EXPENDITURE POLICY

This Government will continue to adopt prudence as the cornerstone of its expenditure policy. As before, we will focus on the delivery of essential public goods and services, consolidate our national economic infrastructure and devote more resources towards the development of our people. The public sector will be contained to grow no faster than GDP, thus ensuring that adequate manpower and financial resources are available for the private sector to continue in its role as the growth engine of the economy.

It is important that Government invest heavily in the development of our economic infrastructure and human resources in order to maintain and improve Singapore's economic competitiveness in the face of growing competition from both the region as well as developed countries. This investment will attract more high value-added and strategic industries to Singapore. In tandem with this, we will provide generous financial assistance to upgrade our local companies, train our workers and develop indigenous capabilities in high value-added skills and R&D.

At the same time, we will have to cater for the rising aspirations of Singaporeans for a higher quality of life commensurate with increasing affluence. The URA will continue to develop high quality housing concepts such as Ponggol 21. A world-class public transport system is also planned for Singapore, combining a comprehensive public transport system with an efficient road network.

It is important that we do not let affluence erode our cohesiveness and resilience as a nation and society. To foster a cohesive, resilient, caring and gracious society, the Government will allocate more funds to promote awareness of our arts and heritage, and community and sporting activities. In particular, nine Community Development Councils will be set up within this fiscal year to promote stronger ties between the Government and the people.

Revenue growth in FY97 is not expected to keep pace with the growth of the Singapore economy because of tax cuts introduced to maintain a low and competitive tax regime. Hence, only a modest budget surplus of $4.8 billion is projected for FY97, after providing for an increase in development spending. Some of this surplus will be used to augment Edusave and Medifund and I propose to make a final contribution of $500 million to top-up the Edusave Endowment Fund to its target figure of $5 billion. An allocation of $100 million will also be made to Medifund to ensure that affordable healthcare continues to be available to all.

Singapore Allowance

The Singapore Allowance is a flat rate supplemental payment made monthly to pensioners receiving a gross pension below a specified ceiling. The Allowance is currently set at $130 per month with the gross pension ceiling at $900 per month. There are currently 16,859 pensioners residing in Singapore, of which 11,827 or 70% enjoy the benefit of the Singapore Allowance.

The Singapore Allowance was last revised in 1993. From 1st August 1997, we will increase the Singapore Allowance by $10 per month to $140 per month, and also the gross pension cap from $900 to $950 per month.

The revised Singapore Allowance will increase the Government's pension bill of $662 million by about $1.84 million per year.