similar socio-economic position in their own societies."

Ms Sylvia Lim (Aljunied GRC) also asked if inequality was systemic and called on the Government to commission a longitudinal study of the topic. To this, Mr Heng said the Finance Ministry had conducted and released two occasional papers in 2012 and 2015 on social mobility. The studies found that cohorts from 1969 to 1982 experienced good social mobility.

He urged Singaporeans to work together to bridge social divides, noting it is not only a matter of fostering opportunities and closing the income gap. "As a society, we must be mindful not to allow invisible, intangible divides to fester."

Economy transformation 'more urgent by the day', warns Heng Swee Keat
By Yasmine Yahya, Senior Political Correspondent and Ng Jun Sen, Political Correspondent, The Straits Times, 2 Mar 2018

The most critical challenge facing Singapore today is to transform the economy, and this grows more urgent by the day, Finance Minister Heng Swee Keat warned yesterday.

In his Budget debate round-up speech, Mr Heng said growing the economy is not only the best way of ensuring strong and sustainable revenues, but also the most important way for Singaporeans to realise their aspirations.

There has been some progress, he noted. More local firms have introduced new processes or training programmes to improve efficiency and expanded their operations overseas in the past few years, he said.

Now, firms must deepen their capabilities at every stage of growth, and the Government has been helping them transform.

Mr Heng had announced several measures in his recent Budget speech to support businesses on their transformation journey, including a new Open Innovation Programme, a new virtual crowdsourcing platform that will match the digital requirements of businesses to solutions created by infocommunications and technology firms.

He also unveiled increases in tax deductions for expenses on research and development and intellectual property registration.

Several MPs, including Mr Low Thia Khiang (Aljunied GRC), Mr Liang Eng Hwa (Holland-Bukit Timah GRC), Mr Sitoh Yi Pin (Potong Pasir) and Nominated MP Ang Wei Neng expressed their support for the Government's strategy to position Singapore as a Global-Asia node of technology, innovation and enterprise.

To achieve this, Mr Heng said, innovation must pervade all parts of the economy, local firms and people must build deeper capabilities while stronger partnerships must be struck at home and abroad to build scale and ride on the region's growth.

But he acknowledged that a big challenge, as cited by MPs such as Mr Melvin Yong (Tanjong Pagar GRC) and Mr Heng Chee How (Jalan Besar GRC), is Singapore's ageing population and shrinking resident workforce. This will cause economic growth to slow unless businesses are able to make full use of this "narrow window before our workforce shrinks further" to raise productivity, he said.

One solution, as raised by several MPs such as Ms Cheryl Chan (Fengshan) and Ms Tin Pei Ling (MacPherson), is for firms to fully embrace diverse hiring practices, including hiring older workers.

Others, such as Dr Intan Azura Mokhtar (Ang Mo Kio GRC) and Mr Zainal Sapari (Pasir Ris-Punggol), suggested this has to be accompanied by fairer compensation policies. For example, they said, the Central Provident Fund system should be reviewed so that employers' contribution rates do not decline as the workers age.

But Mr Heng warned that such measures might instead raise the barriers to hiring older workers.He noted that there are programmes in place to help low-wage and elderly workers such as Workfare, the Special Employment Credit and Adapt and Grow scheme.

"We must continue to invest in our people to ensure that they are equipped with relevant skills to take advantage of new opportunities," he said, adding that this effort requires close partnership of employers, the labour movement and the Government.

Meanwhile, Singapore needs to allow for "a calibrated inflow of foreign workers", especially in areas of critical shortage, he said. "For us to thrive, we must be equally strategic, to develop our Singaporean talent and to draw in the right complement of international talent."

WP chief Low Thia Khiang lauds forward-looking Budget, urges Govt not to let GST hike be a distraction
Focus should instead be on preparing Singapore to tap opportunities in a rising Asia, he says
By Yuen Sin, The Straits Times, 1 Mar 2018

Workers' Party (WP) chief Low Thia Khiang yesterday criticised what he called the premature announcement of the planned increase in the goods and services tax (GST).

He said it was an "unnecessary distraction" in a forward-looking Budget that largely aims to position Singapore to take advantage of economic opportunities, particularly from the rise of China.

It was unfortunate, he added, as in "looking forward too hastily" for future revenue streams, the move has caused "the Government to lose its focus in getting buy-in for the vision because it has to explain the future GST hike instead".

The GST increase will occur some time between 2021 and 2025, and since its disclosure last week, has been on the minds of many Singaporeans and businessmen.

But Mr Low argued that preparing Singapore to tap opportunities in a rising Asia led by China's growth should be the focus, together with exploiting new technologies - two major global trends that "would change the world for our children".

He dedicated the bulk of his 11-minute speech to China's rise.

In the past 50 years, Singapore thrived by making itself useful to global capitalism, especially by identifying future trends before others, said Mr Low, speaking in his last Budget debate as WP chief before the party elects a new secretary-general next month.

For instance, Singapore reaped benefits when it correctly predicted the rise of China and became one of the first countries to share its economic know-how with the Asian giant.

But with China now in the lead, the advantage may be irrelevant, added Mr Low.

This requires Singapore to figure out how it can make itself useful again, by transforming its economy, culture, human capital, diplomatic ties and interpersonal friendships between leaders and citizens on both sides.

That is not all. It also has to grapple with a new challenge: The "kinship advantage" between Chinese Singaporeans and the Chinese in China is fading fast as China modernises.

Meanwhile, some Chinese-educated Singaporeans feel "they are finally free of the feeling of inferiority", and are excited that the "so-called sick man of Asia" has fully awakened. Yet, this comes not without unease, said Mr Low, himself a Chinese-educated graduate of the former Nanyang University.

He warned that China's rise as a superpower could possibly fuel its own imperialist ambitions in the region, using its "sharp power" to compel small states to submit to its will.

"This is not far-fetched if you consider how the Japanese did just that in the first half of the 20th century," he said, adding that how China behaves will have serious implications on small states like Singapore in the near future.

Singapore should thus keep the political scenario of an imperialist China in mind while it focuses on economic opportunities arising from China's rise, he said.

"If we are not careful, and if we fail in our economic strategy to become a global Asia node, we will become the pawn on the chessboard of great power games in South-east Asia."

To grasp the economic opportunities successfully, he said Singaporeans can do two things.

One is to learn Mandarin, a suggestion that was also made by Nominated MP Azmoon Ahmad.

The other is to pick up Chinese dialects. "If one would like to connect better with the Chinese, not just rationally but also affectionately, the language to use is local dialect," said Mr Low.

