Budget Debate Round Up Speech

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A. Introduction

1. Mr Speaker, this year we tabled the largest budget in our history, larger than the five budgets combined in 2020 to fight COVID.
2. Not surprisingly, we also have a record number of Members participating in this debate, and I thank everyone who has spoken and supported the Budget.
3. I would like to start by sharing with members something I say at all budget dialogues I have attended so far. And that is, please do not look at any one Budget in isolation because it's not possible for any single Budget to be all encompassing.
4. So if your favourite item is not mentioned in this year's budget, it does not mean that it has been overlooked or ignored. Because every Budget builds on the last and lays the framework and groundwork for the next.
5. Indeed, in the debate, several members highlighted that suggestions and points they raised on AI in previous years were taken up this year in this year's Budget. That's the spirit in which we craft and design every Budget.
6. On that note, I've listened carefully to the many thoughtful suggestions that have been shared in the last few days. Even in the occasions when I've not been in this chamber, I've read your speeches. We will study your suggestions and give them due consideration and maybe in a few Budgets from now some of these suggestions will be highlighted thereafter.
7. Sir, I will not be able to address every point raised today. Programme-specific questions will be taken up during the Committee of Supply Debates. For my response, I will focus on three broad questions that have been highlighted:
1. a. First, how will we secure continued economic success and good jobs for Singaporeans in a changed world?
2. b. Second, are we doing enough to ease cost pressures and ensure every Singaporean can progress?
3. c. And third, is our fiscal strategy fit for the challenges we face – both now and in the future?

B. How Will We Secure Continued Economic Success And Good Jobs For Singaporeans In A Changed World?

8. Let me start with how we sustain economic success and secure good jobs for Singaporeans. Many Members spoke about this, including Ms Jessica Tan, Mr Victor Lye, Mr Kenneth Tiong, Dr Neo Kok Beng, Dr Wan Rizal, Ms Gho Sze Kee, and Mr Vikram Nair, amongst others.

(I) Pursuing growth and creating jobs in a changed world

9. Our economic strategies must adapt to a changed world.
1. a. This is a world where power and strength increasingly shape outcomes; where rules are more contested; where economic relationships are being rewired.
2. b. We felt these pressures acutely last year, especially after the US Liberation Day tariffs.
3. c. Now fresh changes in US tariffs remind us that uncertainty and volatility is becoming the norm.
10. And in such a world, smaller countries like Singapore risk being bypassed or marginalised.
11. So we cannot afford to stand still.
1. a. We must deepen trusted partnerships, diversify our links, and strengthen our resilience.
2. b. Crucially, we need to establish leadership positions in key domains – so that we create distinctive value that others cannot easily replicate. And many members talked about value capture for our economy – that’s exactly what we are doing.
12. So we’re investing heavily in R&D, building up our enterprise ecosystem step-by-step and anchoring cutting-edge investments in Singapore. We must stay at the frontier – in advanced manufacturing, finance, digital services, and new growth sectors.
13. In the past, growth and jobs moved more closely together. When the economy expanded, firms hired more workers across the board. Today the relationship is more complex. Let me explain.
14. Our fast growing sectors are export-oriented. That’s to be expected.
1. a. Companies in these sectors compete globally and they create well-paying jobs, with strong career progression opportunities.
2. b. But precisely because they compete at the frontier, they have to be productive and operate efficiently – often with lean manpower.
15. And that is a global trend.
1. a. Look at leading companies around the world, some of them run highly automated facilities – including so-called “dark factories” that operate 24/7 with minimal human presence; and
2. b. That is one reason why manufacturing employment in many advanced economies has steadily fallen.
16. We see similar patterns here in Singapore.
1. a. Over the last decade, the manufacturing sector has, on average, contributed about 20% of GDP.
2. b. But its employment share is smaller.
3. c. And it has declined – from 14% in 2015 to about 12% today.
17. Over that same period, employment in exportable services – areas like finance, IT, and professional services – has grown as we diversified our economy. Yet taken together, the manufacturing, finance, IT, and professional services segments of our economy account for just around 30% of employment.
18. Does that mean that growth is no longer important?
19. Far from it.
20. Growth is essential. It creates new opportunities, raises wages, and generates the resources we need as a society. Frontier industries, in particular, produce positive spillovers; they anchor our enterprise ecosystem, and drive demand across the rest of the economy.
21. So without sustained growth, and especially growth at the frontier, investments will go elsewhere, capabilities will erode, wages will stagnate, and Singapore risks a real decline.
22. But growth alone is not sufficient. Growth alone will not automatically translate into job opportunities across the board.
23. We must also uplift the broader domestic economy – raising productivity, wages, and career pathways across the services sector.
24. And that’s why we are taking sustained action in areas like education, healthcare, and social services.
1. a. We have put in place Skills Frameworks to articulate competencies, enable skills upgrading, and support structured progression in these areas.
2. b. We have increased salaries for workers in public healthcare institutions and Government-supported preschools.
3. c. We have updated salary guidelines for the community care and social service sectors.
25. These are not ad hoc, or one-off moves.
1. a. They are integral to our economic strategy.
2. b. Because inclusive growth means more than developing frontier industries.
3. c. It also means ensuring that domestic services – services that Singaporeans rely on daily – become more productive, more professional, and more attractive as careers.

