Address by President S R Nathan at the Opening of Parliament

A Competitive Economy, an Inclusive Society

SINGAPORE AT A TURNING POINT

1.    Forty-one years ago, Singapore was thrust into independence and an uncertain future.  At that defining moment of our history, we resolved to succeed.  Together, Singaporeans made key choices that made us what we are today – a united people of different races living and prospering in harmony.

2.     Singapore now stands at another turning point.  Globally, our environment is changing rapidly, and often unpredictably.  With globalisation, countries cooperate to prosper together, but also compete more intensely.  Moreover, new problems cross borders with greater speed and virulence, including diseases like avian influenza and security threats like extremist terrorism.  In Asia, the rise of China and India will transform the entire continent, and indeed the rest of the world.

3.     Within Singapore, fundamental changes are taking place.  First, our economy has undergone a significant shift.  Globalisation is putting a higher premium on skills, knowledge and flexibility.  Professionals and highly-skilled workers are in demand and can command global wages.  But those who are less-skilled will have to compete with the large population of low-wage workers in China, India and Vietnam, as these countries attract more foreign investments and increase their exports.

4.     Second, our age profile is changing rapidly.  From being a young population and workforce with few aged dependants, we are becoming a more elderly society, with older workers and many more retirees.  Singaporeans are living longer but not producing enough babies to replace themselves.

5.     Third, we are experiencing a generational change.  The founding generation that lived through the upheavals of separation, independence and nation-building is giving way to the P65 generation, born after independence, who have grown up amidst peace and prosperity.

6.     Finally, the generational shift will require a new social and political compact.  The P65 generation is better educated and more globally exposed than their parents, and completely at home in the internet age.  They need avenues to try out their ideas and fulfil their ambitions.  The most successful ones must learn instinctively to identify with their fellow citizens, and lend a hand to those in need.  We must also deepen the sense of mission in this new generation, and provide them more opportunities to take responsibility for our country and build our future together.

7.     The General Election this year was thus a milestone in Singapore’s political history.  Singaporeans of all races, young and old, strongly endorsed a new leadership team, which includes many new MPs from the post-independence generation.  Voters gave them a clear mandate to take Singapore forward.  My Government will work with all Singaporeans to set the agenda and directions for the next phase of our nation’s development.

FOSTERING SECURITY

8.     The first imperative is to maintain a safe and secure environment for our people to pursue their dreams and aspirations.  A small state needs an active foreign policy, for it to be a responsible and effective player in the international arena.  Singapore enjoys good relations with all the key powers.  We participate actively in ASEAN, APEC, the East Asia Summit and other regional forums.  These are important platforms to strengthen cooperation as well as to manage conflicts and transboundary problems like haze.

9.     Sound foreign policy and diplomacy are only effective if we are strong enough to fend for ourselves.  A compact but credible SAF deters potential aggressors, protects our national interests and secures us against both conventional and unconventional threats.  An effective Home Team, as well as the vigilance of every citizen, ensures a safe and secure home for all.

10.    One critical aspect of security is social defence.  We have worked long and hard to foster peace and harmony in our multi-racial and multi-religious society.  We must never take this for granted.  Instead we must do more to strengthen cohesion, trust and confidence between the different communities.  At the same time, we must uphold the fundamental principle of meritocracy, so that all citizens, regardless of race or religion, enjoy fair and equal opportunities.

GROWING THE ECONOMY

11.    An orderly and safe environment will enable us to generate the wealth for our needs.  Without economic growth, we cannot invest in our future or realise any schemes to help Singaporeans.  When conditions are favourable, as they are now, we must grow as fast as we can.  Then even when conditions are tough, we can weather the storm and help those in need.

12.    To achieve our full potential in this ever-changing environment, we must be nimble, flexible and alert.  Our companies must build their capabilities and expand both locally and abroad, especially in Asia.  Our people must continue to work closely together, with a strong tripartite partnership among workers, employers and the Government.

13.     We must also maintain a stable and predictable political climate, tackle problems rationally and constructively, and take a long-term view when making decisions for Singapore.  This is the way to build a better life for all.

