D. Sustaining Singapore’s Success For Our Future Generations

    Sustaining Singapore’s Success For Our Future Generations

  1. Let me move on to how we can sustain Singapore’s success for generations to come.
  2. Our pioneers set out to build a high quality living environment, even when they had to attend to pressing economic and security challenges. They left us a legacy of a clean, green, and liveable environment.
  3. As the Chinese saying goes, “前人种树,后人乘凉”. The generation that planted the seeds does not fully benefit from their toil, but they care to do this, for future generations to reap the fruits.
    1. In the same spirit, we must plant the seeds to secure a better future for generations to come.
  4. By thinking long-term, by confronting major challenges, and by investing for our future, we have beaten the odds. Three major challenges we must continue to confront are: climate change, security, and fiscal sustainability.
  5. Addressing Climate Change

  6. To build a liveable and sustainable home, we must address climate change. As a low-lying island nation, rising sea levels threatens our very existence.
  7. So what can we do as a small island nation?
  8. Supporting International Effort to Fight Climate Change

  9. First, we must continue to support global efforts to combat global problems. Singapore must continue to do our part as a responsible member of the international community. Singapore plays an active role at the UN Framework Convention on Climate Change. Besides representing our interests, Team Singapore is regarded as an honest broker, helping to build bridges and consensus.
  10. This year, we will update our commitment to the Paris Agreement and take a further step to chart our vision for a low-carbon, sustainable future Singapore.
    1. The Minister in the Prime Minister’s Office will elaborate on this later.
  11. Managing our Carbon Constraints

  12. Second, we must manage our transition to a low-carbon, low-emissions economy.
    1. We must turn our carbon constraints into a strength, just like how we have turned our water vulnerabilities into an area of strength, with radical innovations in NEWater and desalination. Today, Singapore is a global hub of water research and innovation.
  13. The circular economy – turning waste into a resource that can be reused in the production cycle – is one way we can reduce our carbon footprint, and open up new opportunities.
    1. NEA will soon begin a field trial to use NEWSand, made from incineration ash, in road construction along Tanah Merah Coast Road.
  14. We will do more to develop new ideas and solutions. We are committing close to $1 billion for research in Urban Solutions and Sustainability. The research will focus on renewable energy, cooling Singapore, and carbon capture, among others.
    1. As climate change is global, innovative solutions created here can be commercialised, turning our constraints into a strength.
  15. More broadly, we have to manage our greenhouse gas emissions, by putting in place the right incentives, tax structures, and regulations.
    1. We introduced a carbon tax in 2019, and supported enterprises in improving energy efficiency.
    2. We introduced and enhanced the Minimum Energy Performance Standards to raise the energy efficiency of energy-intensive household and industrial appliances.
  16. The domestic transport sector contributes a significant amount of greenhouse gas emissions. Vehicles with internal combustion engines, or ICEs, also contribute to pollution, adversely affecting our health and quality of life.
    1. Many major cities have already set ambitious goals to phase out ICE vehicles and shift to cleaner technologies.
    2. Car manufacturers are actively developing cleaner engine technologies such as hybrids and electric vehicles, or EVs, and are exploring new areas such as hydrogen fuel cells.
  17. As a small city-state, we are able to, and have strong reason to stay abreast of these major technological changes.
    1. For both public health and climate change reasons, we should progressively phase out the use of ICE vehicles towards cleaner alternatives, such as hybrids and EVs. We will set a long-term strategic goal for Singapore to achieve this.
  18. Our vision is to phase out ICE vehicles and have all vehicles run on cleaner energy by 2040. To promote this, we will have three measures in this Budget.
  19. First, we will enhance incentives to encourage the adoption of cleaner and more environmentally friendly vehicles.
    1. In 2018, we introduced the Vehicular Emissions Scheme for cars and taxis. Under the scheme, car buyers and taxi operators who choose cleaner car models can receive an upfront rebate of up to $20,000 and $30,000 respectively.
    2. We have seen promising results from the scheme. More car buyers and taxi operators are choosing environmentally friendly engines such as electric hybrids.
    3. Therefore, we will introduce a similar scheme called the Commercial Vehicle Emissions Scheme for light goods vehicles. The Minister for the Environment and Water Resources will announce the details at the COS.
    4. For cars and taxis, I will provide an EV Early Adoption Incentive.
      1. Those who purchase fully electric cars and taxis will receive a rebate of up to 45% on the Additional Registration Fee, capped at $20,000.
      2. This incentive will be implemented for three years, from January 2021.
    5. We will also revise the road tax methodology for cars to better reflect the current trends in vehicle efficiency from January 2021. This will lead to an across-the-board reduction in road tax for EVs and some hybrids. [See Annex D-1].
  20. Second, we will expand the public charging infrastructure for EVs.
    1. Today, there are about 1,600 charging points island-wide.
    2. We will work with the private sector to step up the deployment of chargers in public carparks. By 2030, we aim to deploy up to 28,000 chargers at our public carparks island-wide.
  21. Lastly, the Government will take the lead. We will progressively procure and use cleaner vehicles to do our part for the environment.
  22. Here we are placing a significant bet on EVs, and leaning policy in that direction because it is the most promising technology. It also requires a significant increase in demand to justify the infrastructure investment. This is a significant undertaking involving multiple agencies.
  23. A Resilient Vehicular Tax Structure

