Debate on Annual Budget Statement

Mr Speaker, the Prime Minister has set out an ambitious vision for AI. He asks us to harness it as a strategic advantage. I agree with that framing. The question I want to put to this House today is: a strategic advantage for whom? The answer will determine whether Budget 2026 fulfils its promise; that growth must translate into good jobs and rising incomes for Singaporeans.

I want to address three things. How can we own the technology rather than just renting it? How can we protect the worker who is being asked to adapt in this new age? And how can we ensure that the gains are shared with the people who helped create them?

Let me start with the technology itself.

Mr Speaker, I want to push our AI ambitions further. Right now, the heavy fiscal levers in our AI strategy are largely focused towards adoption – identifying where AI can improve our existing industries and subsidising our businesses to deploy it faster.

That is necessary but not sufficient. If our industrial strategy remains focused on fast adoption, we are agreeing to a permanent, compounding transfer of value to foreign technology companies. Every API call we make, every subscription, every enterprise licence, is rent paid to a landlord in Silicon Valley or perhaps China.

Singapore has never just accepted that kind of relationship with any industry. We move up the value chain, extracting value at the source. We do not just use semiconductors; we manufacture them. And our ambition for AI should be no different. We need to stake out our own defendable positions and capture the value that comes with them.

The question is therefore where, specifically, we have a right to win. And I think that the answer starts with understanding Singapore’s constraints.

We cannot win a compute war. We lack the land, the power grid and the capital to train trillion-parameter frontier models. But Singapore has been here before. When we faced constraints in other industries, we did not try to outspend our larger competitors. Instead, we identified niches where our specific combination of capabilities gave us an advantage and we built from there.

We have already done this in AI. Singapore has produced SEA-LION and MERaLION, large language models built on open-weights foundations, fine-tuned for Southeast Asian language context and our cultural context. We identified a gap in our region and we filled it. That was and remains the right instinct. We must now look further afield with global ambitions.

I want to make the case for another niche, one with global export potential – Edge AI and the efficiency research that underpins it.

The rest of the world is running into the same energy wall that we face when deploying. Data centres are straining electrical grids everywhere. The United States (US) is planning new nuclear plants, specifically to power AI data centres. My colleague, Dennis Tan, earlier highlighted in this House the outsize environmental impact of an indiscriminate rush to embrace large-scale models for every minor task, a dilemma that every nation is grappling with.

This global problem, in other words, is the same problem our constraints have been forcing us to think about – how do you make AI run on less?

This is the field of model distillation and quantisation, compressing large AI models so they can run locally, with minimal degradation in performance, without an internet connection to the cloud, on a fraction of the energy. The result is what practitioners call “Edge AI” – intelligence that runs on the device itself, rather than routing data to a distant server.

The Prime Minister announced four national AI Missions in this Budget. I want to look at two of them through the lens of Edge AI.

In advanced manufacturing, the robots on a factory floor cannot depend on a cloud connection. A production line that hesitates because of network latency or halts because of an outage is a competitive liability. The AI running that factory needs to operate locally and be resilient to disruption.

In connectivity, the autonomous systems that manage our containers at our ports make thousands of routing decisions every second. Our ports handle a large proportion of the world’s transshipment volume. These decisions cannot wait for a round trip to a data centre.

The export potential follows directly. As the rest of the world scrambles to solve their energy and latency constraints, the software that makes AI run efficiently on local hardware will command a significant premium. We are already being pushed to solve this problem. We should be solving it deliberately and with an eye on selling the solution.

I am not a deep technical expert and I am not offering a comprehensive blueprint today. What I am suggesting is a way to think about where Singapore has a right to win, and Edge AI is one possible answer to that question, among many others.

The same logic points towards explainable AI – building tools that make the reasoning that AI models make transparent enough for regulated industries to deploy. Finance and healthcare, the two other sectors that are the focus of our AI Missions, are just these industries that operate under obligations to explain automated decisions.

Singapore's regulatory institutions and our reputation for the rule of law may give us a genuine advantage in the space as well. These are just ideas, and there will be other niches that neither side of this House has yet identified.

So, what do I ask for? The Government has already committed $37 billion under the Research, Innovation and Enterprise 2030 (RIE2030) plan, with AI explicitly within the scope. I ask that within that envelope, Edge AI efficiency research – model distillation, quantisation and on-device deployment – be named as an explicit priority, with success measured by commercial export potential and not just domestic adoption.

My more specific ask concerns the National AI Missions. The four Missions are already funded. I ask that each Mission consider edge deployment capability as a key design criterion, whether an efficient, low-latency, sovereign edge model is appropriate for the use case.

And more broadly, I ask that the Government establish a formal process for identifying Singapore’s AI export niches, applying the same constraint-aware logic that produced SEA-LION and MERaLION, across our strategic industries. Not just Edge or Explainable AI. A systemic search for where Singapore has a right to win and a commitment to back those niches with capital.

The goal is to ensure that in years to come, Singapore is a genuine owner of commercial AI capability that we can export to the world. Not just a well-compensated tenant but a landlord of our own.

But owning the technology is only the first part of the answer. The second is protecting the people being asked to adapt to it, including those the market has already started to leave behind.

Mr Speaker, the aggregate economic data looks encouraging – broad-based wage growth and lower income inequality. But averages can be dangerous and they can mask a specific problem that I think deserves more attention.

Research published in October last year by Stanford University and ADP found that since late 2022, which was when ChatGPT broke cover, entry-level hiring in AI-exposed sectors in the US has fallen by 16%. For software developers aged 22 to 25 specifically, the headcount has fallen by a greater 20%. We do not have such granular data for Singapore but that alone is part of the problem.

This is what I call the broken bottom rung of the ladder.

Now, I want to be clear that what is at stake here is not just in economic terms but in human terms as well.

The first job is not just income. It is the place where you discover what you are capable of. Where someone more senior takes a chance on you, teaches you something you could not have learned any other way and passes on a standard of craft or judgement that you will carry for the rest of your career. It is where professional identity is formed.

If that rung is gone, not because graduates are less capable, but simply because it is now cheaper to automate the tasks that used to justify hiring them, we do not have an unemployment problem; we have a rupture in how knowledge and expertise pass from one generation to the next. The experienced professionals of 2046 are the junior hires of today. If we do not hire them today, we will not have any in 20 years.

After my Parliamentary colleague, Eileen Chong, and I put out a call for feedback some months ago, we heard from many young Singaporeans who are living this.

Graduates who applied for over 100 roles; who took unpaid internships, hoping it would lead somewhere; who are talented, willing and being told by the market there is simply no place for them yet. They are simply asking for a chance to start.

The broken rung is the most visible symptom, but the disruption does not stop at entry-level workers. Mid-career workers face a parallel challenge – skills that took years to build being absorbed by AI faster than retraining programmes can respond.

So, what do I ask for? Data first. We cannot manage what we do not measure. I call on MOM to publish granular employment data for new graduates, broken down by sector, role type and AI exposure levels. If the broken rung is happening here, we need to see it in our numbers before we can respond to it.

The Government's 400% Enterprise Innovation Scheme (EIS) tax deduction for AI expenditure is a powerful lever as well. While the details are being firmed up, I ask that the Government require that firms claiming the EIS deduction above a meaningful threshold demonstrate a credible plan for maintaining graduate and entry level roles, not by preserving roles that AI has genuinely made redundant, but by investing and reimagining what junior work looks like in an AI-augmented firm. Public money for AI adoption should come with a commitment to developing the workers who will work alongside it.

The Government's announcement of six months of free premium AI tool access for workers taking selected courses is also a welcome step.

But six months is a trial period. Mastery takes longer. AI is not a course you complete, it is daily practice, much like using spreadsheet programme is. A worker who builds that habit over six months and then has the access removed is being set up to fall again.

The Workers' Party (WP) has called for SkillsFuture Credit to cover AI tool subscription on an ongoing basis. I renew that call today – for young workers starting out and for those midcareer workers who need to stay current as well as for our senior workers looking to embrace new technology.

The SkillsFuture Level-Up Programme currently targets workers aged 40 and above, but the disruption is hitting many earlier. Singaporeans in their mid to late 30s, the millennial cohort, whose careers were built on skills that AI is now absorbing are facing displacement before they even qualify for mid-career support.

Lowering the qualifying age to 35 is a simple, concrete and targeted step that addresses where the disruption is actually occurring.

That brings me to the third and final question. AI is not just changing how we work. It is changing what we owe each other. The assumptions baked into our social contract about risk, about reward, about the relationship between capital and labour were written for a different economy. Budget 2026 is an opportunity for us to update this.

So, what do I ask for? The WP has called for a redundancy insurance across multiple Parliaments. I argue for it myself in my maiden speech. I will not repeat the following argument today. But I want to offer a different frame for it.

Critics have called it a welfare crutch. I want to make the opposite case. Redundancy insurance is the engine of the economic agility that this Budget demands. A worker with six months of financial breathing room can say yes to retraining. They can take the risk of moving sectors. They can be the bold, adaptable Singaporean that the Government is asking them to be.

Without that buffer, the rational response to uncertainty is not agility, it is paralysis or grabbing the first job that comes along, plunging workers into a cycle of underemployment. Paralysis is exactly what we cannot afford in an economy that is undergoing structural transformation.

The Government is rightly optimistic about AI's potential, but responsible governance requires managing all our outcomes, including the downside. Redundancy insurance is a suitable hedge; and I urge the Government to act on it.

The EIS deduction condition I proposed earlier on maintaining graduate and entry level pipelines as a condition for tax deductions addresses new workers entering the workforce, but there is a parallel question about existing workers. What happens to the person already in the job when AI arrives?

Right now, the tax system is largely neutral on the question. A firm can deploy AI to augment its workforce or to replace it and incentives are often available either way. Without a nudge, the default logic of capital is to substitute labour. Labour is expensive. Shareholders benefit when headcount falls. AI makes substitution easier than it has ever been.

I propose a targeted retraining tax credit, available only to firms that can demonstrate that they have reskilled a specific worker into an AI-augmented role rather than retrenching them. Retention done right cost less than redundancy. Let us make the fiscal system reflect that.

Which brings me finally to the distribution question. Global evidence consistently shows that productivity gains from AI do not automatically translate into wage growth. The Government is investing taxpayer resources and regulatory sandboxes in four national AI missions: advanced manufacturing, connectivity, finance and healthcare. These are the right priorities, but they come with a public obligation.

I propose that an annual AI gains audit, scoped specifically to these four sectors, be implemented. Not red tape for every business, but a targeted accountability mechanism for sectors receiving extraordinary levels of public support to answer one straightforward question: are the productivity gains from state-backed AI missions flowing into the wages of our workers or are they flowing into shareholder returns?

