Government’s share of social spending ‘set to rise’

Government’s share of social spending ‘set to rise’

As Singapore ramps up its social spending, the Government's expenditure could rise to as much as a fifth of economic output, according to Prime Minister Lee Hsien Loong.

In an interview with Japan's Nikkei media group last Wednesday, Mr Lee said the Government's share of spending is set to rise amid "greater social burdens".

Last year, public spending accounted for 14 per cent of gross domestic product (GDP). This share could eventually reach 20 per cent of GDP, Mr Lee said.

But he added that Singapore cannot "be a big government" like in Europe, where government spending makes up some 45 per cent of economic output.

"And whatever it is which we spend, we have to earn because the Government does not have a money machine producing money from heaven," he said.

That means it is "unavoidable" that Singapore will need to "look to our revenues and decide whether we have enough, and if not, where will we be able to raise new revenues".

Asked about a timeframe, Mr Lee said: "For the immediate future we are all right. Over the next five to 10 years, we will have to look at this very seriously."

The Government has been loosening the purse strings recently as it strengthens social safety nets, including in the areas of health care, education and retirement.

Mr Lee's interview came ahead of the President's Address last Friday, in which Dr Tony Tan Keng Yam outlined new strategies of the Government as it begins the second half of its term.

Dr Tan said that public spending will increase over the next decade, but also cautioned that the spending has to be sustainable.

In the interview, PM Lee was also asked about the People's Action Party's (PAP's) strategy to win the next election, which the reporter said was "coming up".

His reply was that the election would not happen for "another two and a half years". An election must be called by January 2017.

PM Lee added that the PAP's focus is on "doing the right things so that people have reason to vote for the Government, which is doing good for them".

Over the last two years, the Government has been addressing both immediate and long-term issues, Mr Lee noted.

Immediate issues include making sure there is adequate housing supply and improving public transport, he said, while a long-term concern is making sure Singapore can grow its economy and upgrade its workers so they can continue to earn a good living.

Addressing another long-term issue of succession, Mr Lee said Singapore's next leader should be "somebody who can command the confidence of the population, solve their problems and inspire them to do even more".

"We have a good team and I hope from amongst the team, leaders will emerge," he added.

This article was published on May 21 in The Straits Times.

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