(II) Supporting our SMEs

26. In this regard, SMEs play a critical role – they employ many Singaporeans, and anchor economic activity across our island.
27. Many members also shared concerns about SMEs, including Ms Diana Pang, Mr Jackson Lam, Mr Fadli Fawzi, Mr Louis Chua, Ms Denise Phua, Mr Azhar Othman, and Mr Sharael Taha.
1. a. In particular, the two SME segments under greater pressure are retail and F&B, food and beverage.
2. b. These sectors face structural headwinds – from e-commerce and changing consumer habits, and from increased overseas travel by Singaporeans, and perhaps also by the strong Singapore dollar.
3. c. Yet even amid these challenges, the number of F&B and retail establishments continues to grow. With more players in the market, competition has intensified.
28. So how should we respond to these trends?
1. a. In the immediate term, we have provided Corporate Income Tax, or CIT, rebates, including in this Budget.
2. b. But over the longer-term, our support must be sustainable and should not distort market incentives.
29. For businesses in retail and F&B, what are their cost drivers? The largest components of their operating expenditure are the costs of goods and materials, labour, and rent. Let me go through each one of these.
30. In a small economy like ours, goods and materials are largely priced in global markets. So there is little scope for us to influence these costs.
31. On rental costs:
1. a. At the macro level, rentals have broadly tracked economic fundamentals. Rent increases for retail spaces have trended below nominal GDP growth and inflation in the last few years.
2. b. Rental costs have also declined as a share of total business costs. Between 2019 and 2024, they fell from 26% to 17% for the F&B sector, and from 30% to 26% for the retail sector.
3. c. Now that is the broad picture. Of course, market rents vary by property type and location. Individual tenants may face higher rent increases at renewals, and we are mindful of these cases.
4. d. Where Government agencies are landlords like HDB and JTC, and where we have direct oversight, like in hawker centres, we have frameworks to keep rents fair and competitive, and we will continue reviewing and updating these frameworks.
5. e. We will also continue to monitor the situation closely to ensure that rentals remain sustainable and competitive.
32. I’ve covered cost of goods, rentals, and next, manpower:
1. a. Indeed, labour costs have increased in recent years.
2. b. Part of this reflects structural factors – an ageing population and tighter labour supply, as well as market forces as firms compete for workers.
3. c. But part of this is also the outcome of policy. Through the Progressive Wage Model, we are raising wages for lower-wage workers.
4. d. That’s the right thing to do — to uplift incomes, strengthen dignity in work, and narrow wage gaps.
5. e. And at the same time, to support businesses through the transition, we introduced the Progressive Wage Credit Scheme. And in this Budget, we are enhancing the Scheme and extending it for another two years.
6. f. That reflects our consistent approach, to uplift workers, while supporting firms to adjust.
33. Mr Mark Lee asked for more leeway for SMEs to hire foreign workers.
1. a. We cannot relax the Dependency Ratio Ceiling (DRC)– doing so will encourage excessive reliance on foreign manpower, and weaken our Singaporean core.
2. b. But we will consider calibrated ways to provide more flexibility – like expanding the sources from which businesses can hire Work Permit holders for certain types of occupations where genuine shortages exist.
3. c. And we will need to strike the right balance – sufficient flexibility for businesses, without undermining Singaporean workforce development.
34. Ultimately, the sustainable path forward is productivity improvement and business transformation.
1. a. And many Members spoke about this. We know that SMEs need more support to embark on such transformation. Several members including Ms Cassandra Lee, Mr Lee Hong Chuang, and Mr Henry Kwek have offered suggestions on what more we can do.
2. b. Mr Mark Lee also highlighted the need to strengthen management capabilities, and he and several other MPs including Mr Liang Eng Hwa and Mr Victor Lye spoke about the importance of internationalisation.
3. c. These are all useful feedback and suggestions. The Government will continue to take them on board, study them and lean forward to enable our SMEs to innovate, upgrade, and internationalise.
35. SMEs that redesign jobs and transform their operations can offer higher wages and more meaningful opportunities to attract and retain Singaporeans. Many SMEs have done so successfully – including those in retail and F&B. EnterpriseSG and the Singapore Productivity Centre recently did a deep dive into F&B establishments in Singapore. The findings were reported in the media, and they are very instructive – because F&B establishments that benchmark themselves with productivity standards, and knew that they were lower than the benchmarks, could find practical and useful ways to raise their productivity. And when they did do so, they have generally done better.
36. I mentioned HarriAnns on Budget Day as one example. Other companies have done so too, restructured, transformed, digitalised, and even expanded abroad. And we want to encourage many more SMEs to take that path.
37. Let me cite another example – Poh Heng Jewellery,
1. a. It was founded in 1948 as a small shop on North Bridge Road.
2. b. Over the decades, it grew into a household name.
3. c. A few years ago, the company embarked on a serious transformation. It strengthened its management. It embraced e-commerce. And with Government support, it is developing AI tools to analyse customer data and shopping behaviour so as to enable more personalised product recommendations.
4. d. It now employs 150 people, and is making plans to expand into ASEAN.
38. These examples show that even traditional industries can reinvent themselves – and in doing so, create better opportunities for Singaporeans.

(III) Adapting well to AI

39. Another powerful force reshaping our economy is Artificial Intelligence (AI). Many Members spoke about this – NTUC Secretary-General Mr Ng Chee Meng, Mr Desmond Tan, Mr Desmond Choo, Dr Charlene Chen, Mr Darryl David, Ms Lee Hui Ying, Ms Mariam Jafaar, Mr Andre Low and A/P Jamus Lim. Many also shared about the anxieties that workers and fresh graduates are feeling.
40. These concerns are real. And we must and we will take them seriously.
41. Historically, every major technological wave has displaced some jobs, but also created new ones.
1. a. Computers displaced stenographers and typists.
2. b. But created new professions in ICT, finance, and services.
3. c. And over time, productivity gains expanded opportunities for workers.
42. Indeed, what we have seen in Singapore so far is that AI can augment jobs and help workers achieve more, even as it automates certain tasks.
1. a. Take the example of Ms Angeline Tan, who works at Nanyang Incorporated, a local event infrastructure company.
2. b. Her company adopted an AI chatbot to handle customer enquiries.
3. c. Instead of being displaced, she stepped up.
4. d. She became a “Chatbot Manager” – assuming responsibility for auditing the system’s responses and ensuring its accuracy.
5. e. But she did not stop there. She upgraded her skills further.
6. f. Today she is an AI Tech Lead in the company, overseeing the implementation of AI tools, improving workflows, and taking on more creative responsibilities.
7. g. And that is the pathway we want to encourage: workers moving up the value chain.
43. AI can also make our workplaces more inclusive.
1. a. Robots can handle physically demanding tasks.