Mr Speaker, this is a Budget with genuine ambition and the WP supports much of its direction. But ambition must come with accountability. The strategic advantage of AI must be felt in the wages of our workers, not just in the earnings reports of the companies deploying the technology.

Own the technology, not just rent it. Protect the worker that is being asked to adapt to it and ensure that the gains of AI accrue to workers and not capital owners. These are not obstacles to Singapore's AI ambitions, they are the conditions that make these ambitions worth pursuing. [Applause.]

Mr Speaker, this is the first Budget of the current Parliamentary term. I would like to think of this as an opportunity for us to future-proof

Singapore in a world characterised by flux, we must be steadfast in holding on to who we are – our collective identity as Singaporeans are our roots, keeping us fixed and resolute as One People through disruptions and upheavals.

Sir, the Budget is as much about our collective values and identity, as much as it is about dollars and cents.

In his Budget speech, the Prime Minister identified that the spirit of our people is our greatest strength. He also said that Singaporeans must be active participants rather than mere spectators in our nation-building effort. I agree with this sentiment.

But Sir, participation requires agency. If the Government is sincere about the spirit of our people being our greatest strength, then it must be equally sincere about giving Singaporeans the means and the space to tend that spirit themselves. Too often, however, Singaporeans find themselves as mere spectators in the making of our national collective identity.

The Government recognises the importance of nurturing the shared bonds of civic friendships among Singaporeans. I hope to, however, convince the House that our national identity and sense of solidarity is something that is best fostered organically from the ground up in ways that affirm and reflect our citizens' lived experiences. In the next few minutes, I will talk about heritage, history and human ingenuity.

First, I want to suggest the importance of heritage conservation, not out of sentimentality or nostalgia, but because these places have meanings for us as Singaporeans. Places and place memories are important to our identity and belonging. Unrelenting change, including those brought about by rampant commercialisation, can degrade our sense of who we are.

Second, I will also suggest that the construction of our national history can be more democratised and inclusive. If Singaporeans are to be active participants in nation building, then we deserve to tell a Singaporean story that is brought forth by the collective memory making of the Singapore public.

My final point will address the Government's focus on AI. I understand that we have to embrace advances in technology and seek to include these tools in our repertoire. My concern is specific that we do not elevate artificial intelligence to such a degree that we risk undermining the very thing that we are seeking to enhance: our human ingenuity.

Sir, our heritage is essential to our civic and national identity. The Government has made it a priority to renew and strengthen our Singapore spirit in this year's Budget. I especially welcome the Prime Minister's plans to strengthen our cultural and heritage institutions, which include the reopening of the revamped Malay Heritage Centre.

However, even at the Istana Kampong Glam welcomes the public through its doors once more, it would be a pity if Kampong Glam itself loses its cultural character as a historical precinct which it has served and still continues to serve local communities.

I spent part of my early childhood in Bussorah Street which was once known as Kampong Kaji. For me, Kampong Glam cannot be separated from the social and communal practices which are embedded within the neighbourhood. Kampong Glam thrives because the district remains a living heritage for the community who live, work and visit there.

I am sure that the House shares my concern about how traditional and heritage businesses often with long standing roots in Kampong Glam are finding themselves displaced by the challenging operating environment.

On 12 January, a report by CNA revealed that between 2023 and 2025, the yearly median rent in Kampong Glam rose from $6.02 to $7.54 per square foot, translating to a 25% increase over two years. During our Sitting earlier this month, the Senior Parliamentary Secretary for National Development confirmed that a small proportion of tenants did face rental hikes of 25% or more in these two years. He, however, said that this involved leases for shops in high footfall streets, such as Haji and Bali Lanes.

However, this is not sufficient as an assurance that Kampong Glam will remain viable for heritage businesses. High rents in Haji and Bali Lanes can easily have a spillover effect on other adjacent streets, such as Arab Street, which houses some traditional textile retailers.

The disappearance of heritage businesses in Kampong Glam will be an irreversible thinning of the precinct's place meaning. We should also not understate the intimate connections between our sense of self, our sense of belonging and our sensing of the physical infrastructure.

To a large degree, our identity is anchored in places. People know who they are because they know where they were, where their grandparents brought them around to run errands, where they posed with their extended family around Sultan Mosque for a Hari Raya photo, or where they socialised over teh tarik with friends or brought their partner for a date.

Even when I grew older, I continued to bond with my father about Kampong Glam and our shared his interest in its history and heritage. Born and raised in Kampong Kaji, my father would regale me with stories of Wak Cantuk and playing with his friends from Gedung Kuning and other parts of Kampong Glam. While he is no longer here, our conversation still lived on fondly through my memories and every time I drop by Kampong Glam.

Mr Speaker, it may be said that churn and change is a constant order of the market. However, such indiscriminate churn can carelessly sever the connective threads nested in Kampong Glam that intricately links people and places, history and memory, and identity and belonging.

A nasi padang stall that has operated for decades, or a textile shop that has served both grandmother and granddaughter – these are not merely commercial storefronts selling goods and services. These are also precious repositories of cultural knowledge, community relationships and public memory. These are simply gone when they are gone. And no influx of souvenir shops, photo booths and Instagram-friendly cafes can compensate for such a loss.

Sir, if I may, I would like to quote a line from an essay titled "Displacing Singapore" written by Mr Peter Schoppert, which described the constant physical transformation of Singapore as such: "The past continually makes way for a future that has no time to ripen into a present."

With Kampong Glam, we have the opportunity to do things differently, to let the past ripen into a present. We can still balance the forces of commerce and the imperatives of culture. This includes helping the heritage businesses that carry the memory of many generations, supporting the families who have anchored this district through the decades and taming speculation so that the cultural heritage of the district is not hollowed out.

The Urban Redevelopment Authority's (URA's) planning parameters for historical districts stipulate guidelines for building use. Would it not be possible to amend these parameters to ensure that heritage businesses can remain viable in the areas, such as introducing heritage business licences, specifically for historic districts?

This would offer businesses some measure of protection from open market competition, as well as prevent the over-commercialisation of a historic district.

Sir, I turn now to the topic of our national history. Recently, I visited the Albatross Files exhibition at the National Library, which I thought was quite remarkable, since it is not often that the state offers a revisionist account of its own historical narrative. As a student, the narrative of separation that I was taught was one of expulsion. A Straits Times report from 21 December 2025 quoting a former secondary school history teacher confirms this.

That aside, the declassification of the Albatross File is a good move. Yet the existence of the file was only first revealed in 1996 by Dr Goh Keng Swee during an interview with Dr Melanie Chew. And it took another 27 years for it to be fully declassified. Must Albatross really wait for 30 years before its existence was to be publicly acknowledged and almost 60 years after Independence before its contents were to be fully revealed to the public?

Even then, the declassification process of Albatross seems tightly managed. I refer to the 7 December speech by Senior Minister Lee Hsien Loong, who shared how a specific team went through the material carefully, picked out the key documents and sections, annotated them and wrote up the editorial apparatus.

I do not mean to downplay the considerable work and effort of these scholars. However, was there a reason that the file was not released to the public domain in the first instance so that the wider community of scholars and the public can read, discuss, interpret and construct their understandings of a past in a more democratic and collective fashion?

As the Minister for Digital Development and Information stated in her written answer on 12 January, "A deeper appreciation of our history and how we got here will strengthen our national identity." I however doubt that our more mature and discerning citizens can truly have this deeper appreciation if the Government's approach to history remains didactic, where history is meant to be consumed by the people rather than constructed by the people and for the people. Historical narratives gain resonance when it is written by the many, not dictated by the few.

Sir, in the spirit of encouraging and facilitating a deeper appreciation of our history, would it not be more reasonable to have, as a default, an automatic declassification and public release of records once 25 years have elapsed?

Currently, even Government documents that have been transferred as public records to the National Archives Singapore (NAS), the so called "public archives", are not easily accessible. In 2023, the then Senior Minister of State for Communications and Information mentioned that the NAS has made the metadata of around 780,000 records available to the public. However, most of these records still require permission from the originating agency before they can be read.

In the Senior Minister of State's statement, it was also revealed that 68,000 filed records have been declassified and made accessible to the public.

Sir, surely any public archive deserving of its name should have its records readily available to the public without the need to seek permission from a Government agency. An automatic declassification process will make records generally available to the public by default instead of requiring interested Singaporeans and researchers to undertake an opaque approval process to gain access.

I understand that a more transparent and open declassification policy may cause some anxieties. However, the Government can heed the advice of Senior Minister Lee, who once said, quote "In teaching the Singapore Story, you have to deal with delicate issues, especially race and religion, and sometimes relations with our neighbours. We must treat such issues sensitively, but we cannot gloss over them. Amnesia is not an option. We cannot pretend that incidents involving race and religion never happened. They are part of our history", end quote.

Sir, a society that can collectively alter its history is one that is confident in facing the future. To future-proof Singapore, amnesia is not an option. If you want Singaporeans to be active participants in their own country, if you want our citizens to deepen their appreciation of our history and to strengthen our national identity, then the Government must believe that Singaporeans can be trusted to participate in the construction of our national history.

Sir, my final topic – AI. A focal point of the Budget speech was on harnessing AI as a strategic advantage for Singapore. The Prime Minister outlined the Government's commitment to strengthen AI literacy for our institute of higher learning (IHL) students and to help workers automate routine tasks so they can concentrate on performing higher value activities that would involve judgement, creativity and human insight.

These are pragmatic measures to familiarise Singaporeans with AI and integrate its use into our daily routines. However, I wonder whether we are in danger of becoming an AI-reliant society, rather than an AI-resilient society.

My worry is that such indiscriminate habituation to AI may risk undermining the very things that we want to augment. Those things that the Prime Minister talked about – judgement, creativity and human insight. Sir, human ingenuity is a precious thing, and we must not let it be the case that the more we rely on AI, the more we end up dulling our critical faculties for human ingenuity.

Sir, as an undergraduate, I remember struggling through dense academic text, picking apart the writings of scholars such as Émile Durkheim, Max Weber and Karl Marx, trying to find out what their words meant and what it is they were trying to convey. Had AI been available then, it would have been convenient and very tempting for me to have ChatGPT summarise the content or generate ideas for an essay or seminar discussion.

However, there is value in undertaking the sometimes slow, often uncomfortable and always arduous task of reading a text and grappling to understand it on your own terms. This is the process through which we sharpen our cognitive skills. This is how we learn to decipher and interpret the meanings of the written word, and by extension, make sense of the world, which those words reflect and shape. This is how we develop our sense of judgement and our capacity for creativity.

I appreciate the Prime Minister's reassurance that the Government will define how AI is developed and used in Singapore, including setting out clear rules for its responsible and safe implementation. I await more clarity in this direction.

