Leong Mun Wai
Singapore
“Okay, yes, Mr Chairman. So, first question, can I confirm that MOM still does not track the change in work pass holders that turned to PRs in the resident PME statistics?”
“Yes. Third question, the increase in part-time workers and contract work are also examples of underemployment. Can the Minister explain why we do not need to be concerned that the proportion of part-time workers out of all employed residents has increased from 8.4% in 2009 to 10.1% in 2023, and can the Minister quote the corresponding inc…”
“Thank you very much, Mr Chairman. I have four clarifications for the Minister. First of all, I would like to thank the Minister for his energetic response to my arguments. I have always respected him for that. However, because I think our views are still very different, I have —”
“For those who do not have a university degree, the prospects are even dimmer and younger workers also face the prospects of skills-related underemployment later in their career. Mr Chairman, let me conclude.”
“And I have three more. To many Singaporeans, including myself, the new policy does not make sense in certain areas. I agree with the Government that NRIC numbers, full or masked, should not be used as authentication, and that must be impressed on Singaporeans. Next question, why is there a need to do away with the masked NRIC policy?”
“In paragraph 40 of the report, it was stated that this July 2024 CM was also emailed to senior Public Service Leaders, including those with key responsibilities in IT and data matters within their agencies. Can I ask the Senior Minister whether any of these senior leaders have voiced concerns over the CM?”
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“Point of clarification, Deputy Speaker, Sir.”
“Thank you, Speaker. Can I ask the Minister whether the AAR will also include a more detailed assessment of how our $100 billion COVID-19 spending has been spent?”
“What I am referring to is, the burden of defending this country must be shared, in my opinion, by all the citizens of this country. That is why we are here today, talking about what are the roles women can play, whether they can play a bigger role in the defence of this country. So, at the same time, we also know that our population is increasing, but there are still not enough male enlistees in our SAF. So, why is that situation allowed to be continued?”
“Speaker, I generally agree with what the Minister for Defence has explained on the women's role in the defence of Singapore. However, I think it is also an appropriate instance now to raise the issue: is the sharing of the burden of the defence of our country now being reviewed, in view of the fact that we have a rising population, but we continue to have a declining number of male enlistees? So, is there a review being done as to how we can ensure that the sharing of the burden of the defence of this country is being done properly?”
“Thank you, Speaker. Just to confirm what the Minister has said. So, the Progressive Wage Credit has taken into consideration future rise in inflation to ensure that Singaporeans' incomes and wages rise with inflation. So, just to confirm that is correct. Secondly, with regard to the COMPASS scheme, I hope tomorrow I will have another opportunity to debate the Minister on the scheme.”
“Speaker, PSP is of the view that inflation is here to stay. It will be a multi-year uptrend. The earlier and the more contingency plans we have, the better. So far, all our discussion in this Chamber has concentrated on cost. I have two questions to ask the Minister for Manpower about income and wages. I would like to ask the Manpower Minister: one, are there plans in place to ensure that Singaporeans' incomes and wages will rise with inflation going forward because we expect inflation to be a multi-year phenomenon? Two, because Singaporeans are in constant competition with foreigners, how to ensure Singaporean workers will continue to be competitive vis-a-vis foreign manpower in a rising wage environment?”
“Okay. So, the second point is: can the Minister enlighten us a bit more on what kind of outcome, what kind of incentive, just a little bit, how is it related to incentivising the individual patient to take more care about his health? The third point is: healthcare is a very resource-intensive thing. I have read that overseas, people are activating community resources to help. So, in Singapore today, when I walk the ground, there are a lot of Singaporeans who are prematurely retired. Are there plans, in the plan that the Minister is putting up, to tap into this resource?”