  24. The transition towards EVs will have a major impact on tax revenues.
  25. Fuel excise duties today yield around $1 billion per year, and are significant contributors to government revenues. They are also a form of mileage tax, which discourages excessive driving, especially in private cars, and thus helps to reduce road congestion.
  26. But EVs do not pay fuel excise duties. Therefore, we will need to update our vehicular tax structure to preserve these two considerations.
    1. Ideally, we would like to implement a usage-based tax on EVs as an alternative to fuel excise duties.
    2. But the technology to do this properly on EVs is the Next Generation ERP System, and distance-based charging using ERP is still several years away.
    3. In the interim, we will impose a lump-sum tax that will be built into the road tax schedule for EVs to partly account for the loss in fuel excise duties.
    4. This lump-sum tax will be phased in over three years starting from January 2021, with the full quantum implemented by January 2023. [See Annex D-1].
    5. Total road tax, after the revision in methodology and the new lump-sum tax, will be higher for some EV models.
  27. However, EV buyers can expect to enjoy substantial cost savings because of the significant EV Early Adoption Incentive.
  28. Building a Sustainable Singapore, Together

  29. I spoke about policy measures that the Government will put in place to reduce emissions. But the Government alone cannot address the threat of climate change. Therefore, mobilising all of us in this effort is the third thrust of our climate change strategy.
  30. Robert Swan, the first person to have walked to the North and South Poles, once said, "The greatest threat to our planet is the belief that someone else will save it."
  31. To deal with climate change, we have to foster a climate of change in our community – where everyone, whether as an individual, as a business leader, or as a community leader, makes conscious decisions to lower our carbon footprint.
  32. One such decision by individuals is our choice of household appliances.
    1. To encourage households to purchase energy-efficient household appliances, we will introduce incentives to help lower-income households with the cost of these appliances.
  33. Outside our homes, we earlier announced plans to add more greenery to our HDB estates.
    1. New housing developments will have around 45% to 60% green cover.
    2. Residents are contributing through the community garden movement. Today, more than 36,000 gardening enthusiasts are nurturing over 1,500 community gardens island-wide. These gardens keep our shared neighbourhood vibrant, and bring people closer together.
  34. To make sustainable living a key feature of our HDB estates, we will have a new HDB Green Towns Programme. It will have three key focus areas: reducing energy consumption, recycling rainwater, and cooling our HDB towns.
  35. Long-Term Adaptations to Climate Change

  36. I spoke about how we are committing to global efforts, managing our carbon constraints, and building a sustainable Singapore, together. We must try hard and we will do our part. But the course of climate change depends on the commitment of all nations. The risk of rising sea levels remains significant. So our fourth strategic thrust is to prepare our island for rising sea levels.
    1. The Minister for the Environment and Water Resources will elaborate on our immediate plans at the COS.
  37. PM mentioned at the National Day Rally last year that climate change adaptation might cost $100 billion or more over 100 years. This is a major fiscal outlay in the coming years – so it is right and prudent that we set aside resources for this.
    1. I will set up a new Coastal and Flood Protection Fund, with an initial injection of $5 billion. I will top it up subsequently whenever our fiscal situation allows.
    2. We must have the resolve to deal head-on with the existential threat of rising sea levels. Just as our pioneers planted the trees for us to enjoy, we must protect our island for future generations to come.
  38. Our food security may also come under threat, as imported supplies come under strain from climate change or geopolitical tensions. To improve our food resilience, the Minister for the Environment and Water Resources will provide more details of our ‘Grow Local’ strategy at the COS.
  39. Securing Our Home

