We should not hesitate to drawdown further on national reserves for more COVID-19 support, says NCMP Leong Mun Wai

"We reckon that $20b to $30b of additional spending for financial years 2021 and 2022 would be necessary to sustain the economic recovery."

While the additional S$8 billion the Government is committing for further COVID-19 support measures is a welcome move, Non-Constituency Member of Parliament (NCMP) Leong Mun Wai of the Progress Singapore Party (PSP) said that the Government should not be afraid to do more, including drawing down further from the national reserves.

In a Facebook post on Tuesday (18 Aug), Mr Leong cited Deputy Prime Minister (DPM) and Finance Minister Heng Swee Keat’s announcement that the S$8 billion will be reallocated from development budgets that have been delayed due to the pandemic, instead of from the reserves.

However, the newly elected NCMP stressed that there needs to be continued “decisive and sustained actions” to help Singaporeans and local companies in these unprecedented times. Using an analogy, he described the pandemic as a “natural disaster similar to a massive earthquake or hurricane” which requires the use of fiscal resources such as the national resources more decisively in order to “to maintain business and consumer confidence, national productive capacity, and individual livelihoods”.

He referred to an article on Academia SG by Economists Yeoh Lam Keong, Manu Bhaskaran, Donald Low, and Tan Kim Song in which they set out key principles that they believe should guide the Government’s support of the poor, unemployed, and the private sector during these trying times.

Mr Leong stressed, “As long as it is for our people, we should not hesitate to drawdown further on our reserves.”

“We should not be too concerned about moral hazards, or the state inadvertently propping up firms that are not viable in the long term,” he added.

Mr Leong asserted that he does not see a need for the Jobs Support Scheme (JSS) quantum to be scaled back as it “adds to the confusion which should be avoided now as sentiments are very fragile.”

On Monday (17 Aug), DPM Heng announced that starting September, the JSS will be scaled back from up to 75 per cent to up to 50 per cent for salaries up to March 2021. The quantum varies depending on the sectors, with the hardest hit sectors receiving 50 per cent JSS up to March 2021, while those managing well will receive 10 per cent up to December 2020.

The PSP politician suggested that the Government would have to spend a further S$20 to S$30 billion for 2021 and 222 to sustain economic recovery in the wake of the pandemic, adding that the reserves can take it.

Mr Leong explained, “That amount is roughly equal to the net investment income from our reserves every year, so spending that amount would not reduce the principal of our reserves.”

“The reserves were accumulated from years of hard work and sacrifices of the Singaporeans and this is the time to draw on it to guarantee our present and future livelihoods,” he emphasised.

In addition to the JSS, Mr Leong also presented some recommendations of adjustments to the Government’s COVID-19 support measures, starting with speeding up the eligibility check for its COVID-19 Support Grant (CSG) and Workfare Special Payment schemes, noting that they have received feedback from many Singaporeans that their applications were being processed very slowly.

Next, he suggested a review on the further JSS payments from September to March. Specifically, whether or not these should also include PRs – another issue he said that they’ve received much feedback on.

“After all, the reserves belong to Singaporeans and should be spent on Singaporeans,” Mr Leong added.

Besides that, he urged the Government to look into ways to reduce rentals, which has not decreased much during the pandemic. In fact, he noted that property prices have increased, which “shows that the property owners are not sharing the pain”.

“The Government should look into ways to reduce rental. It is quite unreasonable that companies should be paying the same amount of rental when the premises are not being used during the circuit-breaker period,” said the first-time NCMP.

Quoting from the article shared in his post, Mr Leong concurred with veteran economist Mr Yeoh’s point, which suggests that Government should “consider legislatively mandated ‘rent abatement’ that permits tenants materially affected by COVID-19 to pay a reduced and fair proportion of rent”.

“The COVID-19 Bill currently contains a provision for the adjudication of applications by assessors, so there is already a mechanism to determine a ‘fair proportion of rent’ under the circumstances,” the quote continued.

Mr Leong highlighted that this practice is a similar move taken by the New Zealand government following an earthquake which rendered many businesses inaccessible. The Auckland District Law Society (ADLS) applies to all natural events which are outside the control of tenants – such as epidemics and earthquakes – and significantly impacts the use of their premises, he explained.

Finally, he suggested that the Government should help start-ups via “a venture eco-system led by the venture capital industry with proper tax incentives” instead of providing equity directly.

Mr Leong concluded, “The force of destruction of COVID-19 has diminished over time as the virus become weaker through repeated mutation and our system more prepared and experienced in handling the crisis.

“Although we should not be complacent, we now have some time to plan better to achieve better outcomes.”

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