Reserves cannot be further tapped for healthcare: PM05 Mar 2018
Drawing more from nest egg will quickly deplete it as spending will keep rising, he says
Singapore cannot draw more from its reserves to fund healthcare spending in the future, as this will quickly deplete its nest egg, said Prime Minister Lee Hsien Loong.
The needs of an ageing society are beyond those of "a rainy day", he said. "It is an 'everyday need money' day. We will need to spend more on healthcare every year, year after year, for many years to come.
"If we use the reserves for something (which requires) money every day, soon you will find that the reserves are going down, depleted."
Speaking at a Chinese New Year dinner last night in Ang Mo Kio GRC, where he is an MP, PM Lee said the Government carefully considered its options before deciding to raise the goods and services tax (GST) from 7 per cent to 9 per cent some time between 2021 and 2025. This is to fund increased spending, especially in healthcare.
PM Lee said the Government decided against tapping more of its reserves as they are Singapore's "precious nest egg". Otherwise, "when the rain comes and the children and grandchildren need the money, really truly, they will find it's gone".
PM Lee's comments - his lengthiest on the Budget to date - came after some MPs suggested during the Budget debate last week that Singapore can consider using more of its reserves to fund additional spending, instead of increasing the GST.
Outside the House, some have also called on the Government to relax its rules on how much of the reserves it can tap.
On Thursday, 89 MPs in Parliament voted in support of the Budget, while eight MPs from the Workers' Party voted against it.
In his speech yesterday, PM Lee said that his government has done the responsible thing by not just listing out "all the good things" it will do, but also how these will be paid for and what taxes need to go up.
He called on Singaporeans to support its plans - both the increased healthcare spending for seniors and the GST hike to pay for it - just as previous generations supported the Government's long-term policies.
"This is a prudent, responsible, long-term approach," he said.
"We are the stewards of Singapore. We are responsible not just for making it work for ourselves, but also for making it work for the next generations, beyond our working lives, beyond our lifetime."
PM Lee said it is the responsibility of all Singaporeans to think like this. "Our children may not be voting yet, our grandchildren may not yet be born. But their lives and future depend on us acting on their behalf... making wise and far-sighted decisions that protect their interests."
On why the GST hike was announced so far in advance, PM Lee said it was so people can plan ahead for the tax increase and understand why it is necessary. "We do not need the money yet, but we can see the way things are going very clearly, and we know that by the next decade, in three or four or five years' time, we will need the money."
His government has announced its intentions "as early as possible" so that people "will not be suddenly surprised when it happens", he said.
Separately, Finance Minister Heng Swee Keat told residents at an event in Tampines GRC, where he is an MP, that the Budget he delivered last month includes long-term plans for Singapore's needs. "And our biggest need is to better take care of our seniors," he said.
• Additional reporting by Audrey Tan