Everyone has benefited from Budgets, and people are at centre of Govt's plans: Heng Swee Keat

SINGAPORE — Singaporeans have benefited from the Budget in previous years, even if there was nothing for them this time around, said Finance Minister Heng Swee Keat as he wrapped up more than two days of debate on Budget 2019.

Addressing points raised by 55 Members of Parliament, Mr Heng also outlined on Thursday (Feb 28) the principles that reflect "the Singapore way”. 

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To MPs who had called for the Goods and Services Tax (GST) hike — slated to happen between 2021 and 2025 — to be postponed for as long as possible, he said the Government has yet to determine the exact date it will increase from 7 to 9 per cent.

It is also “fair and appropriate” to provide the cohort-based Pioneer Generation Package and Merdeka Generation Package, Mr Heng said in response to criticism of the fairness of such periodic packages.

And as the country commemorates its bicentennial this year, Mr Heng said that it is a “good time” to reflect on the country’s journey. That means “fiercely protecting” its freedom to chart its own future despite the uncertain geo-political situation, and “appreciating” the country’s “unique way of solving problems”.

“It means committing to give our best, building on what past generations have done. Together, we can advance, and make this little red dot shine even more brightly,” he added.

Here is the breakdown of Mr Heng’s one-and-a-half-hour speech:

ADDRESSING MPS' QUESTIONS & CONCERNS 

Postponing the GST hike: In response to West Coast Group Representation Constituency (GRC) MP Foo Mee Har’s suggestion to postpone the GST hike, Mr Heng said the Government has yet to determine the exact timing. But “we will exercise care when doing so”, he added.

Reiterating that the GST hike is needed to support structural increases in healthcare spending, education and security, Mr Heng assured the House that the Government “will continue to monitor the prevailing economic conditions, trends in expenditure, and buoyancy of our revenues carefully”.

Imposing wealth taxes: Fengshan MP Cheryl Chan argued that the Government should impose a net-wealth or an inheritance tax to address growing wealth inequality.

Mr Heng replied that there are many types of wealth taxes, and “what works best depends on the country’s overall tax system, and broader economic and social circumstances”.

Singapore’s approach has been to tax fixed assets such as housing.

Impact of diesel tax hike: On concerns raised over the diesel tax increase, Mr Heng said it is necessary to “use a price signal to nudge diesel users towards cleaner and more sustainable alternatives”.

Exempting vehicles and machinery from the diesel tax because there are no alternatives would work against the objective of the policy, said Mr Heng. The hike will “nudge businesses, which are heavy diesel users, towards greater efficiency”. For instance, they can consider using better routing applications to optimise their deliveries.

On the cost impact on taxi drivers, Mr Heng said that all cab companies have pledged to pass the entire savings from the special tax reductions to drivers.

Transparency of reserves: Mr Heng also responded to Workers’ Party leader and Aljunied GRC MP Pritam Singh, who had asked for more data and transparency on sovereign wealth fund GIC’s performance.

The country’s reserves comprise assets invested by the Monetary Authority of Singapore (MAS), Temasek Holdings and GIC, said Mr Heng. While the size of MAS’ and Temasek’s assets is publicly available, GIC’s portion is not disclosed because others would then get the “complete picture of our reserves”.

Singapore’s reserves serve as a “strategic defence”, said Mr Heng, to deter “parties who wish to undermine the interests of Singapore and Singaporeans”.

“Such moves can go beyond currency speculation attacks, to other types of threats,” he said.

'THE SINGAPORE WAY' 

There are three key principles underlying every Budget, which make up the “Singapore way”: Putting people at the centre of the Government’s plans, strategies and programmes; planning long term while being adaptive; and working together.

Such principles have allowed the Government “to do more with less”, said Mr Heng.

“For instance, in the areas of education, healthcare and policing, we have achieved very credible outcomes despite spending less than what other countries do.”

Putting people at the centre of plans means investing in quality education, from the preschool to tertiary level. It also involves deepening workers’ skills so they remain employable, as well as supporting vulnerable low-income households and the elderly.

Planning long term, on the other hand, requires the Government to restructure the economy and invest in things like innovation to prepare the country for volatile economic situations.

On working together, Mr Heng cited how unions, firms and the Government collaborate to ensure the workforce remains competitive.

The “Singapore way” also means that the country comes up with its own solutions to problems. It does not have to be “pressured to conform to theories which sound fashionable but do not work for us”, he said.

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HOW DIFFERENT GROUPS BENEFIT 

Concluding his speech, Mr Heng said several individuals have mentioned to him that “there did not seem to be anything in this Budget for me”.

But as the country plans for the longer term, “we cannot see each year’s Budget in isolation” as each Budget builds on from the previous one, he said.

“Even if there’s nothing new for you this year, you and your family have certainly benefited from every one of our Budgets,” Mr Heng told the House.

Younger Singaporeans have benefited from stronger support in education, housing and parenthood, he said. For instance, parents can receive a maximum of between S$18,000 and S$32,000 in marriage and parenthood benefits for each eligible child. This is on top of paid maternity and paternity leave, tax benefits and preschool subsidies.

To ease healthcare costs, the Government also provided the Merdeka and Pioneer packages on top of enhancing current healthcare schemes.

“We have a multi-year plan, which tackles the priorities as systemically as we can. We plan ahead, like on what we need to do for climate change,” said Mr Heng.

“We look at the needs of different groups of people, as needs evolve and grow. And we invest in growing our economy, so that we have the resources to do more for our people.”