SINGAPORE: The prospect of the High-Speed Rail (HSR) project being cancelled and the Government’s announcement that the Goods and Services Tax (GST) would be raised in due course are two separate matters, Second Minister for Finance Lawrence Wong said in Parliament on Monday (Jul 9).
The planned increase in GST was never meant to finance lumpy investments in infrastructure in the first place, he said, adding that the Government takes a different approach to such investments.
First, where possible, the Government will save ahead and set aside funding for such investments through initiatives like the Changi Airport Development Fund and the Rail Infrastructure Fund. Second, the Government will finance infrastructure through borrowing by Statutory Boards and Government-owned companies.
This will apply to larger investments that can generate economic benefits over many years, like the Changi Terminal 5, the HSR and the JB-Singapore Rapid Transit System Link, he said.
He was responding to Workers’ Party MP Pritam Singh's question on the implications of a potential cancellation of the HSR on the Government's decision to raise GST sometime between 2021 and 2025.
The main drivers for rising Government expenditure in recent years, and in the future, are healthcare, security and social spending, Mr Wong said.
“These are broad-based, structural increases in recurrent spending, so we have to raise recurrent revenues, of which the planned GST increase is one component, to pay for these ongoing needs year after year,” he said.
He also said that it is not appropriate for him to highlight the estimated total expenditure on the HSR project at this time, in response to Mr Singh and Non-Constituency MP Daniel Goh’s questions.
“Doing so could affect the behavior and pricing strategy of bidders,” he said. He reiterated, like other ministers who spoke before him, that pending confirmation from the Malaysian government about its position on the project, Singapore is continuing to fulfill its obligations under the HSR agreement.