The world has been facing rising prices caused by the pandemic recovery and then exacerbated by the Russia-Ukraine war.
In the midst of a perfect storm, the risk of stagflation is real in many parts of both the developing and developed world. The world will now face a higher-for-longer inflation and slower growth.
Inflation is real. It is keenly felt especially by the lower income groups.
But as Mr Tharman said at the conference, 20 to 30 years from now when we look back to today, we will not regard inflation as the most serious problem we face today.
Even as inflation rages its ugly head, there are other very pressing challenges.
Not least of this is the climate crisis which looms big. Then there is the need for the world to be prepared for the next global health security. The covid pandemic shows how ill-prepared the world was and there are lessons in there to learn in order to be better prepared.
What climate change means for Singapore
Singapore is especially suseptible to climate change given its location and low-lying geography.
Our low-lying geography means that rising sea levels and increasing rainfall poses a significant risk of flash floods. Additionally, our tropical location means that rising temperature will pose a risk to health.
This is why Singapore is accelerating its long term climate change plans, and also stepping up its 2030 goals. SM Teo Chee Hean and Minister Grace Fu talked about this in Parliament in March this year.
Taking care of an ageing population
In addition to climate change, Singapore also has to deal with the challenge of an ageing population where 1 in 4 will be a senior 65 and above by 2030.
Singapore must be prepared to take better care of the elderly, including providing more medication subsidies to reduce the burden of healthcare costs on older Singaporeans and their families.
Singapore has to think of how to take care of seniors who live alone, how to provide community-based care and support services within walking distance of a person’s place of residence.
Bringing the inequality gap closer
The GST hike will go towards making resources available to ensure that seniors are well taken care of and our society continues to be an inclusive one where every child, regardless of background, can say that he or she has a good start in life.
Supporting the GST hike requires each and every one of us to look at ourselves as a nation-builder who has to make tough choices every now and then. It means making sacrifices sometimes.
The GST that we contribute will return to us in benefits greater than our contributions through higher subsidies for ourselves or our parents in healthcare, and greater support for our children and the needy through social spending.
The good news is that the GST hike comes with an enhanced permanent GST Voucher Scheme which substantially offset the GST that a lower or lower-middle income family contribute.
Inflation is real, but so are the other challenges Singapore has to deal with. The climate crisis is an existential crisis for Singapore.
To quote Mr Tharman at the conference:
“5-6% inflation can be a very demoralising experience for populations and will complicate the task of governments to rally support for the types of initiatives, the taxes, the carbon pricing that is required to address the larger challenges we face.
So it’s not that inflation in itself at 5-6% is the biggest problem. It is the social and political implications, the implications for the political capital that is required for nations to address the larger challenges.”
At the risk of political capital, the PAP Government is pressing on with the GST hike to ensure that spending remains sustainable and not become a burden to future generations.
Will Singaporeans rise to the occasion and meet the challenge by supporting the GST hike in the midst of inflation pain so that Singapore can remain a bright red dot and a beautiful for generations to come?
Looking back at how Singaporeans had always rallied together with the PAP Government to go through tough times together, I believe that Singaporeans will rise to the occasion.