“Chairman, thank you. I would like to thank the Minister for sharing with us such an exciting plan. One of the reasons that the Progress Singapore Party (PSP) has rejected the Budget is that we want the Government to concentrate more on cutting healthcare cost. We hope that this plan would realise that in the future. I have three supplementary questions with regards to the plan. One is, a lot of feedback from the ground about our current healthcare system is, not so much of the poor being not given medical, healthcare services or treatment, but more of the middle class who can pay. When they get into a healthcare situation, it somehow drains their finances very fast, although we talk about S+3Ms and all that. The first question I want ask is: will the new plan that the Ministry is coming out with take care of that as well, that means give more relief to the middle class? There are many, many areas like, for example, they do not get so much subsidies compared to the lower income, certain medicines are not included and so on. So, that is one point. The second point is that the Minister mentioned about outcome. That is a concept in healthcare for quite some time already. So, I look forward to seeing how the Minister is going to present the plan that take cares of that. One of the things that I thought of in the past when I was running a healthcare fund, that we have also talked about, is how to incentivise the —”
“Should approved therapeutics like Molnupiravir or Paxlovid not be made available to senior patients through the GPs, even before they turn seriously ill and need hospitalisation? We see hope in Omicron being a game changer. Let us review and refine our measures in our fight against COVID-19 and emerge as a people that is more compassionate and united than ever. Legislation of Medical Middlemen”
“Their movements continue to be restrained and some had to give up their right to employment due to such restrictions. Now, parents too, have to contend with stress over vaccinations for their children. And there is a growing number of vaccinated Singaporeans agonising over the issue of booster shots. The latest vaccine safety update by HSA on 23 February reported 10 cases of children, aged five to 11, with serious side effects following vaccination and 280 cases of non-serious side effects. This is of particular concern and warrants closer scrutiny. One case of severe reaction compromising a child's health, going forward, is one case too many, given the fact that children are largely spared from any adverse health challenges from COVID-19 infection. 1.45 pm It is time for the Government to show its magnanimity to this small group of unvaccinated people by relaxing the VDS and not continue to punish them for making rational personal choices. They are not troublemakers as the Government seems to make them out to be. With the continuous surge in Omicron infections despite having all the VDS in place indicates that the VDS are not critical in the fight against the virus anymore. Hence, VDS should be relaxed immediately. Instead, the Government should focus its resources on approving more therapeutics for GPs to treat patients, to deal with the surge and infections. We are especially concerned about the senior citizens. In the last two years, we have established that age is the most important determinant in risk factors leading to death. Hence, management of the senior COVID-19 patient can be more targeted.”
“Chairman, since the end of last year, many countries around the world have removed most, if not, all of the COVID-19-differentiation measures. With the infection cases and deaths from COVID-19 still at a high level, we are not against postponing the easing of the slew of COVID-19 measures announced by Minister Ong Ye Kung on 16 February. However, we hope the Minister will not forget what he said at that virtual media conference, that these rules, meaning the COVID-19 rules, accumulated over the past two years have become quite unwieldy. Indeed, we need to review and streamline many of these rules and the most unwieldy of these must surely be the vaccination-differentiated safe management measures (VDS) introduced incrementally from July 2021, when we switched to the living with COVD-19 strategy. This has brought significant misery to a number of Singaporeans who have valid personal reasons not to vaccinate. Unfortunately, up till today, many of these VDS are still enforced, never mind that other rules have been relaxed with the arrival of the dominant but less virulent Omicron strain. The vaccines reduce the severity of COVID-19 infection, but they have generally fallen short in their touted efficacy. Vaccination was not the universal panacea we imagined and had little impact in reducing both infection rate and a spread of the virus, especially with the current Omicron variant. As we move forward towards normalcy in 2022, we urge the Government to relax all its discrimination policies based on vaccination status. The relevance and justification for VDS have dwindled and I believe the general public does not view this as being favourable or fair. Singaporeans who are unvaccinated are genuinely concerned about their health and each has valid concerns about the vaccine.”
“Speaker, in reply to the Senior Minister of State's question, I confirm that I will put what I said just now on my Facebook.”
