FY2025 MOF Committee of Supply Debate Speech by Second Minister for Finance Ms Indranee Rajah

A. A GREENER AND MORE SUSTAINABLE FUTURE 

A1. Mr Chairman, Mr Liang Eng Hwa asked what MOF agencies are doing to help prepare Singapore for climate change and environmental sustainability.

A2. Singapore is a low-lying island state. It is in our interest to support global efforts to deal with climate change. We have committed to a target of net zero emissions by 2050. This is not a light undertaking and requires a whole-of-Nation effort. MOF is committed to doing our part.

A3. Last month, MOF published an Occasional Paper explaining how sustainability considerations are factored into various stages of the Government’s budgeting cycle. 

a. This includes a commitment of over $10 billion in the decade leading up to Financial Year 2030 to support the Singapore Green Plan. 

b. We have developed new fiscal tools, like green bonds under the Significant Government Loan Act (SINGA), to catalyse our green financing market and support our longer-term spending needs for environmental sustainability. 

c. MOF has also established the Singapore Green Bond Framework, the second edition of which was released last month. 

A4. We are also incorporating sustainability considerations into government procurement.  

a. Environmental sustainability considerations are already incorporated into over 60% of government procurement by contract value. We aim to extend this to all government procurement by 2028, in a manner that keeps pace with industry readiness and international developments.   

A5. Participating in green government procurement is an opportunity for our businesses to build the track record to meet demands of buyers, investors, and consumers who are seeking greener goods and services. 

A6. The Government will be introducing mandatory climate-related disclosures in a phased approach. To help companies ease into the new reporting requirements, they can tap the Sustainability Reporting Grant and the SME Sustainability Reporting Programme to kickstart their journey.

A7. ACRA is also taking steps to grow sustainability reporting and assurance capabilities in Singapore, and build a robust pipeline of professionals in this area. This will also create more good job opportunities for Singaporeans. 

B. A CARING AND INCLUSIVE SOCIETY 

B1. Ms Foo Mee Har and Mr Louis Chua spoke about the need for a strong social compact. Indeed, Forward SG is an exercise in refreshing our social compact. The insights gained from the exercise have found their way into many of the measures in the Budget. 

B2. In his Budget speech, PM spoke about how the Government is fostering a more caring and inclusive society – one where every Singaporean feels valued and supported. 

B3. Inclusivity cannot be created through government policy interventions alone. It needs the collective effort of all of society.  We will spur collective efforts in three ways. 

FOSTERING A CULTURE OF CARE AND GIVING BACK

B4. First, we will continue to encourage individuals and businesses to give back to society. 

a. We offer 250% tax deductions on qualifying donations made by individuals and corporates. Under the Corporate Volunteer Scheme, corporates can also receive 250% tax deductions on wages and qualifying expenses when employees volunteer, provide services, or are seconded to Institutions of a Public Character. 

B5. Ms Foo suggested going further to encourage corporate giving, taking inspiration from India’s 2% mandatory Corporate Social Responsibility spending law.

a. We agree with the intent of Ms Foo’s suggestion, which is to encourage corporates to contribute. 

b. However, we are doing so in a different way. Through tax incentives, we encourage and support corporate philanthropy and allow businesses to contribute based on their own corporate values and business models. 

c. Requiring profitable companies to contribute a certain percentage of profits to corporate social responsibility would take the decision and the initiative out of the hands of corporates and be contrary to the spirit of philanthropy. 

B6. We also provide donation-matching grant schemes, such as Tote Board’s Enhanced Fund-Raising Programme (EFR), to amplify the impact of donations.

a. During the pandemic, we raised matching support under the EFR from 20% to 100% to galvanise community giving.  

b. As PM announced at Budget 2025, the Government and Tote Board will provide an extension of dollar-for-dollar matching for Financial Year 2025, in support of SG60. This enhanced support will gradually taper, reverting to pre-COVID levels in Financial Year 2027. 

B7. Through the EFR, SG Gives and other initiatives, the Government and Tote Board will set aside more than $600 million in matching funds to strengthen our spirit of giving. As we celebrate SG60, I hope Singaporeans will reflect on how far we have come together and donate generously.

SUPPORTING COMMUNITY PARTNERSHIPS THAT UPLIFT THE VULNERABLE

B8. Second, the Tote Board will allocate resources to support collaborations amongst Singaporeans who use their time and talents to uplift the vulnerable.

