In his 2013 budget speech, Shanmugaratnam explained that higher revenues from stamp duties and vehicle related taxes had increased the forecast surplus from 0.4% of gross domestic product to 1.1%. But he noted that these were ‘short-term’ increases in revenues that were not expected to be sustained.
Despite this, Shanmugaratnam forecast a surplus for the fiscal year beginning on April 1, albeit equivalent to just 0.7% of GDP.
Growth was expected to be ‘modest’ in 2013 at between 1%–3% of GDP, in line with the 1.3% recorded in 2012 but down from 5.2% in 2011.
‘While part of this slowdown is due to global cyclical factors which affected sectors such as manufacturing, it is also to be expected as our economy matures and our labour force grows more slowly,’ Shanmugaratnam said.
‘In fact, our economy has been at full capacity since our strong recovery from the global financial crisis. This is why we have virtually full employment. It is also why wage costs and many other costs like rentals have been going up.’
While Singapore was no longer a developing economy, it had yet to achieve the levels of productivity and income of an advanced economy, the minister said.
‘We must make every effort to achieve quality growth: growth that is achieved mainly through innovation and higher productivity, and growth that will benefit all Singaporeans – our children, working families, our elderly and disabled,’ he said.
He added: ‘Higher productivity is the only sustainable way to raise incomes for ordinary Singaporeans, and provide jobs that give people a sense of responsibility and empowerment. Higher productivity is also necessary for us to shorten working hours over time and allow Singaporeans to enjoy a better work-life balance.’
Ensuring a ‘fair and inclusive’ society also required a more progressive fiscal system, Shanmugaratnam said. Singapore would ‘tilt’ taxes and benefits more in favour of lower- and middle-income groups, as well as giving more support for older people to help them with their medical costs.
‘We are building a better Singapore: a more inclusive and caring society, with an innovative and dynamic economy, so that Singaporeans can have better opportunities and more fulfilling lives,’ claimed.
