Could Singapore consider, in the long term, slowing the rate of the growth of our national reserves so that we can invest more in improving the quality of our economy and the liveability of our society, as well as the well-being of our people?

This was one of a series of proposals put forward by Workers' Party (WP) Non-Constituency Member of Parliament Leon Perera in his speech at the Budget debates in Parliament on Thursday (Feb. 27).

He identified three challenges to address:

1. Keeping our economy vibrant,
2. Keeping our society liveable (and making it more so), and
3. Keeping our policies aimed to tackle points 1 and 2 sustainable and responsible,

Perera identified this as one of the areas the government can consider for the longer term.

S'pore's reserves estimated at more than a trillion dollars, growing every year from half net investment returns, land sales & unspent surplus

Perera noted the good position Singapore is in with our reserves, something he added many countries do not have — instead incurring high fiscal debt relative to their gross domestic product.

But he asked if there wasn't a danger of being "too prudent", which may lead to a failure to seize opportunities to develop the capacities of our people.

He referred to the need to find a "Goldilocks zone" between the extreme of drawing down on reserves excessively and saving at the expense of opportunities that are available now.

"I'm not suggesting drawing down the reserves at this point. But in the longer term is there more scope to slow the rate of reserves growth, so as to release more funds to invest in our people and address the challenges we face in terms of liveability, employability, innovation... and so on?"

He also noted the fact that during the worst global economic crisis since the Great Depression, that which took place in 2008, Singapore drew down "only a tiny fraction of the reserves".

He asked if Singaporeans could have "reasonable conversations" on how to vary the growth of the reserves, while agreeing they should only be used in an emergency.

This will then lead to considering how to invest in Singaporean people and companies to become more resilient, innovative, and better able to deal with challenges.

A society Singaporeans feel confidence sinking roots and living in

Perera asserted that putting effort into liveability is "one of the most crucial challenges for Singapore".

Liveability is a tricky thing to define, beyond, quite unhelpfully broadly, as "the degree to which a place is good or suitable for living in", but Perera proposes some ways to look at it in discussing this.

Improving this can prevent young Singaporeans from migrating, increase fertility rate

One is in our fertility rate, which has been one of the lowest in the world for years, and the other is a statistic he shared, of 29 per cent of young Singaporeans saying they would consider migrating in the next five years.

Perera suggested that if policy included social protections and stabilisers, Singaporeans may feel like society "has their back."

This may then reduce risk adversity and the focus on short-term income. He added:

"This internally promotes a culture of being willing, being more willing to take risks to rescale, to start a business, and possibly even to have children, because one is more confident about the future."

Building automatic adjustments to cost of living measures into policy

He touched on how cost of living is approached, for instance, suggesting that the state could consider committing itself to adjusting the quantum of assistance provided in a specific policy measure with inflation, or other economic indicator.

"Parliament can still vote against inflation-based increases should fiscal resources be insufficient, so the mechanism can still contain an element of evaluation.

For the fact that the design of the policy has a built-in mechanism to recommend changes and adjust based on inflation at certain defined time intervals, creates some assurance that yes, society will not leave me stranded in the future one day. This is not just a benefit for today, leaving me uncertain about tomorrow."

Perera stressed at the same time that his proposal to programme adjustments according to inflation is not a call for reckless spending on the part of the government.

"It is a call for building into policy design mechanisms that self-correct, and a built-in adjustment processes, rather than leaving it purely to future executive discretion. The executive and Parliament can still decide not to go ahead if the money is not there."

Threats facing Singapore's economy

Perera also outlined some of the biggest structural challenges facing Singapore's economy in the years to come. These include:

1. Our dependence on China, which was already facing a slowdown in growth prior to the Covid-19 outbreak.
2. Our productivity being spread between extremes, like high-productivity sectors and not-as-productive ones, and MNC sectors with higher productivity versus a small-and-medium enterprise (SME) sector, which employs two-thirds of Singapore's workers, with less.
3. The risk of SMEs and micro-businesses facing difficulty and even finding themselves mired in debt.
4. The relatively lower share of research & development in Singapore's GDP compared with other countries, and its effectiveness in being applied to local companies.
5. The threat of anti-globalisation, where countries pull back on their supply chains in view of geopolitical tension-causing circumstances like U.S.-China dynamics and Covid-19.
6. The rise of disruptive technologies that can wipe out entire categories of employment like drivers, jobs in back-end operations and front-end services.

Perera mentioned that an additional challenge was not only to equip people with skills like deep tech and coding, but "soft skills" like creativity, leadership and entrepreneurship to boost employability.

Suggestions

Here are some of Perera's proposals in his speech:

1. Call to support local firms that are performing well & "can deliver"

He called for greater support for local companies that are doing well, in terms of consistently delivering financial and economic growth while protecting locals' jobs.

"I had an exchange on the subject in this house with the then-MTI minister Iswaran in 2017. And I understand his counterargument that we don't want to go too far down the path of picking winners.

There is a grain of truth there. But some of our existing efforts like state backed co-investment for example could be seen as picking winners anyway. And why not let the winners pick themselves?"

He said support for local firms that do not demonstrate good performance can be "disciplined and focused on competitiveness improvement, job safeguarding, and business succession planning" instead.

2. Creating a programme to coach civil servants in their 30s-50s who want to explore entrepreneurship

Perera noted that 26 per cent of autonomous university graduates in Singapore enter the civil or public service for their first jobs.

A programme like this, he said, would give interested parties the skill sets, connections and funding sources they need to start their own businesses.

"After all, we don't only want locals to get the S$7,000 jobs, and the S$10,000 jobs. We also want some locals to create such jobs."

3. Identifying jobs at risk from Industry 4.0, and encouraging them to re-skill, prepare to switch careers to emerging industries

Perera said this project could map out the categories of jobs at risk, and then inform workers in these segments of this in the mid or long term so they can look to preparing themselves to join high-growth disruptive industries instead.

He also proposed incentives to be offered to Singaporeans to join these new sectors, especially in those where the Singapore core is weak.

He concluded:

"Uncertainty is never a reason not to make projections and not to make bold plans. Times of change in crisis are also moments for the agile, the resilient and the creative to find new opportunities, anticipating and adapting to those moments in history."

Top photo: screenshot via Gov.sg video