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FY2024 MOF Committee of Supply Debate Speech by Second Minister for Finance Ms Indranee Rajah

28 Feb 2024


1. Mr Chairman, Mr Liang Eng Hwa, Ms Jessica Tan and Mr Saktiandi Supaat asked how the Government ensures effective and prudent use of public resources, including for spending needs that span several years. 

2. We seek to achieve prudent spending with good outcomes i.e., value for money. Today, our government expenditure as a share of GDP is about 18%, which is among the lowest across advanced economies; yet at the same time we are ranked highly on many economic and social indices. 

3. Based on 2022 OECD data, general government expenditure in other advanced economies such as the UK, Korea, and Germany exceeded 40% of GDP, while that of Switzerland was about 30% of GDP. 

4. As our spending needs rise, we will continue to manage our expenditure growth carefully. We have mechanisms to evaluate our spending, and to re-allocate resources across the Government. For instance, in FY2023, the Government implemented a 1% cut to the budgets of all Ministries and Organs of State, and channelled the funds towards new and emerging priorities. 

5. Aside from prudent spending at the macro-level, we also constantly strive to optimise our spending. 

6. First, for large expenditure items such as major infrastructure projects, MOF applies additional scrutiny to evaluate their worthiness and cost-effectiveness.  

7. Of the large infrastructure projects submitted for approval in 2023, MOF was able to achieve total cost avoidance of around $1.6 billion (or 7.6% of projects’ capital cost) by working with agencies to explore more cost-effective solutions and alternatives, and size the scope and budget of the projects judiciously. Larger-scale and more complex projects are also reviewed by the Development Projects Advisory Panel, comprising experts from across the private and public sectors and academia.  

8. This is in addition to agencies’ own efforts to ensure cost-effective infrastructure spending when they are developing their designs. For example, the Land Transport Authority considers rail alignment, site and ground conditions, in determining the appropriate tunnelling design for our Mass Rapid Transit system. For phase 2 development of the Cross Island Line, it was assessed that twin-bore tunnels instead of single-bore tunnels could be used for selected stretches. This is expected to achieve cost avoidance of approximately $310 million.

9. Second, Government programmes are subject to evaluation and reviews, to ensure that their purposes are met. Where relevant, the findings also inform how these programmes can be refined, to enhance their effectiveness. 

10. For example, a study commissioned by the Early Childhood Development Agency (ECDA) showed that parents and caregivers who received KidSTART home visits had more positive interactions with their children than families who did not receive such support, and these children also showed improved socio-emotional development. As a result, the revised KidSTART model will deliver child development interventions mainly through home visits. 

11. Government agencies also constantly re-engineer their processes and digitalise them for greater effectiveness and efficiency. For example, the Accountant-General’s Department digitalised audit workflows across the Public Sector through the Audit and Governance Enterprise Management system, to enable timely identification, analysis, and remediation of audit issues across the Government. 

12. The public sector is committed to ensuring that our processes are kept lean and efficient; while providing ample guidance and ensuring sound governance for public officers to respond in an agile and nimble manner. 


13. Mr Liang Eng Hwa and Ms Jessica Tan also asked how MOF is strengthening our competitiveness and hub status.

14. Through decades of hard work, we have built an international reputation as a reliable and trusted hub for business and trade. 

15. A key enabler is to have a strong and robust accountancy and audit ecosystem. Accountants play a vital role in safeguarding and supporting businesses, and Singapore’s strong accounting sector has been the bedrock of our trusted business hub. But the sector has faced manpower challenges in recent years. Fewer students are enrolling in accounting degrees, and among the graduates, fewer are pursuing accounting-related careers. 

16. MOF set up the Accountancy Workforce Review Committee, (AWRC) in 2022 to study these challenges and see how we can build a sustainable pipeline of local accountancy talent. The AWRC’s work is almost completed, and the Committee expects to issue its recommendations in the coming months. 

17. In line with the AWRC’s deliberations, the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Singapore Chartered Accountants (ISCA) have expanded the pathways for Singaporeans to consider accountancy as a career and obtain the necessary professional qualifications and experience to practise as an accountant. 
a. One key initiative is the enhancement of the Singapore Chartered Accountant Qualification (or SCAQ), which will create more opportunities for local polytechnic graduates to become professional accountants. Some of the programme’s requirements will also be streamlined while maintaining rigour and quality. 

