Addendum to the President's Address by Minister for Finance, Mr Tharman Shanmugaratnam26 May 2009
1 Our fiscal policies aim to see Singapore through the current downturn, while pressing ahead with investments that prepare us to grow in the years ahead and maximise opportunities for every Singaporean. With a more challenging economic environment, we have to make judicious use of our resources to develop new competitive advantages for our economy and ensure the well-being of our citizens.
Sound Fiscal Policies Give Decisive Advantage
2 We will maintain the prudent budgetary policies that have served Singapore well and allowed us to build up significant reserves.
3 We tapped the reserves for the first time in Budget 2009, to enable Singapore to respond decisively to the economic crisis. The justification for this draw on reserves - the unprecedented global situation, and the exceptional and temporary nature of the expenditures to be funded by the reserves - sets a high threshold for any future draw on the reserves.
4 We must ensure that the Government continues to spend within its means, so as to achieve a balanced budget over the medium term. Expenditures will grow in coming years, as we respond to a more competitive global environment and the needs of an ageing population. Government expenditures are likely to increase from 15% of GDP to about 17 to 19% of GDP over the next 5 to 10 years. This is why we have strengthened our revenue structure, by raising the GST to 7% from 2007 and implementing a new framework for spending out of Net Investment Returns (NIR) from 2009. The additional revenues have already enabled major new initiatives, such as Workfare for lower-income workers, and investments in life-long learning.
5 The Government will hold to a framework that enables GIC and Temasek to invest in diversified portfolios aimed at achieving long-term returns. This remains the best way to sustain the growth of our reserves over the long term, and to provide a continued stream of revenues for the Budget.
6 Cost-effectiveness must however remain a key priority in all government spending. Our best-sourcing and cut-waste efforts, value management of major projects, smart procurement practices and ex-post value for money reviews will contribute to this. We will also seek to make more efficient use of land and buildings and improve cash management in statutory boards.
Preparing To Seize New Opportunities
7 We are using our fiscal strength to mitigate the impact of the global downturn on Singapore. But we are also stepping up investments to transform Singapore into a high-capability economy, and a global city that stands out for its liveability. We will invest in a significantly expanded transport network, downtown features, waterways and parks that make Singapore a distinctive home. Further, we will intensify our push into R&D, enhance efforts to commercialise research output, and make innovation more pervasive across the economy.
8 We will keep taxes competitive to encourage enterprises of all sorts, and improve tax administration to keep compliance costs low. We will also conclude more bilateral agreements for Avoidance of Double Taxation, which allow for exchange of information where there are proper grounds to do so, in keeping with current international norms. Further, to speed up customs clearance of Singapore exports overseas, we will work to conclude mutual recognition agreements on supply chain security with key partner countries. The Companies Act is also being thoroughly reviewed, to ensure an efficient and transparent corporate regulatory framework that supports Singapore's growth as an international hub for both businesses and investors.
Building A Secure, Cohesive And Inclusive Society
9 Besides a competitive economy geared to new opportunities, a key focus of fiscal policy will be to support the Government's efforts to build an inclusive society and preserve the nation's security.
10 We will help every citizen keep upgrading himself, by investing heavily in education and skills upgrading, and keeping fees affordable in our publicly-funded educational institutions and workforce training schemes.
11 We will increase spending to build up our healthcare capabilities. Through the CPF and public housing systems, we are also better preparing citizens for their retirement and healthcare needs as the population ages. In addition, more resources will be devoted to helping families raise the next generation of Singaporeans.
12 We will ensure effective social safety nets, founded on the principle of self-reliance, for Singaporeans who need additional help. To complement these government schemes, we will encourage and incentivise charitable giving and philanthropy. The Singapore Totalisator Board will itself be enhancing its contributions to the community for worthy causes.
A Whole-Of-Government Approach
13 We will push ahead with integrating and coordinating Government services to provide maximum value and convenience to citizens and businesses. New internet technologies will allow for further improvements and enhance citizen engagement in this regard. We will also forge closer partnerships with the private sector to develop and test-bed innovative solutions in public sector services.
14 The Singapore Public Service Annual Report (SPAR), to be released annually from next year, will track whole-of-government efforts to achieve strategic outcomes for Singapore in the face of increasingly complex and intertwined challenges, and identify areas for improvement.