Debate Highlights: Key Questions on Fiscal Policy, GST and Future Expenditures Answered by Finance Minister
SINGAPORE: The Goods and Services Tax (GST) hike, initially proposed for 2023 and 2024, will proceed as planned, despite objections from opposition Members of Parliament (MPs), following its approval in Parliament. Deputy Prime Minister and Finance Minister Lawrence Wong addressed several critical queries raised by opposition MPs during the debate on November 7.
Louis Chua’s Questions on Government Surplus and NIRC Contributions
Louis Chua from the Workers’ Party (WP) questioned whether the government truly lacked surplus funds, highlighting that Singapore’s revenues had increased by S$5.8 billion in the first half of the year. He suggested that there might be some “slack” in the budget, even after considering the S$1.5 billion and S$1.4 billion top-ups previously announced. Chua also asked about the effects of increasing the Net Investment Returns Contribution (NIRC) rate and whether it would reduce revenue.
In response, Wong acknowledged the revenue increase but noted that government spending had also risen, including the full utilisation of fiscal surpluses from FY 2021. He clarified that Singapore no longer runs surpluses but balances its budgets, occasionally running deficits. He also emphasized that while the NIRC contributes about 3.5% of GDP, it faces long-term challenges such as an ageing population and climate change, which may affect future returns. Regarding GST exemptions, Wong explained that while some goods and services are exempt, broadening this would lead to significant complications, as seen in other countries.
Jamus Lim’s Inquiry on Delaying GST Hike Due to Inflation
Jamus Lim, also from WP, asked whether the government would reconsider the GST hike if inflation continued to rise sharply. He also questioned the urgency of the hike in light of projected healthcare expenditure. Wong countered by explaining that the Assurance Package had already delayed the GST hike for most Singaporeans by more than five years, which was more than the two-year delay suggested. He mentioned that a delay would only be considered in the event of severe external economic disruptions, such as a global recession.
Leong Mun Wai’s Questions on NIRC Spending and Land Sales
Leong Mun Wai, an NCMP from the Progress Singapore Party, asked about the unspent portion of the NIRC and whether past land sales contributed to covering HDB deficits. Wong responded by explaining that there is no unspent NIRC, as all revenue is utilised, and that the HDB grant deficit has always been covered by government funding.
Leon Perera’s Questions on Reserve Use and GST Profiteering
Leon Perera from WP raised concerns about the adequacy of Singapore’s reserve framework in light of its growing size. He asked whether it was time to revise policies on how reserves are used, especially considering the S$50 billion withdrawal from past reserves during the pandemic. Wong firmly rejected this idea, arguing that it would be irresponsible to use more past reserves and leave less for future generations. On the issue of GST profiteering, Wong assured that the Committee Against Profiteering would monitor merchants to prevent excessive price hikes during the GST increase.
Wong Addresses Healthcare Spending Projections and Structural Increases
Regarding healthcare spending, Wong explained that projections made in 2010 accounted for the rising costs associated with Singapore’s ageing population. Although initiatives like Healthier SG may help curb the rate of increase, Wong acknowledged that healthcare expenditures will continue to rise. He stressed that the only alternative would be to reduce spending on the elderly, a position he said no one in the House would endorse.
Wong concluded by reinforcing the government’s position that the GST increase was necessary to support long-term needs, particularly healthcare, and that delaying it would only shift the burden to future generations.
