Deputy Prime Minister and Finance Minister Lawrence Wong delivered his closing speech after three days of Budget Debate on Friday (Feb. 24), with various Members of Parliament (MP) seeking clarifications.
Pritam Singh, the leader of the opposition from the Workers’ Party (WP), asked Wong four questions of his own.
Pritam: Measure Consumer Price Index of different demographic groups
The first clarification Singh asked Wong pertained to the tax burden on the middle class.
While acknowledging the government took into account the burden the people faced from taxes, by continuously providing charts on the percentile of taxes Singaporeans paid and the benefits enjoyed, Singh called for the government to take on a stronger measure by assessing the pain points of the middle class from various perspectives.
He mentioned seeing headlines about the Consumer Price Index (CPI) which is continuously increasing. He referred to a question that Leon Perera, a WP MP, had asked the government in 2018.
Perera had then asked the government to consider measuring the CPI which tracked inflation for specific demographic groups like young couples, parents with children, and retirees.
“The government would say it would do this when it was ready. Five years on, we are still waiting,” Singh said.
He asserted that looking at different categories of people with CPI may paint a different picture compared to what Wong showed in his charts.
“My first clarification is whether the finance minister would consider providing information in that from that perspective specific groups of Singaporeans, which we know in the sandwiched middle class.”
Wong: The government welcome all ideas to keep tax burden low
In response to Singh’s question, Wong said the ministry continues to monitor all different groups.
The government is working to ensure that real income grows for every group of Singaporeans, “especially for the lower income groups”.
Wong said what Singh is asking, is more comprehensive data, not just categorising Singaporeans by income groups, but also by different archetypes and segments.
“We share the same interest… we are all concerned about the same thing and we will continue to do more and do better,” Wong said.
He added that the government welcomes all ideas and will study them regardless of where the ideas come from. But the government will also point out if these ideas may not be as effective or sound.
Pritam: What are the main strategies for keeping tax burden low?
Singh’s second clarification was on Wong’s strategy to keep the tax burden low.
While listening to the various proposals laid out by different MPs, Singh pointed out that none of the PAP MPs mentioned where the money was going to come from in their proposals.
According to Singh, the source of funds is something that WP put out in the last debate.
“So what are the main strategies then, that the government has for keeping the tax burden on Singaporeans low?” Singh asked.
Furthermore, Singh said that many of the proposals put forth by the various PAP MPs which include, but are not limited to, long-term care subsidies, checking the rental rate of government-owned and managed properties, and a windfall tax, “were made in the WP manifesto and by WP members in this house”.
“For a minute, I thought the PAP had become WP-lite,” Singh said, possibly referring to the 2020 general election, where Foreign Minister Vivian Balakrishnan had referred to WP’s manifesto as “PAP-lite”.
Wong invites suggestions to keep spending low for reallocation of funds
In response, Wong said that in the event there is a need for additional revenues, the government will ensure that additional revenues or taxes raised will be done in a way that keeps the country’s overall system of taxes and benefits fair and progressive.
In addition, increased revenues and taxes are not the only options to meet the country’s increased spending needs. Other options include the reallocation of funds through continual exercise to examine the areas that the country can spend less on or even discontinue so that this money can be reallocated to new priority areas.
Wong invited every member of the House across all parties to suggest areas where the government can spend less on such that expenditure and revenues can be managed to ensure sustainable finances.
“And here my appeal to everyone in the House, across all parties is…as finance minister, you hear a lot more proposals to do more, but you very rarely hear proposals to stop doing something,” Wong said.
“I think it would be nice for [a] change to hear members talk about some things we might stop doing (or do less of) and then we may have more ideas to think about how we can manage both expenditure and revenues and ensure sustainable finances.”
Singh: PAP failed to mention WP’s 2019 working paper’s context
In his third clarification, Singh circled back to WP’s 2019 working paper on HDB resale prices, which Minister for National Development Desmond Lee had brought up during the motion on affordable and accessible public housing in parliament (Feb. 8, 2023).
At that time, Lee referred to a passage from the paper, which reads as follows:
Calibrating the construction of new BTO estates
Resident population growth has been approximately 30,000 a year since 2010 and 2011. Assuming an average household size of 3.3, this would mean that around 9,000 or so new dwelling units are required annually. Completions within the same time period have far exceeded the resident population growth. Private vacancies have only started to inch down, but there are still around 12,000 private units completing up to 2022. Will the HDB have a vacancy rate problem, compounded by a still steady stream of 16,000 to 17,000 BTO units in the last few years, which will continue to increase supply up to 2022?
BTO projects should continue, but, rather than creating too many new towns, planners would do well to consider, in future, partly meeting demand from new family formation by selling balance flats in mature estates acquired under the Universal Sale and Lease Back scheme or USB. This would help advance urban renewal in the mature estates where many Singapore desire to live, since these are nearer to the city center.
From this, Lee interpreted that the WP report was persuading HDB against persisting and building 16,000 to 17,000 BTO units, a trajectory that he felt would not have been beneficial to the current housing climate in 2023.
