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B. Tackling Cost Pressures
- 19. Let me start by addressing concerns over rising costs, for both individuals and businesses.
- 20. Global inflation rose sharply in 2022, following the outbreak of the war in Ukraine, and remained high after that due to energy, food, and supply chain disruptions. Like many other countries, Singapore was impacted.
- 21. That’s why we have been providing additional support measures over the last two years to cushion the impact on Singaporeans.
- a. Last year, I enhanced the Assurance Package by $1.9 billion.
- b. The Package has helped to fully offset the effects of inflation for lower-income households, and to provide a significant cushion for middle-income households.
- 22. We will continue to provide support for as long as needed, within our means. While inflation is expected to ease further this year, prices remain high. Singaporeans are still adjusting to these new price realities. Some have had to tighten their belts, rethink spending habits, or make difficult trade-offs to manage their expenses.
- 23. Therefore, in this Budget, I will provide additional support for Singaporeans.
- a. First, I will provide $800 in CDC Vouchers to every Singaporean household.
- i. The first $500 will be disbursed in May this year. And the remaining $300 will be disbursed in January next year.
- ii. As with previous CDC Vouchers, half can be used at participating supermarkets. And the other half can be used at participating heartland merchants and hawkers.
- b. Second, I will provide additional U-Save rebates to help households cope with their utilities expenses. Eligible HDB households will receive up to $760 this financial year. This is double the amount of regular U-Save rebates. It will cover about six months of utilities expenses for those living in 1- and 2-room flats, and three months of utilities expenses for those living in 3- and 4-room flats.
- c. Third, I will provide more support to families with children. They will receive $500 in LifeSG credits for each Singaporean child aged 12 and below this year. These credits are the same as the LifeSG credits we gave to national servicemen last year. And parents can use them to defray their household expenses.
- d. Every Singaporean aged 13 to 20 this year will also receive a $500 top-up to their Edusave account, or their Post-Secondary Education Account. They can use this top-up to pay for their approved education-related expenses.
- a. First, I will provide $800 in CDC Vouchers to every Singaporean household.
- 24. More support will be extended to individuals and families who face greater financial stress.
- a. We will increase the rates for the ComCare Assistance schemes, to better support lower-income households with basic living expenses. For example, a 1-person household on Long-Term Assistance will receive an additional $120 each month, bringing the monthly cash assistance to $760. Those supported by Short-to-Medium-Term Assistance will also receive more than before, based on the household’s composition, needs, and income.
- b. In tandem, we will increase the Singapore Allowance, which is an ex-gratia payment that some of our pensioners receive. It will increase from $350 to $390 each month, to support those with smaller pensions. And the monthly pension ceiling will also increase to $1,320.
- c. Through the ComCare Interim Assistance scheme, we will also provide more support for community organisations as well, to help households in need.
- 25. We are also paying close attention to public housing.
- a. We have ramped up our BTO supply decisively. Application rates for BTO flats have stabilised, and are now well below pre-Covid-19 levels.
- b. We will continue with the robust supply pipeline. Over the next three years, MND will launch more than 50,000 new flats in a wide range of locations, including in Woodlands, Bayshore, and Mount Pleasant.
- c. Last year, more than eight in 10 first-timer families who collected keys to their BTO flats were able to service their monthly mortgage loans with little or zero out-of-pocket cash. To put in perspective, this is a level of affordability that residents in other major cities like London, Sydney, and Hong Kong do not enjoy. But we have been able to achieve this in Singapore. And we will continue to keep public housing affordable and accessible for all.
- 26. Some Singaporeans prefer resale flats as they have shorter waiting times. But they are understandably concerned about the higher prices of resale flats. Our cooling and supply measures will eventually
help to stabilise the resale market. Meanwhile, we will offer more options to home seekers who want their flats sooner.
- a. This year, HDB will launch around 3,800 flats with a waiting time of less than three years. This is about 20% of the full year’s BTO supply. And we will continue to increase the supply of such flats in the coming years.
- b. HDB also launched the largest ever Sale of Balance Flats exercise last week, with around 5,500 flats available island-wide, and it plans to hold another balance flat exercise later this year.
- 27. Higher prices also affect our businesses, many of whom are grappling with the higher costs of rent and labour.
- 28. So I will introduce a 50% Corporate Income Tax rebate in the Year of Assessment 2025.
- a. Not all companies are profitable, and some may not benefit from such a rebate. So, I will provide every active company that employed at least one local employee last year a minimum benefit of $2,000.
- b. The total benefit that each company will receive will be capped at $40,000.
- 29. Despite facing higher cost pressures, I’m glad that many businesses remain committed to uplifting the wages of lower-wage workers.
- a. The Government will continue to share this responsibility with employers.
- b. And taking into account feedback from employers, I will enhance the Progressive Wage Credit Scheme, by increasing the Government’s co-funding levels for wage increases from 30% in 2025 to 40%, and from 15% in 2026 to 20%.
- 30. The measures we have taken in recent years, and are taking in this Budget, will help to mitigate the impact of rising costs.
- 31. But in the longer term, the best way to adjust to higher prices is to grow the economy and increase productivity, so that all Singaporeans can enjoy higher real incomes and better standards of living. And let me turn to our strategies next in these areas.