Family-friendly Budget offers help to weather inflation, uncertain future
By Goh Yan Han, Political Correspondent, The Straits Times, 15 Feb 2023
- More cash payouts to cope with GST increase
- Higher Baby Bonus and more paternity leave
- CPF salary ceiling to go up to $8,000 by 2026
- Higher taxes for high-end property and luxury cars
Budget 2023 proposes to decisively address the pressing concerns of Singaporeans, such as inflation and long waiting time for flats, while strengthening social safety nets to keep the nation in sound shape over the longer term.
The tax system is also being made more progressive, with changes to the buyer’s stamp duty regime for properties and additional registration fee tiers for cars, to fund the Government’s growing expenses. Buyers of more expensive properties and higher-end cars will have to fork out relatively more.
The Budget unveiled on Tuesday also tackled several longstanding issues such as the low fertility rate and the retirement adequacy of seniors as the Government widened its support for citizens in need. The Central Provident Fund (CPF) monthly salary ceiling is being raised, for example, to ensure that Singaporeans have enough to draw upon in their silver years. Families will also be given more help to offset the expenses of raising children.
At the same time, there will be more measures to reduce waiting times for new Housing Board flats and more monetary support for first-timer families seeking to purchase resale flats.
Deputy Prime Minister Lawrence Wong, in his Budget speech in Parliament, loosened the Government’s purse strings in a $123.7 billion proposal – about 18.2 per cent of Singapore’s gross domestic product.
This comes amid a mixed and uneven global economic outlook, said Mr Wong, who is also Finance Minister.
While a global recession is not expected, there are major uncertainties ahead, he said. These include the possibility that the United States and European Union economies could decline more steeply than expected and tip the world into recession. The prolonged Russia-Ukraine war may also escalate and disrupt global trade, or a new Covid-19 variant may emerge.
Headline inflation is also expected to remain high in Singapore, at least for the first half of the year, said Mr Wong.
To tackle this, the Assurance Package, meant to offset the impact of the goods and services tax hike, will be further boosted to $9.6 billion, up from $8 billion following a November 2022 update and $6.6 billion announced in Budget 2022.
The enhanced package will see increases in cash payouts for eligible adult Singaporeans, and a boost of $100 to the 2024 tranche of Community Development Council vouchers to a total of $300.
Mr Wong also announced new one-off support measures under the package, such as a Cost-of-Living Special Payment of between $200 and $400 for adult Singaporeans aged above 21 who have an annual assessable income of less than $100,000 and do not own more than one property, to be given out in June.
He also unveiled a Cost-of-Living Seniors’ Bonus cash payout of between $200 and $300 for about 850,000 eligible senior Singapore citizens also to be given out in June.
Budget 2023 also had a strong focus on stepping up support for families in terms of housing and financial needs, and sharing the caregiving load between parents.
Mr Wong acknowledged that while the HDB already sets aside the bulk of its Build-To-Order flats for first-timer families, who are given priority in flat applications, the pool of first-timers covers a wide range, such as those who already have their own homes but have not received housing subsidies before.
The Government will focus on first-time applicants who are families with children, as well as young married couples aged 40 and below who are buying their first home, through measures such as giving them an additional ballot chance in BTO flat applications, said Mr Wong. He also announced enhancements to the CPF Housing Grant for resale flats for first-timer families.
To support parents with the costs of raising children, the Baby Bonus cash gift will be increased by $3,000, such that eligible first- and second-born children will now receive $11,000 and subsequent children will receive $13,000.
The Government will also increase its contributions to the Child Development Accounts, which parents can use to directly offset pre-school and healthcare expenses, said Mr Wong.
Paternity leave will be doubled from two to four weeks, with the extra two weeks given on a voluntary basis for a start, to give more time for employers to adjust, said Mr Wong.
The paternity leave allowance was last doubled from one to two weeks in 2017.
Another key move in Budget 2023 was the announcement of the increase to the CPF monthly salary ceiling, meant to help middle-income Singaporeans save more for their retirement.
