Second Minister for Finance Indranee Rajah has praised the government via a Facebook (FB) post which said that it is “unprecedented” for a government to disburse $16 billion in the period of less than three months to help the country cope in the ongoing corona virus epidemic. She further said that this was only possible because of the “prudent management of public finances and the strength of our reserves which have been judiciously and painstakingly built up over the years for a time such as this.”
Given that she is Second Minister for Finance, she is not only praising the government but also her own department, aka ownself praise ownself.
There is no doubt that the government has opened the state coffers more generously that ever before. However, it is also important to note that we have never since independence seen a global pandemic such as this. So, what Rajah is basically saying is that the government has taken unprecedented measures in unprecedented times. But, don’t unprecedented times call for unprecedented measures? Isn’t that kinda the point? Let that sink in.
Rajah will not be the first one to praise the government for its great financial management and the health of our apparently enormous state reserves. But despite constantly using the reserves as a benchmark for our prudent governance, it is noteworthy that the government has hitherto refused to disclose details of our national reserves.
We all remember how the Singapore government stonewalled late Mr Ong Teng Cheong, the first elected President when he asked for the breakdown of the reserves. While the president eventually got his answer for the cash reserves but he was told that it would take “56-man years to produce a dollar-and-cents value of the immovable assets”. Even after reaching a compromise with the accountant-general and the auditor-general during his office term, to give Mr Ong a listing of all the properties that the government owns, it still took them a few months to produce the list. And when they gave Mr Ong the list, it was not complete, according to Mr Ong’s own words.
Just last month (7 Apr), Deputy Prime Minister Heng Swee Keat declined to disclose the size of Singapore’s reserves to Workers’ Party chief Pritam Singh who had questioned in his speech about size and usage of Singapore reserves — that it is a matter of national security and cannot be disclosed.
Heng said that these funds serve as a “strategic defence” to protect the Singapore dollar from speculative attacks and bolster the confidence of investors and citizens. “No country’s armed forces will ever tell you exactly how much ammunition and weaponry they really have,” he said.
“To do so is to betray valuable intelligence to potential adversaries. This is obviously not a wise defence strategy, and likewise should not be adopted for our financial reserves.”
This is a paradox. If you are always praising the health of the reserves, why won’t you just tell us, members of the public and stakeholders of the reserves what we actually have?
Given that we do not know what exactly we have in our reserves, we can’t really judge if there has indeed been “prudent management…. strength…judiciously and painstakingly built up….”. The people cannot judge anything in a vacuum. We can only take Rajah’s words at face value.
Let’s not forget that Singapore has recourse to taxes such as, including but not limited to, the Certificate of Entitlement (COE) for car ownership and migrant worker levies. Few other countries have recourse to such means of taxes and in such amounts.
According to calculations by Dr. Stephanie Chok, the government may have collected $2.6 billion or more in migrant worker levies just using the June 2019, number of migrant workers (being 725,200 holding work permits) only. This is just for migrant workers holding bottom jobs, and does not include foreign domestic workers, S Pass holders or Employment Pass holders.
While the Ministry of Manpower (MOM) does not publicly reveal the amount collected via migrant worker levies, then Minister for Manpower, Tan Chuan Jin had said in Parliament in 2013 that the government collected a total amount of S$2.5 billion for the Financial Year ending 2011.
The number of migrant workers and the fee of work levies have steadily increased and since then which means that in all likelihood, the amount collected would be much higher – probably closer to the $4 billion mark per year.
As for the people’s Central Provident Fund (CPF) monies, they are not managed as a separate entity by the Government of Singapore Investment Corporation (GIC) but pooled and invested with the rest of the Government’s funds, said Deputy Prime Minister Tharman Shanmugaratnam back in 2014.
This allows GIC to invest for the long term, including investing in riskier assets like equities, real estate and private equity, said Mr Shanmugaratnam in Parliament. But is there any loss of benefit for the CPF members in such an arrangement since the monies are co-mingled?
So, what exactly is this “prudent management”? Without knowing what’s in there and how the monies are used in the first place, how can we judge?