Impact of Series of Price Increases on Households and Small Businesses03 Oct 2023
Parliamentary Question by Mr Liang Eng Hwa:
To ask the Deputy Prime Minister and Minister for Finance (a) what is the cumulative impact of the series of price increases on households and small businesses; (b) whether there is a risk of triggering an inflationary spiral; (c) whether the Government’s support measures so far are adequate to mitigate the cumulative impact; and (d) what further fiscal measures can be introduced to assist households and small businesses.
Parliamentary Reply by Deputy Prime Minister and Minister for Finance Mr Lawrence Wong:
Mr Speaker, Mr Liang Eng Hwa filed his Parliamentary Question prior to Deputy Prime Minister Lawrence Wong’s announcement of the $1.1 billion Cost-of-Living Support Package last week. Regardless, allow me to briefly recap how the design of the Cost-of-Living Support Package supports Singaporeans and addresses Mr Liang’s concerns.
We expect the increases in water price, public transport fares, and residential Service and Constituency Charges (S&CC) to add less than 0.3 percentage points to household inflation over the next two years. For businesses, the increase in water price is expected to increase total operating business costs of manufacturing and services sectors by less than 0.1% by 2025.
The enhanced support in the Cost-of-Living Support Package will help to cushion the impact on households. The package builds on existing support provided to households at Budget 2023, such as the enhancements to the permanent GST Voucher scheme and the Assurance Package. Combined, the support provided this year will, on average:
a. Fully cover the increases in spending by lower-income households this year, due to inflation and the GST rate increase; and
b. Substantially cover the increases in spending by middle-income households.
c. The Government had provided this assurance at Budget 2023, and we remain committed to it.
All Singaporean households will receive relief from the Cost-of-Living Support Package, with lower- to middle-income families receiving more. This targeted approach ensures that we provide sufficient support to those who need it, without adding unnecessarily to inflationary pressures or triggering an inflationary spiral.
For businesses, including our SMEs, we had provided targeted support at Budget 2023 with the extension of the Enterprise Financing Scheme and the Energy Efficiency Grant until March 2024. The Government is reviewing various measures to help businesses transform and become more productive and efficient. This is a more effective and sustainable way to help businesses manage cost pressures in the longer term and prepare for the future, amidst Singapore’s manpower, carbon and other constraints. We will announce further plans at Budget 2024.
The Government will continue to monitor the inflation situation carefully and stand ready to do more, if needed.