Prime Minister Lee Hsien Loong on Wednesday (Feb 7) challenged opposition politicians to take their ideas on Singapore's national reserves to the ballot box, amid a parliamentary debate where opposition Members of Parliament (MP) pressed the Government to reveal the extent of the reserves and review policies on its use.

"Ultimately, in a democracy like Singapore, on big issues like this, it is the people who will decide. The PAP (People's Action Party) is convinced this is the right approach for Singapore. As long as the PAP Government is in power, this is what we will do," said Mr Lee.

Throwing down the gauntlet to the opposition, he said: "If any other political party thinks that this is not the right approach, if they truly believe that we should dip into our reserves more, then bring it to the ballot box. Put it upfront. Say you want to touch, you want to spend, you want to shift the rules.

"Don't pretend that you're just as prudent, only more kind-hearted. Campaign in the next General Election on this issue. Ask voters for a mandate to form the Government, change the Constitution, dismantle the second key."

Under the Constitution, the President holds the second key to the national reserves and safeguards it.

Mr Lee was speaking on a motion brought by Non-Constituency MP Leong Mun Wai and NCMP Hazel Poa from the Progress Singapore Party (PSP), which 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.

During the debate, MP Liang Eng Hwa (PAP-Bukit Panjang) suggested a few amendments to the motion, the key change being switching out the word "review" to "ensure" the Government's budget and reserve accumulation policies are fiscally responsible and sustainable.

The amended motion was eventually passed with dissent from the opposition, at the end of a seven-hour debate where the issues of whether Singapore's reserves should be disclosed, how to best utilise the reserves and how to deal with revenue from land sales were discussed.

Towards the end of the debate, Mr Lee gave an extensive explanation of how the current system of preserving and using Singapore's reserves was arrived at.

He said that in the 1984 National Day Rally, founding Prime Minister Lee Kuan Yew talked about how the reserves may be "frittered away by a profligate Government".

To guard against a rogue Government raiding the reserves, he mooted the idea that an elected President would have the power and authority to safeguard the reserves, and to be able to say no if the Government wants to spend it for an "unwise purpose".

Mr Lee explained how the Government devised rules to spend the returns from the reserves, eventually arriving at the current system.

Under the Net Investment Return Contribution (NIRC) framework, the Government can spend up to 50 per cent of the net investment returns on net assets invested by GIC, the Monetary Authority of Singapore and Temasek — the three entities that manage and invest Singapore’s reserves — and up to 50 per cent of the net investment income derived from past reserves from the remaining assets.

"There is no magic rule to this, but we arrived at a split of 50-50. There's a certain simplicity and fairness to that," said Mr Lee.

He added that NIRC now accounts for one-fifth of Government revenue or about 3.5 per cent of Singapore's gross domestic product (GDP).

The Prime Minister said that despite the constitutional protection, the pressure to draw on the reserves is still there, especially as spending needs grow.

"Hence the repeated questions and demands, 'How much do we have? Do we have too much? Are we saving too much? Can't we save just a bit less?'"

How much is enough is the wrong question to ask, he emphasised.

"There is no sensible answer to this question. 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," he said.

'PROTECT THIS NEST EGG'

Singapore drew S$40 billion from the reserves for the Covid-19 crisis and this proved to be a "tremendous advantage", said Mr Lee.

"It gave us confidence, and gave others confidence in us. We had the financial muscle to do everything we needed to do, without getting heavily into debt, unlike so many other countries," he added.

Yet such a pandemic is far from the worst thing that can happen to Singapore, he said, pointing out that the war in Ukraine is costing US$100 million (S$134 million) a day, and that Ukraine relies heavily on United States and European support.

"How long more can the US and Europe sustain this support for Ukraine? Looking ahead 50 years, can anyone promise that Singapore will enjoy another half century of peace and tranquillity? Or guarantee that someone will come to our rescue if we ever find ourselves in the same situation as Ukraine?"

Urging Singaporeans to continue to nurture this nest egg left by Singapore's forefathers, Mr Lee said that despite the difficulties and the challenges earlier generations faced, they put aside the savings that current Singaporeans now enjoy.

"We are better off for it and grateful to them for it. Now, we too should fulfil our obligation to our children and grandchildren to protect their interest in this nest egg," said the Prime Minister.

"This nest egg is the money of the people of Singapore... but it is not the money only of this generation of the people of Singapore. It belongs to this generation. It belongs to future generations too, and we have a responsibility to both."

He added: "We are beneficiaries of our forefathers' sacrifice and vision but we are also trustees protecting this inheritance for future generations," he added.

OPPOSITION CHANGED ITS TUNE: PM LEE

Mr Lee said that this ethos was something both the PAP and opposition politicians agreed upon, and has been upheld "across the aisle in this House".

Citing parliamentary debates during the global financial crisis, Mr Lee said that then-Workers' Party (WP) chief Low Thia Khiang questioned the Government's decision to draw from past reserves to fund support measures.

Mr Lee said that it was right to raise this question. Then, when the Government paid back the amount drawn down, Mr Low said that it was the right thing to do.

There was a "common commitment" to safeguard Singapore's reserves, said Mr Lee.

Mr Lee added: "Now, I hear the opposition arguing that we should change the rules and draw more from reserves and that, of course, they have no intention to raid the reserves... They say we can easily afford what they are proposing.

"I conclude their tune has changed."

Responding to Mr Lee's anecdote about Mr Low, Leader of the Opposition and WP chief Pritam Singh said that those were "different times, different measures".

Mr Singh raised his point that leasehold land can be sold time and again, and it was not just a conversion from physical to financial assets. This issue has been repeatedly raised by the opposition as an argument against including land cost in the price of Housing Board flats.

Mr Lee said that land can be sold again after the lease expires, but there is a discount rate applied to leasehold land compared with freehold land.

"Every time I sell the land, I put money into the reserves but I'm not putting money into the reserves all today. I'm putting it in a stream of payments 30 years apart," he said.

"That means the money which you're paying in 30 years from now, today has to be discounted by whatever interest rate the bank is charging, multiplied by 30 years.

"It's not worth S$1 for S$1, maybe 10 cents for S$1, and maybe the next one after that maybe 1 cent for S$1, and the series converges."

Making a final call to protect the reserves, Mr Lee said in concluding: "It's up to us and for us now to prove that we can protect the nest egg and that Singaporeans are capable of being prudent and responsible well beyond the founding generation. We are not ah sia kia (Hokkien for rich kid)."

Mr Lee said that he has spent 40 years of his life stewarding, safeguarding and improving the system.

"Now I'm preparing to hand over to my successor in good order, a Singapore which is more prosperous, more secure," said the Prime Minister.

"I ask everyone to help them maintain the prudent policies that have served us well, to keep Singapore on the right track so that we can all continue to benefit from the nation's success for many years to come."

Source:
courtesy of TODAY

by Today Online

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