'Kick the can down the road, or take hard but necessary decisions?': PM Wong addresses fiscal projection concerns

Prime Minister and Finance Minister Lawrence Wong addressed concerns about the government's fiscal projections during his closing speech on the Budget debate on Feb. 28, 2025.

Some opposition Members of Parliament (MPs) raised concerns about whether the government is being "overly conservative" in its fiscal projections and plans, considering the fiscal surplus it recorded.

Leader of the Opposition Pritam Singh of the Workers' Party and Non-Constituency MPs Hazel Poa and Leong Mun Wai of the Progress Singapore Party also questioned the need to increase the Goods and Services Tax (GST), given Singapore's strong fiscal position.

However, PM Wong explained that this strong fiscal position resulted precisely from the government's decision to take early action in this term to raise revenues.

Governance is about making responsible choices: PM Wong

Going back to the period of Covid-19 in 2020, PM Wong noted that they had to seek the president's approval five times to draw from past reserves.

"We were in the thick of battle fighting Covid. I know it feels like a bad dream and a distant memory to all of us, but those were truly tough times," PM Wong said.

With the impact and uncertainty of the pandemic, the government expected that spending needs such as health care would rise, especially with Singapore's ageing population.

"We looked at different ways to raise revenues, including through property and income taxes. But these moves were still not enough to cover the expected increase in expenditure which was sure to happen," PM Wong said.

That was why they had to consider the GST increase, he explained, adding that it was a difficult decision. Governance is about making responsible choices, not just popular ones, he added.

"We must ask ourselves, do we want short-term populism or long term-stability? Do we want to kick the can down the road or take the hard but necessary decisions?"

GST hike together with assurance package to help Singaporeans

Once there were signs that the economy had stabilised, the government decided to proceed with the GST increase but also rolled out a comprehensive assurance package, which effectively delayed the GST increase for the vast majority of Singaporean households, PM Wong said.

Multiple rounds of enhancements were made to the assurance package to tackle cost-of-living concerns and to ensure that the majority of households will not feel the impact of the additional GST for at least five years, he said.

Singapore is thus in a better position now, together with other revenues from other sources, PM Wong added.

"What would have happened if we chose to avoid the GST increase because it is unpopular, or if we did not enjoy the unexpected upsides in corporate income tax collections which emerged only in the last two years?" PM Wong said.

Singapore would have ended the financial year 2024 on a deficit, and the projected balance in FY2025 would also have been a deficit, PM Wong surmised.

Singapore and Singaporeans would have ended up in a much weaker position, with less funding for essential services, seniors and future planning.

Criticisms on fiscal projections

In his speech, PM Wong also addressed some MPs' criticism of the ministry's "fiscal marksmanship".

"I will not defend the figures if they are off the mark, but I will speak up for our MOF officers who do this work with dedication and professionalism against any unfair criticisms," he said.

Saying that the budget is a projection, he explained that it is done based on the best available information then.

"We have to plan ahead, we have to make assumptions, and we have to decide how we deal with uncertainties."

In a crisis, when there is greater volatility in the economy, it is inherently more difficult to predict the turning points, PM Wong said.

However, if withholding unexpected crises like Covid-19, the ministry's operating revenue projections have generally not been far off the mark, he said.

"Ultimately, it is not a matter of good marksmanship or poor marksmanship. It's a question of the right values and the wrong values, the correct fiscal principles and the wrong fiscal principles," he stated.

"This government will never take risks with Singaporeans' lives and futures," he added.

Top photos from MDDI/YouTube and Canva