In a speech in response to the Significant Infrastructure Government Loan Bill (SINGA) tabled in parliament on Monday (10 May), Progress Singapore Party (PSP)’s Non-Constituency Member of Parliament Leong Mun Wai urged the government to review the country’s long-term fiscal plan and allocate more funds to alleviate the financial pressures on Singaporeans.
Mr Leong had noted that the social security costs are self-funded by Singaporeans, adding, “As a result, the current generation in Singapore has to shoulder a disproportionate amount of the infrastructure and social security costs and has to struggle with a lower level of disposable income giving rise to the phenomenon popularized by Jack Neo’s movie, “Money No Enough”.”
“So there is an urgent need to address this inter-generational inequity,” he asserted.
This led to a somewhat terse exchange in Parliament between Mr Leong and Deputy Prime Minister and Finance Minister Heng Swee Keat. The latter stressed that the claim of workers carrying the burden of paying for various government expenses is “wrong”.
Mr Heng emphasised, “Let me just repeat what I said in Parliament again that about half of our workers do not pay income tax. About half of workers, do not pay income tax at all.”
Mr Heng went on to then respond to Mr Leong’s line of questioning about the government’s expenditure and classification of revenue.
Mr Heng first replied, “As I said before, in this Parliament, we do not comment on the size of our reserves for the reasons I have set up in my earlier speeches.”
Mr Leong had asked Mr Heng if he could confirm that Singapore’s fiscal resources for the past year amounted to S$128 billion—that’s about S$39 billion of Net Investment Returns (NIR), S$12 billion in land sales revenues, and S$77 billion in taxes.
Further to the discussion on the government’s fiscal strategies, Mr Leong also asked about taxes, specifically Goods & Service Tax (GST).
In response, Mr Heng stressed that land sales proceeds “are not to be sued for recurrent spending.”
He explained, “We have a reserve protection framework where land sales go into past reserves. Past reserves are then invested, and we have an elected presidency to ensure that the reserve protection framework is working as it should, working properly.”
“And as for NIRC again, we do not, I said it before that we only take up to 50 percent of the NIRC,” he added, saying that the remaining 50 percent is channelled into the reserves for future generations as needs grow.
Further to that, Mr Heng countered that projection of recurrent expenditures on healthcare, for example, show an increase. Given that it is the government’s “responsibility” to provide for that, Mr Heng said that this is why he argued for the increase of GST from seven to nine percent.
He noted, “We know globally it was a trend of how aging affects health care costs. And what we don’t know is what new treatments will come out, how lifespan will continue to grow, what kind of new drugs, new treatments, approaches will come and therefore how health care expenditure will rise.”
Still, Mr Heng had also stressed that he is not prepared to prepare a 20-year expenditure forecast given how unpredictable the future is, pointing to COVID-19 as an example, as well as the various financial crisis Singapore has faced over the past couple of decades, including the Asian financial crisis, the global financial crisis and SARS.
As to Mr Leong’s question about Mr Heng’s refusal to announce accurate figures of the country’s reserves despite the government’s published financial statements which say that the country’s financial assets amount to about S$1.35 trillion, Mr Heng merely stated that the financial statements are correct when published.
However, “whether this can be spent is a separate matter,” he added.
The gov’t classifies revenue based on international standards: DPM Heng
Later in the exchange, Mr Heng highlighted that the classification of revenue on what constitutes revenue available for spending is based on agreed international standards set out by the International Monetary Fund (IMF).
“It follows the international standards set out by the IMF and the IMF provides for a range of ways in which certain expenditures can be counted or not counted because the structures of governments in different countries are different,” explained Mr Heng.
He added, “And in Singapore’s case, we have made it very clear including during our IMF consultations that we abide by these standards. We have always taken the same standards and reported our numbers consistently as to what we can spend, what [we] cannot spend.”
Pushing back, however, Mr Leong pointed out that Singapore’s classification of NIR and NIRC is not set out by the IMF specifically.
Mr Heng conceded to this but added that while the IMF does not stipulate what constitutes NIRC, it has “a set of clear principles as to what constitutes proper spending”.
“And because we are in the net asset position… instead of using current revenue to pay for that servicing incurred by earlier generations, we have been in extremely fortunate situation that we inherited the legacy of reserves from our forefathers.”
“And I hope that every one of us in this house and in Singapore will abide by that principle, will understand that the need for us to remain prudent, that we are tiny red dots with no natural resources and for which you are subject to the vagaries of the global economy,” concluded Mr Heng.
Watch the exchange between NCMP Leong Mun Wai and DPM Heng Swee Keat on 10 May 2021: