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Past reserves ‘not a piggy bank to be broken at will', says DPM Heng, rebutting Pritam Singh

SINGAPORE — Because of Singapore’s past reserves, the nation did not have to spend “precious time negotiating with creditors or dealing with detractors”, but instead spent the hours deliberating hard over the challenges posed by Covid-19 to the nation, Deputy Prime Minister Heng Swee Keat said on Tuesday (April 7).

Deputy Prime Minister Heng Swee Keat, who is also Finance Minister, in Parliament on April 7, 2020 (left) and Workers' Party chief Pritam Singh in the House on April 6, 2020.

Deputy Prime Minister Heng Swee Keat, who is also Finance Minister, in Parliament on April 7, 2020 (left) and Workers' Party chief Pritam Singh in the House on April 6, 2020.

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SINGAPORE — Because of Singapore’s past reserves, the nation did not have to spend “precious time negotiating with creditors or dealing with detractors”, but instead spent the hours deliberating hard over the challenges posed by Covid-19 to the nation, Deputy Prime Minister Heng Swee Keat said on Tuesday (April 7).

The Government does not view the reserves “as a piggy bank to be broken at will” in order to provide a convenient source of additional revenue, said Mr Heng, who is also Finance Minister, in his round-up speech in Parliament to the debate on the Resilience and Solidarity Budgets.

The two budgets — delivered on March 26 and April 6 respectively — will require a total of S$21 billion drawdown from past reserves, a step that requires the approval of President Halimah Yacob under the Constitution.

But on this point, Mr Heng singled out Workers’ Party chief Pritam Singh’s repeated queries over the years on the depths of the nation’s reserves. On Monday, Mr Singh had also called for the Government to “adopt a different stance towards the reserves, debt financing and deficits”.

Said Mr Heng in response: “If we had succumbed to the political pressure to spend more of our reserves in good years, we would not have had 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.”

The Government also does not disclose the size of its reserves for national security and strategic interests, as the reserves serve as a key defence for Singapore in times of crisis and as a strategic defence for the Singapore dollar against speculative attacks, Mr Heng reiterated. 

The reserves comprise assets invested by sovereign wealth fund GIC, the Monetary Authority of Singapore (MAS), and state investment firm Temasek Holdings. State land, the Government’s properties as well as its financial assets such as cash and shares also form part of the reserves.

Mr Heng noted that both MAS and Temasek disclose publicly the extent of their investments while GIC does not.

In its annual report last year, Temasek — which holds stakes in major Singapore companies such as Singapore Airlines and DBS Bank — disclosed that the value of its portfolio stood at S$313 billion. In its 2018/2019 annual report, MAS disclosed that its net assets were worth S$39.6 billion.

Mr Heng said: “Our reserves are thus no different from the SAF's (Singapore Armed Forces’) arsenal. No country’s armed forces will ever tell you exactly how much ammunition and weaponry they really have. To do so is to betray valuable intelligence to potential adversaries.”

He called for Members of Parliament to focus on the policies and programmes, specifically those which require the use of reserves. Debates should be about the merits of these programmes and the expenditures earmarked for them, he said. 

It is not in the interest of Singapore or Singaporeans to “repeatedly ask about the size of our reserves”, he reiterated. 

“We are in the middle of a storm, and I am disappointed that Mr Pritam Singh has used this occasion to raise this question again,” said Mr Heng.

“Indeed, this crisis has reaffirmed the value of our key institutions and the key tenets of our prudent fiscal policy – to spend prudently, invest wisely, and plan consistently for the long-term.”

US-STYLE NEW DEAL?

On Monday, Mr Singh had also questioned what the three Budgets this year — which have seen the introduction of more temporary taxpayer-funded unemployment benefits — would mean for Singapore’s future after Covid-19 is defeated.

He compared the stimulus packages to the New Deal by the late American president Franklin Roosevelt to provide relief in the aftermath of the Great Depression from 1933 to 1939 to help America recover, calling the New Deal a “thought-provoking” comparison to the Unity, Resilience and Solidarity Budgets. The Unity Budget on Feb 18 was the traditional annual Budget.

“Will these schemes represent a new normal akin to a multi-year ‘New Deal’ to help Singaporeans cope and bounce back from economic hardship? For Singaporeans who will continue to see disruption and technology reducing their job prospects, can we expect continued support for them in the nine months after this package expires, particularly for training and wage support?” asked Mr Singh.

To this, Mr Heng urged caution — the schism caused by the New Deal still exists in the United States today “between liberals who support it for its comprehensive relief and reform programmes, and conservatives who oppose it for being hostile to business and growth”. Others, like the United Kingdom, have also faced a similar phase, he added.

Mr Heng said in policymaking, Singapore pays attention to the “subtle but significant changes” in the tone of society, the attitudes of people and relationships “which will take years to show, and which are not easy to reverse”.

“So let me caution that in making good public policy, we should be rigorous and clear-headed, and not rely on some ideological short-cuts or labels, without thinking deeply about interactions and longer-term effects," he said. 

“For our little red dot, we must have the courage and wisdom to do what is right for us – and not rely on simple ideology or fad or fashion of the day.”

He reiterated that the role of Government is to redistribute resources in the right way so that everyone has a share in the fruits of progress.

Urging MPs to commit to ensuring that what the Government does is fiscally sustainable beyond its current and subsequent terms, Mr Heng said: “It is not just how much we spend, but how well we spend.”

He noted MPs such as Tanjong Pagar Group Representation Constituency MP Chia Shi-Lu and MacPherson MP Tin Pei Ling have come forward to urge the Government to not spend in an “unbridled fashion” from the reserves, even in today’s situation.

Mr Heng recounted how Transport Minister Khaw Boon Wan shared a story with the House on Monday about his granddaughter who had been reminding his wife and domestic helper on safe distancing precautions. Mr Heng said a mother had also written to him that her daughter had asked: ‘Will Singapore become bankrupt?”

Said Mr Heng: “I was surprised and glad that her daughter and Minister Khaw’s granddaughter could understand such values at a young age. As adults, let us also uphold our values, and not let our children and future generations down. It is precisely for them that my team and I are determined to exercise fiscal discipline and prudence.

“Will Singapore become bankrupt? No! We will never let Singapore become bankrupt.”

PARLIAMENTARY EXCHANGE

Following his speech, Mr Singh clarified that the Opposition is fulfilling its duty by repeatedly asking questions about the size of the reserves.

“I have to make a point that the Opposition in this House also is a steward of the reserves and expenditure priorities of the Government, because these things are what all of us must take ownership of,” he said.

“We seek these numbers because when the Government introduces policies where reserves have to be employed, the question that we have to ask is ‘is it enough’, or ‘is it too little’.”

He said while the queries on past reserves are not meant to inconvenience government agencies, it is still possible to “nuance” any answers on the size of the reserves to consider the national security reasons, such as by revealing a portion of the reserves that can go into improving livelihoods.

In response, Mr Heng said Singapore already has the Net Investment Returns Contribution framework, which represents the investment returns from past reserves, and has become the largest component of government revenue today, ahead of personal and corporate tax, as well as the Goods and Services Tax.

“Checks and balance (on the use of reserves) have been very rigorously designed and well observed. Even in presenting this Budget, I had spent a lot of time exploring the details with the President and the Council of Presidential Advisors. They asked very, very good questions.

“(Our system is) much better than systems seen elsewhere and the debts incurred by so many countries,” said Mr Heng. “So, let’s do this carefully, Mr Singh.”

Related topics

national reserves Covid-19 coronavirus Heng Swee Keat

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