Parliament debated for seven hours on Feb. 7, 2024, on a motion filed by the Progress Singapore Party (PSP) to use more of Singapore's reserves to help present-day Singaporeans reduce their financial burdens and improve their quality of life.
Tabled by PSP Non-Constituency MP (NCMP) Leong Mun Wai, the motion calls for the government to review its current budget and reserve accumulation policies.
The People’s Action Party’s (PAP) Liang Eng Hwa later proposed amendments to the motion.
The amended motion read: “That [Parliament] calls on the government to ensure its budget and reserve accumulation policies always stay fiscally 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.”
The amended motion was passed, with PAP MPs voting in favour while members from PSP and WP all voted against one of the amendments and the amended motion.
Reserves would "continue to grow" even if we use them: PSP
In his opening speech, PSP NCMP Leong Mun Wai said that there is no need to keep the size of Singapore’s reserves a “secret” and that the reserves would “continue to grow” even if a larger proportion is allocated to reduce the financial burdens of Singaporeans today.
The motion called on the government to "review its current budget and reserve accumulation policies to help present-day Singaporeans reduce their financial burdens and improve their quality of life while continuing to save for future generations of Singaporeans".
He said the current approach to reserves "does not do justice to the fact that the reserves are accumulated from the blood and sweat of Singaporeans".
He argued that Singaporeans should have a greater say over the amount of reserves being accumulated, used, and saved for future generations of Singaporeans.
PSP made two proposals.
The first was to have no further endowment, trust funds should be created, and no further top-ups should be made to existing funds, instead suggesting consolidating the surplus budget or Net Investment Returns Contribution (NIRC) resources in an omnibus budget surplus fund for future spending for Singaporeans.
He also proposed to waive the land cost for public housing owned by Singaporeans for occupancy under the affordable home scheme proposed by PSP.
PSP belief that government has "plenty of fiscal space" is "misconceived": Indranee
Second Minister for Finance Indranee Rajah said that she cannot support the original motion tabled by PSP as it suggests that the government is over-accumulating surpluses and reserves at the expense of present-day Singaporeans and unfairly prioritising future generations over the current generation.
She said that both points were incorrect.
Instead, she supported the amended motion.
"Ensuring that something always stays fiscally responsible and sustainable does not preclude a review, because from time to time, you may have to make changes if necessary, in order to ensure that you stay fiscally responsible and sustainable," she said.
Indranee also called PSP’s belief that the government has plenty of excess fiscal space "misconceived", saying that the money put into funds is not for "the far unknown future" but for resources set aside to meet specific funding commitments that benefit present-day Singaporeans.
She used the GST Voucher Scheme as an example, saying that over S$2 billion is disbursed annually from the GST Voucher Fund for the scheme — which helps lower- and middle-income Singaporean households defray their GST expenses.
"Setting these moneys aside when we are able to do so, we smoothen out lumpy spending and give Singaporeans assurance that support will be available in the future, and they will not have to scramble to find the money only when it is needed," she added.
“This is prudent, thoughtful and responsible fiscal policy — not evidence of excess fiscal resources."
WP agrees with PSP's original motion
Workers' Party (WP) chief Pritam Singh supported PSP's original motion.
Singh, also Leader of the Opposition, said that the government should be more open about the reserves and reveal figures to facilitate mature conversations about them.
He also said that the government should not rule out using more than 50 per cent of the NIRC to lessen the taxation burden on Singaporeans, adding later "such a move would not jeopardise the growth of the reserves".
WP MP Jamus Lim said that Singapore’s reserves are “not exempt” from the laws of economics.
He said that saving more is better only if "we aren’t making undue sacrifices today".
“When we’re told in a high-handed way that we cannot spend our inheritance for our own good, even when our people are struggling with record-high costs of living, it smacks of paternalism,” Lim said.
Singh added that there is also "significant public belief" that the reserves will likely be very healthy and will continue to grow through land sales since proceeds from such sales go into the reserves.
Land sales do not constitute revenue: Indranee
Indranee said that Singh was mistaken in saying that principal reserves continue to grow with the proceeds from land sales.
“Land sales do not constitute revenue," she said, adding that "selling land does not generate new wealth".
Singh had said that land can be resold as they have leases.
However, Indranee said that the use of the land has been lost during the duration of the lease.
Indranee also noted PSP's suggestion that Singapore spends land sales proceeds by treating them as revenue divided over the lease period.
She said that this was "not so different" from the government's current approach — the difference is that instead of spending that dollar of land sales proceeds directly, it is invested, and half of the returns generated are spent.
“Put very simply, under PSP’s proposal, you have S$1. Under PAP’s approach, the S$1 goes back, and you get more than S$1," she said.
"If you took PSP’s approach, there would be, over time, less to invest. Less reserves means less to invest, and over time, less returns and a lower NIRC. In the long run, PSP’s proposal would result in a reduction in revenue, compared with the current approach."
Current approach is right: PM Lee
Prime Minister Lee Hsien Loong also supported the amended motion.
PM Lee reminded the opposition and all Singaporeans that the reserves belong to all and future generations of Singaporeans.
He believes that the current approach is right for Singapore.
PAP MPs support amended motion
Other PAP MPs also rose in support of the amended motion.
PAP MP Jessica Tan noted that the global political instability and slow economic growth are likely to be prolonged, giving more reason to ensure that measures put in place are "sustainable".
“The key is finding that balance with spending for today to support the current needs of Singaporeans, to improve their quality of life, while doing it in a manner that will allow us to continue to invest for future needs and growth,” she said.
PAP MP Saktiandi Supaat said that it is "tempting" to suggest increasing the NIRC and using the reserves for Singaporeans today.
“But every extra S$1 used today means S$1 less for the future generation, or even S$1 less for us, which [we] will be surviving [on] in the future,” he added.
The answer to the global cost of living issue is not to look at the reserves and "strip it of more eggs" each time, he said, adding that the reserves is a finite resource.
"Instead, each of us needs to make a collective effort to manage our costs and finances and step up to help those who are less well off."
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