He was, however, quick to add that Singapore is first and foremost a multiracial and multilingual society, and "politically at heart a South-east Asian nation".

As ethnic politics and international frictions in the region subside with time, he believes that Asean will soon become a more integrated community that can protect its interests from external dominance.

Low Thia Khiang, Ng Chee Meng cross swords over impending GST hike
The Straits Times, 1 Mar 2018

An exchange between Education Minister (Schools) Ng Chee Meng and Workers' Party chief Low Thia Khiang on the the goods and services tax hike had MPs on the edge of their seats yesterday.

Here is an edited transcript:

Ng Chee Meng: I had not intended to speak, but as I listened to the Workers' Party speeches, I got increasingly baffled. I hear across the different speeches that they essentially agree with the many programmes proposed in the Budget. In fact, they want the Government to do more in education, to take care of the elderly, do more for women, more for the disadvantaged... and on inequalities... and that we have to "take concrete steps to remedy it".

Mr Low Thia Khiang agrees that this is a forward-looking Budget to anchor Singapore firmly in the future, but yet the Workers' Party says that the GST is a distraction.

Our Government has put together a concrete forward-looking Budget so that we can resource all these programmes for Singaporeans. We have outlined how we can take care of our seniors, better prepare our children for the future, prime our businesses to help our workers (amid) dramatic economic changes and technological disruptions (taking place). We want to help the disadvantaged in society more. And yet after all the speeches that I have listened to carefully in this chamber, the Workers' Party thinks that finding the ways to fund all these programmes is a distraction. I find it baffling.

I think it is critical, I think it is honest, I think it is right that we outline to Singaporeans how we intend to chart Singapore's future forward in a sustainable manner.

Low Thia Khiang: I thought the most important point of this Budget is anchoring Singapore.

I am not saying that revenue is not important. But GST is not part of the Budget measures at this Budget, right? You can announce the 2 percentage point increase in GST (due between 2021 and 2025) any time. But I wonder whether is it better to announce (it) separately or debate (it) at the Budget.

We have never said that the Government would have to fund everything without any (additional revenue). But we are questioning whether there is any other avenue to look at instead of raising GST because it affects a lot of people.

My point was that this is basically an important Budget, and a Budget which is looking to the future. But the GST increase can be a distraction because we end up debating whether there is a need to increase GST.

Ng Chee Meng: I have in hand what Mr Low Thia Khiang said in the 2017 Budget debate. I quote: "I hope he", meaning the Minister for Finance, "can be upfront with Singaporeans now so that they are not blindsided by the Government, as they were with the sudden 30 per cent increase in water prices".

You can't have the cake and eat it.

Low Thia Khiang: I stand with what I said. I am not asking you to hide the intended increase in GST. You can by all means announce it well before you want to increase (GST). But the question is whether you need to announce it together with this Budget.

I asked at the last election, and Deputy Prime Minister Tharman Shanmugaratnam promised that we have enough money to spend and will not increase taxes (for the current term of government).

The next election is 2020 or 2021. So you are going to increase it after the next election, (it is) good to announce it now. Then we can debate it at the public rallies.

Is tax hike declaration upfront or premature?
By Elgin Toh, Deputy Political Editor, The Straits Times, 1 Mar 2018

The Workers' Party (WP) has made a number of sensible suggestions over the past two days of the Budget debate - on inequality, care for seniors, women's pay and engaging more with Asean.

Unfortunately, when crossing swords with the Government on the key issue of a goods and services tax (GST) hike, its responses to rebuttals from government MPs seemed to lack vigour.

On Tuesday, WP assistant secretary-general Pritam Singh (Aljunied GRC) could not be faulted for being conservative: He called for a new source of current revenue - land sales - to avert a GST hike.

Land sales proceeds are set aside as reserves and contribute only indirectly to revenues - with half of the returns from investing them available for spending each year.

If, say, $100 million enters the reserves from the sale of land, and the long-term returns on investing that is about 7 per cent per annum, only $3.5 million is credited to the annual Budget.

This conservative formula is meant to deter a land-selling spree to fund a populist agenda, which would squander assets that ought to benefit many generations - especially since land, once sold, stays in private hands for a long time (99 years, in the case of residential leases).

Mr Singh argued that one way to deter irresponsible land sales is to take not more than 20 per cent of average proceeds over 20 years, or 20 per cent of proceeds for that year, whichever is lower.

To get a ballpark figure using the $100 million example: 20 per cent would be $20 million. And if the remaining $80 million generates 7 per cent in returns, that is another $2.8 million for current spending.

In other words, Mr Singh is calling for the contribution from a $100 million sale to be raised from $3.5 million to $22.8 million - or an increase of 61/2 times.

There is nothing inherently wrong with this suggestion. It should be open for debate. Parliament is ultimately sovereign, and if it chooses to tilt the rules to benefit today's Singaporeans, it has every right to do so. MPs are elected to deliberate such issues.

But what was most notable about the debate was that Mr Singh chose not to respond to any of the criticisms - and there were many - levelled by government MPs against his recommendation. This was despite being present in the House when most of the criticism was levelled - he could have stood up to defend his position. It was a curious decision by the WP MP, who is an eloquent speaker.

Some of the rebuttals were not unreasonable. Mr Christopher de Souza (Holland-Bukit Timah GRC), for instance, pointed out that Mr Singh's formula does not solve the problem of "indiscriminate, rash land sales", as the Government can push the 20-year average up through "more and more sales".

A second issue the WP raised had to do with the timing of the announcement of the GST hike.

Though the change is due only after 2021, Finance Minister Heng Swee Keat unveiled the hike - from 7 per cent to 9 per cent - in his Budget speech last week.

WP secretary-general Low Thia Khiang said yesterday that the Government was "looking forward too hastily... by prematurely announcing the GST hike".

It was, he said, a distraction from the larger vision in the Budget - of Singapore making deep changes to prepare to ride on Asia's growth.

His comments drew a response from Minister for Education (Schools) Ng Chee Meng, who noted that WP MPs had, over the past two days, called for more to be done for many groups.

The Government wanted to do more - hence the GST announcement, Mr Ng said. "Yet... the WP thinks that finding the ways to fund all these programmes is a distraction," he added.

Mr Low's answer to Mr Ng was hard to understand. He said he was not opposed to announcing the GST hike early - a volte-face, having earlier described the announcement as "premature".

He also said the Government could make an announcement on the GST at "any time" and could have a debate on it. But to do so during the Budget was distracting.

Not letting Mr Low off the hook, Mr Ng took a tablet, handed to him by Prime Minister Lee Hsien Loong, and cited a speech Mr Low made at last year's Budget debate: Mr Low asked the Finance Minister not to "blindside" people with sudden increases in taxes. (Mr Low was referring then to both a possible GST hike and a water price hike.)