This move is expected to have wide repercussions, ranging from increased employer contributions and thus business costs, to a larger pool of funds for Singaporeans to tap for housing loans as well as a bigger nest egg for retirement.
The current ceiling, set at $6,000, was last updated in 2016. Starting this September and in January 2024, 2025 and 2026, the ceiling will move up to $8,000 eventually, to keep up with rising wages.
Mr Wong also announced a slew of tax changes – increased marginal buyer’s stamp duty rates for higher-value properties to take effect on Wednesday and increased additional registration fee rates for higher-end cars to take effect from the next round of certificate of entitlement (COE) bidding.
He also unveiled a 15 per cent increase in excise duty on all tobacco products with effect from Tuesday to discourage the consumption of such products. The tobacco tax was last hiked by 10 per cent in 2018.
Mr Wong, who leads the nationwide Forward Singapore engagement exercise launched in June 2022, also provided an update on the discussions.
He noted that long wait times for new flats and rising resale home prices are key concerns for many young Singaporeans, and parents have also called for help to better balance work and family commitments, which are areas that the Government is moving sooner on in rolling out measures.
He added that to achieve shared aspirations of a fairer and more inclusive society, the Government is pursuing new strategies in some key areas – uplifting lower-wage worker salaries, better support for reskilling and upskilling, giving everyone opportunities throughout their lives to uplift themselves, and better care for the growing number of seniors.
“These are important but complex issues which require further exploration,” said Mr Wong.
“It is not just a matter of having the Government do more to provide greater assurance and support… Government actions must reinforce the values of personal effort, responsibility for the family and mutual support in the community.”
Parliament will debate the Budget and the spending plans of various ministries from Feb 22 to March 6.
Budget 2023: What you need to know - from more cash payouts to higher property and car taxes
By Jean Iau, The Straits Times, 15 Feb 2023
Deputy Prime Minister and Finance Minister Lawrence Wong announced more support measures and payouts to help households, workers and businesses deal with inflation in the Budget speech on Tuesday.
Here are some highlights from his speech:
1. Assurance Package top-ups and payouts
A total of $3 billion will be pumped into the Assurance Package. The package will cost $9.6 billion, up from $6.6 billion.
Payouts will come in the form of a new Cost-of-Living Special Payment of between $200 and $400 for each eligible adult Singaporean. An additional senior bonus of between $200 and $300 will be given to each eligible Singaporean aged 55 and above.
Cash payouts will be increased by between $300 and $650 for eligible Singaporeans, bringing the total amount received by each adult Singaporean to between $700 and $2,250 over five years.
Singaporean households will also receive $300 in Community Development Council (CDC) vouchers in January 2024, up from the $200 the Government had earlier announced.
2. Housing measures and grants
Families with young children, as well as married couples aged 40 and younger, buying their first HDB home will get more support in their house hunt.
This group of home seekers will get an additional ballot chance for their first Build-To-Order flat application. This will be implemented later in 2023.
For those buying resale flats, the Central Provident Fund Housing Grant will, with immediate effect, be increased from $50,000 to $80,000 for eligible families purchasing four-room or smaller resale flats for the first time, and from $40,000 to $50,000 for those buying five-room or larger flats.
3. Higher taxes for high-value property, luxury cars and tobacco
Buyer’s stamp duty for residential properties: The portion of the property’s value in excess of $1.5 million, and up to $3 million, will be taxed at 5 per cent, up from the current 4 per cent. The portion in excess of $3 million will be taxed at 6 per cent, up from the current 4 per cent.
Luxury cars: Buyers of vehicles with open market value (OMV) of more than $40,000 will pay higher marginal additional registration fee (ARF) rates than they do today. For the highest OMV tier, the revised ARF rates will be 320 per cent, up from 220 per cent today.
Tobacco: Excise duty across all tobacco products will increase by 15 per cent from Tuesday.
4. CPF monthly salary ceiling to rise
The CPF monthly salary ceiling will be increased from $6,000 to $8,000 in 2026 to keep pace with rising salaries.
The increases will be phased in over four years, starting from 2023, to allow employers and employees to adjust to the changes.
