SINGAPORE — A sharp exchange in Parliament on Monday (Nov 7), which got heated at times, broke out between People's Action Party Member of Parliament (MP) Sitoh Yih Pin and two Workers' Party (WP) MPs over whether it was possible to oversave for Singapore's reserves.

WP’s Jamus Lim, MP for Sengkang Group Representation Constituency (GRC), said during a debate on the Goods and Services Tax (GST) hike that it is just as possible to oversave as it is to undersave.

“Based on our calculations, when the Government adjusted the NIRC (Net Investment Returns Contribution) in 2008, it moved from about 10 per cent to the current 50 per cent,” he said, referring to the proportion of money from Singapore’s investment reserves that can be spent in the Budget each year.

Associate Professor Lim, an economist, asked if this meant that the Government was undersaving when it made the adjustment and suggested that the party’s proposal to adjust the NIRC allowed for recurrent spending to be raised from 50 to 60 per cent may not necessarily mean undersaving. 

In response, Mr Sitoh Yih Pin, MP for Potong Pasir, said that for a small country such as Singapore, “there is no such thing as oversaving”. This prompted Assoc Prof Lim and his fellow party member Leon Perera, MP for Aljunied GRC, to jump in to refute Mr Sitoh.

The following are edited excerpts of their exchange:

ON 'OVERSAVING'

Mr Sitoh: For a small country like Singapore, there is no such thing as oversaving. We are not just saving, we are reinvesting, flowing it back to the NIRC of future generations. We are able to invest for the future precisely because of the reserves that our forefathers have given us. So let's not kid around. We have to save as much as we can. Don’t ever use that word oversaving, please.

Assoc Prof Lim: I always thought that academics were the only ones to conceive of unrealistic scenarios but I was somewhat shocked to hear Member Sitoh say that there's no such thing as oversaving. If we take this argument to its own logical extreme, why don't we simply just lower our NIRC ceiling to 0 per cent and not tap the NIRC at all? Is he saying that the Government of 2008, having tapped a lower percentage, actually undersaved?

(On Tuesday, the day after this exchange, Assoc Prof Lim clarified in Parliament that he misspoke, and had meant to ask Mr Sitoh "if relative to the Government of 2008, which tapped a lower percentage, this Government is now undersaving".)

Mr Sitoh: If you were to play back the tape, I said for a small country like Singapore, don’t talk about oversaving. I'm reminded of 1997 during the Asian financial crisis, remember? The countries around us, their currencies all collapsed.

Assoc Prof Lim: As far as I checked, in 2008, it was the same country of Singapore. I’m not talking about China here, I’m talking about Singapore. This PAP Government, in power in Singapore at the time, altered the NIRC.

Mr Sitoh: I think the issue here is not about the NIRC. As far as I know, the Workers’ Party agrees with the NIRC system. For now, I think that 50-50 (savings-to-spending ratio) is about right. If using 50 per cent of the NIRC is not enough, there is a mechanism for the Government to tap the reserves with the President, so I think our system works perfectly well...

Mr Perera: ... I think the question, really, is that the Honourable Member said that there can be no such thing — in theory, by definition — as oversaving for a small country like Singapore. Is that the Member’s position or not?

Mr Sitoh: I was responding to Mr Jamus Lim’s speech. And I say it again. For a small country like Singapore, with a limited population with no natural resources, saving is a virtue. I don’t think we should grouse about oversaving.

Mr Perera: I think the question has not been answered. My question is, do you or do you not believe that there can be such a thing as oversaving, in theory, for a small country like Singapore?

Mr Sitoh: I already answered, Mr Perera. I said for a small country like Singapore, savings must be a virtue and as far as we can, we can continue to save not just for future generations, but for a rainy day.

'NO PAIN, NO GAIN'

Mr Sitoh: The Workers' Party wants to provide analgesia here for an extended period of time. As a country, are we better off and more resilient if we take this approach? Or are we better off if we take the PAP approach, which is to keep the country alert to dangers and challenges, while we give relief to those who are suffering more as we forge ahead to difficult waters?

Mr Perera: Mr Sitoh Yih Pin said that some of our proposals are analgesic and anaesthetic and so on. If that is the case, would the Honourable Member agree that the support package is also an anaesthetic? And it’s better to have pain, because no pain, no gain?

Mr Sitoh: I don't see how the support packages can be no pain. The support packages are meant to help our fellow citizens get over this period. I notice the Workers' Party kept saying you're trying to fan the inflation. But please bear in mind that GST is also a consumption tax in the sense that it is charged when you spend. So I think the Assurance Package, the GST Voucher, are meant to help Singaporeans. I don't see his point.

Mr Perera: If I understood his speech correctly, (Mr Sitoh is) saying that measures to ameliorate the negative impact of GST on the population are, in a way, sort of kicking the can down the road or somehow dishonest because actually, the population should feel the pain — rather, we should allow the population to experience more pain. I would like to ask (Mr Sitoh) whether some of the ameliorating measures that the Government has proposed would also fall into the same category.

Mr Sitoh: I think Mr Perera is putting very serious words into my mouth. What I'm saying is that we are all going through difficult times. I did not say the assistance packages are not helpful. I did not say we deserve to go through this pain. But what I'm saying is that in these turbulent times of calamity, we have to bond together as a nation and we have to go through this together.