Updated: 03/06/2014 03:00

Healthcare financing a key fiscal challenge for Singapore, says DPM Tharman

Healthcare financing a key fiscal challenge for Singapore, says DPM Tharman

Healthcare financing is a key fiscal challenge for Singapore - Deputy Prime Minister Tharman Shanmugaratnam stressed when wrapping up the debate on the Budget Statement today. 

938LIVE's Lianne Chia with more on the Finance Minister's speech. 

Two years ago, the government projected yearly healthcare spending would double from 4 billion dollars to 8 billion in 2016. 

But DPM Tharman says we are likely to hit $8 billion - which is close to 2 per cent of GDP - a year earlier. 

And by 2020, it's expected to triple to $12 billion. 

DPM Tharman also gave the House another reality check. 

He says spending more does not equate to better healthcare outcomes. 

Neither is there free or cheap healthcare anywhere in the world. 

And he highlighted the German example where part of payroll tax goes to a Sickness Fund which is tapped by employees for co-payment. 

If there wasn't this Fund, he says the money could have gone to wages. 

"It may look cheap at point of consumption, but the public is ultimately paying for it, either through taxes or hefty insurance premiums."

So he says Singapore must build up revenues for future spending needs, and it's not just healthcare. 

"You think as our society gets older we have to spend more on healthcare and you spend less at the early stages of life as the cohorts get smaller. In fact despite smaller cohorts we're not spending less on education, because we are spending a lot more per student."

DPM Tharman says the government's approach moving forward is based on three principles. 

The first is to sustain a vibrant economy. 

Singapore has to remain competitive to attract more investments, continue to grow talents, and retain our own talents as global competition intensifies. 

The second is to maintain a fair and equitable system of taxes and transfers. 

This means everyone has to pay some tax but those who have done better, should contribute more, and those in need, should receive the bulk of the benefits. 

And the third is to keep the tax burden on middle-income Singaporeans low, so they get to keep what they earn. 

DPM Tharman says like the pioneer generation, the Budget has to be focused on the future. 

"We know it at every mealtime, we know it from every conversation they have in the community, that's what they're like. They want their children, they want the next generation to be better than them. They are like that. And because they're like that, Singapore's like that. We are like that. We want our children to do better. So every Budget has to be focused on the future. Investing in our young, opening up opportunities, and helping them to create a better Singapore."

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