5. Baby Bonus boost
The Baby Bonus cash gift will be increased by $3,000 for all eligible Singaporean children born on Feb 14, 2023 and after. This means first and second children will receive $11,000, up from $8,000. For the third child onwards, the gift will be $13,000, up from $10,000.
Parents can expect up to $9,000 in payouts in the first 18 months of the child’s life. Subsequently, $400 will be paid out every six months starting from when the child is two years old until the child turns 6½.
Government-paid paternity leave will be doubled from two weeks to four weeks for eligible working fathers of Singaporean children born on or after Jan 1, 2024.
The one-off Baby Support Grant of $3,000 will be extended to children born from Oct 1, 2022 to Feb 13, 2023. It was previously for children born from Oct 1, 2020 to Sept 30, 2022.
6. More support for workers
The Government will continue to provide wage offsets until 2025 to employers who hire senior workers.
It will extend the Part-time Re-employment Grant until 2025 to encourage employers to offer part-time re-employment, other flexible work arrangements, and structured career planning to senior workers.
It will pilot the role of Job-Skills Integrators in precision engineering, retail and wholesale trade sectors. These integrators, which can be existing institutions, will engage enterprises to understand the manpower and skills gaps in the sector and work with training providers to close these gaps.
To encourage firms to employ former offenders, the Government will introduce the Uplifting Employment Credit to provide wage offsets for a limited time.
7. Tax deductions for donations extended
The 250 per cent tax deduction for donations to Institutions of a Public Character, or registered charities, and eligible institutions which was announced in Budget 2021 will be extended for three years to the end of 2026.
To further support social service agencies that serve seniors, there will be a $1 billion top-up to the Community Silver Trust that allows the Government to match donations dollar for dollar.
* Budget 2023 Debate Round-Up Speech
No slack in Singapore’s Budget, says DPM Lawrence Wong
By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 25 Feb 2023
There is no “slack” in Singapore’s Budget and, in fact, without the tax moves announced in 2022 and 2023, Singapore would not be able to meet its spending needs, Deputy Prime Minister and Finance Minister Lawrence Wong said on Friday.
The minister was responding to assertions from some quarters during the Budget debate that the Government is taking too much and giving back too little.
In particular, Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai had said that the Government had billions of “excess fiscal resources” each year. As $72 billion had been spent to fight Covid-19, of which $40 billion came from past reserves, Mr Leong inferred that there was $32 billion of spare resources lying around.
“But that is mistaken,” said Mr Wong, saying that Singapore’s tight fiscal position is very much a reality over the medium term, and this is why the Government decided to proceed with the second step of the increase in goods and services tax (GST) from 8 per cent to 9 per cent in 2024 as planned.
“Deferring this will only store up more problems for the future and will leave us with less resources to take care of our growing number of seniors,” he added.
Explaining why there is no fiscal slack, he said that during the pandemic, projects were deferred, and many planned and budgeted activities could not be carried out. Hence, the Government reallocated these resources towards the more urgent task of fighting Covid-19.
Now that Singapore is in Disease Outbreak Response System Condition green, these funds have to be channelled back to what they were originally meant for, he added.
Mr Leong had also pointed to the injection of $24 billion into endowment and trust funds in the 2022 and 2023 financial years as more proof that there was “slack” in the Budget.
Again, this is not accurate, said Mr Wong. All spending in the Budget, be it direct expenses or top-ups to funds, are resources set aside to meet real needs – be it to strengthen safety nets, improve productivity or build up critical infrastructure.
He added that funds are set up to meet specific funding commitments that are needed today and are stretched out over multiple years.
For example, the GST Voucher fund and Progressive Wage Credit Scheme fund require top-ups when the parameters of the underlying schemes are enhanced, as was done in 2022, and in 2023’s Budget. The monies in these funds are already being drawn down today, and not just in the future.
The broader trend
Mr Wong urged the House to assess Singapore’s fiscal position not by considering the year-to-year changes, but the broader medium-term trend. In this regard, government spending is expected to reach 20 per cent of gross domestic product (GDP) by 2030, up from the current 18 per cent, he said.