One last point, Mr Speaker, I will reiterate what my WP colleague Dennis Tan, and his concerns about AI and the environment.

We should remember that every AI query has a physical and environmental footprint. We may think of AI as performing virtual magic on our computers, giving us answers in almost an instant, or even helping us to generate pantun for Parliament. But this magic has to piggyback on a vast infrastructure of data centres that consume voracious amounts of electricity and water.

Globally, data centres are straining power grids and depleting water sources. Needless to say, the energy and water demands of these data centres also have third party effects, such as increasing the utility cost for everyone else, including residents. This has become such a serious issue in the United States (US) to the extent that the New York Times reported on 15 January, that the politicians and lawmakers have started mulling over legislation to oblige tech companies to pay their fair share for electricity consumption, including paying upfront for the cost of upgrading the power grid.

Locally, data centres accounted for 7% of Singapore's total energy usage in 2020. Moreover, data centres also contribute to the urban heating of our island, because for every one megawatt of heat removed from data centres by the cooling systems, 1.2 megawatt of heat is ejected into the environment.

In fact, resource and sustainability concerns prompted the Government to issue a moratorium on data centre construction in 2019, which has been lifted in phases since 2022. In May 2024, the Infocomm Media Development Authority (IMDA) released the Green Data Centre Roadmap, which established energy and water efficiency targets for data centres for the next 10 years.

I hope that the Government is confident that we are not only on pace to meet these efficiency targets, but to also ensure that the data centres' energy and water consumption does not create upward pressure on the utility cost for households and small businesses.

Sir, I highlight these issues not as a reason to abandon or shun AI, but the world is facing an existential challenge of climate change and the United Nations University Institute of Water, Environment and Health recently warned of a global water bankruptcy. Given these circumstances, it seems only pragmatic for us in this House and as a country to consider the ethical and environmental trade-offs involved as we embark on a national quest to integrate AI into our personal, social and working lives.

Sir, the Prime Minister has identified the many challenges that Singapore is facing. I hope that the Government reads my remarks as I intend them to be: constructive amendments for the purpose of strengthening our civic endurance and collective resilience to navigate the challenging days ahead. [Applause.]

Mr Speaker, I am extremely heartened by the Government’s support of our seniors in this year’s Annual Budget Statement. As the Prime Minister acknowledged in the Budget Statement, with longer lifespans, retirement adequacy is a major concern for our seniors.

This is a sentiment that is echoed by the seniors in Potong Pasir. Our life expectancy in Singapore has risen over the years to about 83.5 years. If a senior retired in 2005 at the statutory retirement age of 62 years, he or she would be 82 in 2025 – a long retirement period of 20 years.

During this 20-year period, if we use the Monetary Authority of Singapore's (MAS’) goods and services inflation calculator, a basket of goods and services under the food, healthcare and transport categories which, in my view, are three categories that affect seniors significantly, increased approximately between 60% to 80%.

For a retired senior, every dollar saved at the time of retirement, for retirement will be stretched with each passing year. Accordingly, the Government has over the years supplemented our seniors in retirement with cash and voucher support in various forms: CPF and MediSave top-ups, Silver Support and the Pioneer, Merdeka and Majulah Packages.

In this Budget, seniors can look forward to benefiting from additional subsidies for CareShield life premiums via a top-up of the long-term care support fund, further CPF top-ups and changes to the CPF system to help build up retirement savings. The objective is to ensure that seniors age with dignity, security and peace of mind.

However, as the number of seniors continues to grow in the community, as we expect it to, it is inevitable that there will be seniors who fall between the gaps. Others may have to grapple with challenges that extend beyond financial concerns. Today, I wish to highlight the concerns of two such categories of seniors.

The first are retired seniors who live in homes with higher annual value (AV). I had raised the issue of reviewing the use of the AV as a means test for healthcare subsidies in my maiden speech last year. This issue has also been raised by other Members of this House on other occasions.

To address this, the Government had reviewed the AV threshold for means testing from time to time and raised it to allow more Singaporeans to benefit from higher subsidies. I agree with the Prime Minister when he explained in his response at the Budget debate last year that there is no perfect means testing regime to test both income and wealth.

However, the fact that this issue has been raised on a number of occasions by Members of this House reflects the ground sentiment that an increasing number of seniors living in homes with higher AV are either extremely concerned about their retirement adequacy in the future or already facing financial challenges in retirement.

To be clear, the means testing regime of PCHI and in its absence, the AV of one’s residence is, on the round, an objective measurement of one's income and wealth in the distribution of subsidies. I will posit, however, that retired seniors, who need to plan their retirement funds over a longer life span, own and live in homes with slightly higher AV purchased through pre-retirement income, or have residential arrangements that may not accurately reflect their level of wealth, are disproportionately more affected by this means testing regime than any other demographic of Singaporeans.

Perhaps the deeper underlying issue is to consider whether there is a need to review holistically how we assess our retired seniors in the various subsidies and support mechanisms that we have in place. Some of these mechanisms are applied nationally across all demographics of Singaporeans. The means testing regime of PCHI and AV is one. Other mechanisms are senior-centric, like silver support and the Pioneer Generation and Merdeka Generation Packages.

For those mechanisms applied nationally, in healthcare for example, some subsidies are tiered, like in hospitalisation ward subsidies, while others suffer a cliff-drop reduction of subsidies, like in the case of residential long-term care services.

Sir, if there is a policy imperative that the needs of our seniors, especially those in retirement, should be prioritised, I ask if the Government will consider reclassifying seniors as a separate category for current subsidy mechanisms that apply across all demographics and apply a more nuanced and targeted approach to address the needs of this growing class of retired seniors.

The second category are seniors who live alone. This is a growing trend. According to the Department of Statistics, the number of one-person households for those aged 65 years and above has more than doubled from 2014 to 2024, rising from 42,100 to 87,200 households.  Based on the overall expectation that one in four Singaporeans will be over the age of 65 by 2030, we can certainly expect this trend to continue to grow.

Through my pro bono LPA Programme over the past 10 years, I have had the opportunity to engage many seniors who make conscious choices on a very difficult and life-changing issue of the possible loss of mental capacity. It is abundantly clear to me that they are anxious, worried and unsettled about what could happen to them as they age, especially if they are single or choose to live alone due to complex family dynamics.

Let me share an example. A senior lived alone in a home that was in a state of disrepair. Our volunteers in the neighbourhood observed that she needed help. No family member or relative was contactable. She was physically frail. Sadly, her mental capacity was also failing. She missed her bills and had her utilities turned off. She missed her meals, even though volunteers left cooked meals at her doorstep. She was friendly one day and extremely hostile the next. Our grassroots team, the Social Service Office, AIC and other volunteer groups rendered assistance in whatever way possible. Yet they were limited as to how far they could go, and no agency had the authority and or the power to intervene directly. Eventually, after almost a year, we were informed that some action had been taken to have her situation addressed.

This may be an isolated case, one with a peculiar set of circumstances. But as the number of seniors living alone in Singapore grows, the expectation must be that more such cases will emerge. Currently, the Public Guardian can only supervise or investigate matters involving LPAs and or deputyships. Under certain circumstances, the Public Guardian may appoint suitable third parties, like social workers or medical care providers as professional deputies.

The Mental Capacity Act, however, does not empower the Public Guardian to intervene directly if a senior loses his or her mental capacity and has no viable person who can be appointed as a deputy to make decisions and manage matters on his or her behalf. This could result in vulnerable seniors failing to get the support or timely intervention they need, even with many willing helping hands in the community.

I ask if the Government will consider reviewing the Mental Capacity Act and empowering the Public Guardian to intervene directly in such cases? The Public Guardian can work alongside the Public Trustee to manage the assets of such seniors and direct caregiving agencies to administer the care required. I understand that in jurisdictions such as Australia, there exists a legal framework that allows for direct intervention in such cases. Interestingly, Australia also recently enacted the rights-based Aged Care Act 2024 which came into force on 1 November 2025 with a focus on empowering seniors to uphold their rights, needs and personal choices in their aged care.

Mr Speaker, as our population ages and the needs of our seniors become more varied and complex, it is vital that our policies evolve with greater clarity and foresight. The concerns I raised today – from retirement adequacy to fair access to support and the vulnerabilities of seniors who live alone – remind us that no single framework can meet every circumstance.

As we continue strengthening our systems, let us work together collectively to achieve the objective espoused in this year’s Budget: for every senior in Singapore to age with dignity, security and peace of mind. Sir, I support the Budget.

Mr Speaker, this year we tabled the largest Budget in our history – larger than the five Budgets combined in 2020 to fight COVID-19. And 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.

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 is not possible for any single Budget to be all encompassing. 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.

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.

So, that is the spirit in which we craft and design every Budget.

On that note, I have listened carefully to the many thoughtful suggestions that have been shared in the last few days, even in the occasions when I have not been in this Chamber, I have 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.

Sir, I will not be able to address every point raised today. The programmes, specific questions will be taken up during the Committee of Supply debates. For my response, I will focus on three broad issues that have been highlighted.

First, how will we secure continued economic success and good jobs for Singaporeans in a changed world? Second, are we doing enough to ease cost pressures and ensure every Singaporean can progress? And third, is our fiscal strategy fit for the future, the challenges we face both now and in the future?

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.

Our economic strategies must adapt to a changed world. This is a world where power and strength increasingly shape outcomes where rules are more contested, where economic relationships are being rewired.

We felt these pressures acutely last year, especially after the US' Liberation Day tariffs. Now, fresh changes in US tariffs remind us that uncertainty and volatility is becoming the norm and in such a world, smaller countries, like Singapore, risk being bypassed or marginalised.

So, we cannot afford to stand still. We must deepen trusted partnerships, diversify our links and strengthen our resilience. And 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 is exactly what we are doing.

And so, we are 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.

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.

Our fast growing sectors are export oriented. That is to be expected. Companies in these sectors compete globally and they create well-paying jobs, with strong career progression opportunities. But precisely because they compete at the frontier, they have to be productive and operate efficiently, often with lean manpower. And that is a global trend.

You 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. That is one reason why manufacturing employment in many advanced economies has steadily fallen.

We see similar patterns here in Singapore. Over the last decade, the manufacturing sector has, on average, contributed about 20% of GDP. But its employment share is smaller. And it has declined – from 14% in 2015 to about 12% today.

Over that same period, employment in exportable services – areas like finance, information technology (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.

Does that mean that growth is no longer important?

Far from it. 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.

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.

But growth alone is not sufficient. Growth alone will not automatically translate into job opportunities across the board. We must also uplift the broader domestic economy – raising productivity, wages and career pathways across the services sector.

