Debate on Annual Budget Statement 2022

MP Dennis Tan

Mr Dennis Tan Lip Fong (Hougang): Mr Speaker, Budget 2022 is a step in the right direction, in many ways. Even as the Workers’ Party disagrees with the key proposal of the GST hike. In my speech, I would like to talk about a carbon tax, our transitions in the petrochemicals and industry and transport, before touching on the GST impact on healthcare costs.

Mr Speaker, the Workers’ Party has been supportive of a carbon tax when it was first mooted. We recognise that the Government has finally thought it appropriate to raise the common tax to a level in line with international standards to help Singapore achieve a net-zero and emissions ambition. We support the move to see the common tax raise progressively to a target between $50 and $80 dollars by 2030. This is still broadly similar to the range as proposed by my colleague, the hon member for Sengkang, Assoc Prof James Lim, in his previous speeches.

It will impose a temporary cause to Singaporeans, but we are of the view that when we do become a green economy, the impact of the carbon taxes will be reduced. However, I like to seek a clarification from the Minister on whether there are any efforts to extend the carbon tax to companies that emit less than 25,000 tonnes of GHGs per annum to enhance our efforts toward a net-zero ambition. I also hope that the Government will present more details on how they intend to mitigate the impact of the increase of the carbon tax on our households beyond the U-Save vouchers.

Mr Speaker, I wish to further address the important issue of Singapore’s green transition. This is an important subject, given the carbon taxes increase over the next eight years and to aim to achieve net-zero emissions, by or around mid-century. Although some details, such as the exact day of the net-zero achievement and of the transition framework for emissions, intensive and trade expo sectors, as well as the exact quantum of the additional U-Save rebates to help mitigate the cost increases to businesses and households, have not been released, this is a step in the right direction for Singapore. The Workers’ Party agrees with the need to transit our economy to a green one as soon as it is practical.

However, the Workers’ Party also recognises that while decarbonisation is necessary, it will also impose a cost. This is especially so if we are to provide climate leadership for our citizens and in this region.

Singapore has taken some early measures on sustainable development, such as switching to natural gas for electricity generation instead of more pollutive fuel oil, imposed a vehicle quota system to cap vehicle growth and has introduced a suite of mitigation measures to decarbonize our industry, buildings and households sector.

We now have a bolder carbon tax trajectory and improve our net-zero climate ambition. Therefore, we need to think carefully about how to bring about this change and not leave anyone behind.

In my speech during the “Towards a Low-carbon Society” Motion last month, I have argued that we are in need of a just transition, one that is inclusive and equips those who work here and plan to work here with the necessary know-how, to access good job opportunities in the sustainability sector. Today, I wish to talk about the need for a just transition within the petrochemicals industry.

There have been movements towards a greener transition within our petrochemical industry. In November last year, Shell has announced that it is halving its crude processing capacity at its Singapore hub and reduce fuel exports. The oil major, a major part of our oil and gas industry, is intending to transit from fossil fuels to cut emissions and meet lobal low-carbon energy needs. This is part of a wider global trend in a transition towards lower carbon fuels and it undoubtedly will affect Singapore.

Earlier this year, students from the group Students for A Fossil-free Future (S4F), produced a 68-page report calling for universities to divest from fossil fuels. I empathised with the concerns of these students. They have proposed that Singapore Universities seek sustainable alternatives to linkages with the fossil fuel industry and implement climate crisis education over the short, medium and long-term.

However, while it is true that we do need to transition, what does that mean for the petrochemical industry in Singapore in its current form? We know that our petrochemical industry has been a strategic pillar of our industrial sector. According to a 2019 answer by MTI to a Parliamentary Question (PQ), the energy and chemicals industry contributes nearly 3% of our GDP and employs about 28,000 people in 2017, with the majority in their 30s and 40s. The number went down to 27,000 in 2020, according to MTI’s answer to my PQ in April 2021. 

Mr Speaker, any growing resistance in Singapore against the oil and gas industry may mean a talent pipeline disruption in this strategic pillar. In 2019, Singapore was the world’s fourth biggest exporter of refined petroleum, and fuels and chemicals accounted for around 23% of our total merchandise trade, according to data from the World Bank and the Observatory of Economic Complexity. We are also a regional trading centre for coal, natural gas and oil products and support dozens of finance houses that specialise in the said commodities. More than a hundred global chemical companies have operations in the city. 

As noted above, Singapore’s linkages into the current brown economy are deep. And while we build for the economy of the future, the reality is that if we take away the manpower and capital in the petrochemical industry abruptly, we will cut the oxygen prematurely at a time when our green ambitions have only just begun. And there is still a need for some petrochemicals in the modern green economy as some petrochemicals can be found in modern solar panels, modern wind turbines and batteries, to name but a few. 

Therefore, I ask that the Government provide more details on how it intends to manage the green transition in our petrochemicals industry and if Singapore will continue to attract and keep parts of the petrochemicals industry in Singapore that are relevant for the green economy. In the Committee of Supply debates, I will focus on the manpower transition in the industry with the hope that Singapore will be adequately prepared for the transition so that our Singaporean workers, young and old, will be able to be optimally employed in the sector as it undergoes the green transition and that we will not need to rely on or import significant foreign manpower. 

Mr Speaker, I next move to some updates from the Minister on our drive towards electrification of the vehicles on our roads. 

