THE Government will defer $1 billion worth of public projects to ease demand on the construction industry, Finance Minister Tharman Shanmugaratnam said on Friday.

The Government will delay projects that are 'less urgent', he said.

Key investments including expressways, subway systems and university campuses will not be affected.

'The combination of higher raw material prices and work on major new projects has caused costs to spike up,' Mr Shanmugaratnam said in his budget speech in Parliament. 'We have to keep our business costs competitive, and not let them run ahead of the cities we are competing with.'

Singapore has already deferred about $2 billion worth of public projects.