Budget 2022: Charting our new way forward together — speech by LO Pritam Singh

Mr Speaker, what caught my attention about the Budget speech was the Minister for Finance’s characterisation of the Budget as a “first step” to renew and strengthen Singapore’s social compact towards a fairer, more sustainable and more inclusive society. The Workers’ Party agrees with this important direction in pathfinding the way forward for our little red dot. Workers’ Party Chair and Aljunied GRC MP Ms Sylvia Lim will speak further on this with inputs on inclusivity and innovation in her budget debate speech tomorrow.

However, there are aspects of the Budget that are of concern to us. We disagree with the decision to raise the Goods & Services Tax (GST), especially at this time, and the WP MPs who speak after me will put forward alternative ideas for revenue generation. 

I will outline the Workers’ Party position on the GST and briefly introduce the areas that WP MPs will speak on. Then, I will share my views on the main prongs of the Budget. 

The WP position on taxation

First, the GST increase. While the GST hike was anticipated, it comes at a difficult time for our people. Inflation is on the upswing and prices are high. Supply chain disruptions are having an outsized impact on people’s purses. There is real concern on the ground that the announcement to raise the GST will lead to price rises across the board. In fact, some price rises have already occurred, with speculation that these were in anticipation of a GST hike.

The Workers’ Party position is that the Government need not raise the GST. There are other options for raising revenue. A Straits Times column last month discussed the urgency of rebuilding public finances in the face of Budget deficits and drawn-down of reserves. The GST hike was held up as being “one of the largest and most stable” revenue sources, difficult to replace with any other kind of tax. The impression created by the article and similar arguments was that raising GST is the only viable option for financing offset packages for the needy and healthcare, and to balance the Budget. We disagree that there no other options.

The Workers’ Party has previously raised several proposals in this House, on both taxes as well as adjustments to the reserves framework. These options do not constitute a raiding of the reserves as the PAP enthusiastically and inaccurately portrays. We have supported the call for fiscal prudence as a principle of governance. But we also believe that the judicious use of progressive tax measures can achieve wider societal goals in Singapore. Within this term of Parliament we have proposed a wealth tax and raised the prospect of more progressive corporate tax policies. We have also supported the carbon tax. 

The Government, has for its part, not rejected further wealth taxes outright, but spoke of the difficulties of implementing some of these tax measures. These will have to be pro-actively explored particularly in view of the limited impact of some measures announced in this Budget which have been characterised as a tax on wealth.

For example, on the Additional Registration Fee or ARF tier for luxury cars announced by the Minister for Finance, a senior manager of a large car dealership which includes luxury vehicles in its stable was asked if the higher ARF would curb spending on high-end cars. He was quoted in the Business Times as saying “It’s possible. But I think there’s still enough wealth going around.” 

As the Government continues to explore wealth taxes, the Workers’ Party’s view is that a distinction needs to be made between different types of wealth taxes. We should recognize the legitimate accumulation of wealth through effort and tangible business activity, especially that which creates jobs for Singaporeans. Even as there remains scope for wealth taxes, the values of entrepreneurship and equitable reward for hard work can nonetheless be recognised and even promoted through tax rebates or reliefs for such individuals.

However, wealth accumulated through capital appreciation and that which leans on arbitrage should be dealt with differently and taxed accordingly in the name of a fairer and more inclusive society. 

The Workers’ Party has also previously asked if we can tweak the reserves framework and the way the reserves contribute to our Budget. We have proposed including a portion of land sales into recurrent revenue, and also an adjustment of the NIRC allowed for recurrent spending to be raised to 60% from the current 50%. The Government has disagreed with these reasonable suggestions. 

In 2001, then PM Goh referred to the reserves as a Golden Goose. The Workers’ Party remains of the mind that we can continue to grow the golden goose, but at a slower rate. The impending population bulge for our seniors portends stress lines for our healthcare needs and our welfare system. The Minister projected that starting from current levels of healthcare spending and assuming increases at a similar rate in the next 10 years, the Government could be spending $27b on healthcare yearly by 2030 compared to 11.3 billion in 2019.

But the fact is that our population is getting older and living longer. While it is responsible to ensure that wastage is minimised as far as possible, our healthcare needs will likely be on an upward trajectory. For the very Singaporeans whose energies contributed to the reserves and who played their part to fatten the Golden Goose, spending for them in their golden years, and at their time of need should not even be a question. Moderating the growth rate of the reserves also improves intergenerational equity and accounts for the changing needs of Singapore and its people.