"You can't have the cake and eat it," Mr Ng said.

Mr Low then conceded it was "good" to announce the hike early. But he repeated that there was no need to do it during the Budget.

It was a difficult argument to make sense of. The Budget is, after all, about revenue and expenditure. To have the Government make a major announcement on revenue in the Budget speech - rather than on a separate occasion later on - seems the natural thing to do.

In a contest of ideas, any two sides must be prepared to defend their positions with vigour and good arguments.

That said, Mr Singh may have been keeping his ammunition dry and may yet opt to respond. There are seven more days in the debate - enough time for the WP to recover and make an impact.

Ideas to help businesses seize opportunities
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 1 Mar 2018

A bundle of ideas on ways to get the Singapore economy ready for the future was unwrapped in Parliament by MPs yesterday.

They centred on the Government taking such steps as helping local companies grow by playing a bigger role in Singapore infrastructure projects, being flexible with rules and regulations, and creating a culture brimming with diverse hiring and pervasive innovation.

Mr Ang Wei Neng (Jurong GRC) was particularly insistent on the Government making it essential for overseas corporations involved in local train projects to form joint ventures with Singapore companies.

Such a move would pave the way for the local companies to pick up skills and gain experience that would make them not only more competitive locally, but also regionally or even globally, he added.

The scope is significant as Singapore plans to double the length of its rail network to 360km by 2030, he noted.

But in the current situation, he said, most of the train tunnelling work is done by foreign giants, and foreign companies are the main providers of rolling stock such as trains and signalling systems.

Pointing out that competition is no longer local, Ms Cheryl Chan (Fengshan) said: "Regional, global markets with substantive scale and actively hunting for talents are what constitute our competition."

In such an increasingly dynamic business landscape, companies also need to be forward-looking in job creation, she said. Elaborating, she urged them to adopt a hiring policy that fully embraces senior employees and mid-career workers retrained in new skills but yet to build up the relevant experience.

Another important move in bolstering the economy is for regulations to be more flexible to keep up with a rapidly evolving business landscape, said Mr Ang. Many companies, especially the most successful ones, provide services across different industries , he added.

For example, China's Alibaba, which offers services ranging from e-commerce to finance, is an example of "creative diversification" which should be encouraged among Singapore businesses.

MPs such as Ms Denise Phua (Jalan Besar GRC) and Nominated MPs Azmoon Ahmad and Chia Yong Yong dwelt on the importance of creating a country-wide culture of innovation.

Ms Phua wants the Budget to allocate resources to study why innovation is not far more pervasive in the private sector, educational institutions and, notably, the public service.

Recounting some of her experiences, she said the public service is restrained by fear of criticism from people and MPs, and of making mistakes and being judged, punished or named and shamed in the Auditor-General's Office's annual audit.

Another obstacle are the limitations caused by existing processes and tools, she added.

True innovation requires "the whole society to create an environment that encourages and celebrates a sense of playing, tinkering and experimenting", she said.

Ms Chia wants children to be nurtured to have an appetite for risk and the courage to fail. Without this mindset, she said, Singaporeans will be nothing more than "buyers and users" of technology.

MPs share thoughts on tackling social inequality during Budget debate
By Ng Jun Sen, Political Correspondent, The Straits Times, 1 Mar 2018

When it came to the issue of a class divide, Parliament was hardly a House divided, with MPs from both sides of the aisle and Nominated MPs (NMPs) rising to speak on the matter.

Social inequality was the hottest subject debated yesterday, with nearly half of all MPs who spoke bringing it up. Some called for more progressive tax policies and further studies to be done. Others said the problem is one the Budget is already addressing.

But all were in agreement on one thing: It is an important issue.

Several MPs cited a recent study by the Institute of Policy Studies, which concluded that the sharpest division in Singapore now is along class lines, and not race or religion.

NMP Kuik Shiao-Yin called social inequality "a deeply emotional issue" for youth, and "one of the biggest issues that they care about".

"They can (see) the class differences in everyday, ordinary interactions, because it is the difference felt at the doorway between the teenager who gets to order from Foodpanda and the teenager who must ride through the rain to deliver food to him," said Ms Kuik.

Workers' Party chairman Sylvia Lim questioned if inequality has become entrenched in Singapore due to government policies.

She asked if poor families are given adequate support to care for children, whether education policies penalised those without a leg-up in pre-school, and if housing policies "unjustly discriminate" against those who are divorced.

"Can we say today that the lot of our poorer fellow Singaporeans is due to their lack of ambition or talent? Or does the system itself inadvertently make it difficult for them to succeed and thus perpetuate inequality?" she asked.

The Aljunied GRC MP called for the Government to commission a longitudinal study to track the fate of families, in order to "dig deep into the daily lives of poor Singaporeans and evaluate the reasons why they do not seem to be able to catch up with the rest of society".

Ms Lim said: "The Government has noted in the past that we must not allow an underclass to form, and so the Government has to show commitment to this goal."

People's Action Party MP Ang Wei Neng (Jurong GRC) said he agreed with Ms Lim on the need for a study on social mobility, but did not agree with her suggestion that the Government is not doing anything to help the poor.

In response, Ms Lim said she was not suggesting that the Government did not have schemes to help those with lesser means, and was only asking about efforts made to study the issue of social mobility.

Several MPs also commented on how the goods and services tax hike of 2 percentage points after 2021 would affect poor and middle-income households.

To counteract this, suggested Dr Intan Azura Mokhtar (Ang Mo Kio GRC), more progressive measures such as a wealth tax should be implemented (see related story).

"Taxes seem to weigh heavily on the minds of many Singaporeans, in the lead-up to the Budget announcement," she said, adding that many were worried about the added burden of tax hikes.

Ms Jessica Tan (East Coast GRC) said that Singapore's economic growth must come with the ability of all Singaporeans to achieve social mobility.

She touted how innovation, a key focus in the Budget, could be effective in ensuring social mobility. "In this new world, with the shifts we are facing, what we are seeing is even when you don't have the legacy, disruptions allow people the opportunity to do better."

Mr Christopher de Souza (Holland-Bukit Timah GRC) said the Budget should be flexible - providing assistance to those who need it, but not discouraging prosperity and diligence.

NMP Ganesh Rajaram turned to his own experience to underscore the pain of a class divide. He recounted his sense of being the odd one out when he went from a non-elite secondary school to an "elite" junior college. In the end, he found friends through school sports.

Mr Ganesh called for more opportunities for children of all backgrounds to mix.

