As the economy recovers to its potential growth path - that means growing as fast as it has the potential to grow - we have to strengthen our fiscal position, not too early, but not too slowly either. So, as a first step, we aim to balance our budget by next year, FY 2005. But balancing the budget is only one decision. The other major decision is in what way we are going to balance the budget. And there are two ways to do this: (1) high taxes, high spending; or (2) low taxes, low spending. And that is a fundamental policy choice: do we want high spending, universal social benefits and be subject to much higher taxes, or do we want free enterprise, more targeted social benefits and much lower taxes? It is a basic choice.

If we want Singapore to be a land of opportunity where the private sector is the engine of growth, then we have got to keep both taxes and spending low. Because by keeping taxes low, we foster a dynamic society where individuals will strive to achieve and excel, and where they are free to decide for themselves how they wish to spend their own money. They earned it, it is their choice. And by keeping public spending low, we foster a self-reliant society where individuals assume primary responsibility for themselves and their families.

Yes, we will need a safety net. Every society needs to provide a safety net, and we will provide a safety net. But we should focus the safety net on those who need it most.