On Tuesday (3 September), Second Minister for Finance Lawrence Wong revealed in Parliament that it would be possible for the Government to fund S$100 billion needed for climate change measures by using a combination of borrowing, ministry budgets and reserves.
“We will need a combination of funding methods to finance the various climate change adaption measures,” Mr Wong said.
Mr Wong made this announcement after Prime Minister Lee Hsien Loong raised the issue of climate change in his National Day Rally speech this year. PM Lee noted that it was “one of the gravest challenges facing humankind” and acknowledged that Singapore is experiencing the impact of global warming already, warming twice as fast than the global average.
PM Lee also pointed out in his speech that Singapore would need at least S$100 billion or more to tackle the issue of climate change and rising sea levels effectively, and that a budget will be put aside for that.
Some of the measures mentioned include adding one more pump house at Marina Barrage, regaining offshore islands on the eastern coast of Singapore and producing polders.
Breaking down how the funding will be generated, Mr Wong explained that “smaller-scale infrastructure such as localised flood barriers for public assets, such as hospitals and bus depots, can be funded from the budgets of ministries.”
He added, “For long-lived major infrastructure such as sea walls, the Government will look to the option of borrowing to spread the cost across the generations which will benefit. Where the measures include land reclamation, the land reclamation costs can already be met from past reserves.”
The Minister said this in response to a question raised by Nominated Member of Parliament Walter Theseira on how much money from the reserves will be used to fund the measures.
Mr Wong, who is also National Development Minister, stressed that using past reserves to finance reclamation costs is in line with the Reserves Protection Framework, adding that this is something that is agreed between the President and Government.
“The land created through reclamation will be protected as part of past reserves, and when such land is subsequently sold, the proceeds accrue fully to past reserves. So the reclamation of land is in essence a conversion of past reserves – from financial assets to state land, and the use is not a draw on past reserves,” he noted.
Based on the Supply Bill that is debated and approved in Parliament annually, Mr Wong said that the Government will be seeking approval for development expenditure, and it will furnish the President with a statement on land-related expenditures each year.
“The Ministry of Finance will continue to study equitable and sustainable ways to finance the full suite of climate adaptation measure we need to protect our island,” he said.
Upon hearing this, Associate Professor Theseira then went on further to ask if it was the commitment that “in all such cases the cost of land reclamation will be coming from past reserves without the draw down or requirement to raise taxes currently” or if it will be flexible, as to what the finance minister says at that time.
“As I’ve said just now, the Reserves Protection Framework already allow the Government to use the past reserves for all land reclamation projects. That is already the case today, and that is the basis for which we operate currently,” he replied.