It must be noted that the Government has shown over time that they are of a similar mind. At the 2001 National Day Rally, then PM Goh said that the reserves must be protected and fattened. However, changes to the reserves scheme have been implemented by subsequent PAP governments.  The 2008 change of the Net Investment Income to Net Investment Returns (NIR), with the immediate inclusion of up to 50% of NIR contributions from MAS and GIC, and the 2015 inclusion of Temasek in the NIRC formula were all deliberate moves. These changes have made the NIRC component the largest source of revenue for the yearly budget, from around $2b in 2006 to close to $22b for the upcoming financial year. This number will only continue rising. This is despite the fact that the Government’s adjustments have slowed the rate at which the reserves grow.

Here, I ask this Government not to rule out changes to our Budget framework. Just as we should not kill the golden goose, we should also not fatten the golden goose at the expense of the people’s well-being.

On the necessity of a GST hike, the Workers’ Party has made the point that the Government should lay out its revenue and expenditure projections for the rest of the decade. This is so that the necessity of a GST hike can be considered properly and with greater introspection. We note the Government has resisted the publication of such revenue and expenditure projections. Publication of such information is not unusual in other jurisdictions.

Just last week, on the 23rdFebruary, the Hong Kong government issued its budget statement. At Appendix A, the Hong Kong budget includes a medium range forecast of its revenue and expenditure positions for each subsequent year up to fiscal year 2026-27, with assumptions laid out. Can the Minister tell us why the MOF does not make such medium-term forecasting part of our public-facing budgetary process? And more specifically, does the MOF have such projections at least up to five years into the future, and what is the hesitation in publishing these projections? Doing so would allow the public to have an in-depth insight as to need to raise GST, and the sustainability of public finances in the years to come.

The question of projections with respect to public finances must also considered in the context of the absolute necessity of the GST at this point in time. For example, a Business Times article today advanced a view held by market watchers that Singapore could potentially make a net gain in terms of revenue from the global move to introduce a standardised minimum corporate tax rate.

GST Hike

Even so, it is of little doubt that the GST has been put to good use by the Government to finance spending. But after more than two decades, its drawbacks remain. The GST is a regressive tax that hits lower-income earners harder, and this fact has been recognised since the GST was introduced in the early 1990s. My colleague, Sengkang GRC MP He Ting Ru will speak more about the GST.  

Like now, the concerns back in the 1990s were about the average Singaporean worker, who was vulnerable to increases in the prices of necessities. Today, with offset packages targeting low and middle-income Singaporeans, it is the middle-class that is particularly anxious. In spite of the headline-grabbing GST offset-package announced at this Budget, there is anxiety as to how much prices will rise in future, over the period the offset package would cover.

In addition to concerns about spikes for specific CPI items, they are also concerns about minor price hikes across the board that will hurt cumulatively, not too different from the analogy of the frog in a pot of gradually boiling water. Should the aggregate of price rises be significant, the impact of the additional offsets may not be as optimistic as highlighted in Annex F-2 of the Budget for 3-room and 4-room HDB households, where the enhanced assurance package is estimated to offset the GST hike for 11.8 and 7.9 years respectively. As Singaporeans well know, no offset package lasts forever. The Government expects that in time, Singaporeans will internalise the GST hike.

At this Budget debate, the Workers’ Party will raise additional alternative proposals to raise revenue so as to stave off a GST hike. In particular, Sengkang GRC MPs Louis Chua and Jamus Lim will explore other levers for revenue generation. Apart from the reserves framework, the alternatives proposed by the WP are not inconsistent with the principle that recurrent expenditures should be met by recurrent revenues. 

What continues to weigh heavily on Singaporeans today is the rising cost of living, including for the middle-income or sandwiched class. Cost increases in electricity, gas and transport were thrust upon Singaporeans last year and over the last few months. Energy prices continue to rise.

The enthusiasm with which the Government spoke of the Electricity Retail Market in 2018 as a means to manage the cost of living has become decidedly more muted with the exit of multiple retail players. In December, the electricity tariff for households was raised by 5.6%. And there was a recent revision of household refuse collection fees, which took effect last month after a previous hike in 2017. 