“Speaker, thank you for giving me this opportunity to make this Personal Explanation. At yesterday's MOM COS, I was hoping to ask the Manpower Minister a very important point about the displacement of Singaporean PMEs. It was not my intent to impugn the Speaker or the Parliamentary processes. But in my social media post, I was trying to highlight that some amount of discretion and flexibility with the Standing Orders will go a long way in enhancing our discussion in this House. But, today, I would like to sincerely and unreservedly apologise to the Speaker and this House for my Facebook comments of 12.52 pm and 12.53 pm on 7 March 2022, and the video I posted at 6.55 pm on 7 March 2022, and the statements therein which impugned the Speaker and the processes of Parliament. I have taken the post down at 5.30 pm today. I withdraw what I said in them and undertake not to repeat such words again. I acknowledge that I had not set out all the facts in my post and thus, gave a misleading impression.”
“I said, there are still questions. The debate is not over when there are still questions.”
“If it truly wants the foreigners to complement the Singaporean Core, then MOM must ensure that the Singaporean jobs are not being threatened. MOM should spend its time tackling this problem, rather than wasting time and resources trying to rebut Leong Sze Hian. Support for Platform Workers”
“Chairman, importance of job statistics. On 7 February 2022, MOM's rebuke of prominent blogger Leong Sze Hian's intuitive post last Christmas on job statistics highlighted the issue of job security for Singaporeans once again. Do foreign PMETs complement Singaporeans, or do they threaten to take over jobs from Singaporeans? The reality is: it is probably more of a threat. So, policy intervention is needed to rebalance the job market. This reality, however, is not obvious from MOM's job statistics. The basic problem lies in MOM's reluctance to present the employment data in individual categories of original citizens at the start of the statistical period, new Citizens and Permanent Residents (PRs). Instead, it has lumped all the figures into one category as locals. So, we do not have a clear picture of how policies have affected each category of people. We have previously pointed out that while the Government has insisted that the 380,000 PME jobs created for locals between 2005 and 2020 have benefited Singaporeans, that is highly unlikely. This is because more than 635,000 new Citizens and PRs were added to the "locals" statistics during the same period. And most of the 380,000-job increase would have been because of that. In other words, the composition of the "locals" statistics in 2005 and those in 2020 are different, and most of the job increase is not a real increase. Hence, not enough jobs are created for the 250,000 fresh Singaporean University graduates who joined the job market from 2005 to 2020. We can estimate that there is a shortage of 100,000 to 150,000 PME jobs for Singaporeans in the last 20 years, not counting those who were demoted due to discrimination.”
“Chairman, I have two clarifications for the Minister. But before that, I would like to clarify that I did not say SPH is a Government-owned company. I say SPH Media Trust. So, I hope the Minister will acknowledge that. My first question is while SPH is not a Government-owned company, but the Government has considerable influence over SPH, the listed company, over the years. SPH has accumulated a huge amount of property assets from the profits generated from the near-monopoly print business in the past. So, the decision that the Government has made, means that the Government is okay to allow the shareholders to take away all the assets and leave behind a $900 million baby for the taxpayer to be burdened with. That is the first point. The second clarification is when Minister S Iswaran presented this deal or this structure in Parliament some time ago, he also said that SPH Media Trust is going to have private donors. So, may I ask the Minister what is the progress in getting these private donors to also fund SPH Media Trust? Are the current shareholders and the future shareholders of SPH, the listed company, in a position to enjoy huge windfall profits going to some of those donors, that will help us out in the funding of SPH Media Trust?”