"At the end of the day, bridging a class divide can only truly happen if Singaporeans work together to ensure that every single child from a low-income family is equipped with the perseverance, confidence and resilience to succeed," he said.

"We must also create more opportunities for children of all income backgrounds to mingle and build lasting friendships."

MPs suggest ways to support current and future seniors
Among proposals: Review of CPF rates for workers past age 55, provide PCs for elderly
By Joanna Seow, Manpower Correspondent, The Straits Times, 1 Mar 2018

It may be time for Singaporeans to reconsider what they think of as "elderly".

The bar for many is now age 65, but this could be raised to 70 or even 75, as many people in their 60s and 70s are still active and gainfully employed, suggested MP Cheng Li Hui (Tampines GRC) yesterday.

She was among a slew of MPs who called for a rethinking of support for older Singaporeans, as the nation grapples with a rapidly ageing population, on the second day of the Budget debate.

The seniors of tomorrow - those in their 40s and 50s today - are tech-savvy and self-sufficient, Ms Cheng noted. "In 20 years' time, we will have a host of capable people who are mobile and independent. The challenge for us is to build a society that encourages our seniors of the future to thrive and live active lives," she said.

MPs like Ms Cheryl Chan (Fengshan) and Ms Tin Pei Ling (MacPherson) called on employers to consider older workers fairly and value their knowledge.

Mature workers have a wealth of experience and can be assets to organisations in a diverse inter-generational workforce, said Ms Jessica Tan (East Coast GRC).

Dr Intan Azura Mokhtar (Ang Mo Kio GRC) urged the Government to review the Central Provident Fund (CPF) contribution rates for workers who are over 55 years old, a call that labour MP Zainal Sapari (Pasir Ris-Punggol GRC) had made on Tuesday.

For these workers now, the employer's contribution to their CPF accounts falls from 17 per cent to 13 per cent once they are past the age of 55 while their own contribution falls from 20 per cent to 13 per cent, then decreases further every five years until they pass age 65.

Dr Intan proposed not cutting the CPF contributions until workers are at least 60 years old, or making the reductions in phases over four or five years.

Other forms of practical help were suggested. Many elderly people feel left behind by the rapid technological changes and services such as Internet banking and chat apps, said Ms Joan Pereira (Tanjong Pagar GRC).

She proposed the Government provide computer systems for elderly residents in rental homes, similar to the provision of fire alarms which are being installed in public rental flats for free. The systems can be simple, to provide seniors with "their own time and space to tinker and learn at their own pace and in their homes".

This could align older folk with the younger generation, and give them access to information on topics such as healthcare that could be useful to them, she said.

Meanwhile, more can be done to encourage children to look after their elderly parents, said Non-Constituency MP Dennis Tan. While he welcomed the extension of the Proximity Housing Grant to singles looking to buy an HDB resale flat near their parents, he asked that the grant for singles be the same amount as that for married couples.

"Many singles end up taking a larger role in caregiving support than their married siblings, who may be bogged down with caring for their children," he said.

"When you make things easier for the caregiver, single or otherwise, the ultimate beneficiaries are the elderly parents of the caregiver."

Besides support for the elderly, Mr Gan Thiam Poh (Ang Mo Kio GRC) said, challenges posed by the ageing population should be addressed through a combination of policies to raise the fertility rate and selective immigration policies, such as giving priority to those who create quality jobs for Singapore.

Kuik Shiao-Yin: Of dollars and sense - the meaning under the maths
The Straits Times, 1 Mar 2018

If the economy is a means to an end, then the discussion at every Budget should be whether Singaporeans share the same end-goals, said Nominated MP Kuik Shiao-Yin. Below is an excerpt of her speech:

Whether we are debating about how we should spend our own personal dollars or the dollars of our nation, the core question to keep returning to is: "Well, what is the meaning we care to make with all our money in the first place?"

So I fully support Finance Minister's reflection in his speech that "a strong economy is not an end in itself; it is a means to build a better home and provide a better quality of life for all our people". One visionary end-state that resonates for most young Singaporeans is still that written down more than half a century ago.The Pledge represents our dream of a Singapore as it should be.

Yet, as each young student ages into a young working professional, many feel their idealism for themselves and for the country being challenged. Along the line, we sense the Singapore way is more like a tense high-wire act where we must learn to calibrate our ideals of communitarianism, democracy and egalitarianism with the realities of individualism, authoritarianism and elitism.

So far, our country has managed to advance forward without falling off the line. But whether our performance has been a gracefully balanced act or one ungracefully tilted too much towards pragmatism has been the fodder of our debate.

The decision to raise the goods and services tax to 9 per cent has been justified as a pragmatic decision in the face of growing national needs in the future. The decision to not raise our net investment returns contributions beyond the 50 per cent mark has also been justified as a pragmatic decision for the sake of signalling to currency markets the strength of our dollar.

Every tilt towards the side of pragmatism is simultaneously a tilt away from the side of our ideals.

I do not presume pragmatism to be bad and idealism to be good. But I believe our idealistic young professionals and students who make up both our current and future tax base have the right to question us: when will it ever be the right time to tilt our balance just a little more towards our ideals rather than always towards what's pragmatic?

We have quite a First World problem on our hands: should we spend more to help the people we have with us today or store more so we can help the people of tomorrow? It's a hard choice - because both are equally good choices. But it is healthy to ask ourselves, if we notice we are in the habit of overestimating for the future, could we also be underestimating our opportunities to do something in the present?

Now I was a terrible economics student so please help me make sense of what the IMF ... says about the size of our reserves. Their assessment is that we are excessively prudent. IMF's opinion is that a good enough amount of reserves would be 27 per cent of our GDP or $113 billion. I read that MAS' foreign exchange reserves alone as of January 2018 are around $369 billion or 88 per cent of GDP... I am not assuming that IMF is right and the Government is wrong. I am certainly not saying let's just take whatever a foreign institution says as gospel truth. So I do think it is helpful for the Government to provide a thoughtful, easy-to-understand response to IMF's assessment because it opens up an important and deeply profound question for us to consider: how much then is enough for us?

I admire the Government's devotion to long-term strategic over-planning and I get the deep fears around under-planning. I appreciate we cannot afford to get the maths wrong. But we cannot afford to get the meaning under the maths wrong either. If we hope to galvanise the support of the young idealists ... we have to give them a braver, broader vision that warrants the bigness of our reserves. Otherwise it can seem like this story is just about growth of reserves for growth's sake.