“So in 2019, the WP was recommending that HDB should only build 9,000 dwelling units or so … had we tapered down our supply to WP’s level in 2019, or listened to you and your experts, I think our BTO shortage would be even greater today.”
During his Feb. 24 speech, Singh claimed that the PAP failed to mention the context of WP’s working paper.
He added: “And on this note, of course, I have to then come to the irresistible conclusion that it is a convenient distraction because if indeed, the point that was raised in the housing paper was critical, then the PAP would have raised it last year when the WP called for more HDB housing for singles.”
Singh sought further clarification on housing subsidies and grants, where he also wanted to find out how much of these subsidies and grants come from taxpayers.
Noting that “more and more fiscal resources are now being diverted to HDB’s homeownership programme”, Singh stressed that it is important for PAP to make more data public, such as the price of land.
“So when the Finance Minister says when we ask questions about pricing of land and so forth, and he says this is a red herring, I respectfully disagree, because we have to try and understand how we can make the budget be balanced and how much is actually being devoted for a programme.”
Wong: “No shame” for WP to acknowledge they were wrong in 2019
Wong rebutted Singh, claiming that he brought up the context of WP’s 2019 working paper in his speech.
“Actually, I thought I said it in the speech. I fully appreciate the context because I was there in Ministry of National Development. The context was concerned about the decay of leases and declining values, but the context was also in the midst of falling resale prices for consecutive years.”
Wong acknowledged WP’s stance in 2019 and noted that it reflected the context of a possible oversupply of flats at that time, before adding that he was also under tremendous pressure to cut back on BTO flats.
He added that there is “no shame” for WP to admit that they were wrong in their 2019 working paper, when they seemingly called on HDB to rethink the supply of BTO flats, as many experts also shared similar sentiments at that time.
However, the current housing situation is no longer the same due to the “very unusual and exceptional circumstances” of the Covid-19 crisis over the last three years.
Wong said the root of the problem now is building more supply and the government is doing its best to try and fix this problem.
Perera: PAP “mischaracterised” WP’s position
WP’s Aljunied Group Representation Constituency MP Leon Perera also brought up the party’s 2019 working paper during his clarifications.
Perera claimed that “PAP seems to be doubling down on this incorrect assertion” – that WP had supposedly called for fewer BTO units to be built – and used its “tremendous public relations and communicative machinery to repeat this assertion about WP’s history paper again and again on social media in letters to The Straits Times, Zaobao.”
On this note, he sought to clarify what WP meant in the aforementioned passage, claiming that “the first paragraph makes observations about the risk of vacancies in the context of a paper on longer-term housing dynamics, that resale prices will inevitably come under pressure at some point”.
Noting the question in the first paragraph, Perera claimed that it does not amount to a call to action. Instead, the second paragraph is the call to action, he emphasised more than once.
“The call to action comes in the second paragraph, which says BTO projects should continue. I repeat, BTO projects should continue. It doesn’t say BTO projects should continue at a reduced rate. It doesn’t say BTO projects should stop.”
On this note, Perera said: “So I think it is very important to, you know, let’s have debates on our real positions and not mischaracterise one another’s positions and we did not put out a proposal in 2019 to cut retail construction. If we had wanted to, we would have set that out clearly in plain language.”
Wong: WP should be “upfront and honest”
Wong rebutted Perera’s explanation – that the assessment that WP had put out was pertaining more to a longer-term concern about a supply overhang – saying that that was ” very clearly not what the write-up says”.
In his opinion, WP’s 2019 working paper assessed that there was a short-term oversupply of new flats and suggested that the government calibrate its building programme.
Wong said it was clear as daylight what WP wanted to do back in 2019 and once again called for the opposing party to “be upfront and honest” that their assessment at that time was not right, claiming that there is no shame in doing so.
Singh: WP is entitled to change its position
Singh’s final clarification pertained to WP’s position, which he said has “evolved because circumstances have evolved significantly”.
Referring to when the government created the Net Investment Returns (NIR) after the global financial crisis in 2009 and included Temasek in the Net Investment Returns Contribution (NIRC) formula in 2015, Singh said PAP changed its position on Singapore’s reserves as circumstances evolved.
In this regard, WP too, is entitled to do the same, Singh said.
Wong: PAP’s underlying philosophy, intent, and principles have never changed and will never change
Wong responded that he was glad that Singh acknowledged the change in WP’s position, but disagreed with how Singh compared that with how PAP updated their position on the involvement of Temasek in the NIRC framework or the net investment framework.
He explained: “Because we have made it very clear when we embarked on this that we did want Temasek to come in, but it was a matter that needed more time to study and therefore the implementation was staged.”
Wong said that PAP’s underlying philosophy, intent, and principles, have never changed and will never change.
“It’s about fiscal prudence, discipline, responsibility, stewardship, that is consistent and has not changed, and will not change. Whereas it seems to me on that part, WP has shifted.”
In a response after Perera’s clarification, Wong said they always had the intention for Temasek to be there, but put in place a framework to provide discipline for the government to use the reserves as an endowment fund.
“It was meant to be a set of fiscal rules that we live by. Not to change at the time when we need money, which is what WP is proposing,” Wong said.
Top image via MCI/YouTube