For example, they can support seniors and persons with disabilities. Ms Denise Phua and Mr Sharael Taha spoke about this and we will step up efforts in this area too.

44. These are not theoretical possibilities. They are already happening today.
45. And for now, our labour market remains resilient.
1. a. The proportion of permanent employees has risen to a record high of nearly 91%, with gains across most sectors.¹
2. b. Vacancies continue to outnumber jobseekers, and

over 40% of openings are entry-level PMET roles – indicating still healthy demand for young graduates.

46. So thus far, the evidence does not point to widespread displacement. But as many Members have highlighted, there are emerging pressures.
47. And we recognise them. We cannot rely only on today’s data. We must prepare for tomorrow.
48. I mentioned earlier the historical experience with major technological waves is that ultimately more jobs are created than lost. That has been so in the past. But there is no economic law that says this will always happen, or that this will happen in the future.
49. Indeed many are concerned that this time may be different. Because AI is more powerful, advancing faster, and affecting a wider range of occupations and many Members raised important concerns. For example, that:
1. a. Companies may lean too heavily on AI and invest less in training their workers.
2. b. More workers could be displaced, and the older ones will find it harder to re-enter the workforce; and
3. c. Entry level jobs – the first rung of career ladders – may be hollowed out.
50. We are alert to these risks. And we will act early to prevent such outcomes from taking hold in Singapore.
51. We will invest more deliberately and more systematically in our people.
52. In that regard, I agree with NTUC Secretary-General Mr Ng Chee Meng’s three calls – to empower every worker to be AI-ready; to strengthen support and safeguards for workers; and to strengthen the Labour Movement’s ability to protect and uplift PMEs.
53. We will work closely with our tripartite partners, especially NTUC, to realise these shared goals.
54. What does this mean in practical terms?
1. a. For example, as we develop Champions of AI and implement our national AI missions, we will not only just help companies transform – we will capture value in Singapore, we will also pay close attention to how companies apply AI, and importantly guide them to use AI to enhance human skills and expertise.
2. b. Take aviation maintenance. Machines and AI can perform many functions. But skilled technicians remain essential. And AI can help them make better diagnoses and perform their work more cost-effectively.
55. Achieving all this will not be easy. Every sector is different, and how they use AI and the impact on workers in each sector will vary. That’s why we are coordinating our efforts through the National AI Council – aligning industry transformation and workforce upgrading, to ensure that AI uplifts our workers. That is our assurance.
56. And that is why our strategy going ahead is clear. We will not have jobless growth in Singapore. We will exploit AI to grow the economy, and we will ensure that growth translates into good jobs and better wages. This is how we give every Singaporean confidence to progress in the future.

C. Are We Doing Enough To Ease Cost Pressures, And Ensure Every Singaporean Can Progress?

57. Let me touch on cost pressures. We achieved better than expected growth of 5% last year.
58. Yet, as many members have highlighted, including Ms Hazlina Abdul Halim, Mr Saktiandi Supaat, amongst others, Singaporeans continue to feel cost-of-living pressures. The data may show improvement. But lived experience and realities do matter.
59. So the question is this: what more must we do to ease cost pressures and ensure every Singaporean can continue to progress?