And that is why we are taking sustained action in areas like education, healthcare and social services. We have put in place skills frameworks to articulate competencies, enable skills upgrading and support structured progression in these areas. We have increased salaries for workers in public healthcare institutions and Government-supported preschools. We have updated salary guidelines for the community care and social service sectors.

These are not ad hoc or one-off moves. They are integral to our economic strategy. Because inclusive growth means more than developing frontier industries. It also means ensuring that domestic services – services that Singaporeans rely on daily – become more productive, more professional and more attractive as careers.

In this regard, small and medium enterprises (SMEs) play a critical role. They employ many Singaporeans and anchor economic activity across our island. Many members also shared their concerns about SMEs, including Ms Diana Pang, Mr Jackson Lam, Mr Fadli Fawzi, Mr Edward Chia, Ms Denise Phua, Mr Azhar Othman and Mr Sharael Taha.

In particular, the two SME segments under greater pressure are retail and food and beverage (F&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. Yet, even amid these challenges, the number of F&B and retail establishments continue to grow. And with more players in the market, competition has intensified.

So, how should we respond to these trends?

In the immediate term, we have provided Corporate Income Tax rebates, including in this Budget. Over the longer term, our support must be sustainable and should not distort market incentives.

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.

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.

On rental costs, 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. 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.

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. 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. We will also continue to monitor the situation closely to ensure that rentals remain sustainable and competitive.

I have covered cost of goods, rental. Next, manpower.

Indeed, labour costs have increased in recent years. Part of this reflects structural factors – an ageing population and tighter labour supply as well as market forces as firms compete for workers. But part of this is also the outcome of policy. Through the Progressive Wage Model, we are raising wages for lower-wage workers. That is the right thing to do – to uplift incomes, strengthen dignity in work and narrow wage gaps.

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. That reflects our consistent approach to uplift workers while supporting firms to adjust.

Mr Mark Lee asked for more leeway for SMEs to hire foreign workers. We cannot relax the Dependency Ratio Ceiling (DRC). Doing so will encourage excessive reliance on foreign manpower and weaken our Singaporean core. 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.

We will continue to strike the right balance – sufficient flexibility for businesses without undermining Singaporean workforce development.

Ultimately, the sustainable path forward is productivity improvement and business transformation. 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.

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. These are all useful feedback and suggestions, and the Government will continue to take them onboard, study them and lean forward to enable our SMEs to innovate, upgrade and internationalise.

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. Enterprise Singapore 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.

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.

Let me cite another example. Poh Heng Jewellery. It was founded in 1948 as a small shop on North Bridge Road. Over the decades, it grew into a household name. 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. And it now employs 150 people and is making plans to expand into ASEAN.

These examples show that even traditional industries can reinvent themselves and, in doing so, create better opportunities for Singaporeans.

Another powerful force reshaping our economy is AI. And many Members spoke about this, including National Trades Union Congress (NTUC) Secretary-General 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 Assoc Prof Jamus Lim. Many also shared about the anxieties that workers and fresh graduates are feeling.

These concerns are real. And we must and, we will, take them seriously.

Historically, every major technological wave has displaced some jobs but also created new ones. Computers displaced stenographers and typists but created new professions in ICT, in finance and services. And over time, productivity gains expanded opportunities for workers.

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.

Take the example of Ms Angeline Tan, who works at Nanyang Incorporated, a local event infrastructure company. Her company adopted an AI chatbot to handle customer enquiries. Instead of being displaced, she stepped up. She became a Chatbot Manager, assuming responsibility for auditing the system's responses and ensuring its accuracy. But she did not stop there. She upgraded her skills further. And today, she is an AI Tech Lead in her company, overseeing the implementation of AI tools, improving workflows and taking on more creative responsibilities. And that is the pathway we want to encourage – workers moving up the value chain.

AI can also make our workplaces more inclusive. 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.

These are not theoretical possibilities. They are already happening today.

For now, our labour market remains resilient. The proportion of permanent employees has risen to a record high of nearly 91%, with gains across most sectors. Vacancies continue to outnumber jobseekers and over 40% of openings are entry-level professionals, managers, executives and technicians (PMET) roles, indicating still healthy demand for young graduates.

So, thus far, the evidence does not point to widespread displacement. But as many Members have highlighted, there are emerging pressures and we recognise that. We cannot rely only on today's data. We must prepare for tomorrow.

I mentioned earlier that 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.

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 companies may lean too heavily on AI and invest less in worker training. That more workers could be displaced and the older ones will find it harder to re-enter the workforce. And that entry level jobs, the first rung of career ladders, may be hollowed out.

We are alert to these risks and we will act early to prevent such outcomes from taking hold in Singapore. We will invest more deliberately and more systematically in our people.

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. We will work closely with our tripartite partners, especially NTUC, to realise these shared goals. [Applause.]

What does this mean in practical terms? 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 pay close attention to how these companies apply AI; and, importantly, guide them to use AI to enhance human skills and expertise.

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.

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 and that is why we are coordinating all of these efforts through the National AI Council, aligning industry transformation and workforce upgrading to ensure that AI uplifts our workers.

That is our assurance and that is why our strategy going ahead is clear. We will not have jobless growth in Singapore. [Applause.]

We will exploit AI to grow the economy, and we will ensure that growth translates into good jobs and better wages. That is how we give every Singaporean confidence to progress in the future.

Next, let me touch on cost pressures. We achieved better than expected growth of 5% last year. 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.

So, the question is this: what more must we do to ease cost pressures and ensure every Singaporean can continue to progress?

We must first understand why affordability and cost concerns have surfaced – not just in Singapore, but across many economies around the world.

After COVID-19 and the war in Ukraine, inflation surged globally. In Singapore, it rose to more than 6% in 2022 and it has since come down to 0.9% last year. Inflation has moderated, but price levels remain higher than before and that is what households are experiencing.

To cushion the spike, we provided more than $10 billion through the Assurance Package. Some have observed that the transfers in this year's Budget are smaller than last year. 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.

What does this mean? A middle-income household with young children receives about $2,800, after you tote up all the different items. A lower-income household with young children – about $5,000. And a retired elderly couple – about $7,600.

Essentially, we give more to those with greater needs and we give more to seniors, especially our retirees, as they are not working and have to cope with higher prices on fixed incomes.

These are meaningful sums 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.

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. I had clarified the matter then. But regrettably, he has repeated this false claim again this year. Because the facts are only about 5% of our overall Budget is for one-off measures – that was so in FY2025 and it is so in FY2026. The remaining 95%, the overwhelming share, is for longer-term and structural schemes.

And in this Budget, we enhanced preschool and student care subsidies, as well as ComLink+ to support families with children.

Total social spending has increased this year. It has not gone down. We are providing more help for Singaporeans.

Our approach is not just to cushion costs because the durable solution to cost pressures is steady, sustainable wage increases.

Mr Shawn Loh highlighted concerns that a decreasing proportion of Singaporeans benefit from economic growth. He highlighted the concerns among seniors and, indeed, one group that will face greater impact is retirees because they are not working and that is why we provide more for them in the Budget.

But when we look at data at both the household and the individual worker levels – household and workers – in fact, incomes have risen faster than inflation over the past decade, across the entire income distribution. So, real incomes have gone up for both households and for workers across the entire income distribution.

We also look at household expenditures. Spending has increased in dollar terms, but expenditure as a share of income – that 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. In particular, the share of household income spent on essentials, like food, public transport, and education, has declined across all income quintiles.

There is one exception – that is, healthcare. Singaporeans are spending a larger share of their income on healthcare and health insurance. That reflects our rapidly ageing population because as you get older, you will tend to spend more on healthcare, and that is why we provide significant and growing subsidies for healthcare services and for our national health insurance premiums. It is 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. And we will continue to ensure that healthcare remains affordable in Singapore. No Singaporean will be denied the healthcare they need because of an inability to pay. That is our assurance. [Applause.]

Another reason for concerns about cost is that inflation for some frequently consumed services, especially F&B, has risen faster than general inflation. Food consumption may form a smaller share of income which I mentioned just now. But we experience the higher prices each time we order something, or we dine out and the psychological impact is immediate and visible.

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. And that is the fundamental tension every economy must manage. Some countries choose to suppress service wages to keep prices low. But then this traps a segment of workers in low-paying jobs. It is not what we want to do.

Others, like the European economies, have taken a different path. Wages in the services sector are high. You go to any European country, you will know they are paid very well. But that leads to higher prices overall and a heavier cost burden, which in turn has to be supported by a larger welfare state, financed by taxpayers. There is no free lunch. Someone has got to pay this.

So, Singapore is forging our own path. We pursue broad-based wage growth. But wage increases have to be supported by skills upgrading and productivity improvements. 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.

Overall, this balance has delivered good and affordable services to Singaporeans at a sustainable cost. But we know that this is still a work in progress. The macro data may be reassuring. But as many Members have highlighted, the lived realities differ from household to household and the circumstances vary for specific segments.

Different families face different pressure points. For example, there are larger families with more children and they will face greater cost burdens, 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.

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. And in fact, we already provide more for them in the Budget, in every Budget, including in this year's Budget.

There are families with members who have special needs. Prof Kenneth Poon and Ms Hazlina Abdul Halim highlighted their concerns. And caregivers too need to be supported, as Mr Cai Yinzhou and Ms He Ting Ru highlighted.

In recent Budgets, including this one, we have strengthened support for all of these groups. And we will continue to do so, and will consider the suggestions that Members have made.

Targeted support for specific groups requires means-testing, And we use different indicators to means-test. The two key ones are the AV of dwellings and PCHI. Quite a number of Members in this debate, including Mr Alex Yeo, Ms Jessica Tan, Mr Gerald Giam, Ms Sylvia Lim just now, Mr Edward Chia suggested reviewing these indicators.

I suppose if you were to 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.

How to measure income and wealth is the challenge. AV and PCHI are practical and effective indicators. But no measure is perfect and we will continue refining our criteria, especially when it comes to support for seniors.

Cost pressures can also feel sharper due to inequality. Because of inequality, comparisons intensify. Social stresses grow. 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 that we are feeling on the ground would have been far worse.

We have achieved good outcomes. But we will continue to press on. And in this Budget, we are raising the Local Qualifying Salary as well as enhancing and extending the Progressive Wage Credit Scheme. Several Members, Mr Patrick Tay, Mr Melvin Yong and Mr Sanjeev Tiwari, suggested further steps to support lower-wage and vulnerable workers. We will study your suggestions carefully – balancing wage increases with sustainable productivity improvements.

We are also paying close attention to wealth inequality. We have begun publishing the data and will track this more systematically. But we are not starting from a weak base. Through housing grants, homeownership and CPF top-ups, we enable lower-income households to accumulate assets in Singapore. Today, households in the lowest quintile have average net wealth of nearly $300,000 – that is a meaningful foundation.

