Opening Remarks by Deputy Prime Minister and Minister for Finance Lawrence Wong for the October Support Package on 14 October 2022.
Over the past several months, I have been providing regular updates on the inflation outlook, and how the Government is helping our people and businesses through these challenges.
In Budget this year, I rolled out the $560 million Household Support Package. In April, I brought forward some of the Budget measures, including the faster disbursements of the CDC vouchers and the Small Business Recovery Grant. In June, because of the challenging global growth and inflation environment, I provided a $1.5 billion support package to provide more immediate and targeted relief for Singaporeans, with more help for our lower-income and vulnerable groups. I also at that time introduced schemes that help businesses deal with higher cost and press ahead with their transformation efforts.
Update on Macroeconomic Situation
Following my July update in Parliament, the global inflation outlook has picked up further. The war in Ukraine has continued to put upward pressure on global energy and food prices. As a small, open economy, it is inevitable that these higher global prices will flow through to Singapore. The duration and severity of inflation remains uncertain, but we expect it to continue to stay elevated for some time, at least till middle of next year, before it gets better. And so, we must brace ourselves for higher prices over a longer period.
With these developments, we now expect full-year inflation for 2022 to be around 6%. This morning, MAS also released its Monetary Policy Statement, which announced its fifth round of monetary policy tightening since October last year. The Government will also do more using our fiscal levers to help Singaporeans manage the impact of inflation.
This afternoon, I am announcing a fresh $1.5 billion support package to provide additional help to households. I fully appreciate how inflation affects everyone, and some Singaporeans more than others. There are two groups that the Government is particularly concerned about. First, lower-income Singaporeans, who will find it difficult to cope with higher prices. Second, retirees who have no income from work.
We have therefore designed the support package with these two groups in mind. But the measures in the package will also cover the middle-income segments, and provide some help for all Singaporeans.
First, I will provide a one-off Cost of Living (COL) Special Payment of up to $500 in December. About 2.5 million adult Singaporeans will receive this Special Payment, and the lower-income groups will receive more. Taken together with the cash payout for the Assurance Package which was announced at Budget this year, eligible Singaporeans will receive up to $700 in December.
Second, I will provide every Singaporean household with an additional $100 CDC Voucher in January next year. The vouchers will help directly with daily expenses and the impact of rising food prices. This is on top of the $200 CDC Vouchers, which was earlier announced at Budget. In total, all Singaporean households will receive $300 worth of CDC Vouchers in January next year, and the Vouchers will be allocated equally for spending at both heartland shops as well as participating supermarkets.
Third, as announced by the Ministry of Transport, I will provide additional public transport subsidies to moderate the fare increase this year. To help lower- and lower-middle income groups with the adjustment in transport fares, we will make available 600,000 Public Transport Vouchers worth $30 each for these households.
Fourth, we will help lower-income families with their children's education expenses. Earlier in August, MOE announced that it will increase transport and meal subsidies for primary and secondary students, and bursaries for pre-university students. Today, we will further enhance our financial assistance schemes. We will raise the income eligibility criteria to defray the school expenses for more students. Around 10,500 more students will now be eligible for additional support, and we will also enhance the bursary quanta for Institute of Technical Education (ITE) students. For diploma and undergraduate students, we are reviewing the government bursaries, and will share more details when ready.
My assurance to Singaporeans earlier this year, is that we will help everyone cope with the impact of higher prices.We know that households have had to incur more expenditure due to inflation. That is why we are monitoring, we have been monitoring what the impact has been on households. With this package that I have just announced, which builds on the measures that we have announced previously, we will be able to provide comprehensive support for many Singaporeans. On average, the total Government support measures rolled out this year will fully offset the increases in inflation-driven spending for the lower-income and retiree households.
For the middle-income households, on average, the Government support provided will offset more than half of the inflation-driven increases in cost of living this year. But with higher wages that they can expect this year and the government support, most middle-income households would be able to cover the inflation- driven increase in spending this year.
I understand that Singaporeans are also concerned about the upcoming GST increase. As I have explained previously, the Government is fully committed to cushion the impact of the GST increase for all Singaporeans. The Assurance Package will offset the impact from the GST increase for the majority of Singaporean households for at least 5 years, and for lower-income households for about 10 years. To keep to this commitment, we will review the sizing and components of the Assurance Packageto account for the higher-than-expected inflation. I will provide more details on this at Budget next year.
The Government will continue to live within our means and ensure fiscal sustainability. We are able to fund the support measures in this package today, without a draw on our Past Reserves, as we have had stronger-than-expected fiscal out-turn in the first half of FY2022, due to the milder Omicron variant and faster economic re-opening. To provide the support in a timely manner, the Government has sought the President's concurrence to make an advance from the Contingencies Fund.
The President has given her concurrence and I thank the President for her support. The Government will subsequently introduce a Supplementary Supply Bill in Parliament to replace the advance within this financial year.
We have been on a bumpy ride, confronting COVID-19, rising food and energy prices, and a changing global order. As with all previous challenges, big or small, the Government will do our part to support Singaporeans through these challenging times.
Just as what we have done during the last two-and-a-half years of COVID-19, we continue to draw on the strong foundation of solidarity and mutual trust in our society, to help one another get through this period. We have each other's backs. To this end, we are also working towards allowing the donation of CDC Vouchers for families who may not need the vouchers. This is one small way we can help those in need, and strengthen our social compact.
I would strongly encourage those with more means to lend a hand to others. The CDCs will share more details on the donation of the CDC Vouchers subsequently. Despite the uncertainties, we have many things going well for us in Singapore, amongst them, a strong economy, solidarity and trust and a caring people and a strong spirit of generosity. We have much to be grateful and hopeful for. As long as we stay as one people, I am confident that we will get through the challenges ahead together.
Let me just say a few words in Mandarin before I take questions.
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