‘Imprudent’ to relax rules on reserves the minute Singapore needs money: Lawrence Wong

SINGAPORE — Responding to call by the Workers’ Party (WP) to change the rules on the use of the reserves, National Development Minister Lawrence Wong said it would be “ill-disciplined, imprudent and unwise” to ease the rules the minute Singapore needs the money.

Speaking in Parliament on Thursday (May 17), the fourth day of the debate on the President’s Address, Mr Wong said that the rules governing the use of the reserves were just debated and the House had settled on a framework that best meets the needs of the people.

“The rules were discussed at length, debated in this House thoroughly, so that we can find the right balance between present and future generations, and ensuring the rules in our Constitution (are in order). This was done not too long ago,” he said

“What does it say about us, and our mindsets and our attitudes, if the minute we need the money, the first thing we do is to relax the rules? Surely that will be ill-disciplined, imprudent and unwise.”

Mr Wong echoed what Finance Minister Heng Swee Keat told Parliament during the Budget debate in March, when Mr Heng said it was “ill-disciplined and unwise" to amend the rules on reserves as a first resort, in response to Members of Parliament (MPs) who asked if the Net Investment Returns Contribution (NIRC) framework could be amended, or if a portion of land sale proceeds could be used for social spending.

Mr Leon Perera, WP’s Non-Constituency MP, had again asked on Thursday if, instead of raising taxes, there is more scope to review the policies towards the reserves, “to tap more from the (NIRC) or land sales” when a Budget funding gap surfaces.

These changes would not reduce the absolute size of the reserves, but would slow down the rate of reserve growth, he added.

Mr Perera also said that this question is “not only a technical economic question but a deep, philosophical question about inter-generational equity”, noting that there are reasonable views on both sides of the issue.

While there are risks to reducing the reserves’ rate of growth, there are also risks in allowing costs and economic pressures to rise in the future, which inhibits growth in areas such as entrepreneurism, total fertility rate or “confidence”.

Earlier on Monday, WP’s Member of Parliament Pritam Singh said that the inclusion of state investment firm Temasek Holdings under the NIRC has given the Government more money and political capital than earlier generations of leaders, adding that “the picture for the immediate future does not appear to be one of a Government needing money to stay afloat or needing to tax the population and, as a result, raising the cost of living”.

Having said that, Mr Singh did note that unlike their predecessors, the fourth-generation leadership are coming into power when government spending will rise in tandem with the changing demographics of Singapore.

Taking up his comments, Mr Wong pointed out on Thursday that Mr Singh “forgot to mention that our fiscal commitments and spending are also at their highest ever levels”.

Mr Wong added that Singaporeans today are being provided with more services and support than before. “For now, we are just able to meet all of our spending needs with current resources. But without additional revenues, how are we to meet the growing healthcare needs, as well as the many other proposals that various people, including the WP, have been asking for?”

Later, Mr Perera asked again if the Government would consider evolving their position on the treatment of the reserves some time in the future.

“Never say never,” Mr Wong said. “We are prepared to listen to different views... to different proposals, and when these proposals come, we are always prepared to review our policies.”

Mr Singh then asked about future projects and endowments in the years to come, noting that the Government has an accumulated budget surplus of S$15.7 billion in the first two years of its five-year term.

Mr Wong said that the surpluses this year were exceptional one-off items and should not be extrapolated. “NIRC as a percentage of gross domestic product (GDP) will continue to provide us with a steady stream of revenue for the future, but we do not expect that to increase as a percentage of GDP… there is a risk it may even come down,” he added.