(I) Addressing affordability and the costs of living

60. We must first understand why affordability and cost concerns have surfaced – not just in Singapore, but across many economies around the world.
61. After COVID and the war in Ukraine, inflation surged globally. In Singapore, it rose to more than 6% in 2022. It has since come down to 0.9% last year.
62. Inflation has moderated, but price levels remain higher than before. And that’s what households are experiencing.
63. To cushion the spike, we provided more than $10 billion through the Assurance Package.
64. Some have observed that the transfers in this year’s Budget are smaller than last year.
65. But in fact, support in this Budget remains substantial, and broader in scope. We are providing CDC Vouchers, cash support, utilities rebates, Child LifeSG credits, and CPF top-ups for seniors.
66. What does this mean?
1. a. A middle-income household with young children receives about $2,800 after you total up all the different items;
2. b. A lower-income household with young children – about $5,000;
3. c. A retired elderly couple – about $7,600.
4. d. Essentially, we give more to those with greater needs.
5. e. We give more to seniors, especially our retirees, as they are not working, and have to cope with higher prices on fixed incomes.
67. These are meaningful sums.
68. And they are on top of substantial, broad-based subsidies for essentials, like education, healthcare, and housing, as well as targeted support for lower-income families and workers.
69. Mr Louis Chua said the Government’s primary response has been to rely on one-off and ad hoc handouts. He said that last year, and I had clarified the matter. But regrettably, he has repeated this false claim again.
1. a. Because, the facts are, only about 5% of our overall budget is for one-off measures. That was so in FY 2025 and it is so in FY 2026.
2. b. The remaining 95%, the overwhelming share, is for longer-term and structural schemes.
3. c. In this Budget, we enhanced preschool and student care subsidies, as well as ComLink+ to support families with children.
4. d. Total social spending has increased this year. It has not gone down. We are providing more help for Singaporeans.
70. Our approach is not just to cushion the costs because the durable solution to cost pressures is steady, sustainable wage increases.
1. a. Mr Shawn Loh highlighted concerns that a decreasing proportion of Singaporeans benefit from economic growth. He highlighted concerns among seniors.
2. b. And indeed one group that will face greater impact is retirees because they are not working. That’s why we provide more for them in the Budget.
3. c. But when we look at data at both the household and the individual worker levels, incomes have risen faster than inflation over the past decade – across the entire income distribution. So real incomes have gone up for households and for workers, across the entire income distribution.
4. d. We also looked at household expenditures. Spending has increased in dollar terms, but expenditure as a share of income has either remained stable or fallen – across the income distribution as well. Meaning Singaporeans, generally, are spending less as a share of their incomes, even if their spending has gone up in dollar terms.
5. e. In particular, the share of household income spent on essentials – like food, public transport, and education – has declined across all income quintiles.
71. There is one exception and that is healthcare. Singaporeans are spending a larger share of income on healthcare and health insurance.
1. a. That reflects our rapidly ageing population. Because as you are older, you tend to spend more on healthcare.
2. b. That is why we provide significant and growing subsidies for healthcare services and for our national health insurance premiums.
3. c. It’s also why we have taken steps to rein in overly generous private riders and other practices that drive up medical inflation, especially in the private sector.
4. d. We will continue to ensure that healthcare remains affordable in Singapore.
5. e. No Singaporean will be denied the healthcare they need because of an inability to pay. That is our assurance.
72. Another reason for concerns about cost – inflation for some frequently consumed services, especially F&B, has risen faster than general inflation.
1. a. Food consumption may form a smaller share of income, which I mentioned just now.
2. b. But we experience the higher prices each time we order something or we dine out.
3. c. The psychological impact is immediate and visible.
73. The domestic services – be it healthcare or F&B – are labour-intensive. We want wages for Singaporeans in these sectors to rise. But when wages rise, costs also increase.
74. And that’s the fundamental tension every economy must manage.
1. a. Some countries suppress service wages and choose to keep prices low. But this traps a segment of workers in low-paying jobs. That is not what we want to do.
2. b. Others, like the European economies, have taken a different path. Wages in the services sector are high. You go to any European country and you would know. They are paid very well. But that leads to higher prices and a heavier cost burden, which in turn has to be supported by a larger welfare state financed by taxpayers. There’s no free lunch. Someone’s got to pay for this.
75. So Singapore is forging our own path.
1. a. We pursue broad-based wage growth.
2. b. But wage increases have to be supported by skills upgrading and productivity improvements.
3. c. And at the same time, the Government bears a substantial share of the costs of essential services, through subsidies and transfers – with more support for lower- and middle-income households.
76. Overall, this balance has delivered good and affordable services to Singaporeans, at a sustainable cost.
1. a. But we know this is still a work-in-progress.
2. b. The macro data may be reassuring.
3. c. But as many members have highlighted, the lived realities differ from household to household, and the circumstances vary for specific segments.
77. Different families face different pressure points.
1. a. For example, there are larger families with more children, and they will face a greater cost burden, as Mr Pritam Singh and Mr David Hoe have highlighted. Mr Singh suggested adjusting the CDC Vouchers. That could be one way to help them, but we will continue to explore other measures to help those with larger families.
2. b. There are also families caring for seniors or children, and especially those sandwiched with both. Ms Yeo Wan Ling, Ms Jessica Tan, and Ms Nadia Ahmad Samdin highlighted their concerns. In fact, we already provide more for them in every Budget, including this year’s Budget.
3. c. There are also families with members who have special needs. Prof Kenneth Poon and Ms Hazlina Abdul Halim highlighted their concerns.
4. d. Caregivers too need to be supported as Mr Cai Yinzhou, and Ms He Ting Ru highlighted.
5. e. In recent Budgets, including this one, we have strengthened support for all of these groups.
6. f. We will continue to do so, and will consider the suggestions that Members have made.
78. Targeted support for specific groups requires means-testing.
1. a. We use different indicators to means-test.
2. b. The two key ones are the Annual Value of dwellings (AV), and Per Capita Household Income (PCHI).
3. c. Quite a number of members, including Mr Alex Yeo, Ms Jessica Tan, Mr Gerald Giam, Ms Sylvia Lim just now, and Mr Edward Chia, suggested reviewing these indicators.
4. d. If we take a step back, most of us would agree that support should be given to households with less income and less wealth. No one would dispute that.
5. e. How to measure income and wealth is the challenge.
6. f. AV and PCHI are practical and effective indicators.
7. g. But no measure is perfect. We will continue refining our criteria, especially when it comes to support for seniors.

