Hazel Poa Koon Koon

Speech by Hazel Poa in support of Budget 2024

Mr Speaker Sir,

Perhaps the most noteworthy thing about this year’s Budget statement was the amount of support measures provided to Singaporeans without any additional major tax increases announced. This will come as a great relief to many Singaporeans who are still struggling to cope with high costs of living and an uncertain job environment.

I will first address the support measures and how we can take bolder steps to support Singaporeans in coping with the rising cost of living. I will then discuss PSP’s views on the proposals in the Budget to support lifelong learning and develop the full potential of Singaporeans.

Support measures and cost of living

Sir, those of us who walk the ground will know that the rising cost of living is the number-one concern for Singaporeans, and we have debated this issue in this House at length last November.

Many Singaporeans are feeling that their wages are unable to keep up with rising prices, leading to feelings of anxiety and insecurity. 

This feeling is borne out in the wage statistics. After taking into account inflation, real wages rose by only 0.4%[1] in 2022, but fell by 4.5%[2] in the first half of 2023.

Furthermore, the Consumer Price Index (or CPI), which measures inflation, does not take into account loan repayments.  This means that higher interest rates which resulted in higher mortgage payments and other loan payments are not taken into account in the calculation of inflation and real wage growth.

The Government’s response has been to provide subsidies and rebates that help households in the short term, for instance, the Assurance Package.  While these short-term support measures are welcome, PSP has always maintained that these are not long-term solutions that address the root causes of the rising cost of living.

While it is true that rising prices are subject to global forces like oil prices, food prices, disruption to supply chains due to pandemics, wars or climate change, there are also domestic factors driving prices. These domestic factors include our property prices, COE prices, population policy and government taxes.

Today, I will only talk about property prices and government taxes, and leave the discussion on COE and population policy to another day.  Suffice to say that COE increases our transportation costs and population policy affects the overall demand for all goods and services, thus putting pressure on all prices.

Property prices

One root cause of the rising cost of living is rising rents. 

In the retail sector, rent constitutes about 30% of the business costs[3]. This means that when you walk into a shop to buy a product, 30% of the cost of that product is due to the shop’s rental.  And this has not yet taken into account the suppliers’ rental costs which had been built into the cost of goods sold.

Similarly, in the Food and Beverage sector, rent forms about 27%[4] of business cost.

Rent therefore has a big impact on the cost of living of most Singaporeans.

PSP once again calls on the Government to take action to moderate excessive commercial rent increases in Singapore. For a start, guidelines on reasonable annual rent increases can be issued, similar to how the National Wage Council issues guidelines on wage increases.

If the rate of rent increases can be moderated, it will not only be beneficial for Singaporeans, it will benefit businesses as well.

In addition, Government is the largest landowner in Singapore and yields significant influence over the property market.  If it has the political will, it can push outcome in the direction it wants.

Another root cause of rising cost of living is home prices.  For most of us, buying a house is the single largest expenditure of our lifetime.

PSP has proposed the Affordable Home Scheme in which HDB flat prices do not include the land cost component for home buyers upon first purchase, but deferred to if and when they sell their flats. This will greatly ease the burden of housing costs on young people and allow them to more easily build up their retirement savings. It might even provide some with the leeway to take risks with their careers and pursue any entrepreneurial dreams without being shackled by large mortgage payments.

Government Taxes

Government taxes form part of the cost of living, with the most obvious one being GST.

In Budget 2022, DPM Lawrence Wong said that healthcare expenditure is increasing due to the aging population and is expected to hit $27billion in 2030.  GST therefore needed to be raised to fund the expected increase in healthcare expenditure. 

If healthcare expenditure hits $27billion as expected and the increase is fully funded by GST, then GST could have to be raised by another 3.5% approximately by 2030, to reach about 12.5%.

Will the Government share whether there are any further plans to raise taxes to fund the increase in healthcare expenditure?

Currently, the Government helps Singaporeans cope with GST increases and cost of living increases by giving cash grants, rebates and vouchers, resulting in a situation whereby the bulk of the population are now in regular receipt of government handouts.

In any society, there will always be people with different income levels, and it is normal for government to give grants to the lower income families. But if the bulk of the population need government handouts to cope with cost of living then that cannot be a healthy situation. We should also be circumspect about the fact that the bulk of the population is getting used to the idea that it is the norm to receive government handouts.

It may be the easier route to provide handouts to cope with the cost of living, but we must focus on taking steps to keep costs in check.

For a start, we ask the government to reconsider exempting a list of basic necessities from GST. We can list specific products rather than broad categories to minimise classification issues and limit price levels to those generally consumed by lower to middle income families.  The need for this measure will become more pressing as GST rate increases.

The way the Government currently treats land sales proceeds and prices HDB flats is also adding to taxpayers’ burden. 

HDB must pay SLA for the land used to build HDB flats. These land sales proceeds are then locked away in past reserves, and are paid for by large Government grants.  These Government grants must be paid for by taxpayers.  So in effect, taxes are being collected to be locked away in the reserves.

