Singapore — Finance Minister Lawrence Wong said that by 2030, government expenditure is expected to increase to more than 20 per cent of GDP (Gross Domestic Product), most of it in healthcare.
During the Budget 2022 announcement on Friday (Feb 18), Mr Wong said that Singapore’s social expenditure, including healthcare and education spending, nearly doubled from S$17 billion to S$31 billion in the last decade. It now accounts for almost half of the annual Budget.
“The increase has gone to programmes that have made a difference in Singaporeans’ lives, like higher subsidies in our healthcare system and tertiary education, as well as schemes like SkillsFuture, Workfare, and the Silver Support (Scheme),” he said.
Mr Wong highlighted that healthcare needs would grow as the population ages.
Ageing will mean an inevitable rise in demand for healthcare and social care, he added, noting that the country’s means to provide will come under strain as the ratio of the working population to aged dependents decreases.
“We will need to revamp our healthcare ecosystem to cater to more geriatric needs across various care settings,” he said. “Healthcare will therefore be the major driver of increased social spending in the coming decade.”
Not right to dip into reserves
Mr Wong explained that such plans require additional expenses, although they are recurring and not temporary.
“Given this, it would not be right to dip into our reserves to meet these new needs. We must husband our reserves for use in major crises and emergencies, as was necessary during the Global Financial Crisis, and especially in the last two years,” he said.
An average revenue stream of around S$17 billion each year is provided by the Net Investment Returns Contribution (NIRC), meaning that for every dollar spent on public services, 20 cents is funded through the NIRC.
The NIRC framework allows the government to spend up to 50 per cent of the net investment gains from its reserves in the annual Budget, said Mr Wong.
He also said that tax adjustments would help to raise extra revenue and contribute to a fairer revenue structure.
“In every area of spending, however, it is not just a matter of spending more, but also how we spend to achieve the right outcomes and to preserve the values of individual responsibility and mutual support from the community even as the government steps in to do more,” he added.
Mr Wong urged for all Singaporeans to continue to stand united as one to overcome these major tests and trials, noting “it is more important than ever to renew and strengthen our social compact, and to reaffirm our values and what we stand for as a nation.”/TISG
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