In fact, over the past decade, government spending had risen by about 3 percentage points of GDP from around 15 per cent to 18 per cent today. So, to keep it at 20 per cent of GDP by the end of the decade already requires some moderation in spending increase compared with past trends, he added.
He said this would not be easy to do, and the projections have not yet taken into account additional spending that may arise from new policy initiatives.
Mr Wong also rebutted Mr Leong’s suggestion that the Government had not been prudent in its spending, because expenditure has exceeded $100 billion compared with the pre-Covid-19 levels of about $85 billion. “What a large increase, he says. But surely he must understand that nominal spending will increase with inflation and with a growing economy,” the minister added.
Other revenue options
He also went through the other revenue options suggested by MPs, such as wealth tax, corporate tax and land sales revenue.
On a net wealth tax suggested by the Workers’ Party, he said that many countries had done away with such a tax as it was difficult to implement effectively. The very wealthy were able to avoid paying such taxes through tax planning, he added.
This is the case even in Switzerland, which is often cited as a model for such taxes, he said.
Mr Wong also noted that the Swiss collect about 2 per cent of GDP in revenues through such taxes, which is comparable with what Singapore collects in wealth taxes from property tax and stamp duties.
As for increasing corporate taxes, he said that with the Base Erosion and Profit Shifting global agreement to reform international tax rules set to kick in, multinational enterprises (MNEs) are already asking the Government what incentives Singapore can offer to keep them here.
“This is not just a hypothetical worry. The MNEs are already making this clear to us in our consultation sessions with them,” he added.
“We cannot afford to price ourselves out of the competition, or else Singapore and Singaporeans will end up the biggest loser.”
PSP Non-Constituency MP Hazel Poa had also suggested spending the proceeds from land sales by treating it as revenue divided over the period of the lease.
To this, Mr Wong said it is not likely to generate more revenue than what is already obtained today from land sales over a period of time.
Currently, when the state sells land, the financial proceeds go into the past reserves and are invested to generate a stream of income into the Budget through the Net Investment Returns Contribution (NIRC).
He said: “The effect is that we will be able to spend more than 1 per cent of the proceeds each year, because the reserves are being prudently invested and generate long-term returns, half of which we get to spend as revenue.
“And we believe this is a more sustainable way of deriving value from the land we own, through the NIRC that benefits us now and in the future.”
But Ms Poa, speaking at the debate, said this was possible only with a 200 per cent return from investing the reserves.
To this, Mr Wong said Ms Poa’s suggestion may bring more returns in the short term and result in a “sugar rush”, but the NIRC framework, which allows the Government to spend up to 50 per cent of the net investment returns managed by Singapore’s investment entities, would yield more in the long run and be more sustainable.
“I have gone through three alternative revenue options. But the fact remains that it is very hard for any of them to replace the GST. And given our growing needs, it is not a matter of choosing between GST and any of these alternatives,” he said.
“Contrary to what the Workers’ Party believes, we will need all of them and a mix of taxes – on income, consumption and assets – to provide sound and stable public finances in Singapore. “
Govt’s prudent position on reserves has never changed and will never change: DPM Wong
By Jean Iau, The Straits Times, 25 Feb 2023
The Government’s position of discipline, prudence and a willingness to sacrifice for the next generation has remained constant, while the Workers’ Party (WP) seems to have shifted its stance on the use of past reserves, Deputy Prime Minister Lawrence Wong said on Friday.
Rounding up the debate on Budget 2023, Mr Wong, who is also Finance Minister, recounted how former WP chief Low Thia Khiang expressed surprise in 2009 at the need for the Government to draw $4.9 billion of past reserves to help tide Singapore over the global financial crisis, when Parliament was debating the matter.
“Mr Low said, and I quote: ‘Past reserves are a strategic asset meant for use in times of need, especially when the Government faces financial constraints due to unprecedented circumstances which require the Government to respond in the interest of the nation.’ I could not have said it better,” said Mr Wong.
