The time allocated in Parliament to debate on Budget 2021 was “insufficient”, said Non-Constituency Member of Parliament (NCMP) Leong Mun Wai as he urged the Government to raise the days spent debating the budget in the future.
“Every year, the Budget and Committee of Supply debates are the most important sessions in Parliament. The Budget Debate will take place first followed by the COS debates. In my first experience of this year’s Budget Debate which was spread over 3 days from 24 Feb to 26 Feb, I felt that the time allotted was insufficient to allow for a thorough debate especially on the alternative views,” he said in a Facebook post on Monday (1 Mar).
As such, the Progress Singapore Party (PSP) member listed down a few important clarifications in his post so that a fuller picture can be presented to Singaporeans.
The first point he raised was on the country’s fiscal resources, in which he questioned Deputy Prime Minister Heng Swee Keat’s rebuttal that there will be a lack of fiscal resources in the future if 100 per cent of the Net Investment Return (NIR) is used to support the 2021 Budget.
“If NIR or Net Investment Return is at $39.2B, why did DPM Heng strongly refute my claim that there is no lack of fiscal resources in the foreseeable future. If the entire NIR is used in the budget, it will more than cover our basic deficit of $31B and gives a surplus of $8.2B for FY2021,” said Mr Leong.
He added, “Under the professional management of MAS, GIC and Temasek, our total financial assets of $1.35T should be able to earn the same level of NIR consistently in the long term after taking into account the short-term financial market volatility.”
While speaking in Parliament last week, Mr Heng, who is also Finance Minister, said that the reserves should not be treated like a “gold mountain”, in response to Mr Leong’s suggestion to use the entire return from investing the reserves.
“If we adopt (Mr Leong’s suggestion, one day even this mountain will be eaten up completely … We have a responsibility to the future generations,” said Mr Heng.
Under the NIR framework, the Government can spend up to 50 per cent of long-term expected real returns, including capital gains, on its relevant assets.
Elaborating on his point, Mr Leong noted that Singapore’s total financial assets will continue to grow, even without the NIR due to two factors. The factors are the county’s land sale revenue as well as further accumulation of foreign reserves from Singapore’s large capital account surplus.
“Even without the NIR, the total financial assets will continue increasing because of two factors: (1) our land sale revenue of about $10B to $15B a year ($11.2B for FY2021) and (2) the further accumulation of foreign reserves from our large capital account surplus. Recent experience has shown that regional uncertainties have triggered even more capital inflow into our country.”
To review expenditure
The second clarification that the NCMP sought is to know if the expenditure side of the budget could be reviewed so that it will be suitable for different socio-economic structure post-COVID.
“For example, if there are fewer foreigners, can we slow down on some of our infrastructural and housing development expenditure,” he noted.
Mr Leong also added that he finds it “puzzling” that over 2.2 million foreigners staying in Singapore did not contribute enough tax revenue to help ease Singaporeans’ burden of having to bear more tax increases.
“Are a substantial portion of the foreigners not productive and hence not paying taxes? Or maybe the additional infrastructural development to house the foreigners cost more than the taxes they pay?
“If the foreigners are not net fiscal revenue contributors, then expenditure increases cannot be blamed solely on the increase in social expenditure for Singaporeans,” he said.
If that’s not all, Mr Leong also urged the tax increases, especially the goods and services tax (GST), to be halted.
“With the NIR revenues and possibility of expenditure cuts especially as the COVID pandemic tapers off, where is the urgency to raise taxes? Even if tax increases are necessary, is it justifiable to single out GST as the only viable source of tax increase?” Mr Leong asked.
The GST is expected to go up from 7 per cent to 9 per cent between next year and 2025.
DPM Heng had said on Friday (26 Feb) that the GST has to be raised and is the responsible thing to do in order to fund the increasing recurrent spending in important areas like healthcare as well as to provide for more social safety nets.
If that’s not all, Mr Leong also called for further debate with more concrete data be presented on Mr Heng’s “rebuttal on the viability of raising other taxes like the additional stamp duty on property transactions and wealth taxes and so on.”
“Is it fair to impose further tax burdens on the middle-income and lower-income Singaporeans when they already have little or no ability to pay, never mind about how many times benefits they get relative to the taxes they pay? The support given to cushion GST is only planned to last for between 5 to 10 years, but the GST hike is permanent,” he said.
Mr Leong continued, “I would like to ask what is the long term target rate for the GST? The 2% hike to 9% GST will only increase fiscal revenue by about 3% and that will definitely not be enough to pay for all the spending increase that they are purporting. If there are more hikes, the burden to the middle-class Singaporeans will get heavier and heavier, where is the end?”
Balance mix of foreign and local talent
Lastly, also pointed out the need to have a level playing field so there will be a balanced local-foreign worker mix.
While the PSP complete agrees with the need for an open Singapore, but he asserted that rebalancing of the local-foreign worker mix is something that needs to be urgently addressed as it affects Singaporeans who are below the top quintile.
“The PSP is 100 per cent for an open Singapore because no one in their right mind will think that Singapore can survive or operate as a closed economy. But we also think that a rebalancing of the local-foreign worker mix is urgently needed to address the many problems affecting Singaporeans who are below the top quintile,” he said.
He added, “Both Minister Ong and Minister of State Gan did not answer my point that it is not a level-playing field for Singaporean workers because foreign workers do not need to contribute to CPF.”
During last Thursday’s Parliament sitting, Mr Leong was embroiled in a spar with Transport Minister Ong Ye Kung and Minister of State for Manpower Gan Siow Huang over foreign talent issue.
Mr Leong expressed his disappointment that the 2021 Budget only included an adjustment on the S Pass quota for the manufacturing sector as a means of managing the local-foreign worker mix.
Mr Leong suggested imposing a S$1,200 monthly levy on all EP holders which he says will differentiate high-salaried foreign talents who would not be affected by the levy from the foreign talents who are low-wage workers.
However, his suggestion did not go down too well with the People’s Action Party (PAP) MPs.
Ms Gan opined that a blanket levy on EP holders sends a signal to foreign investors that Singapore does not welcome them bringing in their own talent.
She went on to conclude that “Mr Leong and the PSP do not believe that Singapore should be an open city, connected to the world, having locals and foreigners complementing each other; and he wants Singapore to be closed up for the top jobs to be given to Singaporeans only”.
When Mr Leong went on to question what the Monetary Authority of Singapore (MAS) is doing in regards to hiring a foreign CEO, as well as whether there is a KPI in MAS with regards to hiring locals, Mr Ong rose to speak.
Mr Ong—who is also a board member at MAS—argued that Singapore’s position as a financial hub has created many jobs. This on top of efforts by the MAS over the decades to push for better education which has allowed many Singaporeans to take up jobs in the sector both locally and internationally.
On the question of why 30 per cent of retail bank managers are still foreigners, Mr Ong said, “Because we are a global financial centre.”
“This is the essence of being an open and international financial sector,” he said.