18. MOF and ACRA have also been galvanising stakeholders to support the AWRC’s work. For example, the Nanyang Technological University (NTU) recently launched a new 4-year Bachelor of Accountancy in Sustainability Management and Analytics. This builds on NTU’s existing 3-year Bachelor of Accountancy programme, with new features such as a 30-week internship component for practical industry exposure, and opportunities to work or study overseas. Through these, students will be able to accumulate more work experience and career development opportunities earlier, and enjoy an accelerated pathway to becoming a Chartered Accountant.  

19. I am confident that our partnership efforts with stakeholders will strengthen the accountancy sector, and in turn, Singapore’s position as a trusted business hub. 

20. Another key competitive advantage of our business hub is our pro-business, pro-trade stance. 

21. MOF continually works to enhance our trade processes to facilitate the flow of goods and reduce regulatory costs for businesses. Singapore Customs has played a leading role in developing the Mutual Recognition Arrangement (MRA) signed by all ASEAN member states. The MRA will recognise each member state’s Authorised Economic Operators (AEOs). Under this arrangement, the AEO companies will enjoy faster documentary and cargo clearance for movement of goods within ASEAN. This saves time and money and shortens the time for goods to reach market. A six-month pilot has commenced with six ASEAN member states, and we aim to implement the arrangement in the third quarter of 2024. This is our first multilateral MRA and adds to the 12 bilateral MRAs we already have with other jurisdictions.

22. As trade with ASEAN member states accounts for a significant 28% of our trade in goods, this will benefit many businesses.

23. By improving and streamlining our trade processes, we are also strengthening Singapore’s position as a global trade node.

24. We cannot take Singapore’s hub status for granted, and I urge all stakeholders to work with our businesses and help them acquire new capabilities and be more competitive. 


25. Mr Leong Mun Wai asked whether the Government has over-resourced the Merdeka Generation Fund, and may be doing likewise for the Majulah Package Fund.

26. This suggestion is not correct. Let us first start with the principle underpinning our approach. For large commitments like the Merdeka Generation (MG) Package, we set aside resources as and when we can, to meet our commitment to every single one of our MG seniors. This is the approach of the Government. 

27. Back in 2019, we projected that we would need more than $8 billion in total to meet our commitments to all Merdeka Generation seniors. This was based on projections of spending and life expectancy. However, to meet this spending, we did not have to set aside the entire $8 billion. We needed to inject only $6.1 billion into the MG Fund, because every year, the Fund grows from investment and interest income. 

28. In the four years since 2019, we have disbursed $0.9 billion from the Fund. At the same time, we have concurrently earned investment and interest income. As such, the net drawdown is $0.4 billion. The Fund balance is now $5.7 billion. This can be found on page 79 of the Government Financial Statements. $5.7 billion is less than what we would need to meet our remaining commitment to the MG seniors.

29. Taking into account that we have already met some of our commitments from paying out over the last four years, the estimated amount needed to meet remaining liabilities is $6.0 billion, and that is at page 78 of the Government Financial Statements. This is more than the $5.7 billion remaining in the Fund. There is a shortfall. We will continue to carefully monitor healthcare utilisation and longevity trends, and make top-ups in future if necessary.


30. Mr Leong then had several other miscellaneous questions. His questions can be categorised into two groups, one on revenue, and the other group on some specific expenditure items. 

31. In relation to the first group, he had suggested that we had not provided sufficient information on taxes. The information is already available in the Revenue and Expenditure Estimates, also known as the Budget Book. Let me deal with his questions quickly.

32. He said that we did not explain what “Other Taxes” were. This can be found in the Overview of the Budget Book on pages XIX, which tells you “Other Taxes” comprises the Foreign Worker Levy, Water Conservation Tax, Land Betterment Charge, and Annual Tonnage Tax. It is also on pages XX, XXI, and XXII. 

33. Mr Leong also asked for the reasons why we collected higher revenue on Other Taxes and Corporate Income Tax. The reasons can be found in the Analysis of Revenue and Expenditure which was published on the same day as the Budget Book, and can be found on the MOF website. 