In 2011, Mr Low lauded the Government’s move to return the withdrawn funds to the reserves.
But WP MPs have been “completely silent” on the fact that the Government is highly unlikely to put back the $40 billion drawn on past reserves due to the country’s tight fiscal position, unlike several People’s Action Party (PAP) MPs who urged it to try to do so, he noted.
Instead, they have repeatedly called for the Government to spend more from the reserves, slow down the growth of the reserves and tweak the 50 per cent Net Investment Returns Contribution (NIRC) formula, said Mr Wong.
NIRC consists of 50 per cent of the net investment returns on net assets invested by GIC, the Monetary Authority of Singapore and Temasek, and 50 per cent of the net investment income derived from past reserves from the remaining assets.
Mr Wong said: “It sounds to me that the Workers’ Party has shifted its position since the days of Mr Low. But in the end, Singaporeans will have to judge what is the more responsible approach to managing our finances and to take Singapore forward.”
He added: “I say, let’s uphold the values of our forefathers and do what is right by past, present and future generations of Singaporeans. Let’s maintain a strong fiscal foundation so that Singapore can continue to prosper and thrive for many more years in this troubled world.”
Responding, Leader of the Opposition Pritam Singh said his party’s position has evolved because circumstances have changed significantly.
The WP chief said the Government’s attitude to the NIRC had evolved after the global financial crisis as well, with the inclusion of Temasek in the framework.
The net investment returns framework was introduced in 2008, and Temasek was included in 2015.
Mr Singh said the Government’s explanation on why Temasek was added – that there are greater healthcare and ageing population needs – was perfectly reasonable.
“Naturally, as circumstances evolve, the PAP also will change its position, and the Workers’ Party, of course, will be entitled to do the same,” he said.
Mr Wong disagreed that the Government had changed its position, noting it had made clear that Temasek would be included in the framework at some point. The implementation was staged due to the complexity of incorporating Temasek, he added.
“More importantly, our underlying philosophy, our intent, our principles, have never changed and will never change. It is about fiscal prudence, discipline, responsibility, stewardship, that is consistent... Whereas it seems to me on that part, the Workers’ Party has shifted,” he said.
WP MP Leon Perera (Aljunied GRC) said that while Mr Wong has set out the view that reducing the rate of growth of reserves is taking away from future generations, the PAP had done just that in 2008 when it created the net investment returns framework, and again in 2015, when including Temasek.
“Why is that not irresponsible and not taking money away from future generations? But when the Workers’ Party says it, then it is irresponsible. Is it seeking political mileage that it is okay when you do it, but it is not okay when we call for it?” Mr Perera asked.
Noting that the Government had always intended to include Temasek in the framework, Mr Wong said: “We put in place a framework that will provide discipline. Discipline for the Government to use the reserves as an endowment fund. It was meant to be a set of fiscal rules that we live by. Not to change at the time when we need money.”
The issue, he said, is the WP’s attitude of wanting to change the rules at the first sign of needing money, not long after the framework was finalised. “Shouldn’t we live by the rules that we have set for ourselves and agreed and put in place?” he added.
Mr Wong said a review of the NIRC could come “years later, after the benefit of lots of experience”, but not so soon.
“We do not think that is sound, nor does that reflect the values that we want to uphold in our fiscal system and in our society,” he said.
Claims that middle-income Singaporeans are overtaxed an outright falsehood, says DPM Wong
By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 25 Feb 2023
Compared with citizens elsewhere, Singaporeans pay much less in taxes and yet are able to enjoy high-quality public services, Deputy Prime Minister and Finance Minister Lawrence Wong said on Friday, as he debunked claims that middle-income Singaporeans are overtaxed.
The impact of the Budget on the middle-income had come up during the Budget debate, with MPs from both sides of the aisle asking for more help for the sandwiched class, who have to care for both young children and elderly parents.
In response, Mr Wong cited figures to show that for households in the middle quintile, taking into account their total taxes paid – not just personal income tax, but other indirect taxes as well – the effective tax burden is around 10 per cent of income.
