Author: Gerald Giam

Budget Debate speech 2026
Gerald Giam (Aljunied GRC)
24 Feb 2026

Mr Speaker, the 2026 Budget Statement arrives at a moment of profound transformation. Globally, we are navigating tectonic shifts in security, trade and technology, while domestically, our workforce is feeling the weight of disruption alongside continuing cost-of-living pressures.

The Prime Minister describes our current fiscal position as “fortunate”, citing a revised FY2025 overall fiscal position that has resulted in a surplus of $15.1 billion. This is attributed largely to the front-loading of investments and a significant revenue surge.

Two-speed Economy

Yet, for many Singaporeans and local small businesses, this success feels distant. More than 2,400 retail food establishments closed last year; youths under 30 are experiencing unemployment rates almost double the national average. As the Association of Small and Medium Enterprises (ASME) highlighted, we are witnessing a “two-speed economy”. Despite positive aggregate macroeconomic data, local SMEs find themselves squeezed by a perfect storm of rising operating costs and weaker domestic demand.

ASME pointed to a productivity and contribution imbalance: Large enterprises contribute 74% of the nation’s nominal value-added, even though they employ just 30% of the national workforce. In contrast, micro and small enterprises contribute only 11% of the value-added, despite employing 45% of the national workforce.

This reveals a staggering labour productivity gap. Since wage growth is only sustainable when backed by productivity, when micro and small enterprises are stuck in a low-productivity “second speed”, it becomes supremely challenging for them to offer the competitive salaries needed to combat the rising cost of living.

Furthermore, as we look toward a future shaped by rapid AI integration and automation, we must confront the risk of structural “jobless growth”, where corporate profits and GDP continue to grow much faster than the labour market.

We must put our huge fiscal surpluses to use to support and empower the workers and sectors that find themselves stuck in the slow-growth track. It is only by doing so that we can secure the necessary social licence for continued high-growth strategies in elite sectors. When the average Singaporean sees tangible, structural benefits from these outsized gains rather than rising inequality, it fosters the public trust and political consensus required to maintain our open and competitive economic model.

Fiscal Projections and the GST Hike

The House should examine the government’s recurring pattern of overly conservative fiscal projections. The revised FY2025 surplus of $15.1 billion is more than double the original estimate of $6.81 billion. This $8.29 billion discrepancy is not an isolated incident; it is part of a trend where projected deficits regularly transform into healthy surpluses. While the government points to the volatility of tax revenue, this consistent under-estimation raises a fundamental question of whether the government is unnecessarily hoarding funds. We need more accurate forecasting that ensures our nation’s abundance benefits current generations as much as future ones.

This fiscal abundance also raises questions about the government’s tax strategy. With surpluses of well over a billion dollars in all but one of the last five years, totalling over $22 billion, we should re-evaluate the necessity of the GST hike.

The government said that the GST hike was meant to fund increased healthcare spending in an ageing society. But the Ministry of Health’s revised FY2025 operating expenditure was $305 million lower than estimated, mainly due to lower-than-projected funding needs for public healthcare institutions. Will the government be revising its projections for future increases in healthcare expenditure?

True prudence is not just about amassing vast fiscal buffers; it is about balancing future security with the current needs of our people. Unnecessary taxation drains liquidity from households up front, creating a dependency on government handouts rather than fostering genuine financial independence. Furthermore, it acts as a handbrake on economic growth by constraining household spending.

Reliance on High Vehicle and Licence Costs

In FY2025, Vehicle Quota Premium collections were 31% over estimates, reaching $8.66 billion. The COE was a primary driver of our massive surplus, and the government expects even more next year, projecting $9.42 billion in revenue. I am concerned that the government may be relying on high vehicle costs to anchor its fiscal position. This could create a perverse incentive to allow the COE to remain high, and result in inertia against necessary reforms to the COE system, which my Hon. Friend, Assoc Prof Jamus Lim, the MP for Sengkang, had called for in his adjournment motion last September.

There are other significant revenue spikes that I seek clarification from the Minister.

