Parliament
SG Parliament rejects PSP’s motion calling for changes in reserves policies
Parliament dismissed PSP’s proposal for a review of budget and reserve policies. PSP NCMP Leong Mun Wai emphasized the need for reserve disclosure, stressing Singaporeans’ rightful ownership in his closing remarks.
SINGAPORE: Parliament rejected a motion by the Progress Singapore Party (PSP) for a review of Singapore’s budget and reserve policies tailored to meet the immediate needs of the current generation.
Instead, an amended motion was passed, stating that the government to remains “fiscally responsible and sustainable” on such policies.
Mr Leong Mun Wai, Non-constituency Member of Parliament (NCMP) from the PSP initiated a robust debate with a motion that proposes equitable fiscal policies: halt new trust funds, waive public housing land costs, and ensure transparent reserve management for Singapore’s sustainable future.
The motion on Singapore’s public finances “calls on the Government to review its current budget and reserve accumulation policies in order to help present-day Singaporeans reduce their financial burdens and improve their quality of life while continuing to save for future generations of Singaporeans.”
However, Liang Eng Hwa, the People’s Action Party (PAP) Member of Parliament for Bukit Panjang SMC, proposed an amendment to the PSP’s motion.
The PAP’s amended motion read: “That this House calls on the Government to ensure its budget and reserve accumulation policies always stay physically responsible and sustainable in order to help present-day Singaporeans reduce their financial burdens and improve their quality of life while planning and providing for future generations of Singaporeans.”
Mr Leong in his concluding speech underscored the importance of disclosing reserves to Singaporeans, emphasizing their rightful ownership despite continuous pressure from the Workers’ Party (WP), PSP, and the public.
Discussing policies better than the current PAP offerings, Mr Leong acknowledged that PAP policies are not bad but believes there’s room for improvement.
He reiterated their proposal, asserting that it doesn’t require drawing down reserves but only a marginal slowdown in accumulation, promising superior economic outcomes for Singaporeans.
“I hope in this Chamber, we can discuss and debating to bring these policies out, and not keep saying that “whatever the opposition says, this is going to bring us down”. ”
Following a seven-hour debate, the amended motion was passed, featuring contributions from 14 Members of Parliament, including Second Minister for Finance Indranee Rajah and Prime Minister Lee Hsien Loong.
PAP MPs present in the House voted in favour of the amended motion.
In contrast, opposition members, including PSP NCMPs and MPs from the Workers’ Party, voted against one of the amendments and the amended motion itself.
NCMP Leong Mun Wai calls for review of Singapore’s budget and reserve policies
Mr Leong in his opening speech contended that maintaining secrecy about the size of Singapore’s reserves was unnecessary. He asserted that the reserves would persistently grow, even if a larger share were allocated to alleviate the immediate financial burdens of Singaporeans.
He criticised the ruling party’s economic strategies, linking them to the escalating cost of living and broader social challenges.
He paid homage to the “good reserve accumulation system” established by the late Dr Goh Keng Swee but was quick to underscore the sacrifices Singaporeans have made to build these reserves.
“However, because our reserves are not accumulated from natural resources, there is a cost to accumulating our reserves, which comes from sacrifices made by Singaporeans,” he articulated, emphasizing the people’s stake in the national reserves.
PM Lee: “How big a nest egg is enough?”
PM Lee later weighed in on the motion debate and emphasized that the ultimate decision on the use of reserves lies with Singaporeans, exercised through their votes at the ballot box.
Providing insights into Singapore’s current approach to managing and preserving its national reserves, he challenged opposition politicians to bring the matter to the election platform.
”The PAP will join issue with them, and convince Singaporeans that our way is the right way for Singapore,” said Mr Lee.
While rejecting the motion presented by the PSP, Mr Lee again asked: “How big a nest egg is enough? … We can never say for sure how much is enough, because we do not know what kind of crises we will face in the future, or how our investments will fare.”
However, he cautioned against mindlessly accumulating savings without considering present needs.
“Instead, our mindset should be to treat past reserves as a precious resource that generations of Singaporeans have built up. ”
Mr Lee advocated treating past reserves as a precious resource built up by generations. The spending rule, enshrined in the Constitution, maintains a balance between current needs and future sustainability, with 50% of investment returns going toward the present and 50% for the future.