Compared with other advanced economies – using estimates for the United States, United Kingdom and Finland based on publicly available data – the Republic’s tax burden is significantly lower than that of these countries, said Mr Wong.
During the Budget debate on Wednesday, Progress Singapore Party Non-Constituency MP Leong Mun Wai said that middle-class Singaporeans are overtaxed relative to their income, as they pay a wide range of indirect taxes, such as the goods and services tax (GST) and the certificate of entitlement.
“I think the facts and figures speak for themselves,” said Mr Wong. “What Mr Leong said is an outright falsehood.”
Among advanced economies, Singapore is also one of the few economies in which people in the middle have enjoyed significant increases in real incomes in the last 20 years, said Mr Wong.
Median household real income growth here over the last decade was 3.2 per cent per annum, higher than that in the US and most other European societies, and also above that in other Asian societies like Japan and Hong Kong.
“So, we will continue to do everything we can to help our broad middle raise their standards of living, and support them in meeting their aspirations,” Mr Wong said.
He stressed that one should not just look at the individual schemes and changes, but also focus on the overall taxes and benefits for the middle-income.
Here again, he pointed out, it is clear that the middle-income overall still receive more in benefits than the taxes they pay.
In particular, for the middle 20 per cent, the amount of benefits they received was about twice the amount they paid in taxes.
This compares favourably with other jurisdictions like the UK and Finland, where the middle quintile received around $1.25 of benefits for every dollar of tax they paid, compared with Singapore’s ratio of two to one.
Even the upper-middle-income groups, or those in the 61st to 80th percentile, received about the same or slightly more in benefits compared with what they paid in taxes.
“They may not get as much in direct cash benefits compared to the lower-income groups, but they enjoy access to affordable housing, healthcare and world-class education,” said Mr Wong.
He added that the overall tax burden on Singaporeans, at 14 per cent of gross domestic product, is also lower than in most other advanced economies, and this is after factoring in the tax changes in this year and last year’s Budgets, including the full GST increase.
“In other words, compared to citizens elsewhere, Singaporeans pay much less in taxes and yet are able to enjoy high-quality public services. At the same time, this low tax burden rewards hard work and enterprise, and allows our people and businesses to keep most of what they earn,” he said.
Working Mother’s Child Relief: Situation has changed
MPs had also questioned the Government’s decision to change the Working Mother’s Child Relief (WMCR) from a percentage to a fixed dollar relief, with some like Ms Jessica Tan (East Coast GRC) and Mr Dennis Tan (Hougang) raising concerns about the impact on the middle-income groups.
Responding to them, Mr Wong said that when the scheme was introduced, it was intended to encourage married women, especially the higher-income ones, to have children and continue working.
At that time, higher-income married women had fewer children on average.
“And that was why the incentive was weighted towards this income bracket,” he said.
“But from our experience over the years, young couples in this income group typically base their decisions to have children on other factors, and not so much on the WMCR incentive.
Furthermore, the situation has now changed. Fertility has been declining across all income segments, and we need to encourage couples in all income groups to have more children.”
This, he added, is why the Government decided to change the basis of the WMCR. “With the fixed dollar relief, we focus instead on providing support for children, regardless of the mother’s income. And effectively, we are tilting the help towards those with greater needs.”
Mr Wong said the WMCR changes should not be seen in isolation, and are part of a package of moves to support marriage and parenthood in this and previous Budgets.
This includes the enhancements to the Baby Bonus Scheme and the increase in parental leave provisions, all of which will benefit young couples, including higher-income couples, as they embark on their parenthood journey.
Singapore actively working on all fronts to keep social mobility alive and well: DPM Wong
By Natasha Ann Zachariah, Correspondent, The Straits Times, 25 Feb 2023
Ensuring that meritocracy works for all Singaporeans has been a key focus of the Government and its policies, but the tendency for society to stratify over time is why collective effort is needed to hold such forces at bay, said Deputy Prime Minister and Finance Minister Lawrence Wong.
While Singapore has done better than many advanced economies in keeping social mobility alive, Mr Wong said more needs to be done, and the Government is “actively working on all fronts” to encourage mobility. They include being open to all good ideas, he said in his Budget round-up speech on Friday.
