Addendum to President’s Address: Why social compact needs to be strengthened in fiscally sustainable way, says DPM Heng

SINGAPORE – In an uncertain and volatile world, more needs to be spent to save jobs and help those who start off in life with less.

But this has to be done in a fiscally sustainable manner, with the better-off contributing more, said Deputy Prime Minister and Finance Minister Heng Swee Keat.

He made the point on Friday (Aug 28) when he laid out his ministry’s plans in an addendum to the President’s Address.

He said that while the Government has stabilised the economy and stemmed unemployment through a slew of measures like the Jobs Support Scheme of wage subsidies, this level of support cannot continue indefinitely.

Singapore faces a challenging fiscal environment ahead, he explained.

Covid-19 will give rise to new spending priorities, even as more money is devoted to supporting families with their healthcare and pre-school needs.

“In parallel, revenues will come under greater pressure from slower global growth in the aftermath of Covid-19 and sharper international competition over tax revenues.”

Alluding to possible future tax-related adjustments, he said a fair and progressive fiscal system is one where the better-off contribute more, and lower- and middle-income households receive more in benefits than the taxes they pay.

“We will continue to adjust taxes on income, consumption and assets to achieve the right balance, while keeping our tax rates competitive.”

He added that the MOF will also develop a framework for responsible and sustainable use of borrowing to finance major long-term infrastructure investments.

Mr Heng stressed that the goal is to build a strong social compact – one with social mobility and opportunities for all at each stage of life, and more help for those who start off with less.

“A strong society is our stabiliser in an ever more uncertain and volatile world. It has helped us to weather crises, while avoiding the social fractures seen in many other countries,” he said.

He highlighted the Government’s efforts over the years to progressively strengthen social security, through such schemes as Workfare and Silver Support, and enhancements to preschool, education and healthcare subsidies, particularly for the lower- and middle-income.

Investments that will build human and social capital, he said, include: doubling the annual spending on affordable, quality pre-school education in the next few years; giving Singaporeans the resources to upgrade themselves; and boosting support for low-wage workers, vulnerable seniors and households with greater caregiving burdens.

Boosting capabilities and building resilience extend to the public service, too.

Minister for Trade and Industry Chan Chun Sing, who is also Minister-in-charge of the Public Service, said the public service has to contend with a more volatile external environment, higher expectations from the public and tighter resource constraints.

To deal with these challenges, cross-agency teams will become more common, he said.

Public servants will also be recruited from more diverse backgrounds and developed differently, with more exposure to the people and private sectors.

“This will keep them close to the ground, and give them a diverse body of networks, skills and experiences to solve problems effectively,” said Mr Chan.

All Government services will go digital by 2023.

National digital infrastructure, platforms and standards will be built, like the National Digital Identity platform which will provide greater convenience and security for citizens when they make online transactions.

Minister for Foreign Affairs and Minister-in-charge of the Smart Nation Initiative Vivian Balakrishnan said the digitalisation push will help develop capabilities in the local information and communications technology (ICT) sector.

He pointed out that the value of government ICT contracts is projected to increase by more than 30 per cent this year, to $3.5 billion.

Small and medium-sized enterprises can participate in up to 80 per cent of procurement opportunities.

The Smart Nation and Digital Government Group will also work with the Ministry of Communications and Information to reach out to less digitally literate people and equip them with hardware and skills.

“This will ensure that digitalisation benefits Singapore and Singaporeans, by transforming how we deliver Government services, grow new economic opportunities, strengthen the core of local talent and improve the lives of our people,” said Dr Balakrishnan.

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