Ministry of Finance Addendum to President's Address28 Aug 2020
MR HENG SWEE KEAT
DEPUTY PRIME MINISTER, COORDINATING MINISTER FOR ECONOMIC POLICIES AND MINISTER FOR FINANCE
- The Ministry of Finance (MOF) seeks to advance the well-being and development of Singapore through sound and forward-looking fiscal policies. We aim to enable an innovative and efficient Government that delivers strong outcomes and value for money for taxpayers.
- In this new term of Government, our immediate priority is to protect lives and livelihoods by enabling a timely and robust response to the evolving COVID-19 pandemic. We are deploying effective fiscal strategies to enable a strong recovery and to position Singapore for future growth. We will continue to build a fair and progressive fiscal system that fosters continued social mobility and uplifts the vulnerable. We will ensure sound finances and a sustainable future for generations to come.
Renewing Opportunities for Growth
- In the face of the COVID-19 crisis, MOF mounted successive major fiscal packages to protect our workers and save jobs. We launched key measures like the Jobs Support Scheme to stabilise the economy and stem unemployment. We also provided support to businesses such as property tax rebates and rental grants, to cushion the immediate impact and provide relief on business costs. This was a substantial slate of support, with more help given to those most affected by the crisis.
- But it will not be sustainable to continue this level of support indefinitely. Beyond immediate relief, the pandemic has increased the urgency of economic transformation. We must help businesses and workers adapt and grow in an economy profoundly reshaped by COVID-19.
- To this end, we are accelerating our innovation and digitalisation push across each of our Industry Transformation Maps, growing our base of innovative enterprises, and pursuing new frontiers of growth by investing in research in areas like health and biomedical sciences, climate change, and artificial intelligence. We are forging stronger connections to major innovation nodes and key demand markets through trade facilitation and digital economy agreements, platforms like the Networked Trade Platform and Global Innovation Alliance, and by pressing on with major investments in our port and airport. These will strengthen our position as a Global-Asia node of technology, innovation, and enterprise. We are also building an adaptable and skilled workforce to take on quality jobs and to power our economic transformation, through the SGUnited Jobs and Skills Package and the Next Bound of SkillsFuture.
Strengthening our Social Compact
- We have been reviewing and enhancing policies over time to build a fair and just society. A strong society is our stabiliser in an ever more uncertain and volatile world. It has helped us to weather crises, while avoiding the social fractures seen in many other countries. We will redouble efforts to strengthen our social compact, and build a united Singapore.
- MOF will deploy resources to maintain social mobility and opportunities for all at each stage of life. We will continue to help those who start off with less. To give every child a good start in life, we are doubling our annual spending on affordable, quality pre-school education within the next few years, from 2018 levels. To help every worker progress throughout their working lives, we are investing significant resources to build an industry-relevant skills ecosystem that will enable Singaporeans to upgrade themselves.
- We will continue to strengthen our support for low-wage workers, vulnerable seniors, and households with greater caregiving burdens. This continues the shifts that we have progressively made over the years to strengthen social security, through schemes like Workfare and Silver Support, and enhancements to preschool, education, and healthcare subsidies. We will continue to support affordable and quality education, healthcare, and housing for the broad base of Singaporeans, particularly the lower- and middle-income segments. These investments build human and social capital.
Building a Safe, Smart and Liveable City
- Even as we meet our needs today, we must also build for tomorrow. MOF will continue to invest in building a safe and liveable home for our families, and support our vision of a Smart Nation, to improve our quality of life for current and future generations.
- We will continue to invest in our defence and domestic security to protect our interests and safeguard our way of life in an increasingly complex external environment. We will build new and stronger capabilities to defend ourselves from evolving and unconventional threats. We will strengthen our resilience against crises so that we can recover and emerge stronger.
- With our major investments in the coming years, Singaporeans will benefit from improved transport connectivity through new rail lines, and active mobility infrastructure. We will rejuvenate our housing estates, and build vibrant communities in our heartlands.We will make significant and early investments to help us mitigate and adapt to the effects of climate change.
Securing a Sustainable Future
- MOF is committed to maintain a sound and sustainable fiscal system that will enable us to realise our long-term plans for Singapore. Our fiscal strength has enabled us to navigate the COVID-19 crisis with confidence. It will also give us a competitive edge in a post-COVID-19 world that puts a premium on reliability and resilience.
- To combat this crisis, we have drawn on our reserves, equivalent to over twenty years of past budget surpluses. We have used a generation’s worth of savings to combat a crisis of a generation. We must therefore ensure that our fiscal balance is put back on a stable path when the economy recovers.
- We face a challenging fiscal environment ahead. COVID-19 will give rise to new spending priorities, even as we spend more to support our families with their healthcare and pre-school needs, and keep them safe. In parallel, revenues will come under greater pressure from slower global growth in the aftermath of COVID-19 and sharper international competition over tax revenues.
- We will take steps to strengthen our revenue position. We will do so in a way that fosters collective responsibility, with each generation contributing its fair share. We therefore plan to raise the Goods and Services Tax (GST) to help fund our growing healthcare and social spending needs, while making responsible use of borrowing to finance infrastructure investments that will benefit many generations to come. We will carefully monitor the timing of such moves, including the state of the economy and our spending needs. As announced in the Unity Budget, the GST rate increase will not take effect in 2021. We will continue to steward the reserves well to prepare us for future shocks and crises, and to invest them for long-term returns that will be shared equitably between present and future generations.
- We are committed to a fiscal system that is fair and progressive – with the better-off contributing more, and lower- and middle-income households receiving more in benefits than the taxes they pay. We will continue to adjust taxes on income, consumption and assets to achieve the right balance, while keeping our tax rates competitive.
- At the same time, we will ensure the effective and efficient use of public resources, maintain value-for-money Government procurement, and continue to support innovation and enterprise through our policies and practices.
Moving Forward Together
- We will need collective action at all levels of society to emerge stronger from the COVID-19 crisis. In the longer term, our success in building a vibrant economy, an inclusive society, and a better home will increasingly hinge on strong partnerships between Government, businesses, and community. We can achieve this through SG Together, collectively harnessing the best of our people, ideas, and energies to improve Singapore. MOF will continue to support, enable, and amplify the efforts, ideas and initiatives of the business and people sectors, to build a better Singapore together.