Mr Saktiandi and Assoc Prof Terence Ho suggested additional asset-based transfers. I think someone called it a "Singapore Dividend" or other forms of putting together the measures that we do to help Singaporeans build assets.

In fact, this is the approach that the Government has long taken. 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. We do this through a range of different mechanisms like the CDA, Edusave, Post-Secondary Education Account, through CPF and our housing policies and most recently, we introduced the Institute of Technical Education (ITE) Progression Award which incorporates an element of CPF top-ups. We will continue to strengthen pathways for Singaporeans to build savings and assets.

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. But redistribution has limits. It is very easy to say, "Let's tax the rich more!"

But capital and talent are mobile and if we rely solely on ever-higher taxes for this segment, eventually, the broad middle will also have to shoulder the burden. And we risk undermining competitiveness, enterprise and job creation. Redistribution alone cannot build a strong and resilient society. So, our approach is balanced.

We keep taxes moderate but progressive. We redistribute resources to those with greater needs. 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. Upward mobility remains central to our social compact. Because here in Singapore, your starting point should never determine your finishing position. [Applause.]

Several Members also spoke about retirement. Mr Saktiandi Supaat has been championing this for many Budgets. Ms Poh Li San also mentioned this in the Debate. And 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.

Our CPF system rests on sound and sustainable principles. Each member saves for his or her own retirement. But we do not leave individuals to fend for themselves. We boost those with lower balances through Silver Support, the Majulah Package and periodic CPF top-ups. And we continue to review the parameters of these schemes. That keeps our system fiscally sustainable, while ensuring that those with less get more support.

The CPF provides, as Members would know, risk-free returns of 2.5% on the Ordinary Account (OA) and 4% on the Special Account (SA), with extra interest of 1% to 2%. Members who wish to invest their savings for potentially higher returns can do so, today, through the CPF Investment Scheme (CPFIS). But the experience with the CPFIS has been mixed.

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. In other words, many would have been better off topping up their CPF SA and earning the guaranteed 4% return. For CPFIS-SA investors, the results were even more sobering – around three in four made 4% or less per annum. In other words, they underperformed the SA rate, which is risk free.

So, the reality is that we all talk about investments. Such a wonderful thing. But investing and earning consistently good returns is not that easy. That is why we took some time to study how to implement a low-cost investment option within the CPF – it has to be simple, low-cost and effective. There are commercial lifecycle products available in the market, but up till now, the take-up has been limited, partly due to the high fees, which can go up to as much as 2%. But in recent years, the market has matured. More players have entered. Digital platforms have helped to lower costs. That is why we now believe it is possible to offer well-diversified life-cycle products at lower fees.

The CPF Board will be engaging the industry next month to call for expressions of interest. There is 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 and seamless user experience. 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.

Beyond retirement, we have and will continue to strengthen support across life stages. We have initiated major moves as part of Forward Singapore. In public housing, through the new HDB classification system of Standard, Plus and Prime flats. In healthcare, through Healthier SG and Age Well SG. We have made SkillsFuture a key pillar of our social compact and we are strengthening this further. We have introduced the SkillsFuture Jobseeker Support Scheme and we have enhanced ComCare and ComLink+. Mr Abdul Muhaimin 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. 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 onboard the scheme. And we will also extend ComLink+ to lower-income families beyond the rental blocks.

Members have also offered many other suggestions to further strengthen our community and social support system. Many suggestions have been offered. For example, in healthcare delivery and integration with social support. Members, like Dr Choo Pei Ling, Mr Dennis Tan, Miss Rachel Ong and Dr Hamid Razak, just now spoke about this.

Suggestions around housing and neighbourhood rejuvenation – Mr Ang Wei Neng and Ms Joan Pereira touched on that.

More support for the arts, culture and community initiatives – Ms Elysa Chen and Assoc Prof Kenneth Goh mentioned that in their speeches, as well as suggestions to review the income thresholds for the Jobseeker Support Scheme (JSS), which Mr Ng Chee Meng and Mr Patrick Tay had advocated.

We will study these suggestions carefully. In particular, the JSS was launched only recently, about a year ago. So, we will review the scheme and its parameters once we have more experience.

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. Indeed, our falling TFR is a serious concern. It is not unique to Singapore. It is happening across all advanced and high-income economies. So, we really should have some humility about this because no country has truly succeeded on a sustained basis to reverse this decline.

Members offered practical suggestions around housing, cost pressures and the affordability of raising children. Some also asked for more work flexibility and leave provisions, so that parents can be present in their children's formative years. 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 now receive up to $48,000 for their third or fourth child, and even more for the fifth or subsequent child.

As a result of the recent enhancements, our expenditure on marriage and parenthood initiatives has increased – from $4 billion in FY2020 to $7 billion in this Budget. But we will not stop here. We have not given up. We will not give up. [Applause.]

We are already planning for the next tranche of measures to strengthen support for families. And there will be an opportunity to discuss this at the Committee of Supply debate and the Minister in the Prime Minister's Office will share more at that occasion.

Sir, this Government will continue to provide stronger assurance for Singaporeans 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.

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? Let us first look at the global context. Since the start of this decade, countries have been tested in ways few could have anticipated. Many advanced economies are now carrying record high levels of public debt. And as debt rises, so will borrowing costs. Over time, this constrains fiscal flexibility and weakens longer-term growth potential for these economies.

Against this backdrop, Singapore's strong fiscal position is a strategic advantage. 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 strength; a source of strength.

Given the surplus we have generated, in FY2025 and also the ones that we expect in FY2026, Mr Gerald Giam have asked whether the Goods and Services Tax (GST) hike should be re-evaluated. But let us consider the facts. 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. 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.

We studied a range of options. We raised property taxes and motor vehicle taxes for luxury cars. We have increased the top marginal personal income tax rates. But these moves were still not sufficient to close the structural funding gap. The WP had suggested raising the maximum Net Investment Returns Contribution (NIRC) we can use in the Annual Budget from 50% to 60%. 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 it will shift a heavier burden onto the next generation.

In the end, the GST was the only broad-based and sustainable option to fund rising healthcare needs, while preserving our reserves framework. But even as we raised the GST, we also made sure we mitigated the impact on Singaporeans. We delayed the effective tax increase for the majority of Singaporean households, by at least five years. We enhanced the permanent GST voucher to further defray the tax paid by lower- and middle-income households. After accounting for these measures, the majority of GST collections are and will continue to be, from higher-income households, tourists and foreigners.

In other words, we secured stable funding for healthcare while cushioning the impact of the increase for most Singaporean households. Could we have relied instead on Corporate Income Tax collections? But remember, back in 2022, when we made the decision on the GST, there was no sign that CIT collections would rise so significantly. At that time, the discussions on BEPS were still evolving. The eventual outcomes and their revenue implications were far from certain. It would not have been responsible to fund permanent healthcare commitments using revenue sources that were uncertain and can yet dry up.

The CIT collections only started rising towards the end of FY2023 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.

And this brings us to the issue of fiscal marksmanship – Mr Alex Yam, Mr Gerald Giam, Mr Louis Chua and Mr Xie Yao Quan touched on this. We have debated this before in the House. It is perhaps, my favourite topic, because I have shared before that I started work in the Ministry of Finance (MOF) doing precisely this – fiscal projections. And as I have explained, our forecast deviations are within a reasonable range – comparable to other advanced economies. Within this range of variation, revenues in recent years have indeed come in above projections.

Is it because we were overly conservative? The short answer is, no. Our projections are prepared by the MOF economists using the best available data at the start of each financial year, including GDP growth assumptions at that time. 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.

Likewise, revenues from property transactions or COE premiums are inherently difficult to predict. Can you tell what the next year's property prices will be? What next year's COE premiums will fetch? It is 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.

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.

A further insinuation is that the PAP Government deliberately painted a "doom and gloom" picture for electoral advantage. Let us consider the facts and the context.

Actually, after the US Liberation Day tariffs, there was widespread uncertainty across the world, not just in Singapore. At that time, how many analysts projected 5% growth for Singapore in 2025? I do not recall any.

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. Deputy Prime Minister Gan 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. Our agencies, our businesses and our workers adapted swiftly and worked tirelessly through a very uncertain period. Their efforts deserve recognition. [Applause.]

Let us not belittle these contributions just to score a political point.

The fact that we are in a better position today than our projections is something we should all welcome. It is good news for Singapore and Singaporeans. [Applause.]

Imagine if we had chosen differently. If we did not raise GST and had instead hoped for revenue upsides. And then the economic situation did not turn out so well. We would be having a very different debate today. We would be scrambling to close fiscal gaps. We would be responding from weakness. But because we made the difficult yet responsible decision, because we chose responsibility over convenience, we are now in a position of strength.

Sir, we did not gamble with Singapore's future. We made the hard call and that is why we can act with confidence today. [Applause.]

Next, let me turn to our medium-term revenue and expenditure outlook. We are expecting structural revenue increases from Financial Year 2027. That is when the first revenue collections from the Base Erosion and Profit Shifting (BEPS) Top-Up Taxes come in. Based on the strong corporate tax collections so far – and that is pre top-up taxes – our initial sense is that the further increase from the top-up taxes could be significant. 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.

Since the BEPS revenue is coming, some may ask, well, how about rolling back the GST? Again, the GST increase was introduced to fund rising structural healthcare expenditure for an ageing population. These spending needs are permanent and will continue to grow. They should be supported by a stable and reliable revenue base.

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. 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.

In fact, expenditure pressures are already evident. Take the example of defence spending. I mentioned that the Ministry of Defence's (MINDEF's) budget of 3% would be where it is for now and that the budget includes spending on cybersecurity by MINDEF and the Singapore Armed Forces (SAF), something Mr Giam asked about. But it does not include cybersecurity spending beyond MINDEF. And we do need to spend more on cybersecurity outside of the MINDEF family. The Ministry of Digital Development and Information, and the Cyber Security Agency, for example, will have to invest more. We will have to harden our critical information infrastructure, like our grids and our power system, against cyber threats. That is why I said in the Budget that security spending will rise in the coming years.

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. And that is clear from our historical records. Mr Xie Yao Quan very helpfully gave a speech yesterday outlining the historical data.

And if you look at the past years, we have had balanced Budgets in many years – balanced meaning within a range of plus/minus 0.5% of GDP, in terms of the overall fiscal balance. We have had years of surpluses, we have had good years, but we have also had years of deficits.

But on the whole, we plan for a balanced Budget over the term of Government. If there are revenue upsides, when there are revenue upsides, we will deploy these to meet our growing needs.

Mr Shawn Loh suggested giving back surpluses above 2% of GDP to all Singaporeans. 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.