Revenue from Licences and Permits has surged by $2.08 billion—a 29% increase from the original estimate to the Revised FY2025 figure of $9.23 billion. According to the MOF’s Analysis of Revenue and Expenditure 2026, the transition to the new Singapore Public Sector Chart of Accounts (PS-COA) makes year-on-year comparisons for this item “not meaningful” due to changes in scope. However, this accounting reclassification alone does not explain why the government collected $2 billion more than it told this House it would just one year ago. Can the Minister clarify what specific licences or permits drove this increase, and whether this represents a permanent increase in the regulatory burden borne by our households and businesses?

While reclassification of FY2025 figures is promised for FY2027, was there some difficulty in providing it this year, so Parliament could properly track spending changes for this debate? Without a clear bridge between the old and new systems, there is a risk of losing oversight of expenditure growth.

Harnessing AI for the Frontline Workforce

Turning to technology, our AI roadmap must look beyond white-collar copilots. To ensure an inclusive social compact, we must deploy physical AI for blue-collar workers in manufacturing and logistics, for example. This could include tools like wearable haptic sensors that alert workers to ergonomic risks to prevent long-term injury, or collaborative robots to assist with heavy lifting on the factory floor. Furthermore, AI can be a powerful tool for blue-collar workers who may struggle with English language constraints. It can translate vernacular dictation into professional English documentation in real-time, allowing workers to focus on their technical expertise rather than linguistic hurdles. These tools enable productivity gains that lead to enhanced wages and reduced physical strain for those on the frontlines. AI should be an equaliser that elevates technical mastery, not a wedge that separates our workforce.

The government has also allowed 400% tax deductions on AI expenses. I propose that this should include corporate AI subscriptions, to give workers access to corporate AI tools to improve their daily productivity while keeping company data secure. Giving every worker a digital assistant should be a baseline goal for a nation that aspires to be an AI leader. This ensures that the benefits of the technology are shared by the employee and the employer alike.

Evolving Means-Testing Approach

Regarding our social safety net, a gap remains for the “sandwiched” generation which falls just outside existing means-testing thresholds. We need a more holistic means-testing model that looks at not just gross income alone, but disposable income after essential expenses are deducted. A household earning $9,000 with special needs children or elderly parents requiring chronic care may be functionally less wealthy than a household earning $3,000 with no such burdens.

Furthermore, I urge a shift toward individual-based assessments for our seniors to better protect their dignity. No senior should ever be forced to plead with an estranged adult child for financial support simply because that child’s income is bundled into the Per Capita Household Income (PCHI) calculation. When subsidies are tied to the disclosure of a child’s salary, we leave vulnerable seniors at the mercy of strained family dynamics. Our social safety net should be anchored more to a senior’s individual income instead of their children’s, to ensure they receive the care and support they need.

Rebalancing Spending

MTI’s development expenditure is estimated to double to $9.24 billion in FY2026, which is an increase of $4.32 billion in a single year. While the government says this increase is mainly due to initiatives to enhance Singapore’s economic competitiveness in an uncertain global environment, can the Minister shed more light on the specific milestones this money is expected to achieve? For comparison, the entire development budget for the Ministry of Social and Family Development is a mere fraction of this, at just $260 million.

There seems to be a disconnect between the government’s own risk assessment and its fiscal response. The Budget Statement identifies significant risks from an AI benefits reassessment and global trade tensions. Yet, the fiscal impulse of Budget 2026 is only 0.6% of GDP. This stance appears rather passive. If the risk of job displacement and investment decline is as real as the government acknowledges, our fiscal injection should be more robust and proactive, particularly when we are riding on a huge surplus from the previous year. We should be building more buffers for our workers now, rather than reacting after the displacement begins.

National Security

Finally, on the matter of security, the Prime Minister stated that defence spending will remain at 3% of GDP. Does this include the cybersecurity budgets across the government, including those under the Cyber Security Agency, for the protection of critical information infrastructure? With the rise in sophisticated cyber-attacks and hostile information campaigns, it is essential to know the true allocation of security resources.

A Budget of National Values

Mr Speaker, a budget is more than just a balance sheet; it is a statement of our national values and priorities. We cannot be a nation that celebrates multi-billion dollar surpluses while our middle-income families are squeezed, our seniors fear being a financial burden on their children, and our workers worry about a digital future that feels out of reach. Let us build a social compact that does not just manage growth, but shares it fairly and transparently.

We should measure our success not by the absolute size of our reserves, but by the security, dignity and peace of mind of every Singaporean.

Sir, I support the Budget.