“Mr Chairman, I was surprised to learn at the February Sitting that taxpayers may have to pay up to $900 million over five years to support Singapore Press Holdings (SPH) Media Trust, the Government-owned publisher of most of Singapore's mainstream newspapers. Since we are raising a lot of taxes in this Budget, we should be careful about such a new and big outflow of taxpayers' money. Firstly, where is the plan to recoup the $900 million over time? Do we have an exit plan, or will we keep funding SPH Media Trust for many more years beyond the first five years? Secondly, why did the Government not ask for more money from SPH, the listed parent, before it agreed to taking the loss-making business out of SPH? SPH assets have grown over the years, thanks to the hefty profits of the near-monopoly media business it previously enjoyed. Although in recent years the print business has become a loss-making business due to the Internet, SPH has maintained overall profitability because of its huge property portfolio. Thus, it is reasonable to expect SPH to continue to fund the transformation of the media business. Hence, the Government's arrangement with SPH is evidently a bad deal as taxpayers have to foot the bill of SPH Media Trust at least for the next five years while the property assets of SPH, which are worth at least $3.9 billion and expected to generate an annual cash flow of $300 million, according to one broker's estimate, are likely to be sold to Cuscaden Peak, a company owned by our local property magnate Ong Beng Seng, for the benefit of existing and future shareholders. Can the Minister explain what is the rationale behind the Government's acceptance of such a deal? Resilience against Digital Risks”
“So, if there is a time limit, we cannot ask any more questions, even though those are relevant questions?”
“No, Chairman, if there is a question, I have to ask the question.”
“Thank you, Chairman. I would like to confirm with the Minister again, since the $1.4 trillion financial assets are reported in the Government Financial Statements, the Minister would know it. And I am asking her to confirm that number. Is it a number that cannot be confirmed? Or I do not know what is the reason why it cannot be spoken in Parliament?”
“Chairman, thank you. I thank the Minister for the clarification on some of my questions, especially the one on COVID-19. Yes, I think we will refer to the Budget Book again. But I think if the Government can help us by singling out all the COVID-19 expenditures, that will help our understanding better. That is one clarification if that can be done. The second question is, I have specifically asked for confirmation about the financial assets, S$1.4 trillion, which is already a reported number, and also some other figures, S$200 billion new reserves accumulated by MAS. Can the Minister just confirm that? I do not think this needs to be another PQ.”
“Before we raise taxes, we should consider whether there are expenditures we can cut. However, it is not easy to understand the expenditure in the Budget. Hence, I have the following questions. Can the Minister present the $100 billion COVID-19 spending in the same format as the Budget, with detailed breakdown by spending category and by Ministry and explain where is the $5 billion annual spending on R&D? Where is it reflected in the Budget and where and how is the allocation approved? Explain how the SINGA loans and investments are being treated in the Budget and the Government's statement of assets and liabilities. What does the $2.4 billion recorded as capitalisation of nationally significant infrastructure for FY2022 meet? Finally, on revenues. Can the Minister confirm that the Government has reported total financial assets of $1.4 trillion as at 31 March 2021 and that MAS has accumulated close to $200 billion of new reserves in the last two years and all these financial assets are now producing more than $40 billion in net investment returns per year? 5.45 pm GST and Alternative Revenue Sources”
“Finally, the original MSF minus ECDA should be reorganised into a new ministry called the Ministry of Resilient Citizens (MRC), with the transfer of the $1.7 billion financial security programme from MOM to it. The MRC will focus on strengthening our social and financial compact, and oversee social and family development, scholarship and bursary programmes, CPF, a national healthcare scheme, a new unemployment insurance and lifelong fulfilment programmes for the benefit of Singaporeans. Ensuring Digital Inclusivity for All”
“In this Budget, we are looking for ways to cut costs. The most effective way to cut costs is to streamline the Government structure. We should ensure that the money is applied efficiently. For each social purpose, there should be only one channel or platform. The People's Association (PA), with its $908 million budget, comes to mind. Community engagement and citizens' welfare are very important, but they are separately served by MCCY and MSF, with budgets of $107 million and $611 million respectively. PA is more like a political structure, led by political appointees and volunteers. Thus, it is not clear whether it is serving the purpose, the people or the ruling party. If it is not political, to avoid duplicating resources, we should either integrate PA into MCCY or put all community engagement activities at MCCY into PA. We should turn our community engagement into asset-light activities and stop incurring huge development expenditures on building new community centres. For FY2022, another $197 million is budgeted for such development. Instead, we should free up the land and resources tied up in the community centres and other facilities and reallocate those resources to other social needs. We can also potentially do more with the same dollar if we reorganise some activities among MOE, MOM and MSF. The $679 million earmarked for SkillsFuture should be taken out of MOE and integrated into MOM to ensure that the spending creates jobs for Singaporeans. SkillsFuture courses that do not result in better jobs should be dropped. The $1.6 billion earmarked for Early Childhood Development Agency (ECDA) can be taken out of MSF and integrated into MOE, to create a seamless education and development curriculum for our children.”
