A NEW S$1.1 billion support package will help Singaporeans – especially lower to middle-income families – cope with rising costs, Finance Minister Lawrence Wong announced on Thursday (Sep 28). There will be no need to dip into past reserves to fund this.

This new Cost-of-Living Support Package includes an S$800 million top-up to the Goods and Services Tax (GST) Assurance Package, bringing the latter’s total to more than S$10 billion. The Assurance Package aims to cushion the impact of the GST being hiked to 8 per cent this year, with a further hike to 9 per cent planned on Jan 1, 2024.

While inflation has come down from its peak, households are still dealing with the impact of price increases in various areas, said the Ministry of Finance in a statement.

On Wednesday, national water agency PUB said it will raise the price of water by 18.2 per cent, or S$0.50 per cubic metre, in the next two years to keep up with “substantially” higher costs of production and supply.

There are four additions to the Assurance Package.

First, there is an additional one-off cash payout of up to S$200 for some 2.5 million eligible Singaporeans – those aged 21 and above, who own at most one property and have assessable income of no more than S$100,000. This Assurance Package Cash Special Payment will be disbursed in December, together with the existing cash payout under the Assurance Package, for a total payout of up to S$800 that month.

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Second, all Singaporean households will receive another S$200 in Community Development Council (CDC) vouchers in 2024. This brings the total amount of CDC vouchers received next year to S$500. These vouchers can be used at participating heartland shops and hawkers.

Third, to help households with utility bills, there will be an additional one-off half-month rebate of service and conservancy charges (S&CC) in January 2024.

Fourth, another S$20 per quarter of U-Save rebates will be disbursed between January next year and December 2025. This means eligible households will receive a total of S$80 in additional rebates per year, for the next two years.

The S&CC and U-Save rebates will benefit about 950,000 Singaporean households living in Housing and Development Board flats.

In addition to these enhancements to the Assurance Package, the new Cost-of-Living Support Package includes public transport-related measures.

Households with a monthly per capita household income of not more than S$1,600 will receive public transport vouchers worth S$50. These will be disbursed from end-December and can be used to top up fare cards or buy monthly travel or concession passes.

The package also includes an additional S$300 million in public transport subsidies in 2024, to cover the deferment of the 15.6 per cent fare hike to future fare review exercises, as announced by the Public Transport Council on Sep 18.

In a press conference explaining the considerations behind the new package, Wong said that while Singapore is not expected to go into recession this year, the risks are weighted on the downside, such as disruptions to food and energy supplies and a sharper-than-expected slowdown in the US and China.

Singapore’s real wage growth is likely to moderate this year as firms are more cautious about raising salaries, added Wong, who is also Deputy Prime Minister. And there have been recent price increases: “We have frozen increases in government fees and charges this year. But some non-government charges have gone up because of higher cost.”

Asked why the government is providing support rather than delaying price increases, Wong reiterated its stance on introducing the GST hike but having measures to cushion most Singaporeans from the impact.

“We don’t want to wait until we are at the very brink (of having) not enough money and then start raising taxes. We want to put in place all the measures that are necessary to ensure sound public finances, not just for one two years, but for the medium- and longer-term,” he said.

As for the recently-announced water price hike, this is a “different matter altogether” as water is a strategic resource for Singapore, he said.

As a “water-stressed” nation, Singapore must price water properly to ensure that consumers understand its true cost, he said: “I think it’s right for (the PUB) to explain and to announce the increases... and not just kick the can down the road.”

As for whether such off-Budget support packages may become more frequent, Wong said they are “not by design”.

In a stable economic environment, the Budget “should be able to provide for all the needs that we anticipate across the year”. But with greater economic volatility and uncertainity in recent years, more off-Budget packages have been needed.

“Will this be a pattern in the future? No one can tell,” said Wong. “Our preference, of course, will be to prepare and provide for things within the Budget itself.”

“But if there are these unpredictable changes in the external environment, then certainly, the government will always stand ready to respond promptly and swiftly and to make sure we provide all the necessary support for Singaporeans.”