Deputy Prime Minister Heng Swee Keat and Workers' Party chief Pritam Singh clashed in Parliament over questions over the use of Singapore's reserves for expenditure.
During his speech in Parliament on Apr. 7, Heng mentioned that taken together, the three Unity, Resilience and Solidarity Budgets dedicated a total of almost S$60 billion for Singapore's fight against Covid-19 and its effects.
Together, the three budgets make up the largest budget in any single Financial Year, both as a dollar amount and as a percentage of Singapore's GDP. It also resulted in the largest deficit ever, S$44.3 billion or 8.9 per cent of GDP.
Heng said that as Finance Minister, he was extremely grateful that he was able to tap on Singapore's deep financial reserves, which meant that the government could respond to the crisis without having to borrow money elsewhere and "burden future generations" with prepayment obligations.
Heng: Reserves are like armed forces, we don't reveal too much
But Heng added: "But just exactly how deep are our reserves? Mr Pritam Singh has asked this question time and again in this House."
Heng explained that the reserves comprise assets invested by MAS, GIC and Temasek.
While MAS and Temasek publish the size of the funds they invest, GIC does not. Heng said Singapore does not disclose the total size of the reserves for national security and strategic interests.
Heng drew a comparison between the reserves and the Singapore Armed Forces (SAF), as the reserves enabled Singapore to defend the dollar against speculative attacks.
Remarked Heng: "No country's armed forces will ever tell you how much ammunition and weaponry they really have. To do so is to betray valuable intelligence to potential adversaries. This is obviously not a wise defence strategy. And likewise, should not be adopted for our financial reserves."
Heng: Disappointed that Pritam raised questions on reserves during the "middle of a storm"
Heng said that MPs should debate the merits and expenditure of policies and programmes, especially if they required the use of reserves. However, he added:
"It is neither in the interest of Singapore or Singaporeans to repeatedly ask about the size of our reserves.
We are in the middle of a storm, and I'm very disappointed that Mr Pritam Singh has used this occasion to raise this question again."
Heng also mentioned that Pritam had asked how the government would ensure sustainable finances in the next term of government, and suggested that the use of reserves should be reviewed in view of the long-term impact of Covid-19.
Reserves are not a piggy bank to provide a convenient source of revenue
Heng addressed this, and said that the government has kept discipline and stuck to its principle, despite urging from many to spend more of the reserves instead of saving or raising taxes. Added Heng:
"We do not view the reserves as a piggy bank to be broken at will, to provide the government with a convenient source of additional revenue. We avoided running deficits in good years and consistently saved.
If we had succumbed to the political pressure to spend more of our reserves in good years, we would not have the war chest to deal with critical moments such as now. And to do even more, if necessary, even in the next term of government."
Pritam: Not to make life difficult for MOF and its team
In his response, Pritam said that the opposition in Parliament are also stewards of the reserves and expenditure priorities, as all MPs had to "take ownership".
Pritam explained that he seeks numbers because when the government comes up with policies that make use of the reserves, MPs had to ask whether it is enough, too much or too little. Added Pritam:
"I think these are the reasons why some of these numbers, some of these issues keep coming up. Certainly not to make life difficult for the Ministry of Finance and its team in this moment. But that's our duty."
Pritam also addressed the SAF analogy used by Heng, and said that while "deep capabilities" are not revealed, the position could be nuanced.
He added that "two Budgets ago", Pritam referred to a Business Times article where Singaporeans were "wondering" whether one part of the reserves could be used to improve the livelihood of Singaporeans while another part remained secret.
Pritam said there were modalities to consider some of these numbers, and how we could have a deeper conversation about them.
Heng: President and Council of Presidential Advisers ask "very, very good questions" on use of reserves
In his follow-up to Pritam's question, Heng said that the Net Investment Returns Contribution (NIRC) makes up the single largest component of spending, more than personal income taxes or goods and services tax.
As this is under the government's spending rules, Pritam could check the increased spending after the government included Temasek in the framework, and that could tell him how much it is spending.
Heng then addressed Pritam's "allusion" to checks and balances of the spending of the reserves.
He said that this is what the elected Presidency is about, and said that the checks and balances in Singapore's system concerning the use of reserves has been very rigorously designed and is very well observed. Heng added:
"And I can tell you that even in presenting this Budget and asking for the President and the Council of Presidential Advisers, I spent a lot of time explaining the details, and I can tell you that the President and the CPA ask very, very good questions.
So much more than systems that I've seen elsewhere, and certainly much better than the debts that have been incurred in so many other countries. So let's do this carefully, Mr Singh."
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Top image collage sourced from Gov.sg.