Last month. I filed a question to the Minister for Transport asking for the total number of electric vehicle chargers installed in 2021 and the expected number of EV chargers that will be installed progressively over 2022 and 2025. Minister S Iswaran said that there were around 2,200 electric vehicle charging points in Singapore, of which, 300 were installed by commercial operators in the past year. In 2022, there will be more than 600 charging points deployed at public car parks under the joint LTA-URA pilot tender, in addition to charging points in other locations like private residences, malls and petrol stations. The Minister also said that LTA will continue to monitor EV adoption trends and accelerate the deployment of our EV charging network where necessary to meet our 2030 target of 60,000 charging points island-wide. The year 2200 appears a long way off the target of 60,000 in eight years’ time and I would like to ask the Minister again what are the Government’s progressive targets over the next few years and how does the Government plan to step up on the installation of public EV chargers.

Last year, in my Budget debate speech, I also mentioned that having a critical number of charging points required in all residential commercial car parks and public car parks as well as the design of the car parks and the siting of the EV charging points are important. Singapore is unlike other countries like the US or Australia, where most people have the luxury of charging their cars in their own garage overnight. The minimum charging time, even with an incomplete charge with a fast charger, may still lead to queues in HDB or condo car parks, if there are insufficient chargers or if the chargers are inappropriately sited.

A year on, I would like to ask the Minister what has been the Government’s experience with the installation of our initial chargers over the past year. Has the Government done any study to establish a suitable ratio of EV chargers versus the number of cars per car park? Will the public car parks be adopting all fast chargers or will there be a combination of fast and slow chargers? Does the Government have any specific planning requirements for the design of car parks in public, private residential or commercial buildings in respect of the installation and siting of EV chargers in car parks to minimise waiting time and avoid any traffic blockage caused by vehicles waiting for charging? For existing car parks, does the Government foresee that some or all car parks may require modifications? If modifications are required, would the assistance offered by way of the current EV common charger grant to MCSTs be sufficient?

Not unlike ICE cars, most vehicles, except for commercial vehicles, will not require daily charging. However, drivers will still have to develop new habits of charging their cars with some forward planning. ICE cars may need just 10 minutes in petrol kiosks. But, for EVs, queuing time aside, typically, a fast charger may take between 30 and 40 minutes for up to an 80% charge, and a slow charger may take up to eight hours for a full charge. Technology is, of course, improving constantly, but depending on the number of cars waiting for charging at any one time, an HDB car park with, say, just three to four chargers, may still possibly create queuing time not currently seen with ICE cars in petrol stations, even with charging operators charging a penalty charge for drivers who leave their cars beyond the charging time required. Will MOT consider using public education messaging on wise and considerate use of public chargers so that we can start engendering good and considerate habits with our drivers while the EV numbers are still small and growing, just as we also want to encourage our ICE drivers not to use slots reserved for EV charging?

It is good to get these issues right as early as possible so that we can minimise the waiting time and enhance charging access for EV owners. Importantly, this will, in turn, have an impact on our efforts to persuade more vehicle owners to convert earlier to the use of EVs.

Mr Speaker, I next move on briefly to the proposed GST hike. As I have mentioned earlier, the Workers’ Party recognises the costs that the decarbonisation move will impose on Singaporeans. Therefore, the GST hike comes at an inopportune time for Singaporeans, many of whom are dealing with record consumer price inflation. I echo my other Workers’ Party colleagues who are asking for the GST hike to be implemented only as a last resort.

Mr Speaker, I am aware that the Finance Minister has provided assistance packages to cushion the impact of the proposed GST increases. Apart from the adequacy of such packages, I note that the assistance package is only available for a few years. As for the enhancement to the permanent GST Voucher Scheme, those with an assessable income beyond $34,000 will not be receiving any assistance, a sharp cliff where, for some, these packages may no longer apply should they earn more. I note that GST has only gone up and has never gone down, even if assistance packages will adequately cushion the impact for low-income earners and even the lower-middle middle class in the short term. 

The eventuality is that the GST increase will be a burden on the middle class, increasing their costs of living. And as the sandwich class, this may be something they can less afford, as compared to higher income groups above them. In particular, we need to pay attention to Singaporeans in their 30s to 50s, but the vast majority are not just paying for necessities for themselves but also for their parents and their children. The compounded pain that households will have to deal with is not something we should ignore out of hand. This is particularly so as we expect an ageing population to come in the near future. According to a Straits Times report on 27 July 2021, citing figures from Census 2020, residents aged 65 years and above form 15.2% of the resident population in 2020, up from 9% in 2010.

About one in four will be above 65 in 2030 and a corresponding increase in old-age dependency is to be expected. Singaporeans will be facing more questions on out-of-pocket healthcare prices. The Government has argued that the Government’s healthcare expenditure will increase significantly, but the out-of-pocket costs of healthcare paid for by the people will also increase as a result of the GST hike. While subsidised patients in public hospitals and polyclinics do not pay any GST, the GST on the goods and services provided by GST-registered private clinics and non-structured hospitals that Singaporeans do go to are not absorbed by the Government. GST also applies to premiums of Shield and group medical insurance plans. Can the Government assure Singaporeans that the hike in GST will not mean that Singaporeans are going to pay more in their out-of-pocket healthcare costs?

Mr Speaker, let me conclude. While Budget 2022 can be said to be matching our climate ambitions to the international standards, the devil is, of course, in the details as we will need to transition away from our current economic structure at some cost. I look forward to more details from the Government on how it intends to manage the transition, particularly within the petrochemical industry, and the move towards electric vehicles.

1 March 2022

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