“Speaker, thank you. I think the Minister did not answer my question. After all, someone has to pay for the $3 billion or $3.5 billion GST. So, I am asking the Minister what is the tax burden on the different groups of Singaporeans? You cannot say there is no increase in tax burden. Secondly, on the income tax. Can I ask the Minister then, what is the total taxable income attributable to the top 10%? I can tell you that a 3% increase in the income tax on the top 10% will yield $3 billion. What is the total taxable income?”
“Thank you, Speaker. We will not be having such a difficult debate, if Singaporeans, especially the middle-class Singaporeans are not asked to pay more taxes. Sir, I have two questions first, for clarification. I have a total of six questions. I hope the Speaker will allow me to ask all the six questions, but let me ask two questions first. I have given a number of the tax burden of the GST on the middle class to be $1.2 billion. Take away all the compensating packages that you are going to give them, divide the taxpayers into three groups. Top 20%, the middle class who will not get permanent vouchers, and those taxpayers who will get permanent vouchers. How is the $3 billion or $3.5 billion additional GST going to spread over these three groups? That is question one. Question two: PSP has not been talking a lot about alternative sources of revenue because we think there is a lot of justification to make use of the unutilised revenues. But if you look at alternative avenues, actually, it is very easy from our point of view. The second question: if you have to choose between a 2% GST hike and a 3% to 4% personal income tax hike on the top 10%, they will yield about the same amount of revenue, would you still choose the GST 2% hike?”
“Thank you, Mr Speaker. Mr Speaker, I think we got to clarify who is going to pay the $3 billion GST increase, since Member Saktiandi say even the middle-class is not paying. Who is paying for the $3 billion? Can anyone from the Government clarify?”
“Speaker, yes, the calculations do not take that into consideration. But I presume that the GST Vouchers and all the compensation payments will only apply to the lower-income Singaporeans. There are some applying to the middle-income, but the permanent GST Vouchers belong to only to the lower-income. So, at the end of the day, when the Government argues that this is not regressive, it is not true, because apart from the top 20%, who are the people who are there, the remaining 40% of the GST increase? It must be the middle class Singaporeans. I hope that answers Mr Saktiandi Supaat's question. 5.08 pm”
“I thank the Member Mr Saktiandi for the question. Speaker, I got the data by calculating from the ratio given by the Minister for Finance in terms of the share of the GST paid by the top 20% and the bottom 80%. It was in the ratio of 60%:40%. So, 40% to the bottom 80% and 60% to the top 20%. If the total amount of GST revenue to be raised from a two-percentage point increase in GST, will be about $3 billion, so, 40% of $3 billion, I got my $1.2 billion. Yes, that is how I got my $1.2 billion.”
“That is how we make Singaporeans more resilient.”