B9. The Tote Board’s Enabling Lives Initiative (ELI)  Grant supports community partnerships that benefit persons with disabilities.

a. Recently, a team of researchers, engineers, physiotherapists, and social workers used the ELI grant to develop a device that translates minute finger movements into software controls. It enables persons with muscular dystrophy to use smart devices, even in advanced stages of their condition. The product has tested well and the team is planning to scale up its deployment.

B10. To support more such partnerships, Tote Board has committed a further $23m to the ELI Grant until Financial Year 2028. 

MAXIMISING SOCIAL IMPACT OF GRANTS BY STRENGTHENING IMPACT MEASUREMENT CAPABILITIES

B11. Third, we are strengthening impact measurement capabilities across the non-profit ecosystem to maximise the social impact of our grants. 

a. Tote Board will onboard all new projects onto its Impact Measurement Framework by the end of Financial Year 2025.

b. Tote Board is also collaborating with the National Council of Social Service to set up a data hub to help the social sector move towards evidence-based interventions. The data hub will gather impact evaluation data, and provide common standards that more than 500 social service agencies, funders and the Government can use to measure outcomes.

B12. These efforts will allow Tote Board, as a grant-maker, to optimise resource allocation and spur the social sector towards greater effectiveness.

A FAIR AND PROGRESSIVE SYSTEM OF BENEFITS AND TRANSFERS

B13. I come now to Mr Louis Chua’s cut. 

B14. First, many Singaporeans remain anxious about cost-of-living pressures. Such concerns and anxieties are not limited to lower-income households. Recognising this, the Government intentionally designed the CDC Vouchers scheme as a broad-based measure to provide support and assurance for all Singaporean households. It initially started out as a small scheme for the lower-income, but recognising these cost pressures on all households, something which has been echoed in this Chamber by many Workers’ Party speakers, the Government extended it to all households. 

B15. This is not to say, however, that we do not have other schemes which are targeted. I note Mr Chua called to redesign, although it is not clear whether this is in addition to the CDC Vouchers or not, to provide more targeted support for daily necessities, and he referenced the Blue and Orange CHAS card as a way of triaging or indicating who would be eligible.

B16. I see that Mr Chua has drawn inspiration from the CHAS Blue and Orange card holders scheme that NTUC FairPrice has launched. 

B17. The fact of the matter is that the Government already has in place a comprehensive system of targeted support in which the lower-income receives much more. 

a. Under the enhanced Assurance Package and the permanent GST Voucher scheme, households with less means can get more cash transfers, as well as larger rebates for utilities and Service & Conservancy Charges. 

b. On top of these, PM increased the rates for ComCare Assistance schemes in this Budget, to better support lower-income and vulnerable families with basic living expenses. We also recently enhanced Workfare and Silver Support to provide targeted structural support to vulnerable groups. These include lower-wage workers, and seniors with low incomes in their working years who now have less savings in retirement.

B18. If one looks at the system of Government subsidies and transfers as a whole, you will see that the Government has put in place a progressive system that provides more for those with less. PM just showed earlier a chart in his Round-Up Speech a couple of hours ago, where in short, everyone benefits from government spending, but the lower-income and the vulnerable receive more.

C. VALUATION OF PUBLIC HOUSING LAND 

C1. I now turn to the Leader of the Opposition Mr Pritam Singh’s cut. Mr Singh wanted to know why there is no information available to the public about land prices for HDB flats, similar to the 118-zone Land Betterment Charge (LBC) Table of Rates, and how the Chief Valuer (CV) assesses the value of land purchased by HDB to build flats.

C2. Mr Chairman, there are two parts to this cut. First, the comparison to the LBC Table of Rates. Second, how the CV assesses the value of the land. I will deal with each in turn.

C3. First, the comparison to the LBC Table of Rates is misconceived. The general principle is that rates or valuations are made known to parties who would have to pay the fee or the price. 

C4. The LBC is a tax payable on the enhancement in land value arising from modifications landowners make to their land. 

a. Any landowner can make this request to modify their land, such as to intensify the use of the land, and this is subject to approval by URA or SLA. Following this approval, they would have to pay the LBC.

b. There are several hundred LBC transactions in any given year. 

c. For ease of tax administration, we have a Table of Rates (TOR), instead of valuing each transaction individually. 

d. This TOR is made public so that the parties who need to make payment know how much they have to pay. 

