Budget 2020: How S’pore responds to technological change, inequality, other challenges will ‘define us’, says DPM Heng

SINGAPORE — Singapore’s response to long-term technological and population challenges and the growing inequality of how people start out in life will define the country, Deputy Prime Minister Heng Swee Keat said in Parliament on Friday (Feb 28).

“We will confront complex new challenges ahead, including the pressures of technological and demographic change, and the growing inequality of starting points, as our society matures,” said Mr Heng in his round-up speech to the Budget debate.

“Our response to these challenges will define us,” he said.

Mr Heng also identified climate change as a challenge that threatens Singapore's very existence as a small, low-lying island state.

In his speech, Mr Heng, who is also Finance Minister, addressed concerns raised by MPs in the past three days of debate on the long-term challenges to Singapore’s future: Strengthening its social compact and tackling inequality, transforming its economy and labour market, and taking on the existential threat of climate change.

For Singapore to stay successful, Mr Heng said it must have the courage to chart a different path, noting that a number of societies around the world are turning inwards from the world, even as they grow more divided within.

“We must continue to anticipate and respond to change, plan for the long term, and find practical solutions to create better lives for Singaporeans. We must continue to stay open and connected to the world.

“A Singapore turned inwards cannot survive,” he said.

TRANSFORMING THE ECONOMY AND DEVELOPING PEOPLE

Mr Heng echoed former Manpower Minister Lim Swee Say’s speech on Thursday on the need for “a globally competitive economy, and a locally cohesive society”, or “glocalisation” as Mr Lim had put it.

He said Mr Lim expressed Singapore’s objectives to transform its economy to be internationally competitive, develop Singaporeans’ ability to seize these opportunities, and to strengthen the Republic’s social compact by ensuring that “all benefit from the fruits of progress and no one is left behind”.

These goals require Singapore to adopt sensible and prudent fiscal policies directed at growth and social equity, to use appropriate monetary policy to create stability, and to roll out structural policies that expand the capacity of firms and the labour force.

He noted that Singapore began its “urgent” economic transformation journey in 2016 with the formation of the Committee on the Future Economy, which he led.

Since then, the Republic moved to quickly secure its external economic space and create new opportunities, raised the capacity of enterprises and industries to innovate and grow, and mobilised firms to take ownership of economic transformation.

Yet, Mr Heng said the process has not been painless, as Manpower Minister Josephine Teo had said on Wednesday. Businesses had to “bear the transitional pains, to be creative and resourceful, and to seize opportunities where others see challenges”, he said.

Said Mr Heng: “At its heart, economic transformation involves the courage to brave transitional pains as we change the way we do things.”

Despite these difficulties, these efforts have paid off, he said. He noted the growth of more than 41,000 jobs each year on average, low local unemployment of about 3.2 per cent of the resident labour force as of last December, as well as higher earnings for locals.

In 2019, 51 per cent of full-time local workers earned at least S$4,000 in gross monthly income, which excludes Central Provident Fund contributions from their employer. This is up from the 37 per cent of locals who did the same in 2010.

Besides the economy, the labour market is also facing structural change, said Mr Heng. An ageing population means a shrinking resident workforce, and longer lifespans mean longer and multiple careers, he said.

Noting the speeches of Nominated MP Lim Sun Sun and Holland-Bukit Timah Group Representation Constituency (GRC) MP Christopher de Souza on technology and disruption to jobs, Mr Heng said: “Our collective mentality towards upskilling must change, from nice-to-have, to must-do.”

To develop the skills of people, Singapore embarked on a three-pronged tripartite approach, involving Government, workers and firms, he said. Mr Heng then reiterated the several policies and subsidies available to support jobs, such as SkillsFuture, as well as the work of the unions to help workers transform and learn.

In education, Mr Heng said Singapore has also invested heavily upstream, with over 90 per cent of the total cost of educating people from primary to pre-university level subsidised by the Government.

“In all, by the time a Singaporean child reaches 16, he or she would have received more than S$180,000 in education subsidies, including pre-school subsidies. Then when they go on to an institute of higher learning, which most students do, they get an additional S$15,000 to S$22,000 in subsidies per year,” he said.

