Singapore—On Tuesday, February 26, Workers’ Party (WP) chief and Member of Parliament Pritam Singh proposed a permanent healthcare package for older Singaporeans.
He suggested that it could be funded via existing surpluses. Finance Minister Heng Swee Keat answered him on February 28, saying the surpluses had come from “volatilities and uncertainties in revenues and expenditure.”
Moreover, he took exception to Mr Singh looking to fund initiatives through such revenues, saying, “I am afraid such an approach of hoping for the best is not how we secure Singapore’s future.”
The Finance Minister explained that the surpluses in question were not because Temasek Holdings was included in the NIRC (Net Investment Returns Contribution) framework, as Mr Singh had suggested.
As he ended the #SGBudget2019 debate, Mr Heng explained that the volatilities and uncertainties in revenues and expenditures which were responsible for most of the surplus that the Government had accumulated.
Mr Heng voiced concerns about the difficulty of forecasting, especially since certain revenue items dependent on sentiment-driven markets are volatile, giving stamp duty or vehicle quota premiums as an example.
For the 2018 fiscal year, the Government had predicted a decrease in stamp duty collections due to property market cooling measures, but this did not turn out to be the case.
On the other hand, Mr Heng pointed out, there can also be unexpected expenditure items, such as the suspended Kuala Lumpur-Singapore High-Speed Rail project.
The overall Budget surplus projected for the last fiscal year is $2.1 billion, which is actually $2.7 billion higher than the projected the $0.6 billion deficit.
Mr Heng explained, ”While the Government’s approach is to look ahead, plan ahead, and prepare for the unexpected, it seems that Mr Singh would prefer to look backwards to find unexpected revenue upsides, and count on them to keep happening.
I am afraid such an approach of hoping for the best is not how we secure Singapore’s future.”
The Finance Minister called the accuracy of the Government’s revenue and expenditure projections as reasonable and respectable by international standards, noting that the actual figures for revenues and expenditures are within plus or minus 4 percent of original estimates.
He responded to another question from Mr Singh as well. The WP head said that when Mr Heng talked about the budget, he had mentioned that borrowing would pay in part for the expansion in infrastructure. Mr Singh then inquired if this meant that other revenue streams would be freed to fund spending that’s recurrent.
Mr Heng replied in the negative. “Borrowing does not create new revenues for recurrent spending. It merely converts a concentrated lump of spending in a few years into a smoother stream of loan repayment with interest…. In fact, it is irresponsible for a government to borrow to spend on recurrent needs such as healthcare and security. Such borrowing shifts the burden of paying for today’s needs onto future generations.”
In Parliament earlier this week Mr Singh had claimed that a permanent healthcare package for older Singaporeans would “represent a critical symbol of integration” for everyone.
The WP chief said that this would give citizens a basic level of medical benefits that would help them in keeping up with the cost of living, as well as ease their burdens when it comes to medical expenses.
Mr Singh said that this kind of health care scheme would help the Government in answering claims that periodic benefit packages like the Pioneer Generation Package (PGP) and the newly-announced Merdeka Generation Package (MGP) leave others out, therefore rendering them unfair.
The WP head cited certain people who said that the MGP was “pungently timed with the election cycle, giving off the odour of an unfair advantage aimed at the electoral prospects of the People’s Action Party (PAP)”.