(II) Mitigating social inequality

79. The cost pressures can also feel sharper due to inequality. Because of inequality, comparisons intensify. Social stresses grow.
80. Encouragingly, in Singapore, income inequality has narrowed compared to a decade ago. Lower- and middle-income workers have seen faster real income growth than those at the top. Without this inclusive growth, I have no doubt that the cost pressures we are feeling on the ground would have been far worse.
81. We have achieved good outcomes, but we will continue to press on.
1. a. In this Budget, we are raising the Local Qualifying Salary; as well as enhancing and extending the Progressive Wage Credit Scheme.
2. b. Several members (Mr Patrick Tay, Mr Melvin Yong, and Mr Sanjeev Tiwari) suggested further steps to support lower-wage and vulnerable workers.
3. c. We will study your suggestions carefully – balancing wage increases with sustainable productivity improvements.
82. We are also paying close attention to wealth inequality – we have begun publishing the data, and will track this more systematically.
83. But we are not starting from a weak base.
1. a. Through housing grants, homeownership and CPF top-ups, we enable lower-income households to accumulate assets in Singapore.
2. b. Today, households in the lowest quintile have average net wealth of nearly $300,000 – that’s a meaningful foundation.
84. Mr Saktiandi and A/P Terence Ho suggested additional asset-based transfers, I think A/P Terence Ho called it a social dividend, or other forms of putting together the measures that we do to help Singaporeans build assets.
1. a. In fact, this is the approach that the Government has long taken.
2. b. We focus not just on income support, but on enabling Singaporeans to accumulate assets — because asset ownership gives families a concrete stake in our nation’s success, and allows them to share directly in Singapore’s progress.
3. c. We do this through mechanisms like the Child Development Account, Edusave, Post-Secondary Education Account, CPF, and our housing policies. Most recently, we introduced the ITE Progression Award, which incorporates an element of CPF top-ups.
4. d. We will continue to strengthen pathways for Singaporeans to build savings and assets.
85. We also have progressive taxes on wealth, through our property and vehicle taxes. We will continue to study ways to moderate excessive wealth concentration – carefully and responsibly.
86. But redistribution has its limits.
1. a. It’s very easy to say, “Tax the rich more!”
2. b. But capital and talent are mobile.
3. c. If we rely solely on ever, ever higher taxes, eventually the broad middle will also have to shoulder the burden.
4. d. And we risk undermining competitiveness, enterprise, and job creation.
5. e. Redistribution alone cannot build a strong and resilient society.
87. So our approach is balanced.
1. a. We keep taxes moderate but progressive.
2. b. We redistribute resources to those with greater needs.
3. c. And we complement that with heavy investments in human capital: early childhood education; quality schooling and tertiary education; as well as lifelong learning through SkillsFuture.
4. d. Upward mobility remains central to our social compact.
5. e. Because here in Singapore, your starting point should never determine your finishing position.

(III) Strengthening retirement adequacy and social support

88. Several Members also spoke about retirement. Mr Saktiandi has been championing this for many Budgets. Ms Poh Li San also mentioned this in the Debate. In this Budget, we are indeed strengthening our CPF system – because Singaporeans are living longer, and we want them to retire with confidence and peace of mind.
89. Our CPF system rests on sound and sustainable principles.
1. a. Each member saves for his or her own retirement.
2. b. But we do not leave individuals to fend for themselves. We boost those with lower balances through:
  1. i. Silver Support;
  2. ii. The Majulah Package; and
  3. iii. Periodic CPF top-ups.
  4. iv. And we continue to review the parameters of these schemes.
3. c. That keeps the system fiscally sustainable, while ensuring that those with less get more support.
90. The CPF provides, as Members would know, risk-free returns of 2.5% on the OA and 4% on the SA, plus extra interest of 1-2%. Members who wish to invest their savings for potentially higher returns can do so today through the CPF Investment Scheme, or CPFIS.
1. a. But the experience of the CPFIS has been mixed.
2. b. From 2016 to 2024, while a majority of CPFIS-OA investors earned above 2.5% per annum, only about half achieved returns of more than 4%. This is for OA.
3. c. In other words, many would have been better off topping up their CPF Special Account, and earning the guaranteed 4% interest.
4. d. For CPFIS-SA investors, the results were even more sobering – around 3 in 4 made 4% or less per annum. In other words, they underperformed the CPF SA rate, which is risk free.
91. The reality is that investing and earning consistently good returns is not easy. That’s why we took some time to study how to implement a low-cost lifecycle investment option within CPF – it has to be simple, low-cost, and effective.
1. a. There are commercial products available in the market, but take-up has been limited partly due to the high fees, which can go up to as much as 2%.
2. b. But in recent years, the market has matured. More players have entered. Digital platforms have helped to lower the costs.
3. c. That’s why we now believe it is possible to offer well-diversified life-cycle products at lower fees.
4. d. The CPF Board will be engaging the industry next month to call for expressions of interest. There’s still a lot of work to be done – designing the scheme, the specific parameters that several Members talked about, building the IT system, and ensuring a smooth user experience.
5. e. The CPF Board is working towards rolling out the scheme in the first half of 2028, but if we can do this earlier, we will.
92. Beyond retirement, we have and will continue to strengthen support across life stages. We have initiated major moves as part of Forward SG.
1. a. In public housing, through the new HDB classification system of Standard, Plus, and Prime flats;
2. b. In healthcare, through Healthier SG and Age Well SG;
3. c. We have made SkillsFuture a key pillar of our social compact, and we are strengthening this further.
4. d. We have introduced the SkillsFuture Jobseeker Support scheme.
5. e. We have enhanced ComCare and ComLink+.
  1. i. Mr Abdul Mulhaimin asked about this particular issue of ComLink+. Let me just touch on it briefly. There are today about 11,000 families on ComLink+, most are in rental housing. There are around 14,000 eligible families living in rental flats. We have approached them, but some chose not to come onboard ComLink+ or could not be contacted.
  2. ii. With the enhancements to ComLink+, we will redouble our efforts to reach out to them and with stronger community support, we hope more of them will come on board the scheme. We will also extend ComLink+ to lower-income families beyond the rental blocks.
93. Members have offered many other suggestions to further strengthen our community and social support system. Many suggestions have been offered.
1. a. For example, in healthcare delivery and integration with social support. Members like Dr Choo Pei Ling, Mr Dennis Tan, Ms Rachel Ong, and Dr Hamid Razak just now spoke about this;
2. b. Suggestions around housing and neighbourhood rejuvenation. Mr Ang Wei Neng and Ms Joan Pereira touched on that;
3. c. More support for the arts, culture, and community initiatives – Ms Elysa Chen and A/P Kenneth Goh mentioned that in their speeches;
4. d. As well as suggestions to review the income thresholds for the Jobseeker Support Scheme, which Mr Ng Chee Meng and Mr Patrick Tay had advocated.
5. e. We will study these suggestions carefully.
6. f. In particular, the Jobseeker Support Scheme was launched only recently, about a year ago. So we will review the scheme and its parameters once we have more experience.
94. Many Members also asked for more support for families, especially for parents and would-be parents. Mr Foo Cexiang, Ms Hany Soh, Mr Shawn Loh, Ms Eileen Chong, Mr Gabriel Lam, and others have highlighted this concern.
1. a. Indeed, our falling Total Fertility Rate is a serious concern.
2. b. It’s not unique to Singapore. It is happening across all advanced and high-income economies so we should really have some humility about this.
3. c. No country has truly succeeded on a sustained basis to reverse this decline.
4. d. Members raised practical suggestions around housing, cost pressures and affordability of raising children.
5. e. Some also asked for more work flexibility and leave provisions, so that parents can be present in their children’s formative years.
6. f. In fact, we have taken significant steps on both fronts recently. We have enhanced shared parental leave, and with the Large Families Scheme, parents can receive up to $48,000 for their third or fourth child, and even more for fifth or subsequent child.
7. g. As a result of the recent enhancements, our expenditure on marriage and parenthood initiatives has increased – from $4 billion in FY 2020 to $7 billion in this Budget.
8. h. But we will not stop here. We have not given up. We will not give up.
9. i. We are already planning for the next tranche of measures to strengthen support for families, and there will be an opportunity to discuss this further at the COS Debate.
10. j. The Minister in the Prime Minister’s Office will share more at that occasion.
95. Sir, this Government will continue to provide stronger assurance at every stage of life. We will do this in a coherent and deliberate way – strengthening individual responsibility, reinforcing collective support, and preserving long-term sustainability. We will continue to strengthen our social compact and ensure Singapore remains a society where every citizen can progress with confidence.