Further grants are given to HDB flat buyers in order to make the flats more affordable.  These grants must also be paid by taxpayers. 

I have previously proposed that land sales proceeds be treated as revenue divided over the duration of the lease. It is heartening to hear the Prime Minister acknowledge that this is not an unthinkable proposition during the Public Finances debate earlier this month. As this measure can relieve the tax burden on Singaporeans, I hope the Government will consider it seriously.

Apart from containing costs, another way to cope with rising cost of living is through raising wages and ensuring they keep pace with the rising cost of living.  One major way of doing this is through education and training. 

Before I talk about education, I wish to declare that I own a private education company.


PSP supports the introduction of the SkillsFuture Level-Up Programme for Singaporeans aged 40 and above, which consists of a $4000 credit, subsidies for another full-time diploma, and training allowance for full-time trainees.

We believe that full-time training will be more effective in enhancing the employability of our workers. These policies will also enable our middle-aged workers to switch careers more easily and move into areas with better or more job opportunities.

We are however disappointed that details of the temporary financial support scheme for the involuntarily unemployed are still not ready.  

Retrenchments are becoming increasingly common. Temporary financial support would be greatly beneficial to retrenched workers seeking a new job.  Any delay in the implementation of this scheme has real consequences on the retrenched employees.  We hope the Government can finalise the scheme as soon as possible.

In addition, if a retrenched worker decides to enter full-time training a few months after they were retrenched, we hope that the size of their training allowance will not be impacted by their period of unemployment. We seek the Government’s confirmation that their training allowance would be based on their last drawn pay when they were employed.

ITE Graduates

In his budget speech, DPM announced his intention to ensure that the wages and career prospects of our ITE graduates should not be too far below their Polytechnic- and University-going peers.  He then announced a new ITE Progression Award which provides a $5,000 top up to the Post-Secondary Education Accounts of ITE graduates who enrol in a diploma programme and a $10,000 CPF top-up for ITE graduates when they attain polytechnic diplomas.

We whole-heartedly support the intention of helping our ITE graduates, but feel that the ITE Progression Award does not quite fully meet that objective.

Today, about 4,000 ITE graduates[5], or about 28%[6] of the annual ITE graduating cohort, qualify for polytechnics each year and about 4,000 ITE graduates enrol in the polytechnics each year[7].  Since most of those who qualified already chose to progress into diploma courses, the Award has limited scope to encourage more to do so.

The $5,000 top up to the education accounts does help to ease the financial burden of ITE graduates enrolling for diploma courses, but the $10,000 CPF top up less so, and furthermore is actually going to a group who are no longer just ITE graduates, but a specific group of diploma holders.  

An issue of parity amongst diploma holders arises here.  Giving $10,000 to some diploma holders but not others, based solely on the route they took to enter polytechnics, can get controversial.

We are of the view that a better way to help ITE graduates would be to:

  • Help more ITE graduates qualify for polytechnics.  Entry requirements can be reviewed to recognise the value of relevant work experience rather than just GPA.  Those who decide to take the O levels in order to qualify for polytechnics should also be supported.  This can be done through promoting or expanding the ITE General Education course, or providing education grants to those doing so as private candidates. 
  • Help those who enrolled in diploma courses successfully complete their programme by conducting bridging courses to cover the gaps between ITE programmes and O level programmes.  A TODAY article in July last year cited students who expressed the need for such courses in areas like Math and essay writing.[8]

The above support measures should also be extended to those who had dropped out of school even before completing ITE, but now wishes to return to the education system to upskill or upgrade themselves.

PSP hopes that the Government will consider our suggestions so that together, we can find a more permanent solution to the challenges faced by Singaporeans in coping with the rising cost of living. 

Sir, the Progress Singapore Party (PSP) supports Budget 2024. Thank you.

[1] https://stats.mom.gov.sg/Pages/Income-Summary-Table.aspx

[2] https://www.straitstimes.com/singapore/politics/real-median-income-in-s-pore-falls-45-in-first-half-of-2023-due-to-inflation

[3] https://www.mti.gov.sg/Newsroom/Parliamentary-Replies/2022/08/Written-reply-to-PQ-on-rent-in-retail-store

[4] SingStats

[5] https://www.moe.gov.sg/news/parliamentary-replies/20230803-ite-to-polytechnic-admission-requirements

[6] https://www.ite.edu.sg/newsroom/news/details/press-release—ite-honours-outstanding-graduates-of-2023

[7] https://www.straitstimes.com/singapore/polytechnics-draw-students-from-secondary-schools-jcs-and-ite-through-multiple-pathways#:~:text=Polytechnic%20admissions%20in%202023&text=%2D%20Some%20290%20students%20who%20entered,graduates%20progressed%20to%20the%20polytechnics.

[8] https://www.todayonline.com/singapore/students-bridging-courses-aid-transition-ite-polytechnics-moe-guaranteed-places-2218651

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