C5. However, the CV could also do a site-specific, or what we call, a spot valuation of the land value enhancement for each case. 

a. This happens if the landowner opts for it for precision, or if the LBC TOR is not applicable, such as when the current or proposed new use do not fall within a comparable Use Group within the LBC TOR.

b. For this spot valuation, the CV would use established valuation methodologies, consistent with how she values any State Land for sale. 

c. In this instance, the spot valuation outcome is made known to the requesting party, as the potential paying party, but not to the general public at large.

C6. The valuations for State Land purchased by HDB are all spot valuations because there is only one buyer – HDB. 

a. The valuation outcome is made known to HDB as the paying party. 

b. It is not necessary to put out a public table of rates like the LBC TOR, as there are no other buyers for these sites. 

C7. In all three instances, whether it is LBC TOR, the spot valuations for landowners, or HDB, the CV uses established valuation methodologies.

C8. Let me now deal with the second part, on the valuation of land sold to the HDB. Mr Singh asked how the CV “discounts” the land sold to HDB. 

C9. Again, this question is misconceived. There is no discount. 

C10. HDB pays fair market value for State Land. The fair market value is determined by the CV using established valuation principles.

a. This approach would be no different from that of other professional valuers. 

b. The normal approach is to reference comparable transactions. Private housing transactions would not be a suitable reference as public housing has restrictions, such as a more stringent eligibility criteria.

c. Hence, for public housing land, the methodology takes into consideration relevant resale flat transactions and site-specific attributes. 

C11. So, for the reasons I have just explained, the fair market value of land sold for public housing will typically be lower than the fair market value of that same land if it were to be sold to a private developer for private housing. 

C12. This is not a discount. It is the fair market value of land intended for the purposes of public housing. One must not confuse the two concepts.

C13. Our approach of paying fair market value for land, including land sold to the HDB, helps maintain our reserves for the benefit of all Singaporeans. 

a. By putting the fair market value of land into the reserves, we preserve the value of our reserves.

b. The financial proceeds of the sale are invested to grow them for the benefit of Singaporeans. 50% of the investment returns on our reserves supplement the annual Budget through the Net Investment Returns Contribution (NIRC).

c. This careful approach of managing our reserves strikes a balance between the needs of current and future generations of Singaporeans.

C14. Then Mr Singh also made a reference to BTO flats. He said, “What we do know is that the land price for BTO flats takes reference from resale HDB prices, and with the increase in resale flat prices for 2024. There is inevitably a serious concern about whether land for HDB BTO flats is priced sustainably, or if growing subsidies are going to be needed in the future.” 

C15. That is a question of the price of the BTO unit, not of the price of the land that HDB purchased. That is a separate concept, and we have answered this many times before, but let me do a very quick summary.

C16. The issue of land costs should not be conflated with BTO affordability. The land cost is the amount paid by HDB for the land. That is different from the flat price, which is what the BTO flat buyer pays HDB for the unit. BTO flat pricing is based on affordability, not cost. We have explained this many times before.

C17. HDB first establishes the market value of the flats by considering the prevailing market conditions, the prices of comparable resale flats nearby, and the individual attributes of the flat. It then applies a subsidy to ensure that BTO flats are affordable for Singaporeans across different income levels. Then on top of this, HDB provides housing grants to support eligible first-time buyers, with lower-income buyers receiving more support of up to $120,000. The pricing of BTO flats is therefore not based on the land cost of the flats, and we do not pass land costs through to the BTO buyer.

C18. Our approach has paid off. 

a. We have one of the highest homeownership rates in the world, with 90% of households owning their own homes. 

b. Our BTO system plays an integral part in keeping public housing affordable for Singaporeans. 

c. By pricing BTO flats based on affordability, more than eight in 10 first-timer families who collected keys to their BTO flat last year had a mortgage servicing ratio of 25% or lower. This means they were able to service their monthly mortgage repayments with their monthly CPF contributions, with little to no cash outlay. This has remained stable in the past few years. 

D1. We have also taken further steps to ensure that BTO flats remain affordable and accessible to Singaporeans.

a. HDB will provide additional subsidies to those buying Plus and Prime flats, on top of the significant market discounts that already apply to all BTO flats. To ensure fairness, we impose tighter restrictions and a subsidy recovery rate commensurate with the extent of additional subsidies. 

b. Over the past five years, we have ramped up our BTO supply significantly to meet Singaporeans’ demand for housing, and HDB is on track to exceed its commitment to launch 100,000 new flats from 2021 to 2025.

D2. Mr Chairman, these figures speak for themselves. Our approach ensures that BTO flats remain affordable and accessible to Singaporeans, and we will continue to keep it that way.