Last year, we used that to fund the SG60 package. This year, we channelled them towards CPF top-ups and the Cost-of-Living Special Payment. We have also strengthened our national priorities by investing in our social support system – enhancing our connectivity, security and economic resilience.

For this FY2026 Budget, expenditure is at 18.4% of GDP. As I said just now, it is the largest Budget on record. Earlier, MOF had projected that Government spending could reach 20% of GDP by 2030. But if you look at the trends, since emerging from COVID-19, expenditure has grown by an average of $10 billion every year. And we expect our needs to rise even more for the coming years, in this term of Government. So, Government spending is likely to exceed 20% of GDP well before 2030.

In light of our fiscal position, Mr Shawn Loh had asked if the Government can commit to not making further major revenue moves. 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. We have already said that there will be no further GST increases until at least 2030. Aside from the GST, we continue to review our tax system regularly as part of prudent fiscal management. 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.

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.

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.

But a word of caution is in order. Because in today's fast-changing world, assumptions can quickly become outdated. The forward projections serve as a guide and will have to be continually updated. Ultimately, what matters most is maintaining fiscal discipline, together with the agility and nimbleness to respond swiftly as circumstances change.

Let me turn to specific points on our tax system. Ms Diana Pang asked about the timing of the changes to the Preferential Additional Registration Fee rebate. We implemented the vehicle tax changes immediately to prevent a rush-to-market. 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. A number of questions has been raised on this particular issue, and MOT will address them separately.

Mr Saktiandi and Mr Louis Chua shared their views on the personal income tax regime. When taken together with our progressive tax rates, tax reliefs and rebates, currently about one in three resident workers pay no personal income tax. Among those who do, about eight in 10 have an effective tax rate of less than 6%.

We will consider these suggestions around the personal income tax as part of our regular fiscal reviews.

There was a debate yesterday about what it means to run a fiscal surplus. Does a fiscal surplus mean that the Government is taking more from the economy and leaving households and businesses to bear a deficit? This is an oversimplified and inaccurate characterisation of how our fiscal system works. A surplus simply means that in a year, revenue exceeds expenditure. And in Singapore's case, revenue includes significant investment income from our reserves, not just taxes collected from businesses and households. So, if you exclude Net Investment Returns Contribution (NIRC), expenditure exceeds revenue. In other words, we are putting money back into the economy, not draining money from businesses and households. In fact, our Budgets in both 2025 and 2026 have been expansionary, with significant support for households and businesses.

More importantly, we should look at who pays the tax and who benefits from the transfers. And on that score, the picture is clear. For every dollar of tax paid by the top quintile, they receive 20 cents in benefits. That is the top income quintile. Pay a dollar in tax, you get 20 cents in benefits. In contrast, the middle quintile receives around $2 in benefits. A dollar of tax, you can get back more, $2 in benefits. And the bottom quintile gets $7 in benefits.

In other words, those who are better able to contribute, are the ones who generally pay more in taxes. We use that revenue to strengthen our social compact and provide greater support to those who need it most.

Mr Speaker, our fiscal system is fair, progressive and sustainable. It is pro-worker, pro-enterprise and pro-Singapore. [Applause.]

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, asking for more information to ensure fiscal accountability and value for money in Government spending.

We want to do that. We want to ensure that. This is why we have been publishing the Singapore Public Sector Outcomes Review biennially since 2010. That sets out the key outcome indicators across major policy areas and allows the public to track our progress over time.

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. Ministries on their own also conduct detailed reviews of major spending programmes to assess effectiveness and outcomes. 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.

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.

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. Others may be subtle – seeking to influence opinions, shape narratives, or even sow division among our people.

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.

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 choices made by generations of Singaporeans.

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 we will continue pushing forward to seize new opportunities on the horizon.

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. [Applause.]

Sir, I appreciate Prime Minister Wong's highlighting of the F&B sector, which of course, is close to many Singaporeans' hearts and stomachs. It is facing indeed undue pressure, and something that we get as feedback as well.

Prime Minister emphasised how the Government has, where it can, looked to mitigate pressures that they face on rent. He spoke about how it hopes to try to limit hikes in properties that it controls. Yet many business owners share that there is insufficient effort at restraining unbridled market forces and they hope that some form of a cap on the year-to-year rate of increase in rentals, without outright rent control via a fixed rent ceiling, may be helpful. I wonder whether Prime Minister can share whether this is a possibility in future.

On labour, I appreciate Prime Minister's explanation that foreign worker quotas and levies remain needed to ensure a Singaporean core. Yet, the feedback we receive is that despite paying rather solid wages in these sectors, it is really hard to attract locals. And I note that certain other sectors, like construction, actually have higher DRC. I believe the F&B is currently classified under services, which has a much lower DRC. Given the unique work conditions within F&B, I am wondering if the Government will consider relaxing the ratio for this sector.

Sir, on rentals, as I mentioned just now in my speech, at the macro level, we have not seen rental rates spiking up. In fact, as I mentioned just now, at the macro level, rental rates have moved in line with economic fundamentals – lower than GDP growth, lower than inflation rates. There may be localised issues, localised shortages, or a particular area, very popular, that kinds of things, these things can happen. I am not saying they do not. There will always be a distribution of rental increases. But overall, the situation remains stable, so we do not envisage imposing rental caps, particularly since at the macro level, the situation remains stable.

In fact, the experiences of jurisdiction everywhere when they impose such rental caps has been not so positive. Because you end up with inadvertent consequences and you do not always achieve the objectives that you had wanted to do, which was to ensure competitive rentals.

On foreign worker levies and DRCs for the F&B industry, they are part of services. The DRC is lower than construction, but we prefer not to carve out something separate for F&B, because it is really very hard to distinguish between F&B as a service and the other service industries. Once you make the DRC for F&B lower, you can be sure there will be many F&B foreign workers in Singapore doing non-F&B jobs. [Please refer to ​"Clarification by Prime Minister and Minister for Finance", Official Report, 26 February 2026, Vol 96, Issue 20, Correction By Written Statement section.] And it is very hard to monitor. It is very hard to enforce because they are all service-related.

So, we rather keep services DRC as a whole, where it is. But as I mentioned, where there are ways in which we can extend some flexibilities to businesses, like on the source of workers, we will consider doing so.

Thank you, Mr Speaker. I have got three supplementary questions. First of all, I would like to thank the Prime Minister for mentioning that he will be releasing fiscal projections beyond 2030. Just wondering whether I can get clarification from Prime Minister whether those projections will be accompanied with economic baseline assumptions, specific scenarios? That will be useful for the public.

Within the same domain, thank you to Prime Minister for explaining the reassurance that the fiscal policy has been expansionary. It helps to relieve concerns that it has been extracting and there is opportunity cost on that front.

Second supplementary question, Mr Speaker, is on climate transition. I think Prime Minister in his speech and in his opening Budget speech does touch a bit on climate and energy transition. But I was wondering whether the Prime Minister can share a bit more about climate transition, especially our plans to have those polders around Singapore. What are those costs on our fiscal needs and our fiscal expenditure going forward, because those will be quite substantial beyond 2030 and beyond 2040 as well.

And thirdly, I would like thank the Prime Minister for him mentioning my suggestion about changing the income tax thresholds, to help relieve lower-income and middle-income workers and Singaporeans. I was wondering whether what is the possibility of that suggestion actually being implemented.

Sir, on the three questions. First, yes, we will provide the economic assumptions underpinning our fiscal projections. Second, on the climate transition, we will continue to provide more information on both our mitigation, as well as our adaptation plans, because we are moving on both.

On the mitigation, it is really about pushing for decarbonisation and doing more in terms of clean energy, and there will be opportunities in due course to share more. On adaptation, it is really about protecting Singapore against rising sea levels, and we will also find opportunities to share more about these plans. We have already started to set aside resources for these two areas of work, which will require a lot of additional investments, so we are already setting aside funds for that.

Thirdly, on the personal income tax thresholds, as I said just now, we will take on board these suggestions as part of our regular fiscal reviews.

I would also just want to mention again, on the point that Assoc Prof Jamus Lim talked about rental, while I gave a macro picture about the overall rental rates, as I mentioned in my speech just now, I do recognise averages may not capture every single experience. There will be instances where rental renewals end up with sharp increases. We know that this happens, but the interventions and the way we help will have to take into account the different considerations. We do not think rental caps will work, but for example, if we understand better a particular situation where there has been very sharp increase in rental for that location, it could be a supply source shortage, there could be specific circumstances linked to that area. Then we will have to study and consider what appropriate interventions might work for such circumstances.

Sir, as I have mentioned, in instances where the Government is a landlord or where we do have some control over rentals – hawker centres, HDB rentals, JTC rentals – we already do so and will continue to finetune our framework.

Thank you, Speaker. I have two clarifications for the Prime Minister. First of all, thank you so much for addressing the increase in capital intensity at some length. I have actually asked two Parliamentary Questions yesterday about it that I did not get to ask a supplementary question for, so I am going to take the time to do it now.

At the same time, I am very heartened to hear the promise that in Singapore, we will not have jobless growth. I also am very heartened by the promise at the end of your speech on greater transparency on outcomes. So, I was wondering if you could share if capital intensity continues to increase, how will the Government's measures of outcomes change, if any?

My second clarification is, you talked about making the hard calls. I think it is very easy to talk about hard calls in terms of raising revenues, but let us also remember that hard calls are also in how much we choose to invest to grow the economy. And so, I would like to just hear his thinking around how he will balance the need for immediate support, preserving fiscal space for unforeseen pandemics or higher than expected healthcare increases, but also importantly putting more into things that will grow the economy. Even though a billion dollars is being laid out for AI, for example, I would like to hear whether there is openness and preserving fiscal space for investing in growth.

Sir, as the Member has highlighted, returns to growth accrue to capital or labour. There is a lot of concern that with AI you will see a disproportionate shift of returns to capital, and labour will suffer. We are, as I said in my speech, I did not highlight that in such terms, but that is the risk we are very much alive to.

And if the trends in the marketplace globally are moving in that direction, well, we will have to consider what additional levers, what steps to take, how we ensure that workers benefit from growth. That is our commitment. We will try our very best to have AI develop in such a way that is pro-worker that enhances human skills and expertise. And at the end of the day we will have levers also, through SkillsFuture, through transfers, through a whole range of different means, to make sure that growth in Singapore is balanced and Singaporeans will benefit. Not just capital owners, not just the companies that push out AI tools. Singaporeans will always benefit from growth in Singapore.

On the question around our openness to using fiscal space and resources for growth, yes, of course we are. We will always want to grow the pie, because that is what our future is about. We have to be at the frontier. We have to keep on expanding the pie for all to benefit. Our investments in R&D are very much in that direction. With AI and all the moves we talked about in AI, we will also allocate more resources to pushing the frontier, so that we can continually expand opportunities, jobs and better incomes for Singaporeans.