Issues of social mobility and inequality were raised by several MPs such as Mr Leon Perera (Aljunied GRC) and Mr Desmond Choo (Tampines GRC) in their Budget debate speeches, with Mr Perera cautioning against an “unbridled and winner-takes-all meritocracy”.
Mr Wong said the Government has long recognised this problem and had set out to achieve a more open and inclusive meritocracy more than a decade ago, as seen in help for children from lower-income families and in the labour market through Workfare and the Progressive Wage Model.
Noting that support in the early years is critical, he said more will be done to narrow the pre-school enrolment gap between children from lower-income households and their peers.
“We are not done yet, and we are actively working on all fronts to minimise social barriers and encourage mobility – because this is what Singapore has always been about, and must continue to be,” he said.
The Government is also focused on new entrants to the workplace, particularly Institute of Technical Education (ITE) graduates, whom Mr Choo spoke about.
Mr Wong said programmes such as the work-study and technical diplomas have resulted in ITE graduates seeing better employment outcomes, with median starting salaries comparable with those with a polytechnic diploma.
But the Government cannot narrow wage gaps on its own, he said. For wages to go up sustainably, Singaporeans must be prepared to pay more for services, treat everyone with respect and value all kinds of work.
Employers, too, have a role to play. The move to raise the Central Provident Fund (CPF) monthly salary ceiling is to keep pace with the 80th percentile of monthly resident wages, which crossed $8,000 last year.
Mr Wong said he understood the concerns that this will raise business costs, but the move will benefit workers by enabling them to save more and strengthen their retirement security.
The Budget debate also saw several MPs raise issues concerning seniors, such as on employment, retirement security and long-term care arrangements.
In response, Mr Wong said the Government is reviewing the CPF system and retirement policies such as the Silver Support Scheme.
“Our aim is to assure all Singaporeans that as long as they work and contribute consistently to their CPF, they will be able to meet the basic retirement sum,” he said. Other ways will be found to help those who do not have the ability to work or the runway to work and save through CPF, he added.
Long-term care arrangements and their affordability are also being looked into, he said. But a broader review of Singapore’s aged care system is under way to enhance the care and living options for seniors in the community, said Mr Wong.
This includes looking into developing more senior living options in housing estates, how best to deploy and operate Active Ageing Centres and how to offer accessible and integrated services across neighbourhoods.
This is a challenge, given that the aged care sector is extremely complex and fragmented, and resources such as land and manpower are limited, he said.
On its part, the Government will continue to be pragmatic and open to all good ideas, regardless of where they come from, pledged Mr Wong.
“It is about what works, and what is effective in bringing us closer to our goals,” he said.
Budget 2023 a delicate balancing act amid tight fiscal position: DPM Wong
By Goh Yan Han, Political Correspondent, The Straits Times, 25 Feb 2023
Budget 2023 has been a delicate balancing act to find the sweet spot amid a tight fiscal position and competing demands, Deputy Prime Minister Lawrence Wong said on Friday.
Balance was a key theme of his speech: Between more taxes and more handouts; between various priorities of the day, as “the Budget cannot cover everything”; and between increasing corporate taxes and maintaining competitiveness, among other things.
He explained in Parliament how the Finance Ministry planned to balance the Government’s books, while responding to MPs who had called for more cost-of-living support or more help for certain groups or areas.
“So, we enhanced our parenthood and family-related schemes in this Budget. Next time, we will look at other schemes, so everyone will get a chance,” said Mr Wong, adding that every Singaporean still stands to benefit from the Budget.
In his round-up speech, he addressed questions raised by 58 MPs over three days of debate, which revolved around whether the Government was taking too much and giving back too little, if it was doing enough to stay competitive and help businesses and workers, and if it was doing enough to help Singaporeans and households in need.
“We want to get back to a more sustainable fiscal position, but we cannot taper down support too quickly because the economic outlook remains uncertain,” he said.