D. Is Our Fiscal Strategy Fit For Our Current Challenges, And Positioning Us Well For The Future?

96. Let me move on to the third question – is our fiscal strategy fit for immediate challenges, and is it positioning us well for the future?
97. Let us look at the global context.
98. Since the start of this decade, countries have been tested in ways few could have anticipated.
1. a. Many advanced economies are now carrying record high levels of public debt.
2. b. And as debt rises, so will borrowing costs.
3. c. Over time, this constrains fiscal flexibility and weakens longer-term growth potential for these economies.
99. Against this backdrop, Singapore’s strong fiscal position is a strategic advantage.

(I) Explaining our fiscal position

100. Many Members spoke about our fiscal position and public finances, including Mr Ang Wei Neng, Ms Valerie Lee, and Mr Xie Yao Quan. I am glad they see our healthy fiscal position as a source of strength.
101. Given the surplus we have generated in FY 2025 and also the one we expect in FY 2026, Mr Gerald Giam had asked whether the GST hike should be re-evaluated.

102. But let us consider the facts.
103. At the beginning of this decade, we knew that healthcare spending would rise sharply in line with our rapidly ageing population. This was structural, not cyclical. And healthcare was not the only area where spending pressures were increasing.
104. We had estimated that healthcare alone would require additional funding of 0.6% to 1.2% of GDP, and this would happen in the second half of this decade which we are in right now. That is a significant and permanent increase. The question was how to fund this.
105. And we studied a range of options.
1. a. We raised property taxes and motor vehicle taxes for luxury cars. We increased the top marginal personal income tax rates.
2. b. But these moves were still not sufficient to close the structural funding gap.
3. c. Worker’s Party had suggested raising the maximum Net Investment Returns Contribution (or NIRC) we can use in the annual budget from 50% to 60%.
4. d. We did not agree with that proposal because the NIRC framework was carefully designed to safeguard intergenerational equity. If we increase the cap to 60%, that can ease immediate pressures. But it will weaken fiscal discipline, reduce our buffer for future shocks, and shift a heavier burden onto the next generation.
5. e. And in the end, the GST was the only broad-based and sustainable option to fund rising healthcare needs, while preserving our reserves framework.
106. But even as we raised the GST, we also made sure we mitigated the impact on Singaporeans.
1. a. We delayed the effective tax increase for the majority of Singaporean households, by at least five years.
2. b. We enhanced the permanent GST Voucher to further defray the tax paid by lower- and middle-income households.
3. c. After accounting for these measures, the majority of GST collections are, and will continue to be, from higher-income households, tourists, and foreigners.
107. In other words, we secured stable funding for healthcare while cushioning the impact of the increase for most Singaporean households.
108. Could we have relied instead on Corporate Income Tax collections?
1. a. But remember, back in 2022, when we made the decision on the GST, there was no sign that Corporate Income Tax collections would rise so significantly.
2. b. At that time, discussions on BEPS were still evolving. The eventual outcomes, and their revenue implications were far from certain.
3. c. It would not have been responsible to fund permanent healthcare commitments using revenue sources that were uncertain, and can yet dry up.
109. The Corporate Income Tax collections only started rising towards the end of FY 2023, and have stayed elevated until now. This outcome was not anticipated. It was due to GDP growth outperforming expectations in 2024 and 2025, as well as better-than-expected contributions from multinational enterprises in a few key sectors.
110. And this brings us to the issue of fiscal marksmanship. Mr Alex Yam, Mr Gerald Giam, Mr Louis Chua, Mr Xie Yao Quan touched on this.
1. a. We have debated this before in the House. It is perhaps my favourite topic, as I have shared before that I started work in MOF doing precisely this, fiscal projections.
2. b. As I have explained, our forecast deviations are within a reasonable range – comparable to other advanced economies.
3. c. Within this range of variation, revenues in recent years have tended to come in above projections.
111. Is it because we were overly conservative?
1. a. The short answer is no.
2. b. Our projections are prepared by MOF economists using the best available data at the start of each financial year, including GDP growth assumptions at that time.
3. c. But for a small open economy, like Singapore, growth outcomes can diverge significantly from forecasts, as global conditions evolve. Because we are so dependent on the external environment, forecasting Singapore’s GDP growth is like forecasting the world’s GDP growth, which is very, very difficult to do.
4. d. Likewise, revenues from property transactions or COE premiums are inherently difficult to predict. Can you tell what the next year’s property price or COE premiums would fetch? It’s very hard to do. In the case of COEs, we increased the quotas yet the premiums continued to rise with sustained demand – that explains the increase in revenue from Licences and Permits, which Mr Gerald Giam asked about.
5. e. So forecasting in such an environment will never be exact. But I assure everyone in this House and Singaporeans that our approach has been and will be responsible and professional.
112. A further insinuation is that the PAP Government deliberately painted a “doom and gloom” picture for electoral advantage.
1. a. But let’s consider the facts and the context. After the US Liberation Day tariffs, there was widespread uncertainty across the world, not just in Singapore.
2. b. At that time, how many analysts projected 5% growth for Singapore in 2025? I don’t recall any.
3. c. The reason why things did not turn out as badly as we feared was partly due to factors beyond our control, but also partly because of the decisive steps we took.
4. d. DPM Gan Kim Yong and the team moved quickly – engaging the US to safeguard our core interests, deepening links with other countries, forging new agreements that sustained investor confidence.
5. e. Our agencies, our businesses and our workers adapted swiftly and worked tirelessly through a very uncertain period.
6. f. Their efforts deserve recognition. So let us not belittle these contributions just to score a political point.
7. g. The fact that we are in a better position today than our projections is something we should all welcome – it’s good news for Singapore and Singaporeans.
113. Imagine if we had chosen differently.
1. a. If we didn’t raise GST,
2. b. And had instead, hoped for revenue upsides,
3. c. And then the economic situation didn’t turn out so well,
4. d. We would be having a very different debate today.
5. e. We would be scrambling to close fiscal gaps. We would be responding from weakness.
114. Because we made the difficult yet responsible decision, because we chose responsibility over convenience, we are now in a position of strength. So Sir, we did not gamble with Singapore’s future. We made the hard call and that’s why we can act with confidence today.