Budget debate an opportunity for MPs to draw attention to important issues
By Elgin Toh, Deputy Political Editor, The Straits Times, 28 Feb 2018

The marathon nine-day debate was flagged off yesterday, as MPs took turns to air their views on the last Budget before Parliament enters a mid-term recess. Traditionally, MPs see the debate as a useful opportunity to speak not just on the Budget, but on just about anything.

After all, any issue one might have a view or concern about would come under the purview of one ministry or another. And since the Budget debate is the time for ministers to defend their ministry programmes for the coming year, Parliament takes the opportunity to exercise broad scrutiny over all aspects of work by the executive branch.

On a long day which saw 28 MPs making full speeches, at least three stood out for drawing "thumps" from their peers - the gesture of applauding by hitting the armrest, gently or otherwise, that by parliamentary convention signifies approval.

The first was the veteran Lee Bee Wah (Nee Soon GRC), who is well known for her straight-talking and absorbing style of addressing the House.

Yesterday, it was her wit and imagination that attracted loud thuds, as People's Action Party MPs, including Prime Minister Lee Hsien Loong, put hand to leather to express their strong endorsement.

Speaking in Mandarin, the language she is more comfortable in, she told a parable of a housewife lamenting to her husband about the trouble she had paying their monthly household bills, not least because of her ailing mother's visits to the doctor and their children's need for more nutritious meat in their pubescent years.

Ms Lee is a master of suspense, and one was left wondering, at least early on in the tale: Is this a true story? Where is she going with it? It became clearer as her story approached its high point.

The husband proposes to pay off the bills with his chance lottery winnings. When his wife points out the unsustainable nature of relying on one-time windfalls to pay recurrent bills, he proposes to sell the house.

Her thinly-veiled swipe was directed at two groups. First, government critics who have been asking why the goods and services tax needs to go up from 7 per cent to 9 per cent when the Budget ran a record $9.6 billion surplus last year. The second is the Workers' Party (WP), which yesterday proposed using proceeds from land sales to offset long-term spending increases, instead of putting those proceeds into the reserves, as is currently done.

Whether or not one agrees with Ms Lee's underlying argument about fiscal sustainability - something even reasonable people can disagree over - she gets full marks for her clever, creative communication and canny ability to draw listeners, inch by inch, into her narrative.

The other two who were feted with applause were Nominated MP Kok Heng Leun and labour MP Zainal Sapari (Pasir Ris-Punggol GRC) - for the strength of their convictions.

Mr Kok devoted much of his speech to the unnamed Singaporean activist, whom he portrayed as a much misunderstood and unappreciated figure. Whether championing the cause of the poor, the disabled, gay people, foreign workers or death-row inmates, he said, they "raise issues to highlight hidden problems, to make the invisible visible".

"They are concerned about solving problems and eradicating prejudice and injustice," he added. They don't want to be in opposition to the Government, even though they sometimes have to criticise government policies to stay true to their chosen cause, he said.

"This is patriotism. Patriotism is not always convenient or comfortable. Patriotism can sometimes come in the form of thorns in our sides," he added.

The other vulnerable group that found an advocate was the low-wage worker. Mr Zainal, who is a National Trades Union Congress assistant secretary-general, has fought in their corner since he entered politics and joined the labour movement in 2011. He called yesterday for these workers to receive as of right, an annual 13th month salary, better medical benefits and a Central Provident Fund employer contribution that is equal to that of younger workers, when they turn 55.

He fired one pointed reminder after another: "We must not fool ourselves to think that as a society, we are doing enough in being fair to all our workers... We are not powerless to help them... (We must) think more about them and less about us."

As he was making his way back to his seat, even WP MP Pritam Singh (Aljunied GRC) found himself thumping his armrest.

Mr Kok and Mr Zainal won the admiration of their fellow MPs because they lent their voices to the voiceless, and had the courage to confront their colleagues with uncomfortable facts.

There is a long way more before the marathon debate comes to an end. Hundreds of speeches long and short are still to be made over the next eight days. Many may simply end up in the annals of parliamentary records.

A few will succeed in stirring hearts and challenging deep-seated assumptions, as these three did yesterday. They serve to show that each MP, when he or she is at the podium, has an unparalleled platform for influencing policy and bringing attention to important issues.

Systems in place to allow public servants to speak up, says DPM Teo and Ong Ye Kung
Officers are encouraged to suggest improvements, report wrongdoing, DPM Teo and Ong Ye Kung assure House
By Joanna Seow, Manpower Correspondent, The Straits Times, 2 Mar 2018

Are public servants not speaking up out of fear or disillusionment?

Two ministers said in Parliament yesterday that this should not be the case, noting that there are systems in place for public servants to report wrongdoing or suggest improvements.

Both Deputy Prime Minister Teo Chee Hean and Education Minister (Higher Education and Skills) Ong Ye Kung addressed comments by Mr Louis Ng (Nee Soon GRC), who said during the Budget debate on Tuesday that public officers dare not speak up for fear of getting into trouble, and feel efforts to improve processes would be in vain.

Mr Ong, who leads public service innovation efforts, said officers are encouraged to raise ideas. For instance, a mechanism was recently added to the bonus system for agencies to recognise officers who show innovation and enterprise.

All agencies also conduct regular employee engagement surveys, he said, during the debate on the budget of the Prime Minister's Office.

Public officers at all levels must recognise that change starts with themselves, he said. As a minister, he asks himself if he is giving policy directions that are bold, clear and empowering enough for staff.

Permanent secretaries or chief executives would look at the culture they have built, while directors would ask if they have made improvements and motivated staff.

Individual officers should reflect on whether they have acquired the skills to do their jobs and serve the public better.

In response to Mr Ng, Mr Ong said where the public service has fallen short, it will address the problem. "But when generalisations that tar the entire service with the same brush are made in public, and worse, further spread through media, it does not do justice to our officers, it discourages and undermines improvement efforts."

He suggested that Mr Ng, as an MP and public figure, do his part by assuring civil servants that in his own experience he has never landed in trouble for speaking up.

If they feel the system does not allow them to make a difference, Mr Ng can ask them what it is they want to change. "If it is something that makes things better but their immediate supervisor is not supportive, then inform their Permanent Secretary or the head of Civil Service, or even have a word with me, and I will see to it," he said.

DPM Teo, who is Minister-in-charge of the Civil Service, in turn noted that the internal disclosure framework for public servants to report wrongdoing is working well.

About 320 cases were reported through the framework last year, a figure which has remained stable over the past three years, he said, responding to Non-Constituency MP Leon Perera, who asked if all public servants are aware of the whistle-blowing channels available.

Of these, nine in 10 cases were formally investigated and 134 resulted in some form of disciplinary action. Many did not involve the misuse of public funds and "did not reflect serious gaps in the public service's systems of checks and controls".