“How about the billions of dollars of taxpayer money spent on local Universities that have relied heavily on foreign talent, but do not seem to be producing sufficient local skills and talent needed for our economy? When public funds are used to support or rescue a commercial organisation, are there plans to claw back the funds when the commercial organisation starts to make money? For the COVID-19 spending, many Singaporeans have questioned why the $30 billion Jobs Support Scheme (JSS) is used to support profitable companies without a claw back feature. The clawed back funds could have been used to help many more Singaporeans who needed help. So, as the amount of resources at the disposal of the Government grow larger, we need to check on the expenditures more closely. We are also against the goody bag approach that is adopted by the Government to convince Singaporeans to accept the GST hike. Handing out short-term ad hoc goodies to Singaporeans instead of using permanent schemes, will not produce resilient Singaporeans but dependent Singaporeans. Let me give you a specific example. I have been recommending a minimum living wage of $1,800 per month in take-home pay for all Singaporean workers. This works out to about $2,250 in gross wage per month. This may appear high, but if you add Workfare Supplement, GST Voucher (GSTV), U-Save rebate, CDC Voucher, and now, Progressive Wage Credit Scheme (PWCS), you could easily reach the $2,250 gross wage per month. Hence, instead of handing out drips and drabs to Singaporeans, the Government could have provided a lump sum to top up the average worker's gross wage to $2,250 per month. A permanent monthly wage of $2,250 will give workers more clarity in making personal financial plans for himself and for his family.”
“Thus, even without touching the growing reserves, we have a total of $30 billion of unutilised revenue annually, which can be deployed for the current year spending in the future. We can actually provide for our current generation while continuing to save for future generations at the same time. Hence, the Government's argument for the future generation does not hold water. The virtue of frugality preached by the Finance Minister is telling cash strapped Singaporeans to tighten their belts again while the Government is sitting on massive reserves and unutilitsed revenues. Of course, we cannot rest on our laurels and rely on our reserves and unused revenues all the time. I only want to stress that we have the buffer and time to make better long-term plans. Those plans should include the Government focusing on fiscal efficiency and discipline. While the Government has been running Budget surpluses these years, public spending cuts have not been discussed openly. Our Budget has increased by about 7% per year over the last two decades to about $100 billion for FY2022. There is, thus, ample room for us to cut down on existing spending. The Finance Minister has disclosed he is imposing a 3% cut on existing expenditure from next year. If he can achieve that every year, we will have a saving of $3 billion per year. Again, there is no need for the GST hike. We can probably do more cuts than 3%. We advocate setting clear socio-economic targets for each expenditure. That is the reason we supported the SINGA scheme, which will bring big infrastructural projects under stricter financial discipline. For example, many Singaporeans are asking, what are the socio-economic targets for SPH Media Trust, to which the Government is committing $900 million over the next five years?”
“This is the best timing to share with Singaporeans a small part of the huge windfall profits chalked up by GIC, MAS and Temasek last year. However, not only did the Government not do that, it also increased the tax burden on Singaporeans. This is incomprehensible to me. The Government used healthcare costs as the main rationale for raising taxes. However, Singaporeans have paid and are still paying dearly for healthcare. Is it fair to ask them to pay more taxes for healthcare again, especially in these challenging times? Look at the facts: $100 billion of the Singaporeans' CPF funds are locked up in MediSave accounts, and Singaporeans contribute $10 billion to MediSave every year; $10 billion of reserves have been accumulated in MediShield and CareShield, while Singaporeans continue to pay $3 billion of CareShield premiums every year and the premiums are likely to rise every five years. Singaporeans also pay billions of dollars in private healthcare insurance. Singapore is actually in a very strong financial position. We have the resources to pay for even the large healthcare cost increases forecasted by the Government. Look at the facts again. The Government reported $1.4 trillion of financial assets as of 31 March 2021. This is an indication of the size of our national reserves. Our nation's financial assets are currently closer to $1.6 trillion, due to an increase of $200 billion of reserves over the last two years, despite and after the COVID-19 drawdowns. Net investment income from these assets is now more than $40 billion a year. Half of the net investment return, or $20 billion, is recycled back into the reserves. Another $10 billion of annual land sales proceeds is put into the reserves directly and not used for the current year spending.”
