Record $143b Budget passed; S’pore’s good outcomes over time due to ‘prudent fiscal policy’: Indranee

(Photo credit: ST Photo)

Source: The Straits Times

Parliament unanimously passed on March 10 a record $143.1 billion spending plan, the last Budget of the current term of government.

Rounding up two weeks of debate, Leader of the House Indranee Rajah recapped the 12 Budgets that were passed between 2020 and 2025, which included supplementary budgets and ministerial statements on support measures during the pandemic years.

While every term of government has its fair share of ups and downs, this term was “more like a roller coaster”, said Ms Indranee, who is also Minister in the Prime Minister’s Office.

In 2020 and 2021, Singapore had to battle the crisis of a generation in the Covid-19 pandemic. It then had to adjust to the post-pandemic world, and barely had time to catch its breath before it had to grapple with the impact of wars in Europe and the Middle East, she added.

“While all this was going on, we simultaneously had to work on sharpening our competitive edge, refreshing our social compact, and positioning ourselves for the future,” said Ms Indranee, as she recounted the “unprecedented number” of Budgets the Government brought before Parliament over this period.

She recalled the “dark and bleak” start to the 14th Parliament, when Singapore was still not fully out of lockdown and did not yet have vaccines.

The Budgets passed in 2020 – including the Unity, Resilience, Solidarity and Fortitude Budgets – and those in 2021 enabled Singapore to mount a strong public health response, secure early access to vaccines and protect both lives and livelihoods, said Ms Indranee, who cited the Jobs Support Scheme and the Self-Employed Person Income Relief Scheme.

“The Budgets of this period also gave us the fiscal firepower to be agile and adaptive throughout that unpredictable and volatile period,” she noted.

Ms Indranee said the country’s prudent fiscal policy was why it was able to spend some $80 billion on its pandemic response without burdening future generations with debt. About half of this sum, or $40 billion, was drawn from past reserves.

The financial assurance provided by the Budgets of 2020 and 2021 also gave the Government the confidence to think beyond immediate problems at hand and to plan ahead, she added.

Ms Indranee noted that, in contrast, many other countries are still trying to lower their debt-to-gross domestic product ratios after having accumulated significant debt during the pandemic that exceeded the peaks after World War II.

While Singapore emerged from the pandemic in 2022 battered but generally safe and ready to embark on its plans for reopening, it then ran straight into global troubles such as the war in Ukraine, which led to global inflation spiking and energy and food prices going up.

“We were confronted with the twin challenges of having to take care of Singaporeans’ immediate concerns in the new inflationary environment not seen since the global financial crisis in 2008, while at the same time having to chart a new way forward for the longer term,” she said.

The Government had to make tough choices and tread a path between two equally difficult challenges – much like Odysseus between Scylla and Charybdis, said Ms Indranee in a reference to the mythical Greek hero who had to navigate the sea passage between two monsters.

In the Budgets of those years, the Government made the “difficult decision” to raise the goods and services tax to ensure sufficient revenue to meet the projected rise in healthcare spending, while cushioning the impact of the increase for Singaporeans, she added.

“These Budgets also saw intense debate in which the fundamental principles underpinning our fiscal policy were challenged, debated, and ultimately upheld by the majority.”

Support for those Budgets was not unanimous, she noted.

The Workers’ Party and Progress Singapore Party (PSP) did not support the 2022 Budget as they opposed the GST increase. The PSP also did not support the 2023 Budget, and proposed its own alternative spending plan.

While the opposition acknowledged the need for increased expenditure going forward, their alternative proposals to raise revenue were not agreed to as they would have involved a draw on past reserves or would not have raised sufficient revenues to close the gap, said Ms Indranee.

“(In 2022 and 2023) it was also clear that we were on the cusp of a new era, and there was a need to make major changes to suit changing times and the changing population, to redefine the Singapore dream and refresh our social compact,” she added.

Hence, the Government embarked on the Forward Singapore engagement exercise, which culminated in a road map for the future published in October 2023.

The Budgets in 2024 and 2025 breathed life into the ideas co-created with Singaporeans in this road map, said Ms Indranee.

These included making public housing more affordable and accessible, helping Singaporeans bounce back from career setbacks, and pressing on with the nation’s green transition, among other things.

In essence, the latest two Budgets made important changes that will reshape Singapore profoundly, while also providing ballast and stability in the current turbulent times, said Ms Indranee.

Noting that 2025 is also the year Singapore commemorates its 60th year of independence, she said Singaporeans can take quiet pride in how far the country has come through the efforts of past and present generations.

This includes top spots in home ownership, life expectancy, innovativeness, Programme for International Student Assessment – or Pisa – scores and other metrics.

“We did not get to this point by accident or luck, but through careful long-term planning, building on the trust and cooperation between Singaporeans and the Government,” she said.

These are also the results of Budgets past and present, which resourced and funded the policies that enabled Singapore to achieve these outcomes, she added.

“When we look back through the lens of each Budget, what we see is that this House has, by its approval of the successive Budgets in this term, steadfastly steered Singapore through uncharted and choppy waters with decisiveness, agility and forward planning,” she said.

In a Facebook post after Parliament had adjourned, Prime Minister Lawrence Wong, who is also Finance Minister, said that Budget 2025 would lay the foundation for a stronger, more secure tomorrow, even as Singapore navigates a more uncertain and turbulent world.

“From strengthening our healthcare system to transforming our workforce and uplifting vulnerable groups, the policies and strategies will help to build a more resilient and inclusive society – one where every Singaporean has a stake, and no one is left behind,” he said.