After the debate, Mr Ng said he would take Mr Ong's advice. He added: "I'm glad the ministers replied and came out to say that public servants shouldn't be afraid of speaking up."

Mr Ong also spoke about improving recruitment and progression schemes in the public service, in response to MPs such as Associate Professor Muhammad Faishal Ibrahim (Nee Soon GRC) and Mr Patrick Tay (West Coast GRC) who asked for an update on public service efforts to focus on skills rather than paper qualifications.

He cited air traffic control officers, who are now placed in the same grade and receive the same salaries once they demonstrate the skills required, regardless of academic qualifications. The Public Service Division will work with other agencies to identify other areas where this can be done, he said.

Govt urged to engage with activists, NGOs
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 28 Feb 2018

Activists and non-governmental organisations (NGOs) work "incredibly hard" to fight for justice for the marginalised in society and most are not looking to incite trouble, said Nominated MP Kok Heng Leun.

He urged the Government to try to be "a vulnerable observer, a vulnerable listener" and participate in dialogue with these groups.

The work of NGOs and activists, while not in opposition to the Government, can sometimes clash with the Government's position, he said.

"They don't want to be at loggerheads with the State. In fact, they want to get the State on their side, so that policies can be changed," he added.

However, they appeal for support from the public if they feel that they are not heard. But this is what a functioning democracy is all about, added Mr Kok, who is artistic director of theatre company Drama Box.

"Asking hard questions always begins with messiness. We need to first acknowledge the mess. Then, together, we wade through the messiness, sort things out and listen to different views."

Review CPF contributions for older workers
By Yasmine Yahya, Senior Political Correspondent, The Straits Times, 28 Feb 2018

It is time to review employers' Central Provident Fund (CPF) contributions for older workers, given that the current rates were set 30 years ago in 1988.

Labour MP Zainal Sapari, during the Budget debate in Parliament yesterday, suggested having one universal rate for employers' contributions until workers reach 65 years, to help low-wage workers, especially older ones, to save for retirement.

Currently, the employer's contribution rate towards workers' CPF accounts decreases progressively after the worker reaches 55.

The different CPF contribution rates, tagged to different age bands, were meant to ensure companies could remain competitive, noted Mr Zainal (Pasir Ris-Punggol GRC).

However, many workers, regardless of their age, are already being paid based on the job value, as Singapore has moved away from a seniority-based wage structure, he said.

"It is also in our best interest to ensure that workers can meet their basic retirement sum, as it would reduce the burden on social services in later years, which would have to be shouldered by the current working population," he said.

The assistant secretary-general of the National Trades Union Congress suggested making the annual wage supplement (AWS) - or 13th month bonus - mandatory for all workers. This could increase the salaries of low-wage workers by 8.3 per cent, which would help narrow the widening income gap, he said.

Speaking to The Straits Times later, Mr Zainal said only about 20 per cent of workers in the security and cleaning industries get AWS.

In his speech, he also recommended amending the Employment Act to include better medical coverage for workers, by making employers pay for the full cost of non-chronic outpatient treatment at polyclinics or company-appointed clinics. Currently, the law only requires employers to pay for consultation fees when a worker sees a doctor for outpatient treatment, and there is no requirement to pay for employees' medication costs.

Call for panel to help older Singaporeans work longer
Labour MP also urges review of retirement age, digital tech training for older workers
By Joanna Seow, Manpower Correspondent, The Straits Times, 28 Feb 2018

NTUC deputy secretary-general Heng Chee How wants a review of the retirement age, which currently is 62. He also suggested that a tripartite committee be formed to look at how to help older people work longer.

"The longer our mature citizens can remain employed and earning, the more they can help contribute to tax revenue and pay for their own needs, delaying and reducing the need for younger citizens and companies to have to chip in earlier than necessary," he said on the first day of the Budget debate.

With an ageing population, more older Singaporeans will leave the workforce, constraining the ability of companies to grow and placing more strain on government revenue, he added.

This year, for the first time, the proportion of Singaporeans above 65 years old is the same as the proportion of those below 15 years old, and the older group will grow in years to come, said Mr Heng, who is Senior Minister of State in the Prime Minister's Office and an MP for Jalan Besar GRC.

The retirement age was first legislated in 1993 and was raised once in 1999 from 60 to 62.

In 2012, a re-employment age was introduced, making it compulsory for employers to offer eligible workers re-employment up to the age of 65, or a one-off payment if no job is available. This age ceiling was raised to 67 last year.

An earlier tripartite committee which made recommendations in 1997 had studied how to progressively raise the statutory retirement age to 67.

Mr Heng suggested a new tripartite committee be formed to:

• Assess the effective retirement age, or the age at which people declare themselves retired, and recommend measures to raise the employment rate of older workers;

• Consider if a statutory retirement age or re-employment age ceiling is still necessary, as performance-based employment practices are becoming more common;

• Clarify the conditions under which the ceiling of 67 could be further raised, and to what age, if the age ceiling is still necessary.

Mr Heng also suggested more programmes be rolled out to build older workers' confidence in digital technologies, "the new basic language in the world of work", as he put it. This includes knowing how to work with robotics and using data smartly. Digital skills can help older workers cope with job changes caused by technological disruption, he said.

Singapore National Employers Federation executive director Koh Juan Kiat said the issues raised by Mr Heng are "important issues for the tripartite partners to address".

But he said the re-employment age was just extended last July, adding: "We will need to monitor the responses from both employers and workers for the time being."

The Manpower Ministry is expected to address the issue during the debate on its budget next week.

Non-Constituency MP Daniel Goh also spoke during the debate about improving support for older women, who may be disadvantaged when returning to work after a break. "By the time women try to return to the workforce, they face the triple challenges of making sure their skills stay relevant, discrimination against older workers, and wage stagnation compared to their male peers," he said.

This is exacerbated as older women have, on average, lower Central Provident Fund balances than older men and spend more years in disability than men, he added.

He suggested that social service and community development agencies which place the elderly in jobs could help them draw up favourable contracts and provide them with retraining opportunities to improve their income prospects.

MPs want burden of GST hike to be eased for vulnerable groups
By Seow Bei Yi, The Straits Times, 28 Feb 2018

The 2 percentage point increase in the goods and services tax (GST) to 9 per cent is to take place at a point between 2021 and 2025, but some MPs are already asking the Government if more could be done to ease the burden on vulnerable groups.

Several also asked if the hike could be postponed, should the economy do better than expected.

The groups that concern them most are the low income, retirees and small businesses, and their plight was among the top issues dwelt on during the parliamentary debate on Budget 2018.