As a result, resident employed households experienced sustained real income growth at the median, growing by 3.7 per cent each year over the last decade, said Mr Heng.

STRENGTHENING SINGAPORE’S SOCIAL COMPACT

Budget 2020 provides further support for those who may face greater pressures, he said.

“For all our efforts to maximise opportunities for everyone, there will be some that will continue to face difficulties,” said Mr Heng.

He noted that some struggle in being employed and growing their incomes to keep pace with inflation, acknowledging the concern by NMP Walter Theseira, Pasir Ris-Punggol GRC MP Zainal Sapari, and Hougang MP Png Eng Huat on the vulnerabilities of low-wage workers.

There are also retired seniors who had low incomes in their working years, and little or no family support, and some middle-class families are also “sandwiched” financially because they have to care for both their children and their elderly parents, as mentioned in speeches by Mr Melvin Yong, MP for Tanjong Pagar GRC, and Mr Saktiandi Sapaat, MP for Bishan-Toa Payoh GRC.

Measures and enhancements, such as the S$1.6 billion Care and Support Package and enhancements to the Silver Support and GST voucher, were announced to aid these groups, said Mr Heng. These moves add to the extensive subsidies already available, he added.

He noted that the Gini coefficient, which measures income inequality, fell to 0.398 after taxes and transfer last year, which was the lowest level since 2001. A value of zero means perfect equality, while a value of one means total inequality.

“This is encouraging, but our work is not done. We will always continue to look at practical, effective moves to tackle inequality and ensure that all Singaporeans progress together,” he said.

Mr Heng thanked MPs, including Workers’ Party chief Pritam Singh, for their various Budget speeches in support of the Singapore Together national movement and the “democracy of deeds”, and spent some time highlighting the various deeds by other MPs to serve communities in their own ways.

“This is how we should rise to the challenge of inequality in this day and age – by coming together as one people to uplift the less privileged amongst us, with the state providing strong foundations of opportunity and support,” he said.

TURNING CLIMATE CONSTRAINTS INTO STRENGTHS

Speaking about the existential threat of climate change, Mr Heng noted that Singapore has always risen to the challenge in the face of adversity.

“We have never accepted our fate or our starting circumstances meekly — instead, we adapt, innovate, mitigate, and overcome,” he said.

Singapore turns constraints into opportunities and strengths — its water and land constraints led to the city-state becoming leaders in water technology and urban planning; manpower limitations pushed it to automate, digitalise, and be more productive; and the country has also come up with a plan to tackle its carbon and energy constraints.

Hence, the environmental challenge is one that Singapore will face “head-on”, said Mr Heng.

“We are not only securing our coasts, but also transforming our sources of food and water, and remaking our entire economy and city for a green and sustainable future.”

A whole-of-government approach, coordinated by the National Climate Change Secretariat, is working in concert to execute its plan against climate change, he said.

This includes plans by several Government agencies to transition Singapore towards a low-carbon economy, to develop its own food production capabilities, to phase out internal combustion engine vehicles by 2040, as well as an expected update to Singapore’s commitment to the Paris Agreement later this year, he said.

More details of the various plans will be revealed during the debate dealing with the relevant ministry’s budget.

Mr Heng reiterated the S$5 billion injection into a new Coastal and Flood Protection Fund in this year’s Budget as a necessary commitment for the future, as future generations will reap the benefits of climate change decisions even though current generations may not.

“I could have chosen instead to spend it on more ‘hong-baos’ or red packets, to make myself more popular. But by making the commitment today, these resources will go towards pumps, tidal gates, and infrastructure that will keep our children, and their children, safe from rising sea levels in decades to come,” he said.

Thanking the many young Singaporeans who are passionate about environmental causes and want to be a part of the solution, Mr Heng said tackling climate change is a “whole-of-society, multi-generational effort”.

Said Mr Heng: “If we take the long-term view, and each generation plays its part, Singapore can face the future with confidence. Confidence that we will always have the capacity to overcome every challenge — be it a virus outbreak, recession, or rising sea levels. Confidence that we will be able to provide for our families and community. And confidence that our children will have the best chance of a better life, come what may.”