Defending tax hikes, responding to questions on Budget surpluses, and convincing the House that utilisation of government debt will be “disciplined and prudent”, Mr. Heng eloquently outlined the different methods that the government will employ in order to finance spending in his Budget debate round-up speech.
Mr. Heng likewise underscored the need to meet growing fiscal demands by using “the right tools for the right needs.”
An example is the freshly-crafted Scale-Up SG programme which is not about the government “picking winners”, but rather, partnering firms that are willing to transform or the raising of quotations in government procurement from S$70,000 to S$90,000 to provide smaller firms with greater access.
“We have yet to decide on the exact timing of the GST increase and we will exercise care when doing so. We will continue to monitor the prevailing economic conditions, trends in expenditure, and buoyancy of our revenues,” Mr. Heng said, adding that there will also be a transitional package.
There were three reasons why he rejected the idea of a multi-rate GST to help the lower-income group – 1) it is hard to define necessities; 2) better-off households tend to spend more in absolute terms and thus benefit more; and 3) a multi-rate system raises firms’ costs, which could be passed on to consumers.
Mr. Heng also addressed the potential new fiscal tool of government borrowing. Noting upcoming infrastructural investments “to enhance connectivity and create new growth opportunities”, he said the government “is studying the option of borrowing carefully, as a tool to finance major, long-term infrastructure. ”
But Mr. Heng also stressed that such borrowing does not create new revenues for recurrent spending.
“It merely converts a concentrated lump of spending in a few years into a smoother stream of loan repayment with interest…. He further said that it would be irresponsible to borrow for recurrent needs, as that “shifts the burden of paying for today’s needs onto future generations.”
Mr. Heng highlighted the importance of the reserves, with the NIRC – derived from returns on invested reserves – as the largest contributor of government revenue. Declining Workers’ Party MP Pritam Singh’s request for more data on the reserves, he noted that having the reserves as “a strategic asset” helped Singapore weather the global financial crisis.
No “fits-all” model
According to PM Lee, no single model of sustainable development works for all countries. Each country must adopt solutions to fit their specific circumstances and priorities and to remember that sustainable development is not a solo mission.
It is a collective goal, thus, Singapore has much to learn from other countries’ experiences, that forging partnerships with them and exerting effort to stay friendly with the neighboring nations is imperative.
Confronted with inadequate resources and limited land, the country’s leaders are addressing vital issues as they espouse a long-term perspective in policymaking.
There is now concerted effort in developing education, security, infrastructure, healthcare, and housing, while having in mind the necessity of being far-sighted and tactical in order to take full advantage of resources.
To sustain growth and keep up with the times, Singapore leaders have also made a conscious effort to incessantly re-invest the resources the economy has generated into the development of human capital, R&D, and the detection of new zones of growth.
The search for methods to create and add value, and focus on guaranteeing that Singaporeans are well-equipped with the knowledge and skills to take on jobs becomes a top priority.
Caring for the environment
In a concerted effort to pursue sustainable economic development, the government has been cautious not to upset the natural environment.
With the Garden City being created, there is abundant and flourishing foliage with clean surroundings to make life more pleasant for all Singaporeans.
Clean energy solutions were also opted and today, Singapore is among the 20 most carbon efficient countries and natural gas generates 95% of the nation’s electricity.
The city-state has adopted a Whole-of-Nation, bottom-up approach to develop creative, sustainable solutions.
For example, in making Singapore a genuine smart city, the nation’s leaders have taken on a people-centric approach and confer extensively with the private sector and civil society. Such method secures greater buy-in and commitment to action by all segments of society.