Among the 28 MPs who spoke at yesterday's sitting, at least 10 touched on GST-related issues.

Ms Foo Mee Har (West Coast GRC) stressed the importance of helping the less well-off.

She wants the lower-and middle-income households as well as seniors to get more help to cope with the higher cost of living.

Also, the GST offset package that will accompany the rise should explain how it makes up for the higher GST the family will pay, she said.

"It must do a better job to assure Singaporeans the GST increase will be implemented in a progressive manner, and that the authorities will moderate the impact of this increase on those who struggle to make ends meet," she added.

Mr Henry Kwek (Nee Soon GRC) called for more active help for retired seniors, especially in monetising their assets to cope with their living expenses.

Dr Lim Wee Kiak (Sembawang GRC) and Nominated MP Thomas Chua worried about the GST impact on business. Dr Lim wondered especially how it would affect tourism and Singapore's competitive edge.

Mr Chua said small retailers worried that "consumers will swarm into Malaysia, particularly Johor Baru, to shop for daily products".

It may become severe from 2024, when the Singapore-Johor Rapid Transit System link starts operating, he added.

But the bigger concern is whether the hike will become an excuse for profiteering, said Ms Lee Bee Wah (Nee Soon GRC) and Mr Lim Biow Chuan (Mountbatten).

Ms Lee wanted a task force formed to ensure that businesses do not use the GST rise to exploit consumers.

Mr Lim noted a Committee Against Profiteering was set up previously to combat such actions and asked if a similar group would be formed before the next hike.

Mr Chong Kee Hiong (Bishan-Toa Payoh GRC) asked if the increase would be postponed beyond the projected timeframe if the economy did better than expected.

Such a move would be unlikely, Finance Minister Heng Swee Keat had said in a Straits Times interview last week.

Mr Chong also asked if the GDP contribution from large infrastructure projects would help cut the reliance on future GST increases to raise revenue. "We also have to consider if we should set a ceiling on our GST rate in the future," he added.

Prudent to refrain from using more of Singapore's reserves: MPs
By Yuen Sin, The Straits Times, 28 Feb 2018

There is some scope for reviewing how much Singapore should tap its reserves, said some MPs, but the general consensus that emerged yesterday is that it should stick to the current formula.

Most said it was prudent to maintain the existing net investment returns (NIR) framework, which allows the Government to spend half of the long-term expected real returns from investing the reserves.

Nominated MP Randolph Tan, who supported the status quo, noted "growing criticism from a vocal minority about the growth in Singapore's reserves".

He said developed economies like Singapore could be more exposed to financial crises than less-developed economies, and cautioned that the reserves have to be protected through a disciplined approach so that Singapore has the means to weather economic crises.

During the 2008-2009 global financial crisis, the reserves funded $4 billion for the Resilience Package to help workers, he noted. "If those reserves had not been readily available, the consequences would have been unimaginable," he said.

Mr Liang Eng Hwa (Holland-Bukit Timah GRC), chairman of the Government Parliamentary Committee for Finance as well as Trade and Industry, said putting back half of the investment returns to the reserves pot will help to grow the principal amount and lead to larger NIR contributions in the future.

He said the current proportion establishes a "fair balance" between spending on the current generation and saving for future generations.

Warning against changing it, he said: "It is always tempting to go for the short-term painless solution. Our forefathers were resolute in not taking that easy path and so should we."

Workers' Party assistant secretary-general Pritam Singh (Aljunied GRC), though, said the Government should consider tweaks to the NIR framework to stave off "increasing regressive taxes like the GST (goods and services tax)".

These include making a slight increase to the 50 per cent spending cap, which can be done temporarily to fund non-recurrent investments in infrastructure, he suggested. When the infrastructural projects have been completed, the cap can be returned to its original level, and revenue earned from the project can be returned to the reserves.

Mr Singh, noting that the reserves are estimated to be in excess of $1 trillion, said: "How much of it do we need to protect the Singapore dollar from currency speculators is a valid question."

Mr Seah Kian Peng (Marine Parade GRC) said there is scope to review the NIR framework at some point, but stressed that the NIR contributions have already been "called into service to a very large extent" - as the biggest contributor to Singapore's revenues.

"It is only when we do not have enough to cater to (vulnerable groups who fall through the cracks) that I feel we should consider raising the percentage - not as a means of populist hot-air balloon for everyone who demands a specious equality with their neighbour," he said.

Workers' Party does not support GST hike, says Pritam Singh
He asks Government to consider raising revenue needed through use of proceeds from land sales instead
By Ng Jun Sen, Political Correspondent, The Straits Times, 28 Feb 2018

The Workers' Party (WP) does not support the plan to raise goods and services tax (GST), said the party's assistant secretary-general Pritam Singh, suggesting that proceeds from land sales should be used to boost revenue instead.

Stating the WP's position in Parliament yesterday, he said: "GST may well have to rise, but Singaporeans could be more likely to accept it if the Government considers the pros and cons of moving from the established orthodoxy, and consider new approaches that improve social protection thresholds for all."

GST is set to go up from 7 per cent to 9 per cent some time from 2021 to 2025, Finance Minister Heng Swee Keat announced last week, to support growing public spending such as in healthcare.

Mr Singh, the first opposition MP to speak during the Budget debate, asked the Government to consider instead what he described as a novel and relatively radical approach to raising revenue: the use of proceeds from land sales.

Under the Constitution, revenue from land sales is not available for budgetary spending, as land forms part of Singapore's past reserves.

The Government has said this prevents each term of government from unnecessarily selling land to meet expenditure needs, which could drive up property prices.

It has also said that part of the income from land sales, which is invested as part of the past reserves, is already available for spending through the Net Investment Returns Contribution (NIRC) framework. Up to half of the returns from investing the reserves can be spent.

Noting these reasons, Mr Singh said the issue of unnecessary land sales can be addressed with a cap on the amount of earnings that can be used, such as "not more than 20 per cent of the value of average land sales over 20 years, or 20 per cent of land sales for that year, whichever is lower".

"This would give no good reason for an ill-advised government to ramp up land sales when in government to increase its own income," said the Aljunied GRC MP.

He added that while part of the proceeds from land sales can already be used through the NIRC framework, there will be greater transparency if there is no "co-mingling" of the income from land sales with other reserves for investment.

This can also guard against poor investment decisions by entities that invest Singapore's reserves such as the GIC, said Mr Singh.

He also said the Government had not made clear what its expenditure will be in future when GST is slated to go up by 2 percentage points.