A Today article from late October last year, quoted the Monetary Authority of Singapore predicting that food, preschool and healthcare costs may go up this year. In view of the current economic outlook, it is safe to say that this is a foregone conclusion. According to data released by the MAS and MTI last week, the headline Consumer Price Index remains at what it was last December at 4%.  CPI data from last month show that utilities and other fuels rose 11.8% compared to a year earlier and transport is up by 12.7% year-on-year. Lower-income Singaporeans, working Singaporeans and middle-class Singaporeans – all are being hit very, very hard.

There is also a pattern of increasing public transport fares over the last three years, as shown in information from the Public Transport Council. While adult card fares were alternatingly increased and reduced between 2014 to 2017, they were raised by 6 cents in 2018, a further 9 cents in 2019, then another 3-4 cents in 2020. While measured in cents, these increases are by no means small to many who have to incur these costs every day, not as a luxury or as discretionary spending, but as an unavoidable expense simply to get to work and back. About three weeks ago Comfort Taxis announced an increase in fares by 8%. Just last Friday, all the other taxi companies announced that they would follow suit.

All these, and the other inevitable price hikes to come over the next five to 10 years will blunt the impact of the GST assurance package, to say nothing of the psychological impact of the package’s reduced effectiveness against a backdrop of rising prices.

Committee against Profiteering

The Workers’ Party’s position on the GST notwithstanding, I welcome the announcement of the formation of a Committee against Profiteering to address concerns that some businesses could use GST as a cover to raise prices. I would like to raise a few issues relating to the Committee.

First, in order for this Committee to be effective, the public should be clearly informed as to what evidence they would need to file a complaint with the Committee; otherwise it would be a case of the word of a person against that of a business.

Second, at a time when inflation due to the supply chain crunch is a real concern, some businesses may have good reason to raise prices, for example, because of the rising prices of raw materials, and not under the pretext of the GST hike. This may cause misunderstanding amongst the public about resorting to the Committee to investigate the price hikes. But if rising business costs are due to supply chain woes, then prices should correct in time and even fall as the supply chain crunch eases. If they do not, then it would be legitimate for the Committee to enquire why this is the case.

Third, the Committee should look into the businesses that move to raise prices before the GST hike is introduced. It should not rule out looking into complaints of such pre-emptive price rises that try to bypass the Committee’s terms of reference. SMEs, hawkers and sole proprietors should be allowed to respond to the Committee if they have been falsely or unfairly accused of doing so.

Finally, the Committee should closely track price rises at heartland shops, where many Singaporeans purchase food and essentials. MOS Ms Low Yen Ling has written to me to nominate one member from the opposition benches to sit on this Committee. I have extended this invitation to our parliamentary colleagues from the Progress Singapore Party and NCMP Ms Hazel Poa has agreed to sit on the committee. 

Broad remarks on the Budget

Let me now move to topics other than the GST. The Workers’ Party is of the view that the Budget is broad-based in providing assistance to individuals and businesses to address both immediate as well as short to medium term concerns. Specifically, it provides useful transitional support such as the Small Business Recovery Grant, to businesses in eligible sectors that have been hit hard by COVID-19. One input we have, is to ask the Government to actively consider appeals from businesses who fall outside the eligibility criteria on a more flexible and case-by-case basis as far as possible.

We also support CPF transition offsets to help phase in the raising of employer and employee CPF contribution rates for senior workers. This raising of rates is vitally important in supporting the retirement adequacy of senior workers.  

What was not fleshed out in significant detail was the Minister’s commitment that the Government intends to refine how Employment Pass applications are assessed to increase certainty and transparency for businesses. Even while it is a given that Singapore will always be open to talent, we must always prioritise Singaporean talent who represent the Singapore core. If a Singaporean can do the job or can be trained to do the job, the Government should not, inadvertently make it easier or more convenient to resort to hiring foreigners. I hope Minister will share more details of the Government’s thinking on the new EP framework in his wrap-up speech.

Low-Wage Workers

The Budget also renders important support to businesses to ensure that our workers at the lower-end of the salary spectrum will see meaningful salary increments. 

In this regard, I hope the Minister for Finance can consider moving more decisively to ensure that Singaporean workers who take home less than $1300 can rely on the PWM Credit Scheme to raise their wages immediately. With the PWM Credit Scheme as announced by this Budget, I would argue that this can be achieved forthwith, instead of waiting for all PWM sectors to be rolled out incrementally, before their low-wage situation is addressed. Let me explain. 