Thank you, Speaker. I have three clarifications for the Prime Minister. I think the first is on the point he mentioned about the one-off, Sir, that I mentioned in my speech. To me, the question is really, as I have shared in my speech, in light of our surpluses, are we then better off to put in place the structural levers and interventions, rather than having to decide on these on a one-off basis year after year?

So, I gave the example of personal income taxes. Are we better off having that updating of the bracket rather than have varying personal income tax rebates year after year? Similarly, on the corporate front, are we better off with revising, maybe some of our Partial Tax Exemption and Startup Tax Exemption schemes, which were last changed in 2018? And I also gave the example of how for the Global Trader Programme, that was extended up till 2031. So, that is the first.

The second is in relation to the Occasional Paper that MOF has put out. Just wondering if the Prime Minister has given the MOF team perhaps a timeline as to when recommendations may be put forth to address some of the issues that were brought up, specifically when it comes to the taxing of wealth. I think it has always been mentioned that it is mainly via our system of property taxes. And the report has showed wealth, especially for the top 20%, to the extent that it is under reported. I would say that probably the share of non-property assets is likely to be larger than what we have found. So, in the context, wealth taxes beyond just property taxes.

And last but not least, in terms of the TFR, on this front, again, to maybe borrow a phrase from the Ministry for Sustainability and Environment, are we willing to have ambitious and realistic targets with regards to the TFR, even if for a medium to longer term to guide our policy interventions?

Sir, I thank Mr Chua for his clarification on the first point about the Government relying on one-off ad hoc measures. I hope we can banish this forever in this House. Because we do not rely only on one-off ad hoc measures. We have some, yes, 5% of the Budget. How is that an over reliance?

We have much more allocation of resources on longer-term and structural schemes. And will there continue to be some one-off measures? Yes, we will, from time to time, it is not mutually exclusive. But the weight of our fiscal moves are really on the longer-term and structural schemes. The emphasis is in that direction. And it is not just a mindset issue, it is not just a policy issue. You can look at it from a resource issue: 95% allocated there; clearly, the emphasis is in these areas and the reviews will be done from time to time.

As I mentioned just now, policy changes, policy reviews, take some time. We take in suggestions. Some suggestions we may not be able to do, and we explain our position, and there will be differences of views. But there will be suggestions which we think are good and we will consider them carefully. And in time to come, we will make the changes.

For the suggestions that Mr Chua had put forward on personal income tax, we will take them, as I had mentioned to Mr Saktiandi, together with other suggestions that Members have given as part of our regular fiscal reviews. That also goes to timeline.

The Occasional Paper that we are putting out will be done by next year, but the fiscal reviews that we do on policy front, that happens on a regular basis. There is no specific timeline for this because we are always on a continuing basis, reviewing and updating our policies.

On TFR and measures, will we be more ambitious? I would say we have always tried to be ambitious. We have pushed the boundary each time in terms of the moves we made. And in this coming review we will be even more ambitious. Can we set targets? Name me a country which has succeeded on a sustained basis. These are very complex. This is a trend that is happening around the world. It is not just about economics. If money can solve the problem, I will put the money down and solve the problem. But it is not just an economic issue, it is far more complex than that. Countries have spent far more than us and have not been able to achieve a meaningful, sustained improvement in their TFR.

So, we will try. We are not giving up. We will be more ambitious. And Minister Indranee at the COS debate will share more about how we can try to engender a whole-of-society reset around marriage and procreation. We will give it our best efforts. [Applause.]

Just a quick point that my colleague just highlighted to me when Mr Singh talked about the RIE reports and what have been published. In fact, someone alerted me that there are additional reports that, beyond what Mr Singh had shared. At the office, the National Research Foundation has put out more information already. But in any case, as I said, our commitment, whatever the baseline is today, we will do more.

Thank you, Mr Speaker. I have two clarifications for the Prime Minister. When tariff shocks escalated last year, businesses were certainly genuinely uncertain. It was the Government's swift and credible response that stabilised sentiment and positioned Singapore as a trusted base amid fragmentation. However, as the tariff situation becomes uncertain again and supply chains continue to readjust, could the Prime Minister give assurance to businesses that we will have the fiscal space to support them, to respond decisively if volatility intensifies?

At the same time as we move decisively into frontier industries like AI, quantum and space technologies, these are energy intensive and capital heavy sectors. Could the Prime Minister clarify how the Government assesses our long-term fiscal headroom to support both frontier industry development and the sustainable energy infrastructure required to power it?

Sir, on the first question, yes, we give our assurance to all businesses. We are all in this together. Whatever uncertainty and volatility we may face, the Government will certainly be there to walk with our businesses and our workers to navigate the changes ahead of us.

We are not out of the woods yet. The situation was better than expected last year, but there is new uncertainty now. And I think uncertainty and volatility will now be the norm anyway. So, we will continue to work closely with our businesses and workers, and also as part of our tripartite system.

On the frontier industries and the fact that they are energy intensive, it is a cause for concern. I think Mr Dennis Tan had also spoken about this. We are trying our best to manage this and the solution for us at the end of the day is to accelerate our efforts on decarbonisation to be able to harness even more clean energy sources than the limited sources we have today. That is key.

The new sources may not materialise in the short term. We are working on multiple fronts, including importing clean energy from outside Singapore, pursuing ideas like hydrogen, as well as civilian nuclear energy. But we are going full steam ahead on all of these areas so that we can find clean energy sources for ourselves that are reliable, sustainable, competitive, and that will help drive the industries of the future.

Thank you. Prime Minister, our workers were very, very encouraged and inspired to hear that you will be personally overseeing the Singapore's AI transitions.

With autonomous vehicle bus services expected to commence this year, as well as pilot autonomous vehicle (AV) shuttle services already underway, it is clear that the pace of change is accelerating. My question is, how will we ensure that sectors such as our bus industry and point-to-point transport sector are given sufficient time and structured support for these transitions? In particular, how do we sequence implementation so that technologies like AI and AV strengthen safety standards, uplift skills and enhance livelihoods, rather than become a source of disruption and anxiety for our workers?

Sir, I recognise the anxieties of our drivers. In fact, when I had the dialogue with union leaders, this was surfaced as well. The assurance I give then and I give now is that we will manage this very carefully. We already have very close engagement with the unions and drivers, and as we introduce these new technologies, we will pace the transition in a way that ensures that we are also able to retrain workers if jobs are impacted and make sure that the transition and the introduction of technologies do not adversely impact our workers. We want workers to benefit from new technologies.

Thank you, Speaker. The Prime Minister mentioned in his Budget speech that 1% of the GDP is dedicated to R&D expenses, commonly known as the gross expenditure on R&D (GERD).

Israel, an innovation nation, has 6%. I think Sweden has 4%. For most of the European countries, it is about 3%. What is our target and how can we actually use part of the $15 billion surplus to give it a boost?

Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good. If we are getting good results, we are able to get good projects, certainly, we will be prepared to put more into Government R&D.

But we also do not just track what the Government spends. We want Government spending to catalyse more business R&D. So, the other measure, aside from Gross Domestic Expenditure (GERD) on R&D is BERD, the business expenditure on R&D, which is commonly tracked as well. And we are heartened that the business side, private sector R&D in Singapore has also gone up, corresponding or together with Government spending on R&D. That bodes well for the future because that means that the private sector, too, are seeing the benefits of investing more in R&D and investing for the future.

Thank you, Speaker. I, of course, respect the Prime Minister's prerogative to characterise my views on R&D as somewhat one-sided. So, I would like to offer him the opportunity for a fuller defence in light of, perhaps, three groups of facts.

First, since 1991, the first National Technology Plan to RIE2030, the nominal amount committed is about $125 billion, of which I think there are indeed few visible commercial outcomes. Mirxes in 2025 was the first and only billion-dollar IPO. I do not recall any other commercially significant companies out there. Even if we were to give it to the Government that it is an MNC-driven strategy, the first phase of the Biopolis project was not a big success. For all the MNC R&D offices for these pharmaceutical companies – in 2010, we had the departure of Eli Lilly; in 2013, we had the departure of Pfizer; in 2014, the departure of GlaxoSmithKline; in 2016, the departure of Novartis.

So, I do not really quite see where, perhaps, he is having his different view from.

My second clarification is whether he will consider putting on a policy investment bank function or, rather, reconstituting it, given that it has been missing since Mdm Ho Ching took over Temasek in 2002.

Sir, as far as the outcomes of R&D are concerned, we track a whole range of outcomes. It is not just on the basis of a company getting IPO success.

There are outcomes with regard to jobs created. There are outcomes with regard to the spillovers to local industries and the SMEs that support our multinational enterprises (MNEs) doing research here. There are outcomes to the wider economy and incomes that are raised. There are outcomes with regards to business expenditure on R&D, which we have talked about just now.

So, it is not just a narrow focus on a single measure of success but a wide range of different indicators, for also the research part, mind you, which is also important because we do not only want commercialisation success, we also want to anchor strong basic research. That scientific base is important. It is also tracked with another set of different indicators, like publications, which we also track.

So, there are a wider range of outcomes we track in terms of our R&D spending. That is why I said just now that the views that Mr Tiong had highlighted were rather one-sided. I do agree with Mr Tiong though, about what he said about the broad principle that sometimes the system can be risk-averse, that there are ways to do more in terms of value capture. There is no disagreement, in principle, in terms of that direction.

We want to encourage more private innovation. We want to encourage more of an enterprise-building approach, in terms of how we grow our economy rather than just focus on specific individual grant schemes. There is scope to have less fragmentation. These are things we are already doing and will continue to do.

On the question of an investment bank approach. Well, I would also disagree with him that this has changed with the chief executive officer in Temasek. This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.

If there are things that the Government wants to do and Temasek thinks it is useful to do from a commercial point of view, then, yes, we can partner Temasek to do so. There are many instances even till today, including some of the equity funds which are done with a co-investment approach with Temasek, not because we forced Temasek to do these as national undertakings but because they see commercial value in growing enterprises and growing the enterprise ecosystem, and in achieving and securing better long-term returns for their portfolio.

This has been consistently the approach from the start and that is the same approach we will continue with Temasek going forward.

Thank you, Prime Minister, for a convincing roundup speech. I am seeking three clarifications.

Number one is on SMEs. In this age of AI and growth, I asked about how the Government intends to strengthen the intermediaries who are actually advising the SMEs in this age, intermediaries, like the SME Centres, Singapore Business Federation, the National Trades Union Congress (NTUC), the Employment and Employability Institute (e2i) and the trade associations, for example. From where can these intermediaries tap on resources to advise and to be in a good position to advise as well. That is my first clarification.