“The Government remains very focused on advancing the well-being of the broad middle of society,” added Mr Wong, who is also Finance Minister.
The middle-income group in Singapore pay less taxes than their counterparts in other advanced societies like the United States and Britain, and also receive more in benefits than they pay in taxes, he added. He noted that Singapore’s tax to gross domestic product ratio, at 14 per cent, is considerably lower than in most other advanced economies.
“Compared to citizens elsewhere, Singaporeans pay much less in taxes and yet are able to enjoy high quality public services. At the same time, this low tax burden rewards hard work and enterprise, and allows our people and businesses to keep most of what they earn,” he said in a 90-minute speech wrapping up the Budget debate.
The House on Friday endorsed the $123.7 billion Budget, which had included a suite of measures to support parents and families, as well as financial support measures to combat the rising cost of living and inflation.
Mr Wong noted that Singapore’s tight fiscal position is very much a reality over the medium term.
“That is why we have to proceed with the second step of the increase in goods and services tax (GST) in 2024 as planned. Deferring this will only store up more problems for the future and will leave us with less resources to take care of our growing number of seniors,” he said.
The GST rate increased from 7 per cent to 8 per cent on Jan 1, 2023, and is slated to rise another percentage point to 9 per cent on Jan 1, 2024.
Mr Wong said that while the Government wants to help Singaporeans tackle cost-of-living pressures, it must be careful not to inadvertently generate more demand and worsen inflation.
Acknowledging that many MPs have made good suggestions and that there may well be very good reasons for more government intervention, Mr Wong said all of that means additional spending.
Additional spending will then need to be anchored by a fiscal plan that is sound, sustainable and fair, he said.
Mr Wong said he wanted to set the record straight on economic growth. Singapore remains focused on growing the economic pie and has not moved from a pro-growth to a pro-redistribution approach.
“Only then can Singaporeans build better lives for themselves and their families, and only then will we have the resources we need to redistribute, strengthen our social compact and progress as one people,” he said.
But given the more challenging external environment, Singapore has to redouble its efforts, build more capabilities and work hard to be more competitive and anchor more quality investments.
At the same time, it cannot “score own goals, do moves that will price ourselves out”, he said, addressing calls from Workers’ Party MP Louis Chua (Sengkang GRC) and Non-Constituency MP Hazel Poa to increase taxes for multinational corporations.
Mr Wong said multinational corporations here are not stuck in Singapore permanently and have cheaper or more inviting options for them to be headquartered elsewhere.
He said: “Many members in this House now are concerned that we are not sufficiently focused on growth, that if we are faced with a shrinking pie, contentious disputes over how to distribute limited resources will be inevitable, which can be very socially divisive, as we have seen in many other countries.
“But sir, in fact, we have always taken a balanced approach in our economic development and strategies. Our focus has always been to grow the economy, not for its own sake, but as a means to improving the well-being and the lives of everyone in Singapore.”
Mr Wong also spoke about Budget 2023’s additional support for groups that are facing difficulties, such as lower-wage workers and lower-income households with young children, in response to MPs who had raised the issues of inequality and social mobility.
He noted that Singapore had long recognised the problems with an unbridled winner-takes-all style of meritocracy that WP MP Leon Perera (Aljunied GRC) spoke about, which is why it had set out to achieve a more open and inclusive meritocracy more than a decade ago.
“We are actively working on all fronts to minimise social barriers and encourage mobility, because this is what Singapore has always been about, and must continue to be,” he said.
Mr Wong also spoke on the need to ensure that the reserves are well protected, but added that the Government is unlikely to return the $40 billion that it took out during the Covid-19 pandemic due to the tight fiscal position.
He said Singapore has to consider the major risks that it may face – war, pandemics and climate challenges – and should not “blithely spend more from the reserves”, which he said members of the opposition had proposed.
“Let’s maintain a strong fiscal foundation so that Singapore can continue to prosper and thrive for many more years in this troubled world,” he said.
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FY2023 Budget Debate Round-Up Speech by Deputy Prime Minister and Minister for Finance, Mr Lawrence Wong -24 Feb 2023
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