Referencing the 2002 Budget Statement, MP for Jurong GRC Mr Xie Yao Quan observed how the PAP Government has been spending more and doing better for Singaporeans over the years — all while doing so sustainably and responsibly.
Below is an excerpt from Mr Xie’s Budget debate speech, delivered today (Feb 22, 2023).
Back in 2002, total operating and development developmental expenditure was S$28 billion or 17 per cent of GDP.
Fast forward two decades, in this year’s Budget, it is S$104 billion — four times — but we’ve managed to keep this at 16 per cent of GDP.
In other words, the Government has been spending more and more, and doing better and better for Singaporeans year after year, and it has been doing so sustainably and responsibly.
How has the Government done this?
First and most obviously, by ensuring our economy grows.
Between 2002 and 2023, our economy has grown by four times in nominal terms too, keeping pace with spending. The Government has grown the pie so that it can do more for Singaporeans sustainably.
That is the first order of business.
But second, in these years, the Government has also found new important ways to maintain our fiscal sustainability.
It transited from a Net Investment Income framework (NII) to a Net Investment Return framework (NIR) to leverage more on the strength of our reserves to fund current needs.
NII contribution in 2002 was $2.4 billion, 1 per cent of GDP. Today, NIR contribution is $24 billion, or 4 per cent of GDP.
On the other hand, in 2002, taxes and fees amounted to 17 per cent of GDP. Today, it is 15 per cent — lower than in 2002, although our spending needs have gone up — shot up — dramatically.
And so the Government has done this while keeping personal and corporate income tax regimes highly competitive.
That is why we need GST, which taxes consumption rather than income as another part of our fiscal base and that is why GST has gone up.
Yet with our unique system of permanent offsets, we make sure the bulk of higher GST is net-net raised from foreigners, tourists and higher-income Singaporeans but channelled towards benefiting all Singaporeans.
In our revenue base today, taxes and fees are already at 15 per cent of GDP. How much lower do we want to go?
NIR, on the other hand is already at 4 per cent. How much higher do we want to go? How much more do we want to leverage on our reserves?
As a society, we will have to make our own judgments based on our shared values.
Higher GST in a high-inflation era creates anxieties for Singaporeans, but it is the right thing for all of us to do for ourselves and our future generations.
While raising GST, the Government has rolled out decisive moves to put cash in Singaporeans hands, to uplift real wages, especially at the bottom and to provide immediate assurance.
It shows a remarkable political will to do right by Singaporeans in the long term, and to take care of Singaporeans’ needs in the short term.
In management studies, there is a concept by Jim Collins about eschewing the “Tyranny of the Or” and exercising the “Genius of the And”.
Now, in the context of governing a country, I would refrain from using the word “genius” but “gumption” perhaps or “steel”.
The Government has, over the decades, steadfastly eschewed false choices, avoided the “Tyranny of the Or” and held on to “Gumption and Steel of the And”, and it shows in how it has raised GST responsibly, while taking care of cost-of-living concerns compassionately.
There is something else to be gleaned from the 2002 Budget Statement. Then-DPM Lee introduced an offset package while announcing the increase in GST from 3 to 5 per cent.
And he said this in 2002, more than 20 years ago, and I quote:
“The offset package will cover at least five years’ worth of additional tax payable for all flat sizes. And in fact for those living in one-or two-room HDB flats, they’ll be covered for the next 10 years.”
Sounds very familiar.
In 2007, then-Minister Tharman rolled out an offset package along essentially similar lines.
20 years on, today, the Government carries on the tradition and remains consistent in its commitment to take care of Singaporeans.
It is remarkable.
The 2002 Budget was billed “A Budget for A Different World”.
Singapore was coming out of its worst recession at that time since India independence, and then-DPM Lee said, and I quote:
“We are entering a very different world. Conditions are uncertain and volatile competition is intense and change is faster than ever…We cannot prevent the changes from happening. Instead, we must act decisively.”
Today we are debating a budget that’s titled “Moving Forward in a New Era”, indeed, another different world, and the words uttered in 2002 ring as true today.
But I am confident that if we stay open as a country and embrace the world, stay nimble as a tribe and seize opportunities to make hay when the sun shines and stay united as one people and take care of each other, we will have another brilliant 20 years ahead of us towards SG75 and towards SG100.
Top image via Xie Yao Quan/Facebook