Economic growth ‘non-negotiable’ for Singapore, even with shifts in social compact: DPM Wong

ECONOMIC growth is “non-negotiable” and Singapore’s government will always be pro-growth and pro-inclusivity, even as the country embarks on key shifts as part of its new social compact, Deputy Prime Minister Lawrence Wong said on Monday (Apr 17).

These changes include a new approach to skills and a new definition of success – which all consumers will have to support by paying more for goods and services.

“Our growth rates will gradually come down as our labour force expands more slowly, but growth remains essential,” Wong told Parliament. “If we don’t grow the economic pie, there will be fewer jobs and less scope for social support. So please do not be mistaken.”

He was speaking on the first day of debate in response to President Halimah Yacob’s address a week ago, at the opening of the second session of the 14th Parliament.

In her speech, President Halimah pushed for a “broader meritocracy” and more inclusivity, among ways to strengthen Singapore’s social fabric in a troubled world.

These themes were tackled by most of the 14 Members of Parliament (MPs) who spoke on Monday, who called for measures such as support for vulnerable workers and limited inheritance taxes.

In his speech, Wong reiterated “stark realities” such as big power rivalry, which threaten not just the economy but the open and stable global order. While Singapore will continue to be afflicted by external headwinds, Covid-19 has shown that Singaporeans have the grit and resolve to overcome challenges, he said.

The government will build on Singapore’s strong foundations, but it must also have the courage to change where it is needed, said Wong. The Forward Singapore exercise, he added, has given insights on how the government can review its policies.

He noted that some ask if the fourth-generation (4G) leadership team has shifted to the left, given the shifts in Singapore’s social compact. But he replied: “It’s not so simple. Our governing approach is not so easy to characterise along the traditional political spectrum of left and right.”

“We have always taken care not to base our legitimacy on any narrow social group or class.”

Nor does the government “blindly copy or replicate” other countries’ models, such as the high-tax systems in Europe: “We will not adopt such a model of comprehensive universal welfare.”

Singapore will chart its own way forward, staying true to its core values, he said: “While we will indeed do more to strengthen social safety nets, we will move with prudence and discipline, and not end up inflicting heavy tax burdens on everyone.”

“Today, our overall tax burden for the middle-income group is far lower than other advanced nations, and we will strive to keep it that way.” Singapore will also continue to sustain real income growth for the middle – which is why economic growth is “non-negotiable”, he said.

“This government will, and must, always be pro-growth and pro-inclusivity. Securing our economic competitiveness will become more, not less, important in the next phase of Singapore.”

A core ethic underlining Singapore’s governing approach is individual effort, as well as personal and family responsibility, he added. Government actions should “reinforce, not negate, individual and collective responsibility”.

A focus on collective responsibility is one of five major shifts for Singapore’s social compact, which Wong laid out in his speech. The refreshed social compact “is not just about the government doing more” but about all parts of society doing their part.

In social support, the new approach involves empowering the vulnerable – with more help for those who “help themselves” – and assuring the middle; in caring for seniors, it includes enabling them to age in place and updating the Central Provident Fund system.

In skills, mindsets must shift towards lifelong learning, with upcoming changes to SkillsFuture to reduce costs and lower barriers. And there must be a new definition of success: valuing a variety of occupations in concrete ways such as economic structures, remuneration, and career prospects.

Said Wong: “Here I have a plea to everyone: for a new definition of success to become a reality, all of us – as consumers – must be willing to bear a higher cost for the goods and services we consume.”

“We must recognise the important work that our fellow citizens undertake to keep our society going, and do our part to uplift and boost their wage prospects.”

Desmond Tan, deputy secretary-general at the National Trades Union Congress (NTUC), said the labour movement is focused on expanding career opportunities, including for workers in “skilled essential trades”.

There are more than 50,000 such local workers, but a growing concern is the emerging “skilled trades gap” as the older generation retires and fewer qualified candidates take on these jobs, he said. For a start, the NTUC will prioritise three such trades: plumbers, electricians, and air-con technicians.

Expanding opportunities was one of three priorities that Tan laid out for the labour movement. The others are enhancing career assurance and protection, particularly for workers who are lower-wage, mid-career, self-employed, older or caregivers; and ensuring career resilience, by supporting career changes and upskilling.

As Parliament debates the government’s new policy directions, laid out in the President’s Address, Wong said he believes the Workers’ Party broadly supports these directions. But the opposition’s “sums do not add up” even as they have offered some revenue alternatives, he said.

“Where the opposition have good ideas, or where they can make a contribution to the ideas for improving our country, we welcome them. But we ask that you be upfront about the realities and trade-offs we face as a country, and be honest about your plans, policies and intentions,” he said.

Among the MPs who spoke on Monday was WP MP for Sengkang GRC Jamus Lim, who resurfaced the party’s push for Singapore to draw an official poverty line, adding: “The fact remains that, if we are to help the poor, we must know who they are.”

He said there is instead a “confusing mishmash of thresholds” that different agencies use to determine what counts as “poor”.

People’s Action Party MP Seah Kian Peng suggested further taxes on supercars, while Nominated MP Raj Joshua Thomas proposed limited inheritance taxes, calling intergenerational wealth the “antithesis of meritocracy”.

Taking a global perspective, Sembawang GRC MP Vikram Nair noted that multilateralism has come under fire for how free trade has “exaggerated the differences between the rich and the poor”. Multilateralism’s defenders must thus acknowledge its side effects and have domestic policies that correct for this, he said.