The second one is on the Prime Minister's comment on no jobless growth. I wrote that down. The Prime Minister said that. No jobless growth. I wanted to hear his thoughts on the prognosis of those Singaporeans who are unlikely to catch up. The vulnerable, for example, like some of the seniors, like persons with disabilities who have higher support needs, for example. They might actually lose jobs in this time and age. So, I wanted to hear his views on those who are likely to lose jobs and actually may not be able to take up or upgrade their skills, in that sense.

The third clarification is on TFR. I think somebody mentioned it, but I am very relieved to hear from the Prime Minister that this is not a lost cause and that even if the Budget Statement does not cover it, Minister Indranee will cover that. Hopefully, what Elon Musk has predicted, that Singapore will become extinct, that will not be a reality.

But can the Prime Minister share a little bit more about strategies other than producing our own? We know that many young people may not want to get married or, even after they get married, some of them prefer pets to children. Are there other strategies that the Prime Minister will consider, like easier adoption procedures to have more people be adopted, more of us Singaporeans adopting? The second is, in terms of immigration as well, to bring in people who are of the right profile and suitable profile to grow our Singaporean population.

So, three clarifications for you, Sir.

Sir, on intermediaries, it is an area we are looking at. No easy answers now because when it comes to providing IT solutions that are AI enabled, that is quite straightforward. But when you talk about intermediaries who truly understand what it means to transform an enterprise using AI, in fact, there are very few. I mentioned this in my Budget speech, even the leading companies are grappling with this and looking at ways to do this better.

So, it is an area where we ourselves are looking to build capabilities and expertise and identifying experts who can help us and not just help us as in help the Government, but help the intermediaries within our economy, who can in turn help our businesses, especially our SMEs.

Second, on jobless growth and the concerns that vulnerable groups may have.

We are very mindful of these concerns. That is why we have progressively strengthened our social support system. We have put in place Jobseeker Support, we are strengthening SkillsFuture and we will continue to monitor this segment very closely and the impact that AI may have on vulnerable and disadvantaged workers, on seniors. We will continually review and strengthen our support mechanisms.

Third, on the TFR and whether there are other ways in which we can encourage or we can maintain our Singaporean core, whether it is through adoption or immigration. Yes, indeed, we will have a multi-faceted approach.

Mr Foo Cexiang gave a very good speech yesterday on adoption procedures and how it can be very complex and frustrating for parents who would like to adopt. I think it is something that certainly we would want to take a closer look to see how we can streamline.

So, our approach, as Minister Indranee will share during the Committee of Supply, will not – of course, marriage, procreation, parenthood within Singapore is important, but also other areas, like adoption, as well as immigration will come in as well.

Thank you, Speaker. I thank the Prime Minister as well for his wrap-up speech. My questions relate to education and inequality. Just like Member Denise Phua, I want to quote something the Prime Minister mentioned, which is that the starting point should never determine our finishing position.

I think that is a very high and inspiring principle to share. But I bring this up because based on recent data – and I had asked a Parliamentary Question to MOE before about the difference in Programme for International Student Assessment (PISA) scores across different income groups, we find that these differences are statistically significant. They are there. While they are no different from other Organisation for Economic Co-operation and Development (OECD) countries, I think that we have that larger aspiration not just to match up to what other countries are doing, but to do better, regardless of what the other countries are doing. So, I wanted to hear from the Prime Minister, what his thoughts are and what MOF is thinking is around this issue.

Sir, the concerns that the Member had raised on education are indeed on our agenda. In fact, many Members spoke about education during the Debate.

I did not really touch on it as a topic in the round-up speech, but we have this as one of the key items on our agenda for this term of Government, looking at how we can especially help disadvantaged groups level up in our education system, focusing on those with less resources, those with different start points, making sure that more support is given to them, but at the same time addressing the other concern too, which many Members spoke about – the concerns about high-stake exams, the anxiety about the arms race that parents and students are feeling.

So, that is on our agenda. That is something we are looking at.

Other concerns that I think Members raised in this House during the Debate, for example, around digital screentime, Ms He Ting Ru talked about that, others too. Access to social media for children, that is also on our agenda. So, there are things that we are reviewing. Like I said, I cannot cover every single topic in a Budget or in a round-up speech, but these are things and priorities that we are looking at and we will have future occasions to address them.

Thank you, Mr Speaker. I thank the Prime Minister for responding to my speech. I have got two clarifications.

The Prime Minister said that Budget Estimates are prepared by MOF as economists based on variable data, including GDP growth projections. While I accept that GDP is highly sensitive to external shocks and can deviate significantly from forecasts and this impacts the actual fiscal position. But in the interest of transparency, will MOF provide more disclosure regarding the methodology of its revenue projections? For example, our GDP assumptions pegged to the mid-point of the official forecast range at the start of the fiscal year and what is the specific weighting of GDP growth in fiscal estimates?

Secondly, the Prime Minister argued that these deviations are within a reasonable range and result in unavoidable volatility. However, this does not fully account for the systemic nature of the trend. Could the Prime Minister explain why there is a consistent directional bias towards conservative fiscal marksmanship over the past 20 years, excluding the two years of exceptional circumstances of the COVID-19 pandemic and the FY2023 Majulah Package allocation? For 18 of these 20 years, the actual surpluses have consistently exceeded original estimates by significant margins. A review of the historical data shows that these variances frequently reach double-digit, triple digit or even quadruple digit changes.

Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis. There is a well-defined methodology used by many governments to project revenue, which often are tied to incomes. There is a certain buoyancy estimate of how buoyant the revenue is when incomes rise so the GDP is the most critical assumption in many revenue projections.

The estimates are what they are. Why have we seen more revenue upsides than downsides over the years? Perhaps, there is a simple explanation to this – which is that we have consistently performed better than expected. We should welcome that. [Applause.]

Thank you, Mr. Speaker. When we mentioned about space technology, quantum technology, AI technology and decarbonisation technology, if we look forward, it is very exciting to see all these coming. But, at the same time, we must also understand the capacity of our workforce. At one point, they must be prepared to train towards a certain skill and these skills are somewhat, I would say, common across the board and these technologies need expert skills or those who are highly skilled.

Having said that, how do we ensure that our workforce can keep up to the change? And furthermore, does our education allow that to happen as well? Because the speed of technology moves so fast; in other words, the speed of the education must also follow through as well.

So, these are things that that become very clear and very apparent of what I think we must prepare the workforce for: the ability to learn, the ability to quickly learn become crucial.

Secondly, the point I want to raise is that I look at countries who have 2040 Vision, 2050 vision. I am sad to say that the fundamentals of the citizens are not able to cope to the change where the country wants to go to. In other words, as a country move forward and get better and better, the workforce or the people still lag behind. At one form, they try to get better because of their own internal problems or their own family problems. Another section is that how do we improve, how we make them improve to keep up to the technology, to the change?

So, Singapore in the context whereby we are moving quite rapidly; so does the world. But is the workforce, is the citizen able to do so? And how do we change the structure or allow the structure to be evolved, starting from education and looking at how the workforce can adapt to it because —

Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the Investments. It is about updating our system so that at the school and tertiary levels, we help prepare our students well for new industries of the future.

But even that alone is not enough because, as Mr Azhar highlighted, the technology is changing so quickly, whatever you have learned in school or from tertiary levels of education may very well need a refresh and an update a few years later after you graduate. And that is again why we are investing significantly in SkillsFuture and we have made it a key pillar in our social compact.

So, we are mindful of all of these concerns – of the need to prepare our people well for the future and we will continue to invest heavily in every Singaporean.

Mr Speaker, I have quite a few questions. But the Prime Minister has been answering our questions for close to an hour. So, I will ask only one. And I note the collective sigh of relief in the House.

I am glad to hear Prime Minister's round-up speech. Specifically, he acknowledged that rising incomes are the best way to guard against increases in the cost of living. But he also acknowledged that for the half a million retirees in Singapore, they do not experience these rising incomes when the cost of living increases. To the Government's credit, the last few years of support have given that assurance to our retirees.

Would the Prime Minister now agree that we should assure this group of retirees that structural support should always keep up with the cost of living, not including the one-off measures that Prime Minister mentioned but that 95%? Can Prime Minster promise our half a million retirees in Singapore that the cost of living should be not too much of an anxiety to all of them and that the current levels of support should stay the same in real terms?

Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question.

To answer the question, we will continue to monitor cost of living across all segments of society. We are very mindful that retirees will face potentially the biggest concerns because they do not have incomes, they will not benefit from wage increases and the cost-of-living pressures would be felt more acutely by this segment. And so our assurance to them is that we are watching out for them, we will take care of our retirees. But at the same time, we will also take care of all Singaporeans, to make sure that we help wages go up, we help retirees who do not have wage increases ease their cost pressures across different areas. And everyone, everyone in Singapore can truly benefit from the nation's progress.

Thank you, Mr Speaker and thank you, Prime Minister, for the round-up speech.

Prime Minister, you mentioned in your Budget speech on taking SkillsFuture forward and strengthening the assurance for mid-career workers and seniors. In my speech, I asked to help our young seniors stay relevant and employable for the long term. I call for more fundamental revamp of the SkillsFuture and to retrain our workforce every 10 years or so, to counter the shorter economic cycles and the impact of AI.

I would like Prime Minister to share more about beyond merging WSG and SSG, and involving the Institutes of Higher Learning (IHLs) and Institutes of Education (ITEs) more for continuing education and training, will the Government be looking at more measures to help our young seniors, especially the PMETs to stay effectively more relevant and more employable?

Sir, the short answer is yes, we will certainly help our young seniors. We know that at that mid-career level if you are made redundant, getting back into the workforce can be more challenging. At that level, wage increases also may not be as high because there is a certain life-cycle to wages. Wage increases tend to be higher when you are younger and then, after a while, it starts to plateau off. So, they will face more pressure too. So, we are mindful. That is why we have already put in place schemes, like Level-Up for those above 40. And we will continue to see how we can strengthen support for mid-career, young seniors. And with the merger of SSG and WSG, I am sure we can do more.

There are many, many good ideas put forward by Members for many different segments: young seniors, retirees, disadvantaged groups. We want to do more for everyone. I wish I had a wand, a magic solution that can solve every problem and take care of every group overnight. But the realities of life are not like that. Policies take time, new schemes take resources and importantly, let us be very mindful, we are able to talk about all of these things and all the good things we can do because our economy has done well, because we have good growth and now, we are in a position with the resources to act decisively.

If these foundations are not present, we would be scrambling, we would be having a very different conversation. So, let us also be mindful of the fundamentals – keep growth, keep our economy growing, keep on ensuring a dynamic vibrant economy, good growth and generate the resources we need in order to take care of all the different segments of society.