(II) Planning for an uncertain world

115. Next, let me turn to our medium-term revenue and expenditure outlook.
116. We are expecting structural revenue increases from FY 2027, when the first revenue collections from the BEPS Top-Up Taxes come in.
1. a. Based on the strong corporate tax collections so far, and that is pre-Top-Up tax, our initial sense is that the further increase from the Top-Up Taxes could be significant.
2. b. We will continue to firm up our estimates over the coming months as we get more up-to-date data on how firms are performing and adjusting their plans.
117. Since BEPS revenue is coming, some may ask, “How about rolling back the GST?”
1. a. But the GST increase was introduced to fund rising, structural healthcare expenditure for an ageing population.
2. b. These spending needs are permanent and will continue to grow. And they should be supported by a stable and reliable revenue base.
3. c. At the same time, as I have shared in the Budget, Government spending is rising in many other areas aside from healthcare – for social needs, economic competitiveness, our energy transition, security, and infrastructure.
4. d. So the additional corporate tax revenues will strengthen our fiscal position and support these growing needs. But they do not replace the structural role of the GST. And especially what we have done to fund permanent and rising healthcare costs.
118. In fact, expenditure pressures are already evident.
1. a. Take the example of defence spending.
2. b. I mentioned that MINDEF’s budget of 3% of GDP would be where it is for now, and that budget includes spending on cybersecurity by MINDEF and SAF, something that Mr Giam asked about.
3. c. But it does not include cybersecurity spending beyond MINDEF. And we do need to spend more on cybersecurity outside of the MINDEF family.
4. d. In MDDI and the Cyber Security Agency, for example, we will have to invest more.
5. e. We will have to harden our critical information infrastructure, like our grids and our power system, against cyber threats.
6. f. That’s why I said in the Budget that our security spending will rise in the coming years.
119. In short, our aim is not to run high surpluses for the rest of this term of Government, something that Mr Liang Eng Hwa asked about. Our objective is a balanced budget over the term of Government. That is clear from our historical record. Mr Xie Yao Quan very helpfully gave a speech yesterday outlining the historical data. If you look at the past years, we have had balanced budgets in many years – balanced meaning within the range of 0.5% of GDP, we’ve had years of surpluses, we’ve had good years, but we’ve also had years of deficits. On the whole, we plan for a balanced budget over the term of Government. When there are revenue upsides, we will deploy these to meet our growing needs.
1. a. Mr Shawn Loh suggested giving back surpluses above 2% of GDP to all Singaporeans.
2. b. But in practice, we actually do not wait to cross a mechanical threshold like that. Whenever there are revenue upsides, we have shared some of the gains with Singaporeans.
3. c. Last year, we used that to fund the SG60 package.
4. d. This year, we channelled them towards CPF top-ups, and the Cost-of-Living Special Payment.
5. e. We have also strengthened our national priorities – by investing in our social support system; enhancing our connectivity, security, and economic resilience.
120. For this FY 2026 Budget, expenditure is at 18.4% of GDP. As I’ve said just now, it is the largest Budget on record.
121. Earlier, MOF had projected that spending could reach 20% of GDP by 2030.
122. But if you look at the trends, since emerging from COVID, expenditure has grown by an average of $10 billion every year.

And we expect our needs to rise for the coming years in this term of Government.