On the other side of the ledger, it is not known how much revenue levying GST on imported services will bring in. And given the Smart Nation push, Singapore is likely to become more efficient in collecting taxes, which could affect sectors traditionally thought to under-declare their income such as the self-employed, hawkers and taxi drivers, he said. All this "is likely to have a positive impact on tax revenues".

The final question mark is over the shape of the Government's offset package for the low income and middle income, he said.

Given this, there is a "lack of clarity" on whether it is necessary to raise GST, said Mr Singh.

"In view of the absence of such details, the Workers' Party is unable to support the announcement of a GST hike at this moment in time."

Several People's Action Party MPs took issue with Mr Singh's suggestion in their speeches.

Mr Vikram Nair (Sembawang GRC) said that it is "fundamentally wrong in principle" to use the capital upfront instead of putting it back into the reserves. "Ultimately, land is an asset...The best we can do is to treat it as an asset after it is sold, and if there is income, then we can use that," he said.

Added Mr Lim Biow Chuan (Mountbatten): "Once the land is sold, the asset is gone."

WP chairman Sylvia Lim (Aljunied GRC) was also scheduled to speak yesterday, but was not present when her name was called.

GST hike, plight of elderly workers among issues as Budget debate kicks off
The Straits Times, 28 Feb 2018

From the impending goods and services tax hike, to whether more of the reserves should be used to fund Singapore's growing needs, Members of Parliament yesterday weighed in on this year's Budget.

On the first day of the debate - which usually lasts two to three days - 28 MPs rose to speak.

Mr Liang Eng Hwa, chairman of the Government Parliamentary Committee for Finance and Trade and Industry, kicked off the six-hour debate.

He called for the Government to continue using Budget surpluses to redistribute wealth among the less well-off. "Besides helping to mitigate the impact of GST and rising costs, it can also help to manage the income disparity that we see widening in our society."

Finance Minister Heng Swee Keat announced last week that the GST will go up from 7 per cent to 9 per cent some time from 2021 to 2025.

Other MPs raised their concerns - ranging from the plight of elderly workers to the pitfalls of meritocracy to Singapore's long-term economic challenges - and offered suggestions on what could be done.

Meanwhile, the Workers' Party said it does not support the GST hike, saying that a better option is to use some of the proceeds from land sales. The Government should also consider tapping more of the reserves on a temporary basis to stave off "increasing regressive taxes like the GST", said its assistant secretary-general Pritam Singh.

But most of the MPs, from the People's Action Party, expressed support for the existing framework, calling it prudent. Said Mr Liang: "Overall, Budget 2018 exhibits traits of what makes Singapore exceptional: always plan and act for the long-term good of Singapore."

Mr Heng is expected to round up the debate tomorrow.

Government plans far ahead for Singapore's needs

We refer to Mr Matthew Chang's letter (Announcement of GST poorly timed; Feb 24).

First, he says that the Government floated the idea of an immediate tax hike last year to test ground reactions. "Taken aback by the backlash", it postponed the goods and services tax (GST) increase.

Second, he says there is no need to raise the GST in view of earlier budget surpluses, and faults the Government for not taking forward planning seriously.

Both assertions are misleading.

Prime Minister Lee Hsien Loong first mentioned the need to increase taxes at the 2013 National Day Rally.

Finance Minister Heng Swee Keat reiterated it in his Budget 2017 speech. Singapore has always planned for its fiscal needs. The Government has given notice for serious matters, including raising the GST.

The GST was mooted in 1986 and only implemented in 1994.

When GST was raised from 3 per cent to 5 per cent in 2003/2004, and to 7 per cent in 2007, the Government prepared citizens well in advance.

These plans were carefully implemented in anticipation of increased spending on citizens.

Acting early allowed the Government to provide measures to help lower-income households.

As for not needing to raise GST due to previous surpluses, this is unrealistic. The fact is that the basic budget balance has been in deficit for some years, as reported at each year's Budget.

We have had overall budget surpluses only because of the net investment return contributions (NIRC) from our reserves, now the single largest contributor to the Budget.

We will still be able to manage till 2020 but will need additional revenue beyond that.

Looking ahead, spending will exceed revenues (including NIRC), primarily due to an ageing population and rising healthcare expenditure.

We would have to have sustainable revenue for these.

In 2016, the top 10 per cent of earners paid about 80 per cent of personal income taxes.

Furthermore, households at the 20th income percentile get about $4 in benefits for every $1 paid in GST. A middle-income household receives $2 for every $1 paid in GST.

Singapore's tax system is thus redistributive, progressive and one that shares fruits of the nation's progress with citizens.

The Government has informed citizens of the need to raise the GST sometime between 2021 and 2025 because it believes in being upfront and honest with Singaporeans.

Lim Yuin Chien
Director (Corporate Communications)
Ministry of Finance
ST Forum, 28 Feb 2018

Cabinet reshuffle after Parliament break to give younger 4G ministers more responsibility: PM Lee Hsien Loong
It will take place after Parliament break, and ensure his successor is supported by stronger team
By Ng Huiwen, The Straits Times, 28 Feb 2018

Prime Minister Lee Hsien Loong said yesterday that he will reshuffle the Cabinet after Parliament prorogues to give younger ministers more exposure and responsibility.

This will ensure that his successor will be supported by a stronger and more experienced team that is committed to lead Singapore in the future, Mr Lee said in a Facebook post.

Sharing a brief timeline of when the Cabinet reshuffle will take place, he said the Budget debate would begin yesterday, after which Parliament sits to debate each ministry's expenditure plans.

Parliament will then prorogue for a mid-term break before reopening in May, he noted.

President Halimah Yacob is due to give her inaugural address laying out the Government's agenda for the remaining term at the opening of the new parliamentary session in May.

Mr Lee said that he is asking the fourth-generation ministers to draft the Government's agenda for Madam Halimah's address.

"It will give Singaporeans a better sense of them and their thoughts," he said.

Mr Lee had previously said no new deputy prime ministers will be appointed in the upcoming Cabinet reshuffle, which suggests that no clear front runners will be made known to the public even after the reshuffle.

The issue of leadership succession came to the fore when Emeritus Senior Minister Goh Chok Tong said in December last year that he hoped the younger ministers will choose their leader in the first six to nine months of this year, and that this person can be made prime minister-designate within 2018.

To this, Mr Lee said last month: "My assessment is, it probably will take a little bit longer."

In his Facebook post yesterday, Mr Lee also shared a photo from an early Chap Goh Mei dinner last Friday at the Istana with Members of Parliament, community leaders and guests.

Chap Goh Mei this Friday marks the 15th and last day of the Chinese New Year, and is popularly known as the Chinese Valentine's Day.

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