MP Alex Yam admonishes Opposition for assuming national reserves can be ‘easily funded’

• MP Alex Yam said the Opposition should not treat the national financial reserves like a cookie jar to be raided
• Workers’ Party MP Leon Perera rebutted that the PAP Government itself had changed rules on the reserves 
• He asked if that would also constitute as attempts to “raid” it
• The debate in Parliament also turned to whether data on the reserves should be made more transparent

SINGAPORE — Members of Parliament (MP) from the People's Action Party (PAP) and Workers' Party (WP) briefly clashed over the topic of the country’s past financial reserves on Thursday (Feb 25), with Marsiling-Yew Tee MP Alex Yam criticising the Opposition’s proposals as excessively draining on the reserves.

Mr Yam said that drawing from the Government's Net Investment Returns Contribution (NIRC) is “a bit like taking a cookie out of the cookie jar”. 

The NIRC, which is at the disposal of the Government to spend, are returns generated from the assets owned by Singapore’s sovereign wealth fund GIC, the Monetary Authority of Singapore and state investment firm Temasek Holdings.

Mr Yam said: “It's really tempting, after that first delicious cookie, to keep reaching in cookie after cookie… So you end up like a cookie monster forever tempted, when you see a cookie.”

Suggestions from the opposition parties indicate that “everything can be easily funded, because it is only ‘x’ per cent of the GDP (gross domestic product)”, he added.

“But if we take all these suggestions to get ‘x’ per cent here, ‘y’ per cent there, ‘z’ per cent somewhere else, it adds up significantly.”

He continued to say that WP’s proposals seem to indicate that the Government can “eat, eat away (but) not everything… if we run low, instead of buying the ingredients, the Government should make more (cookies) yet not (do) what is necessary to provide ingredients to make the cookies.” 

As for the Progress Singapore Party (PSP), it had indicated that “we should take everything from the jar… including the crumbs,” Mr Yam said.

Leader of the Opposition Pritam Singh, who is also WP’s chief, asked if Mr Yam could identify which WP members made the points, but the query went unanswered. 

In a Facebook post on Wednesday morning, Deputy Prime Minister Heng Swee Keat had said that further drawdowns on the reserves would be needed should Singapore’s economic and fiscal situation take a turn for the worse. This may include funding initiatives aimed at helping the country emerge stronger from the Covid-19 crisis.

"We should then think hard about how we can ensure that if we need to draw on past reserves for this purpose, we can, over time, build this back," he wrote.

He noted that the country has benefited during this crisis from the prudence of previous generations and thus owe it to future generations to exercise this prudence and ensure that they can deal with future crises.

Opposition party members had been putting forth policy suggestions on how the reserves should be used this financial year. 

WP had made several policy suggestions over the past two days of debate in Parliament. 

On Wednesday, Mr Singh, who is MP for Aljunied Group Representation Constituency (GRC), called for an independent fiscal office that would look into how taxpayers’ money is spent in light of the massive drawdown of reserves to fund Singapore’s Covid-19 response.

On Thursday, Mr Leon Perera, also MP for Aljunied GRC, made a point about board-based tax hikes for the Goods and Services Tax (GST), for example, and the petrol duty that was increased last week.  

He asked if the Government would consider raising taxes on transactions in the property sector by way of taxes such as the stamp duty and the Additional Buyer’s Stamp Duty, “but only for more expensive properties”.

“Of course, such a move may not raise as much revenue as a broad-based tax hike such as raising corporate tax or GST, for example,” Mr Perera said. “But (increasing corporate tax) can be considered, to reduce the need for… a broad-based tax hike.” 

Non-Constituency MP Leong Mun Wai said on Thursday that his party, PSP, believes that the Government should not hesitate to spend more, even up to the total net investment returns it earns every year.

He noted that the Government’s policy is to use half of the net investment returns every year. 

“For the foreseeable future, we do not see any shortage of fiscal revenues,” Mr Leong said. 

Rebutting Mr Yam’s argument that the Opposition treats the NIRC as a cookie jar, Mr Perera asked if the Government’s past amendment of the rules governing the net investment returns would constitute “raiding the cookie jar” as well. 

For instance, in 2008, the change in rules governing the use of the reserves to create the net investment returns framework, and in 2015, changes again to include Temasek Holdings in the framework. 

Mr Perera also questioned if any kind of deviation away from these rules that are now entrenched in the Constitution amounts to “raiding a cookie jar and becoming a cookie monster”. 

“Over time, over decades, as the absolute amount of reserves relative to GDP changes, does (Mr Yam) not acknowledge that these rules should also evolve and change? And (also) as society and the needs of society change and opportunities to invest in the people of the country change?

“I just like to invite (Mr Yam) to agree with that general philosophical point.” 

Mr Yam then replied that while the Government does make adjustments to the Constitution regarding the reserves, it does so with the view that “we think about the future and not just about the now”. 

“The cookie jar exists for moments of need such as these… where we would benefit certainly from being extraordinarily generous,” he said.

“It's quite a different scenario from introducing changes to rob the cookie jar. We've always ensured that we are prudent about it, that we make returns to it.” 

SENSITIVE INFORMATION

Separately, Bishan-Toa Payoh MP Saktiandi Supaat challenged calls by the Opposition, such as Non-Constituency MP Hazel Poa, to grant greater transparency on the national reserves.

Ms Poa had said a day before that Singaporeans may then “better understand the rationale for difficult decisions like the need to raise the GST to 9 per cent in the future”.  

Mr Saktiandi said that Singapore uses its exchange rate as the instrument of monetary policy, which “makes us vulnerable to currency speculation and attacks”. 

“Publicising data from our reserves is akin to revealing the size of our ammunition to hedge funds and speculators out there with large pool of funds to play with,” he said.

“The potential risks and downsides outweigh the benefits of transparency.” 

On this point, WP’s Jamus Lim, who is MP of Sengkang GRC, said that while the revelation of the reserves could encourage speculation, the opposite could also be true.

“If we were off (regarding) our fundamentally determined exchange rates, we could encourage market participants to engage in speculative activity that will get us back on to our fundamental exchange rate,” he said.