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- PM Wong set out how Singapore will secure growth and good jobs in a tougher global climate.
- He outlined measures to manage cost pressures while safeguarding long-term stability.
- He reaffirmed that Singapore’s fiscal strategy remains prudent and sustainable for the future.
Prime Minister Lawerence Wong opened his Budget 2026 debate round-up speech by noting that this year’s Budget is the largest in Singapore’s history, even larger than the five Budgets combined in 2020 to fight COVID-19. He thanked Members for their participation and support, as well as urged them not to view any single Budget in isolation.
Each Budget, he said, builds on the last and lays the groundwork for the next. Suggestions raised in previous years, including on artificial intelligence (AI), have since been taken up. While not every point could be addressed in the round-up, programme-specific issues will be covered during the Committee of Supply debates.
He focused his response on three broad questions:
- How Singapore will secure continued economic success and good jobs in a changed world.
- Whether enough is being done to ease cost pressures and ensure progress for every Singaporean.
- Whether the fiscal strategy is fit for present and future challenges.
Securing economic success and good jobs in a changed world
Growth in a more uncertain global environment
PM Wong said Singapore’s economic strategies must adapt to a changed world.
He said: "This is a world where power and strength increasingly shape outcomes; where rules are more contested; where economic relationships are being rewired."
Recent US tariff changes, he added, including those following US Liberation Day, highlighted how uncertainty and volatility are becoming the norm. In such a world, smaller countries risk being marginalised.
Singapore cannot afford to stand still, he affirmed. To this effect, the Government will deepen trusted partnerships, diversify economic links, and strengthen resilience. It will also establish leadership positions in key domains to create distinctive value that others cannot easily replicate.
Heavy investments are also being made in research and development, the enterprise ecosystem, and frontier sectors such as advanced manufacturing, finance, digital services, and new growth areas.
However, PM Wong acknowledged that growth and jobs are no longer as closely linked as before. Fast-growing sectors are export-oriented and compete globally. They create well-paying jobs with strong progression, but operate with lean manpower. Manufacturing still contributes about 20% of GDP, but its employment share has declined from 14% in 2015 to about 12% today.
Despite this, growth remains essential. It creates opportunities, raises wages, and generates resources for society. Without sustained frontier growth, investments could go elsewhere and wages could stagnate, PM Wong highlighted.
But growth alone is not enough. The Government is also uplifting the domestic economy through skills frameworks, salary increases in public healthcare and preschools, and updated salary guidelines for community care and social services. These are positioned as integral to an inclusive growth strategy.
Supporting SMEs under pressure
Small and medium-sized enterprises (SMEs) were highlighted as critical employers anchoring economic activity across the island.
Retail and F&B face structural headwinds from e-commerce, changing consumer habits, overseas travel, and a strong Singapore dollar. Yet the number of establishments continues to grow, intensifying competition.
In the short term, the Government has provided Corporate Income Tax rebates. Over the longer term, support must be sustainable and not distort market incentives.
On cost drivers:
- Goods and materials are largely priced globally, with limited local influence.
- Rental costs, at the macro level, have tracked economic fundamentals and declined as a share of total business costs between 2019 and 2024. Frameworks remain in place where Government agencies are landlords.
- Labour costs have risen due to ageing, tighter labour supply, and policy choices such as the Progressive Wage Model. The Progressive Wage Credit Scheme has been enhanced and extended for two years to support businesses through this transition.
Calls to relax the Dependency Ratio Ceiling (DRC) were rejected, though calibrated flexibility in certain occupations may be considered.
Ultimately, the sustainable path forward is productivity improvement and business transformation. SMEs that redesign jobs and digitalise can offer higher wages and more meaningful opportunities.
Adapting to AI while protecting workers
AI was described as a powerful force reshaping the economy. While technological waves have historically displaced some jobs, they have also created new ones.
PM Wong said evidence so far in Singapore suggests AI is augmenting jobs rather than causing widespread displacement. The labour market remains resilient, with nearly 91% of workers in permanent employment and vacancies continuing to outnumber jobseekers. Over 40% of openings are entry-level PMET roles.
