PM Wong rejects Pritam's claim that GST hike 'turbocharged' inflation: 'This chamber is not an election rally'

In his closing Budget speech today (Feb. 28) Prime Minister and Minister for Finance Lawrence Wong responded to Workers' Party (WP) Pritam Singh's recent comment that the Goods and Services Tax (GST) hike "turbocharged" inflation for consumers.

"Where is the turbocharging? Look, I know elections are approaching, but this chamber is not an election rally," said PM Wong.

"Let's not get carried away by hyperbole and have a debate based on facts."

PM Wong's response

On Feb. 26, Singh questioned the government's decision to raise the GST despite an "exceedingly healthy fiscal position".

He pointed out that even with imported inflation contributing to the increase in local prices, there was "no need" for the government to "add fuel to the fire and fan the flames of inflation further with the GST hike".

He added that there was "ample policy space" to delay the second GST hike in 2024 "when the country was in the thick of inflation".

"Why the PAP went headlong and headstrong into raising GST, and thereby turbocharging inflation further, is something only the PAP itself can answer."

In response, PM Wong pointed out that with Singapore's small and open economy, inflation is driven primarily by global factors such as wars, supply chain disruptions, and rising energy costs.

He also noted that the Monetary Authority of Singapore (MAS) had assessed that the GST hike's effect on inflation would not be permanent.

Pre-GST hike in 2022, the Consumer Price Index (CPI) inflation was 6.1 per cent.

The GST was increased by one percentage point in 2023 and by another percentage point in 2024.

However, CPI inflation moderated to 4.8 per cent in 2023 and came down to 2.4 per cent in 2024.

Vibes

While inflation has eased globally and in Singapore, PM Wong noted that people are still concerned about cost pressures.

This is not unique to Singapore, as cost pressures are also felt across many other advanced economies, where headline economic indicators are positive but sentiments remain poor.

"But there is a reason for the negative vibes. It's not just about feelings and sentiment. It's because price levels remain high, even though inflation has eased. And these create real pressures.

And it takes time for people to adjust to these new price realities."

PM Wong reiterated that the government understands these concerns and will continue providing temporary help through measures like the Community Development Council Vouchers.

"As I said in my Budget statement, we will continue to provide cost of living support for as long as needed and within our means," said PM Wong.

Appear unhappy and displeased

PM Wong moved on to rebut points made by the WP and the Progress Singapore Party (PSP).

He commented that the WP and PSP "appear to be unhappy and displeased that the government is providing vouchers to help Singapore with the cost of living."

"They suggest that the government is relying solely on vouchers to help with the cost of living.

But we've never said that. These are temporary help measures, they are not long terms solutions."

PM Wong shared that the cost of living measures and the SG60 package account for about five per cent of the budget.

He shared that a "much larger" part of the spending is in structural programmes "that equip and empower Singaporeans through education, skills training, skills upgrading, job training and the significant moves we are making on SkillsFuture."

These would help ensure that Singaporeans receive help and are able to "stand on their own feet" and thrive in a rapidly changing world.

"As we have repeatedly emphasised, the more durable, the more sustainable way to tackle cost of living is to ensure that Singaporeans enjoy higher real incomes."

Lived realities differ

However, PM Wong recognised that even with a strong and growing economy, Singaporeans' day-to-day lived realities may differ.

He pointed out that the government has been strengthening Singapore's social support system as part of the Forward Singapore exercise.

"We want to provide greater assurance to Singaporeans across every life stage on their basic needs, basic needs like education, retirement, healthcare and housing.

We want to provide more support for the disadvantaged and vulnerable groups. We want to ensure that no one is left to fend for themselves in Singapore.

And if anyone faces setbacks, we have a system in place to help them recover and bounce back stronger."

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Top photos via MDDI/YouTube & Canva