  40. In uncertain times, there are many calls on our budget. However, we cannot take our peace, prosperity, and stability for granted.
    1. As a small city-state, we are particularly vulnerable to volatilities in our external environment.
    2. Securing our home remains a high priority in our Budget and must be funded adequately. It is imperative that we continue to invest in our external, internal, cyber, and data security, to keep Singapore and our families safe and secure.
  41. Diplomacy and deterrence are the twin pillars of maintaining Singapore’s sovereignty.
    1. We strive to build good relations with our neighbours and international partners, and to promote a rules-based world order.
    2. A strong Singapore Armed Forces supports our diplomatic efforts and ensures that other countries take Singapore seriously. We must be ever ready to defend our interests should negotiations fail.
    3. We must continue to draw a credible deterrence, by maintaining our military and technological edge, in a prudent manner that stretches every defence dollar.
  42. Back home, we are committed to protecting our safety and our way of life.
    1. Our Home Team agencies will continue to enhance the operational readiness of their officers, leverage technology, and build partnerships with the community.
    2. Singaporeans share a strong conviction to look out for each other and to partner the Home Team to prevent and deal with terror threats and crisis, through the SGSecure movement.
  43. We must also be prepared to deal with cyber threats, as digitalisation becomes more pervasive. Our cyber capabilities have been raised significantly, with the setting up of the Cyber Security Agency, or CSA, in 2015, and the passing of the Cybersecurity Act in 2018.
    1. CSA is preparing measures for the next level of cybersecurity, as we adopt more advanced technologies such as Artificial Intelligence, Cloud, and the Internet of Things.
    2. All of us, in the Government, enterprises and as individuals, will need to stay vigilant and strengthen our cyber and data security capabilities.
  44. Data security is also a vital prerequisite and key enabler of Singapore's Digital Economy. It is key to preserving trust in a digitally-connected world.
    1. We enacted the Personal Data Protection Act in 2012, and the Public Service has adopted comprehensive measures to secure and protect citizens’ data.
    2. As we embark on initiatives to realise our Smart Nation ambitions, we must continue to enhance our cyber capabilities.
  45. I will set aside $1 billion over the next three years to build up the Government's cyber and data security capabilities, to safeguard citizens’ data and our critical information infrastructure systems.
  46. The respective Ministers will provide more details of the schemes to confront the challenges of climate change and security.
  47. A Fiscally Sustainable Singapore

  48. As we lay out our plans for our economy, people, and environment, we must ensure these plans are fiscally sustainable, so that we have the resources to deal with future needs and challenges.
  49. We must continue to plan our finances based on long-term structural drivers.
    1. Revenue flows are difficult to project accurately – we can end up having more, or less.
      1. In this term of government, we happen to have more, mainly due to exceptional Statutory Board contributions from MAS, and increased stamp duty collections.
      2. We used some of the unexpected surpluses to save ahead for anticipated needs, and shared some of the surpluses with Singaporeans.
      3. But we must not count on such revenue surprises to keep happening.
    2. We must anticipate long-term spending needs and be disciplined to raise revenues ahead of time, so that we can continue to provide quality public services to all Singaporeans.
    3. At the same time, we must be mindful of the uncertainties and downside risks to our revenue.
      1. There are ongoing discussions to revise international tax rules under the Base Erosion and Profit Shifting project, and we are actively participating in them.
  50. Our fiscal strategy must also be equitable.
    1. Major long-term infrastructure is lumpy, and requires hefty upfront investments. But once built, they benefit many generations of Singaporeans.
    2. Borrowing for such developments allows us to distribute the cost equitably across current and future generations, without the need for sharp increases in taxes.
    3. However, we must remain disciplined about our use of borrowing. We should continue to pay for recurrent needs, like healthcare expenditure, through recurrent revenues such as taxes.
      1. Our fiscal discipline has helped us to be among a select group of countries with a triple-A credit rating.
      2. This in turn lowers the borrowing costs of enterprises and households, and promotes a virtuous cycle of economic growth.
  51. We must also maintain our fiscal posture and leave enough to deal with unexpected shocks and longer-term challenges.
    1. The Constitution requires us to run a balanced budget over each term of government. We are being prudent to preserve fiscal buffers, to ensure that we have the wherewithal to stand our ground and bounce back quickly if the tide turns against us.
    2. This is how we have been able to respond decisively to fight the COVID-19 outbreak, and support Singaporeans and our workers.
    3. And at the same time, to be able to set aside an Assurance Package for GST to help Singaporeans in the years ahead.
    4. The accumulated surpluses at the end of the term of government becomes part of our past reserves, which are invested. Today, the Net Investment Returns Contribution from our reserves is the biggest component of our revenue. This is remarkable for a country with no natural resources of any kind.
  52. Other Tax Changes

  53. I am making further changes to our tax system to strengthen its resilience while maintaining competitiveness. The details are in the Annex. [See Annex D-1.]
  54. Budget Position

  55. Let me summarise our overall budget position.
  56. For FY2019, we expect an overall budget deficit of $1.7 billion, or 0.3% of GDP. The deficit is $1.8 billion lower than the $3.5 billion deficit forecasted a year ago. This is due mainly to lower-than-expected expenditures arising from unforeseen project delays.
  57. When we exclude the Government’s top-ups to funds and Net Investment Returns Contribution from our reserves, we expect a basic deficit of $5.1 billion, or 1.0% of GDP.
  58. In the coming year, the Singapore economy faces considerable uncertainty, because of heightened risks in the global economy, and the rapidly evolving COVID-19 outbreak. Hence, for FY2020, our budget position will be more expansionary, with a larger basic deficit of $12.3 billion. This, together with the Stabilisation and Support Package, will impart a considerable fiscal boost to the economy to address near-term concerns.
  59. On the whole, we expect an overall deficit of $10.9 billion or 2.1% of GDP. [See Annex D-2.]
  60. With our fiscal prudence since the beginning of this term of government, we have sufficient accumulated fiscal surplus to fund the overall deficit in FY2020. There is no draw on past reserves.