Assuming that we want to provide immediate relief to the 32,000 full-time Singaporean workers who earn less than $1300 with a generous $400 a month wage hike for 13 months each financial year, a back-of-the-envelope calculation shows that it would require about $167 million dollars a year to significantly uplift the well-being of these lower income workers.

This sum would constitute 8% of the 2 billion dollars set aside under the Progressive Wage Model Credit Scheme, and only 9.2% of the $1.8b that the Government has committed each year over the next five years for this scheme. I hope the Government is persuaded to move quickly on this, even as discussions on more PWM sectors are ongoing. As they already earn very low salaries, these 32,000 workers can and should be supported with higher wages immediately.

A second intervention I would suggest for low-income workers amongst us concerns the changes to the Workfare Income Supplement. The Finance Minister has introduced a new minimum income criterion of $500 per month. There was no such criteria in the past. The Minister said that the policy intent of this is to encourage part-timers and casual workers to take up regular, full-time work.

However, this new criterion will penalize part-timers and casual workers significantly. There are legitimate reasons why Singaporeans take up part-time or casual work. Some may be caregivers who do not have the flexibility to take up full-time work. Others may not be able to stand for 8 hours a day in a Food & Beverage setting for various reasons, including their advanced years. For such individuals, full-time work can be gruelling. For some, retraining is easier said than done. Yet others simply cannot find full-time work in the limited areas they are qualified for, and take what part-time or casual work they can find. 

According to the Ministry of Manpower’s Labour Force in Singapore 2021 dataset, there were 46,600 residents who earned less than $500 a month last year. The new criterion will deny the Workfare Income Supplement to these workers. I would urge the Minister for Finance to remove this criterion so that our most financially vulnerable workers can benefit from Workfare.

The Workers’ Party believes the Government can move the needle for these low-income earning Singaporeans in a decisive way. It would be consistent with the philosophy of this Budget – charting our way towards a fairer, more sustainable and more inclusive society – to alleviate the financial stress of our most vulnerable Singaporeans. In his budget speech, Aljunied GRC MP Faisal Manap will speak on other segments of Singaporeans who continue to feel left behind because their plight has not been adequately addressed. 

Carbon Tax 

Next, the carbon tax. Singapore’s net zero carbon emission goal, as part of our green transition, recognises the important shifts that are taking place across the globe. The Budget announcement of a carbon tax of $50-80 dollars per tonne of emissions by 2030 is consistent with a commitment to mitigate this climate emergency. Hougang SMC MP Mr Dennis Tan will focus on Singapore’s transition to the green economy in his budget speech. More generally, Workers’ Party MPs made several interventions and suggestions during the debate on the climate motion in this House last month, covering subjects such as green-washing, just transition, and accelerating EV adoption, among others. 

I note the Finance Minister’s commitment to provide U-Save rebates to cushion the impact of the carbon tax on households from 2023. Going by the Government’s own calculations taken in a linear way, it would follow that a carbon tax of about $75 per tonne could potentially increase utility bills by $12 a month. However, unlike the new tiers for personal income tax at the upper end, property taxes and ARF hikes for luxury cars announced at the Budget, the Minister did not reveal the absolute quantum of revenue the carbon tax is projected to bring in up to 2030.

The Government should reveal these figures. This is not only for the purpose of showing how the carbon tax revenue would be utilised to support decarbonisation. This information would allow meaningful debate to take place on the funding for these decarbonisation measures, but whether and how cost-of-living pressures for the average Singaporean could be further alleviated through the carbon tax. 

Measuring Outcomes 

Before concluding, I am reminded that in Singapore, “A”s are not usually given for effort, but for outcomes. With this Budget positioned as a first step in renewing and strengthening Singapore’s social compact, the Government should review how it reports on initiatives that were previously announced and whether they met their goals. The new social compact ought to require a report card that goes into far greater detail than the bi-yearly Singapore Public Sector Outcomes Review. Let me explain using the Industry Transformation Maps or ITM as an example. 

