PSP’s Leong Mun Wai explains why he thinks Budget 2021 measures are short term, ad-hoc payouts

Earlier on 16 Feb, Deputy Prime Minister Heng Swee Keat said the government has committed a total of S$107 billion under its Budget 2021 to help Singapore emerge stronger from the economic impact brought by the COVID-19 pandemic.

Mr Heng, who is also the Minister of Finance, noted the government will draw up to S$11 billion from the country’s reserves in the current budget, on top of drawing S$42.7 billion in the previous budget.

In a Facebook post on Wednesday (17 Feb), Non-Constituency Member of Parliament (NCMP) Leong Mun Wai gave his two cents on the Budget 2021, saying that the key budget measures are “short-term” and “ad-hoc payouts” which do not tackle the root cause of the problem.

He explained that of the total S$107 billion budget, S$82 billion is for operating expenditure to run the government, S$20 billion is for development expenditure, while another S$5 billion is allocated to help Singaporeans.

“As the total operating revenue is estimated to be $76B ($2B higher than pre-COVID level in 2019), the basic budget deficit is the difference between $76B (Revenue) and $107B (Expenditure) which is $31B,” said the Progress Singapore Party’s (PSP) member.

Mr Leong pointed out that it is the government’s policy to use only half of the investment returns – which is the Net Investment Return Contribution (NRIC) – for spending each year, while the other half will be retained in the reserves.

“Including the NRIC from our $1.35T [trillion] in financial assets which is $19.6B (meaning our Net Investment Return for 2021 is estimated to be $39.2B), the overall budget deficit becomes smaller by reducing the shortfall of $31B (Deficit) by $19.6B (NIRC) which gives a final deficit of about $11B,” he added.

However, Mr Leong noted that there would be “no deficit” this year if the government uses 100 per cent of the Net Investment Return (NIR) – estimated at S$39.2 billion – which he believes can provide “a very strong financial base” for the nation.

“Even the $52B drawdown to fight the COVID-19 only equals to about one and a half years of our investment returns. There is little damage done to our overall financial reserves and position even when we are fighting the worst crisis of a lifetime to date,” he said.

Mr Leong also provided a breakdown of the allocated cost for Singaporeans in his post, in which S$2.9 billion for Job Support Scheme, S$1.5 billion for SG United Jobs and Skills Package – including SG Growth Initiative – S$0.4 billion for COVID-19 Recovery Grant, S$0.2 billion for SingapoRediscover Vouchers, and S$0.9 billion for Household Support Package.

That brings the total cost allocated for Singaporeans to S$5.9 billion.

“Many of the key budget measures are short term, ad-hoc payouts which do not tackle the root cause of the problem. Middle-class Singaporeans continue to feel stressed because the rising housing, healthcare, education costs are still there.

“Further, the measures for economic transformation are from the old mold which had proven to be not successful despite having spent about $80B on economic transformation mainly through A*Star and Enterprise Singapore in the past two decades, a sum that is far greater than the COVID-19’s drawdown,” he noted.

Mr Leong added that all the points above will be included in his speech for the Budget Debate slated to be held from 24 to 26 February.