123. At this pace, Government spending is likely to exceed 20% of GDP well before 2030.
124. In light of our fiscal position, Mr Shawn Loh asked if the Government can commit to not making further major revenue moves.
1. a. At this juncture, if circumstances remain broadly stable, and without any further major revenue moves, we expect our fiscal position during this term of government to remain healthy.
2. b. We’ve already said that there will be no further GST increases until at least 2030.
3. c. Aside from the GST, we continue to review our tax system regularly as part of prudent fiscal management.
4. d. We will make revenue adjustments only when necessary – to fund structural spending needs, or to achieve clear policy objectives, like strengthening progressivity or addressing externalities.
5. e. These are difficult decisions. Any tax change, I should say any tax increase, is a difficult decision. We take them only after careful study, and full consideration of the impact on households and businesses.
125. MOF had earlier published medium-term fiscal projections up to 2030. With updated revenue and expenditure developments, these projections will need to be refreshed. So we will publish updated medium-term projections – extending to 2035 – by next year.
1. a. But a word of caution is in order, because in today’s fast-changing world, assumptions can quickly become outdated.
2. b. So the forward projections serve as a guide, and will have to be continually updated.
3. c. Ultimately, what matters most is maintaining fiscal discipline, together with the agility and nimbleness to respond swiftly as circumstances change.

(III) Upholding a sound and progressive fiscal system

126. Let me turn to specific points on our tax system.
127. Ms Diana Pang asked about the timing of the changes to the Preferential Additional Registration Fee rebate.
1. a. We implemented the vehicle tax changes immediately to prevent a rush-to-market.
2. b. That has long been our practice for property and motor-vehicle-related taxes – the changes are announced and then applied immediately to ensure market stability and fairness.
3. c. A number of questions have been raised on this issue, and MOT will address them separately.
128. Mr Saktiandi and Mr Louis Chua shared their views on the personal income tax regime.
1. a. When taken together with our progressive tax rates, tax reliefs and rebates, currently about 1 in 3 resident workers pay no PIT.
2. b. Among those who do, about 8 in 10 have an effective tax rate of less than 6%.
3. c. So we will consider these suggestions around the Personal Income Tax as part of our regular fiscal reviews.
129. There was a debate yesterday about what it means to run a fiscal surplus.
1. a. Does a fiscal surplus mean that the Government is taking more from the economy – and leaving households and businesses to bear a deficit?
2. b. This is an over-simplified and inaccurate characterisation of how our fiscal system works.
3. c. A surplus simply means that in a year, revenue exceeds expenditure.
4. d. And in Singapore’s case, revenue includes significant investment income from our reserves – not just taxes collected from businesses and households.
5. e. So if you exclude NIRC, expenditure exceeds revenue. In other words, we are putting money back into the economy, not draining money from businesses and households.
6. f. And in fact, our Budgets in both 2025 and 2026 have been expansionary, with significant support for households and businesses.
7. g. More importantly, we should look at who pays the tax and who benefits from the transfers.
130. And on that score, the picture is clear.
1. a. For every dollar of tax paid by the top quintile, they receive 20 cents in benefits. That’s the top income quintile, they pay a dollar, to get 20 cents in benefits.
2. b. In contrast, the middle quintile receives around $2 in benefits. A dollar of tax, you get back more, $2 in benefits. And the bottom quintile gets $7 in benefits.
131. In other words, those who are better able to contribute, are the ones who generally pay more in taxes. And we use the revenue to strengthen our social compact, and provide greater support to those who need it most.
132. So, Mr Speaker, our fiscal system is fair, progressive, and sustainable. It is pro-worker, pro-enterprise, and pro-Singapore.
133. Let me conclude on a final point around accountability. I agree in-principle with the many comments and suggestions that Members have made, including Mr Pritam Singh, Dr Haresh Singaraju, and Mr Yip Hon Weng, who asked for more information to ensure fiscal accountability and value for money in Government spending.
1. a. We want to do that. We want to ensure that.
2. b. That is why we have been publishing the Singapore Public Sector Outcomes Review biennially since 2010.
3. c. That sets out key outcome indicators across major policy areas, and allows the public to track our progress over time.
4. d. We will continue to review the indicators in the report, and ensure they are relevant and useful.

It is not static. We continually look at refreshing and updating this document.

e. Ministries on their own also conduct detailed reviews of major spending programmes to assess effectiveness and outcomes.
f. I will ask all Ministries to provide clearer and more accessible information on major initiatives – so that Singaporeans can better understand how public resources are used and what results they achieve.

E. Conclusion

134. Mr Speaker, let me conclude. I have outlined our strategies to secure our future together in this changed world. I thank Members of this House for your support for the direction we must now take
135. This next phase will not be easy. The economic headwinds remain. The geopolitical environment is becoming more contested. The major powers are competing more intensely. They may say they are not asking others to choose sides. But in reality, they are using the full range of tools – from economic leverage to regulatory controls and technology restrictions – to advance their interests. Some pressures will be overt. Others may be subtle – seeking to influence opinions, shape narratives, or even sow division among our people.
136. Now, we must be clear-eyed about these realities. But we have faced difficult external environments before. We have navigated uncertainty, preserved our sovereignty and independence, and emerged stronger – because we remained one united people and acted with resolve.
137. And we enter this new era with considerable strengths. A strong economy. A cohesive society. Sound public finances. These are not accidental achievements. They are the result of decades of hard calls made by generations of Singaporeans.
138. So this Budget builds on that strong foundation. It is a collective commitment – that we will do what it takes to thrive in a more demanding world; that we will stand together when pressures mount; and that we will continue pushing forward to seize new opportunities on the horizon.
139. The world may be more uncertain. But we are prepared. We are united. And together, we will shape our own destiny, and secure a brighter future for every Singaporean.
140. Thank you, Mr Speaker.

Footnotes

¹ Source: MOM Labor Force in Singapore 2025.