Singapore must press on with plans for next growth phase: DPM Heng
SINGAPORE – With a narrow window of opportunity in which to transform its economy, Singapore has to press ahead with planned investments in order to secure its next decade of growth, Deputy Prime Minister and Finance Minister Heng Swee Keat said on Friday (Feb 26).
Doing so would enable the economy to provide jobs in new areas even as it restructures, and enable the country to emerge stronger after the Covid-19 pandemic has passed.
And if it has to draw on the country’s reserves to do so, it should do its best to make good on the draw, he told Parliament.
“Now is the time to chart our course, position ourselves to catch the winds of opportunity and sail boldly in the reshaped world,” he said in his speech rounding up three days of debate in which 65 MPs spoke.
Mr Heng set out what it means for Singapore to emerge stronger together – the theme of this year’s $107 billion Budget – and stressed that the Government cannot do this all alone.
“The Government is committed to put in the investments,” he said. “To succeed, every Singaporean must come together to build the Singapore that we want.”
By creating opportunities for workers to acquire skills needed for the new jobs of the future, the Government would help them stay employable, and also help prevent a “Covid-19 generation” of young people without jobs.
He called on businesses to look beyond hiring just “plug and play” workers and consider taking on those with potential to learn. At the same time, job seekers should keep an open mind, taking the initiative to build new skills and staying receptive to new job roles.
Singaporeans must also look out for one another, he said, adding that the Government will push ahead with plans to develop deeper capabilities in the social sector.
At the same time, Singapore has to consider how to pay for the choices it makes, Mr Heng said, noting that discussions on building a society with better social safety nets are “only one half of the conversation”.
“We must be upfront – if we want to spend more, we have to raise the revenue,” he said, reiterating that the impending goods and services tax (GST) hike from 7 per cent to 9 per cent, which will take place soon, between next year and 2025, is necessary to fund Singapore’s rising spending needs in areas such as healthcare.
“Economic growth alone is not likely to raise enough revenues to fully meet our needs,” he added. “The honest, but hard, conclusion is that we will need to raise more tax revenue.”
The GST hike will be matched with a $6 billion Assurance Package that effectively delays its effect for at least five years for most Singaporean households, he said.
Mr Heng acknowledged that it is natural for everyone to look out for what is new in each year’s Budget. But Singaporeans should also appreciate what is already there, and look at the nation’s spending in totality over the years, he said.
Over the past decade, Singapore has been gradually tilting its system of taxes and financial transfers in favour of lower-and middle-income groups, he noted.
This year, a member of a lower-income citizen household can expect benefits of $6,500 after taxes on average, and a member of a middle-income household gets $3,500. In contrast, a member of a household in the highest income group pays around $9,500 in taxes, after accounting for benefits, he said.
Mr Heng also addressed concerns MPs raised that this year’s Budget appears to have little short-term support for middle-income households. This is not so, he said, noting the $42 billion set aside for social spending and transfers on top of security spending and economic investments, all of which benefit Singaporeans.
“We should not look at each Budget in terms of ‘goodies for me’, but whether the totality of the spending creates more opportunities for us and our children.”
He also cited Nominated MP Hoon Hian Teck, who on Wednesday articulated Singapore’s need to balance stabilising the economy to avoid a sharp downturn, and investing in structural policies for transformation.
Mr Heng also noted how Mr Shawn Huang (Jurong GRC) put it aptly when he said that for Singapore to survive, it had to pivot and develop an edge to seize opportunities of the future. “If we get this right, we can set our economy on the path of growth for the next five to 10 years,” said the DPM.
Read Mr Heng’s full speech here.
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