A transition is taking place from the original Industry Transformation Maps to ITM 2.0 which is now dubbed “ITM 2025”. I wish to ask if there is a report card of what has been achieved by the initial ITM, especially for deliverables where Singaporean workers are supposed to benefit? In previous exchanges in this House, notably in 2020, we received assurances that Singaporeans are benefitting, and are prioritised in such efforts to generate quality jobs, so there was no need to worry. To date, however, we still do not have a detailed dataset, sector by sector, on how many jobs were generated by ITM 1.0 since its inception in 2017, and how many of those jobs went to Singaporeans and at what wage levels.

The ITM 1.0 roadmap set out to develop “new and re-designed jobs with better wages,” provide “more opportunities overseas” and more strongly support Singaporean workers’ upgrading and skills-deepening. Without the numbers, however, it is hard to tell whether these broad and lofty goals were achieved. The overall picture may be rosy, with rising wages and low unemployment maintained. But the precise deliverables of ITM have to be followed up on to know whether outcomes have been meaningful, or whether alternative approaches to improve outcomes should be considered.

A significant goal of the ITMs was to further the interests of Singaporean workers. To this end, the timely, transparent reporting of ITM 2025 outcomes should be made a key objective of the Government. When I asked for specific figures on the first ITM’s outcomes, and what it has achieved for Singaporean workers, the Ministry of Manpower stated that more time was needed before we could obtain the full data.

Surely enough time has passed for such data to be available as the planning for ITM 2025 is well underway. If such data is released, it can ameliorate the persistent angst surrounding competition between Singaporeans and foreigners over job opportunities. Further, making such information accessible would help Singaporeans better understand the overall economic landscape so they can develop skills in specific industries. This is really about empowering the Singaporean worker to make informed choices surrounding their economic future, in line with the nation’s. 

In this regard, the announcement of further adjustments to our foreign manpower policies announced by the Finance Minister is instructive. The value proposition for businesses to hire Singaporean workers ought to become more compelling given the anticipated increases of S Pass qualifying salaries and separately, foreign worker levy hikes announced in the Budget.

With the minimum qualifying salary for new S-Pass holders increasing from $2500 to $3000 this September and further increases already forecast for September 2024 and 2025, it would be useful for the ITM framework to pro-actively track, disclose and identify which of the ITM sectors are more reliant on S-Pass holders and where there could be opportunities for Singaporean workers. Businesses would also benefit from this information as they can be incentivized to redesign jobs to attract Singaporeans.

The same expectations should be set for the large taxpayer dollars set aside for national plans like Research, Innovation and Entreprise 2025 Plan where $25b has been allocated from 2021 to 2025. The outcomes of such initiatives should be a major feature of the new post-pandemic social compact that the Budget seeks to renew between citizens and Government. My colleague, Aljunied MP Leon Perera will explore the national goals the Government should focus on aggressively, including poverty alleviation, inequality and social mobility. Ready access to data on outcomes of Government initiatives, including multi-year ones, would greatly support all three prongs that Mr Perera will advance. 


To conclude, COVID was and remains a generational crisis. But it has also proved to be a priceless opportunity – to reflect on the robustness of our social compact and the lived reality of Singaporeans, particularly at the lower and lower to middle-income levels. It is also an opportunity to reflect on our values as a people.

How much do we value the efforts and contributions of those around us, regardless of socio-economic class or nationality? How does the Singapore system recognise the effort and labour of those who work with their hands like our conservancy and landscape workers, or those that invest their lives in looking after others such as nurses or nurturing the future generation of Singaporeans like our teachers? What about our artists and sporting talents and what about the foreign workers in our midst? Their living and working conditions must be a priority for not just their well-being, but for our well-being too. I say for our well-being too because caring for others establishes the standards we set for ourselves on the type of people we wish to be.

While COVID has been debilitating for the economy and for many families, from a community perspective it reminded us of the nurse, the teacher, the cleaner, security guard, the bus captain and so many others who continued working to keep Singapore on an even keel. The efforts of these Singaporeans make my colleagues and I in the Workers Party’ proud to be Singaporeans.

These times have shown the resilience of our people, a subject my colleague Aljunied GRC MP Gerald Giam will peg his budget debate speech upon. 

The Workers’ Party notes the broad thrust of the Budget and supports the call for greater fairness, sustainability and a more inclusive society – a philosophy that comes with much promise for the future. However, the Workers’ Party will object to the Budget, as we disagree with the decision to raise the GST.

Thank you.