34. Very briefly, the FY2023 estimates for Other Taxes were revised upwards because of higher Land Betterment Charge collections from unforeseen redevelopment projects. The increase in the FY2023 estimates for Corporate Income Tax was due to stronger than expected economic growth in 2022.

35. For the second group of questions: 

a. On ERP, the revenue estimates are reported under the C16 Account – Transport and Communication License and Permits. For both FY2023 and FY2024, ERP collections are estimated to be about $80 million annually.

b. On Foreign Worker Levy, the total levy collected is projected to be around $6.5 billion for FY2023 and around $6.8 billion for FY2024. Based on actual collections from January to December 2023, Work Permit and S-Pass holders accounted for around 77% and 17% of total collections respectively, with the rest attributable to Migrant Domestic Workers.  

c. On land sales proceeds, the receipts fluctuate based on the projected number and value of land sales each year. These are driven by our physical planning needs. We are estimating higher receipts in FY2024 because we expect more higher-value land sales in the coming year.

d. On property taxes, because Mr Leong asked why there was a significant increase in property tax despite the revisions in the taxable Annual Value (AV) bands, we would like to clarify that the revisions in AV bands will only take effect from 1 Jan 2025. I should also point out that the $753 million figure – was actually the change in property tax collections for all privately-owned properties, not just private residential properties. In other words, non-Government properties, which would include commercial properties as well. 

36. More generally, any report, including the Budget Book, presents data in meaningful ways for its users. So not every single tax, fee, line item expenditure or capital receipt is listed. So you can imagine how many more pages the Budget Book would need to have if that were to be the case. We therefore aggregate smaller items into larger groupings in our reporting and highlight the more salient changes. As it stands, our Budget Book has comparable amount of detail to jurisdictions like Hong Kong and India.   

37. Moving on to expenditure, some of these cuts would have been better addressed by other Ministries. Nonetheless, since Mr Leong has raised them, I will touch on them briefly.

38. On SPH Media Trust, the Minister for Communications and Information will share more at MCI’s COS.

39. On HDB’s deficit, it is on the books of HDB, which is a Statutory Board. Hence, information on HDB’s deficit can be found in HDB’s Financial Statements, rather than the Revenue and Expenditure Estimates. Mr Leong can refer to the FY2022 Financial Statements available publicly for the latest figures. FY2023 and FY2024 information will be published in due course.

40. With regard to Ministers travelling overseas for official appointments in their private capacities, this information is not tracked as a separate item of expenditure.  First, it is important to understand, that Ministers taking up international appointments in their private capacities are allowed to do so only when it is in the interest or in the service of the nation. In other words, in those situations, they are travelling and working on behalf of the State, albeit in their private capacity. They are doing it for the State, even though they are using their private capacity. This is not a case where it is the State funding their own personal things. They are allowed to do this, because it is in the interest of the State that they do so. As such, it will be part and parcel of the normal expenditure that you would expect and it comes under the expenses reflected in two accounts, “2100 Consumption of Products & Services” and “2400 International & Public Relations, Public Communications”, on page 8 of the Budget Book. In any case, there are very few who have done so, and when the few Ministers travel in their private capacity, they may also have official meetings. In fact, to save time, very often we would do that. So one trip may serve multiple purposes, some in their official capacity, and then one or two meetings in their private capacity.  

41. The spending on all development projects is available in the Budget Book. This includes ongoing projects with total project costs exceeding $1 billion, such as the Woodlands Health Campus and Phase 2 of the Deep Tunnel Sewerage System. The focus of providing these spending figures is for accountability of spending on these projects. As the total project cost and annual spending of each development project is listed in the Budget Book, Mr Leong can look these up, based on his area of interest.

42. And finally, regarding capital injections into Temasek Holdings, Mr Leong previously filed a PQ on this topic in January last year. MOF provided him the figures for 20 years up to March 2022. Since then, capital injections into Temasek are similar to the average annual historical capital injections mentioned in our earlier PQ reply. 

43. Mr Chairman, MOF is committed to ensuring fiscal sustainability, prudent spending and achieving good value-for-money outcomes for the benefit of current and future generations. 

44. Let us continue to work in partnership to build a strong, united, and inclusive Singapore.