A continued study on equitable and sustainable methods of financing combined with borrowing, using past reserves and ministry budgets are among the methods that the Singaporean government intends to use to fund its ambitious S$100 billion climate change protective measures to ensure the safety of Singapore.
This was announced in a statement in Parliament by Second Minister for Finance Lawrence Wong on Tuesday (Sep 3).
The pronouncement followed Prime Minister Lee Hsien Loong’s announcements contained in his National Day Rally speech delivered on Aug 18 that Singapore will need to spend approximately S$100 billion over 100 years to deal with the issues on climate change and rising sea levels.
The initiatives to be funded include the building of an additional pump house at Marina Barrage, the creation of polders and the reclamation of offshore islands on the eastern coast of Singapore.
“We will need a combination of funding methods to finance the various climate change adaptation measures,” Mr Wong said.
“Smaller-scale infrastructure such as localised flood barriers for public assets, such as hospitals and bus depots, can be funded from the budgets of ministries.
“For long-lived major infrastructure such as sea walls, the Government will look to the option of borrowing to spread the cost across the generations which will benefit.
“Where the measures include land reclamation, the land reclamation costs can already be met from past reserves.”
Mr Wong, who is also National Development Minister, was responding to a question by Nominated Member of Parliament Walter Theseira on how much of the reserves will be used to fund the measures.
The minister explained that the utilisation of past reserves to fund reclamation costs is in accordance with the Reserves Protection Framework, which is agreed between the President and Government.
“The land created through reclamation will be protected as part of past reserves, and when such land is subsequently sold, the proceeds accrue fully to past reserves,” he said.
“So the reclamation of land is in essence a conversion of past reserves – from financial assets to state land, and the use is not a draw on past reserves.”
Under the Supply Bill that Parliament deliberates on and approves each year, Mr Wong made it clear that the Government will seek approval for development expenditure, which includes land reclamation costs.
“The Ministry of Finance will continue to study equitable and sustainable ways to finance the full suite of climate adaptation measures we need to protect our island,” he added.
Associate Professor Theseira then asked if it was the commitment that “in all such cases the cost of land reclamation will be coming from past reserves without the draw down or requirement to raise taxes currently” or if it will be flexible, based on the finance minister at that time.
“As I’ve said just now, the Reserves Protection Framework already allows the Government to use the past reserves for all land reclamation projects,” Mr Wong responded.
“That is already the case today, and that is the basis for which we operate currently,” Mr Wong stressed.