2.22 Our response therefore must be to focus on growth and embrace globalisation, but manage its downsides and make it work for everyone. We will do this by maximising opportunities for all Singaporeans — the opportunities to get a good education, to work or to start a business, to retrain and upgrade, and the opportunity to own a home. We must maximise opportunities for all, but we must also accept that doing so does not result in equal rewards for all. We should never reduce the incentive for Singaporeans to work and to make the most of their skills and talents, so as to get higher reward for themselves. That has to be the basis for our society, for how we keep our economy growing, and for how living standards of Singaporeans will rise over time.
2.23 Our first priority therefore is to grow the economy. We must now build capabilities for the future. We must attract new investments, grow new businesses, and create new and better paying jobs to replace old ones. We must build on our strengths and compete — not just on efficiency and low cost, but on trust and value.
2.24 As we grow the economy, we must ensure that no one is left behind and that all Singaporeans have the opportunity to succeed. Over the years, the Government has been helping the lower-income groups through various assistance measures. Since 2001, the Government has distributed more than $7.5 billion through the Progress Package, U-Save and S&CC rebates, CPF top-ups and New Singapore Shares, to share budget surpluses with Singaporeans. In all these distributions, we have made deliberate efforts to ensure that the lower-income groups get the greatest benefits. But going forward, we have to do more to help needy Singaporeans and we have to do it more systematically. This is why we are introducing Workfare. Workfare will give those at the lower end of the workforce a stronger incentive to get a job, stay in a job, and save for their future.
2.25 We also have to prepare now for the challenges of an ageing population. Healthcare spending will rise over time, as our people grow older and as medical science advances. Our living environment and physical infrastructure will have to be adapted to meet the needs of our growing ranks of senior citizens. This is the generation that has helped to bring Singapore up from Third World to First World. We must ensure their well-being.
2.26 Building capabilities for the future, strengthening our social security system and providing for the needs of older Singaporeans will require Government to spend more in future. This means we will need additional revenues. We cannot raise direct taxes. Countries the world over are reducing corporate and personal income taxes. To continue to attract talent and investments, and maintain strong incentives for our people to excel, we will in fact have to lower our direct taxes further over time.
2.27 We will therefore raise additional revenues by extracting more income from our reserves and by raising the GST. Because we are doing this now, when the economy is doing well, we are able to provide a very comprehensive set of measures to help Singaporeans adjust to the GST increase.
2.28 This Budget is therefore about preparing Singapore for the future and for the world. It ensures that we retain our dynamism as an economy while we take significant steps forward to preserve an inclusive society. It sets out the key changes we must make to:
- Build capabilities for the future;
- Strengthen our social security system;
- Reduce direct taxes and raise additional revenues, including GST;
- Provide Singaporeans with an offset package for the GST increase.
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