SINGAPORE — Using Singapore’s reserves to fund healthcare spending will deplete a “precious nest egg” that has been built up over a long period of time, said Prime Minister Lee Hsien Loong.

Speaking at the Teck Ghee Chinese New Year dinner on Sunday (March 4), Mr Lee reiterated the Government’s resolve not to tap into Singapore’s reserves to boost national coffers. He said: “It is our duty to manage the reserves, invest them wisely... to keep them safe and intact for a rainy day, so that one day, when we encounter a rainy day, the reserves will be there for us."

Healthcare and Singapore’s ageing society is not a “rainy day”, but “a long-term trend,” added Mr Lee, a Member of Parliament (MP) and grassroots adviser for Ang Mo Kio Group Representation Constituency.

“It is an ‘every day need money’ day,” he said.

Since the start of this decade, the Government has more than doubled its healthcare spending, from S$3.9 billion in FY2011, to an estimated $10.2 billion in FY2018. The increase went into building and operating more hospitals and other healthcare facilities, as well as enhancing healthcare subsidies.

“We will need to spend more on healthcare year after year, for many years to come,” said Mr Lee, who was speaking in English and Mandarin to some 2,500 Teck Ghee residents and their family members.

“If we use the reserves for (this recurrent spending), they will soon be depleted. When in fact the rain comes, with thunder and lighting... and when the children and grandchildren need the money, they won't find it."

Under the Net Investment Returns (NIR) framework introduced in Financial year 2009, the Government can spend up to half of expected real returns from assets managed by the Monetary Authority of Singapore, state investment firm Temasek Holdings, and the GIC.

In FY2016, the NIR contribution (NIRC) overtook corporate income tax collections for the first time to become the Singapore’s largest source of revenues. It is expected to contribute about S$15.9 billion to national coffers in FY2018.

Some MPs and observers have suggested increasing the NIRC cap to boost national coffers, or tapping on the Republic’s past reserves through revenue from land sales, which are currently excluded from budgetary spending.

But the crux of the Budget goes “beyond the numbers”, Mr Lee said in Mandarin.

“It is about investing for the long term, for our future generations.”

The current generation has a “responsibility” to pass on a larger sum of reserves to the future generation than what it had inherited from Singapore’s pioneers, he added.

Mr Lee said the Government has decided on the “prudent, responsible, long-term approach” of raising the goods and services tax (GST).

“We are responsible not just for making it work ourselves, but for making it work for the future generations... Their futures depend on us, the present generation, acting on their behalf... making wise and far-sighted decisions in their interest,” added Mr Lee.

During the Budget statement delivered last month, Finance Minister Heng Swee Keat announced a 2-percentage points hike to the GST, which will set in sometime between 2021 and 2025.

Mr Lee added that announcing the GST hike ahead of time is “the responsible way” for Singaporeans to plan ahead and understand why it is “necessary and justified”.

He said on Sunday: “(The Government) has announced its intentions now, so that people will know early... We do not need the money yet, but we can see the way things are going, very clearly, and we know that by the next decade, we will need the money.”

In next financial year, expenditure is projected to hit S$80 billion, up by S$6.1 billion or 8.3 per cent from FY2017. An overall budget deficit of S$600 million is expected in FY2018.

Mr Lee stressed that the Government cannot just list out “all the good things (it) will do”.

He added: “When there are good things to do, we will do them. But at the same time we also tell people what it will cost, how we will raise the money to fund them, and what taxes need to go up to pay for them... It is easy to spend money. It is much harder for people to earn it, and for the Government to raise it.”

"But we have to be honest when we have to do it."