Indranee defends PAP’s fiscal policies
Ms Indranee rejected PSP’s motion, asserting that its language implies an excess of fiscal resources not being utilized for Singaporeans.
She defended that funds allocated by Singapore are not intended for the distant future but are reserved for specific commitments, exemplified by the GST voucher scheme.
She highlighted that setting aside such funds ensures a reliable source of support for Singaporeans, illustrating prudence, thoughtfulness, and responsible fiscal policy, rather than an indication of excess fiscal resources.
She argued that this approach assures without the need for last-minute scrambling for funds.
In response, Mr Leong contended that accumulating reserves, while manageable during periods of rapid economic and income growth, may adversely impact present-day Singaporeans if continued at the same rate.
He pointed to pressing social issues such as mental health and declining fertility rates resulting from Singapore’s economic policies, urging a shift in focus from reserve accumulation to addressing these challenges.
“Today, it is not unreasonable for Singaporeans to expect the government to focus less on accumulating reserves and do more with our financial resources to address these social ills.”
Ms Indranee countered by emphasizing that when funds are placed in reserves and managed by GIC, 50% of the anticipated income is annually returned to the budget, constituting about 20% of the total sum.
She clarified that investments in reserves translate into tangible benefits for Singaporeans, dispelling the notion that money is withheld.
Furthermore, Ms Indranee stressed that the current pace of reserve accumulation does not significantly outstrip economic growth.
Ms Indranee assured that the Net Investment Returns Contribution (NIRC) has consistently matched Singapore’s economic growth, remaining stable at approximately 3.5% of the Gross Domestic Product (GDP).
Highlighting the WP’s stance against increasing the goods and service tax (GST), Ms Indranee justified recent hikes by pointing to Singapore’s spending trends.
“We have to spend more in several key areas, and we will need the revenues very soon.”
Ms Indranee also refuted the assertion made by WP Chief and Leader of the Opposition Pritam Singh, emphasizing that proceeds from land sales do not contribute to the growth of reserves.
She clarified that land sales do not qualify as revenue and, therefore, should not be considered a source of new wealth, outlining the potential drawbacks of relying on land sales as revenue.
These drawbacks include vulnerability to property cycles and the incentive to maintain high land prices.
Mr Singh argued that land can be resold due to the leases it holds. However, Ms Indranee countered this by stating that during the lease period, the use of the land is forfeited.
PSP suggested an alternative approach, proposing that Singapore treat land sales proceeds as revenue spread over the lease period.
Ms Indranee acknowledged the similarity to the government’s current approach but highlighted a key difference.
Under the PSP’s proposal, the land sales proceeds are invested, and only half of the generated returns are spent.
In a straightforward comparison, Ms Indranee explained that under the PSP’s proposal, there is a direct expenditure of S$1, whereas, under the PAP’s approach, the S$1 is reinvested, yielding more than a dollar.
Ms Indranee criticized the proposal to treat land in Singapore’s reserves as having no value, asserting that it disregards the sacrifices of those who relinquished their land under the Land Acquisition Act.
“Because their land, which did go into the reserves, means something to them, means something to us when we built on it, and you should not treat it as though it is worth nothing.”
WP backs PSP’s call for transparent disclosures on reserves
WP MPs voiced their support for the PSP’s original motion, with Mr Singh emphasizing the need for the government to disclose reserve figures not merely for the sake of transparency but to foster “mature conversations.”
The party advocated for an increased utilization of the NIRC beyond the current 50%, addressing the importance of balancing savings without imposing undue sacrifices on the present.
Associate Professor Jamus Lim, WP MP for Sengkang GRC stressed the relevance of economic principles to Singapore’s reserves, cautioning against high-handed restrictions on spending the inheritance.
He argued that such restrictions, especially in the face of rising living costs, appear paternalistic.
Assoc Prof Lim expressed his inability to support the amended motion, citing concerns that the amendments undermine the significance of a thorough review.
The sentiment conveyed was that the amendments may downplay the importance of a comprehensive reassessment.
This article was first published on Gutzy Asia.