14.    To sustain growth and vitality, there must be enough people living and working in Singapore.  So we must encourage Singaporeans to marry, and couples to have more babies.  At the same time, we need to attract more new immigrants.  They will not only augment our numbers but also add talent and diversity to our city, and help us all to prosper.  So each of us must make an effort to welcome new immigrants as part of our Singapore family, and help them to integrate into our society.

MAINTAINING AN OUTSTANDING PUBLIC SERVICE

15.    The private sector will take the lead in creating wealth.  However, the government creates the preconditions for the private sector to prosper.  It is critical for Singapore to have an effective government and an outstanding public service, with high standards of competence and integrity, able and determined to deliver results for the country.  The public service must offer competitive and attractive careers, in order to recruit and retain talented and committed people and maintain the quality of government that Singaporeans have come to expect.   This is a key competitive advantage for Singapore which makes up for our small size and other disadvantages.

INVESTING IN OUR FUTURE

16.     One important way the Government can facilitate growth and prosperity is by investing in the future of Singapore.  We will invest in our people, by upgrading and transforming our education system at all levels – primary, secondary and tertiary.  All students will have opportunities to pursue their diverse interests and develop their creative talents.

17.     We will invest in R&D to build new capabilities, particularly in the emerging areas of biomedical sciences, interactive and digital media, and environmental and water technologies.  We will also continue to deepen our capabilities in the electronics, chemicals and engineering manufacturing industries.  These R&D efforts will move our economy up the value chain, spur growth and create fulfilling and well-paying jobs for Singaporeans.

18.     We will invest in our infrastructure to meet the business needs of tomorrow.  Singapore will be fully connected to the digital highway, as we build a pervasive wireless network and high-speed broadband connections to every home and office.  We will enhance our air and sea ports to entrench our position as a major transport hub.  We will build a high-quality, affordable public transport system to serve commuters.

19.     We will invest in our city to make it vibrant and cosmopolitan, energetic and exciting.  Arts and culture will add a creative buzz to Singapore.  We will transform Marina Bay and the business district to create something special that will attract visitors and create a sense of pride and belonging in our people.  At the same time, we will renew and rejuvenate our HDB estates to improve on our first-class living environment.  Singapore will become the best place in Asia to live, work and play.

BUILDING AN INCLUSIVE SOCIETY

20.     Even as we meet competition and pursue growth, we need to strengthen social cohesion.  We will build an inclusive society which leaves no one behind.   Because of globalisation, incomes in many countries are stretching out.  Singapore faces this problem too.  While most Singaporeans will benefit from the opportunities that globalisation brings, some segments of our population are finding it more difficult to cope.

21.     We cannot solve this problem by resisting change, or hiding from competition.  This is futile and will only reduce growth and make things worse for all Singaporeans.  Instead, our basic approach must be to stay open to the world and pursue growth and competitiveness, while doing more to assist Singaporeans who are adversely affected.

22.     Education is the best way to level up our society.  The Government already invests heavily in each child.  Going forward, we will continue to provide every child access to a top-rate education, so that he or she gets the best possible start in life.  We will further reduce attrition among students, and help those who are at risk of dropping out.  Children from low-income families will not face a digital divide, because we will help them to own computers and access broadband services.

23.     To help lower-skilled workers, particularly the older ones, the Government will provide them with more skills training and upgrading, in close cooperation with unions and employers.  We will redesign low-wage jobs so that such workers can become more productive and earn more.  The workers too must make the effort to learn new skills and keep themselves employable as the needs of industries change.

24.     The Government will also do more to assist lower-income Singaporeans, to help them progress with the rest of society.  We will target our assistance, and encourage them to work and upgrade themselves, to build up their assets, and to support their families.

25.     A second looming social issue is the ageing of our people.  Ours is one of the fastest ageing populations in the world.  On current demographic trends, the number of Singaporeans aged 65 years and above will double in 15 years.  This will be a dramatic change, with far-reaching implications for our society and economy.

26.     The post-World War Two baby-boomers will soon be retiring.  We need to tackle holistically, on many fronts, all the challenges of a greying society.  Singaporeans need to stay active longer, retire later, and lead productive and fulfilling lives in their golden years.  We need to build a living environment with more user-friendly features to help the elderly and the disabled.  We must help older Singaporeans to unlock the substantial asset value of their homes and convert it into income for their retirement.  We must keep good basic medical care affordable to all.  Most of all, we need fundamental mindset changes – on the part of families, workers, employers, and the Government.

27.     The growing needs of lower-income and older Singaporeans require us to strengthen our social safety nets.  This calls for many helping hands.  Individuals have to make the effort to help themselves, and to provide for their future needs.  Employers have to adapt workplaces to suit older workers.  Families have to stay together, sharing responsibility for one another and helping to care for elderly parents.  Community and voluntary welfare organisations have to support troubled families and the disadvantaged, and provide avenues for Singaporeans to volunteer and contribute in a spirit of cohesion and generosity.

28.     For its part, the Government will do more.  Already, we have implemented schemes such as Comcare, the CPF and Medisave Top-ups, the Utilities Save, the Additional CPF Housing Grant, the Workfare Bonus, and the Progress Package.  These measures have helped many lower-income households to weather their recent difficult years.  We will introduce more such measures to help needy Singaporeans more systematically, learning from our experience about those measures which work and those which do not.

29.     Our social security system is based on three pillars.  First, the CPF helps Singaporeans save for their retirement.  Second, the 3Ms – Medisave, MediShield and Medifund – help us afford good quality healthcare.  Third, HDB home ownership provides a roof over the heads of all Singaporeans, and gives every household a stake in Singapore.  This approach is sound.  It enables almost every Singaporean to be self supporting, and avoid becoming dependent on the state.  We will adapt, reinforce and update these three pillars of our social safety net.  We will provide more support for those facing difficulties, and help them to save more in their CPF and Medisave accounts.

EMPHASISING ACHIEVEMENT AND WORK

30.     However, in building an inclusive society, we must avoid the mistakes other countries have made in pursuing welfare schemes.  Starting off well-intentioned, many are now stuck with increased dependency and higher unemployment.  The work ethic of their people has been eroded and their motivation sapped.  With this heavy burden of welfare, these economies have stagnated.

31.     We would all like the Government to do even more, but the Government can only spend within its means.  We have kept taxes in Singapore low, especially direct taxes on income.  This keeps us competitive, and ensures strong incentives for Singaporeans to work, to excel, and to make the most of their abilities.  That is a main reason why people and companies want to live, work and invest here.

32.     We have to maintain this approach.  Therefore we must be very cautious in taking on new state-funded welfare commitments.  We must ensure that our programmes are sustainable and affordable, and that we have the resources to fund and sustain the schemes we want.

33.     However, Government spending will inevitably rise over the next decade, as we invest more in Singapore’s future and spend more to meet our growing social needs.  We have to provide for this, in order to balance the budget and command the resources that we will need.  Every citizen must contribute to our shared well-being, but better off Singaporeans have a responsibility to do more to help their less successful fellow citizens.  Only then can we maintain social cohesion, and foster an inclusive society where every citizen has a stake in Singapore.

CONCLUSION

34.     Today as in 1965, we face major choices that will profoundly shape our future.  But we are far better equipped today to make these choices and act on them than our founding generation.  We have built sound institutions, our people are better educated, and our economy is one of the most competitive in the world.

35.     Our choices will determine Singapore’s future in the 21st century.  If we are fearful and reluctant to adapt to new challenges, we will lose ground amidst a changing world, and Singapore will become a nation divided by wealth, race and religion.  But if we respond boldly and creatively to our challenges, we will make Singapore secure and prosperous, harmonious and cohesive – a country that Singaporeans are proud of and love, and that other nations respect and admire.  Let us resolve to stay together and move ahead.  Let us build a competitive economy and an inclusive society for ourselves and our children in Singapore.