However, risks are acknowledged. Concerns include companies investing less in training, older workers struggling to re-enter the workforce, and entry-level jobs being hollowed out.
In response, the Government will invest more deliberately in people, empower workers to be AI-ready, strengthen safeguards, and work closely with tripartite partners. As AI initiatives are rolled out, attention will be paid to how companies apply AI to enhance human skills and expertise.
The strategy, he said, is clear: Singapore will not have jobless growth. AI will be used to grow the economy while ensuring that growth translates into good jobs and better wages.
Easing cost pressures and supporting progress
Turning to cost-of-living concerns, PM Wong acknowledged that while inflation has moderated to 0.9% last year after peaking above 6% in 2022, price levels remain higher than before.
To cushion households, more than S$10bn has been provided through the Assurance Package. This year’s support includes CDC vouchers, cash support, utilities rebates, Child LifeSG credits, and CPF top-ups for seniors.
With these measures, a middle-income household with young children could receive about S$2,800 in total support, a lower-income household about S$5,000, and a retired elderly couple about S$7,600.
PM Wong stressed that only about 5% of the overall Budget is for one-off measures, with 95% going towards longer-term and structural schemes. Total social spending has increased.
The durable solution to cost pressures, he said, is steady and sustainable wage growth. Data shows real incomes have risen faster than inflation across the income distribution over the past decade. The share of income spent on essentials has declined, though healthcare spending has risen due to an ageing population.
Singapore’s approach balances broad-based wage growth, productivity improvements, and substantial subsidies and transfers, with more support for lower- and middle-income households.
Retirement, social support, and family measures
The CPF system is being strengthened to support longer lifespans. While members can invest through the CPF Investment Scheme, returns have been mixed. A low-cost lifecycle investment option is being developed, with a possible rollout in the first half of 2028.
Support across life stages continues through housing reforms, healthcare initiatives such as Healthier SG and Age Well SG, SkillsFuture enhancements, ComCare and ComLink+.
On families, expenditure on marriage and parenthood initiatives has risen from $4bn in FY2020 to $7bn in this Budget. Shared parental leave has been enhanced, and under the Large Families Scheme, parents can receive up to $48,000 for their third or fourth child.
The Government is planning further measures and will continue discussions in upcoming debates.
Fiscal strategy and long-term discipline
In a global context of rising public debt, Singapore’s fiscal position was described as a strategic advantage.
The GST increase was introduced to fund structural healthcare spending linked to ageing. Other tax changes, including property and motor vehicle taxes and higher top marginal personal income tax rates, were insufficient to close the funding gap.
Even with higher Corporate Income Tax collections in recent years, these were not anticipated when the GST decision was made and are not seen as a stable replacement for structural funding needs.
Government spending is rising and could exceed 20% of GDP before 2030. The aim is to maintain a balanced budget over the term of Government, not to run persistently high surpluses. Revenue upsides have been shared through packages such as SG60, CPF top-ups, and cost-of-living payments.
On tax progressivity, PM Wong noted that about one in three resident workers pay no personal income tax. Among those who do, around eight in 10 have an effective tax rate of less than 6%. For every dollar of tax paid by the top income quintile, they receive 20 cents in benefits, compared to $2 for the middle quintile and $7 for the bottom quintile.
He reiterated that the fiscal system is designed to be fair, progressive, and sustainable, while preserving long-term discipline and flexibility.
A collective commitment in an uncertain world
In closing, PM Wong acknowledged that the next phase will not be easy. Geopolitical competition is intensifying and external pressures may grow.
However, he added, Singapore enters this period with a strong economy, cohesive society, and sound public finances built over decades of difficult decisions.
This Budget, he said, builds on that foundation and reflects a collective commitment to secure economic resilience, good jobs, and continued progress for every Singaporean in a more demanding world.
To read the full Budget debate round-up speech, click here.
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Lead image / PM Wong Facebook
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