“Mr Speaker, the Progress Singapore Party (PSP) will not support this Budget because of the GST hike. Middle class Singaporeans will have to bear an additional GST burden of $1.2 billion per year. On top of that, many Singaporeans living in private properties who are asset rich but cash strapped, will bear a significant part of the $380 million property tax increase per year. This Budget is a feeble attempt to increase the taxes on the rich after three decades of favourable tax policy towards them. The additional personal income tax raised is only $170 million per year, which many Singaporeans cynically pointed out, was not enough to pay for the $180 million per year funding for SPH Media Trust. The Additional Registration Fee increases for luxury cars is not really a burden to the rich, because the fee is transferable to future owners. Not enough has been done on foreign manpower policy too. The increase in the minimum qualifying salary for Employment Pass (EP) holders is too little to be effective. I am also surprised that S Pass holders are needed in the finance industry where many Singaporeans are hoping to work. The more effective way to manage the quality of our EP holders is to ensure fair competition between the EPs and Singaporeans through imposing a standard wage levy on all EPs who do not make CPF contributions. If we impose a monthly $1,200 EP levy, as I had recommended in the Budget debate last year, and then again in the Foreign Talent and Comprehensive Economic Cooperation Agreement (CECA) debate, the levy will raise almost $3 billion and make the GST hike unnecessary. As global inflation is on an upcycle, we will have to do more to help Singaporeans to cope with the rising cost of living and asset inflation.”
“Mr Speaker, this is not the right understanding of the process, you know. I can invite other Members in this House to comment on this. When MAS buys foreign assets from the market, MAS needs to pay for it. If there are no Government deposits to pay for it, MAS will have to print more Singapore dollars to pay for it. So, that will have a different effect on our economy. You cannot say there is no departure from the current way of monetary policy operations.”
“Mr Speaker, pardon me, I would still like to ask the Minister for Finance. My understanding of how MAS operates in the market seems to be different from his. The issue is not about OFR. The issue is, when MAS accumulates foreign reserves, accumulates foreign assets, or now we can call foreign reserves, what does it use to buy the reserves in the first place, right? In the past, we have excess savings. So, MAS has a lot of Government deposits on its balance sheet. So, it can use the Government deposit to buy the foreign reserves first; and then, it transfers over to GIC and reduces both the assets and liabilities at the same time. But if you do not have enough Government security deposits on the balance sheet of MAS, then, when MAS accumulates the foreign currencies, or foreign reserves, what does MAS use? I would like to ask the Minister for Finance, what does MAS use to buy the foreign assets?”
“Speaker, I would still like to ask the Minister again. I am actually puzzled when he says that there is no departure from the current way we are doing things. So, currently when we buy foreign assets, MAS buys foreign assets from the market, MAS uses Government deposits, right? So, if in the future, we do not have Government deposits, which I have explained in my speech, those are our excess savings, if in the future, our excess savings come down drastically and we do not have excess savings to buy the foreign reserves, MAS will have to buy the foreign reserves with Singapore dollars, right? So, that will be a very different way of managing our monetary policy going forward. So, that is a major departure. Especially when he suggested a $580 billion limit, that means over the next few years — okay, let us say $380 billion left after the current transfer and you use it over five years, for example. Then, you will be talking about $70 billion accumulation of reserves every year. That is a big amount. I do not know the number, but probably, currently, we are accumulating at about $30 to $50 billion a year, right? So, you say that we do not have the excess savings anymore and on top of that you are accumulating $70 billion, that is a big amount.”
“Thank you, Speaker. I have two questions for the Minister for Finance. One is, yes, we may not need to announce another number for our national reserves. But would he agree that every year, when the Government financial statements are published, the mainstream media should report our country's statement of assets and liabilities? Meaning, the $1.4 trillion of financial assets, for example, will be announced in the public. That is one question. The second question is, can I ask what is the average rate of reserve accumulations in the past and what is the expected reserve accumulation going forward? Because when he described that this round, we probably have to transfer $200 billion, use up the RMGS limit, about $200 billion dollars to transfer the assets to GIC, we are still left with $380 billion. And he said that in a few years' time we will be accumulating – I mean, that is what I hear from what he said – that will be a lot of reserves to accumulate, you know? Another $380 billion. That is why I have suggested that we should reduce the limit. Okay, two questions.”
“Printing money to acquire foreign reserves, allowed under this Bill, will carry with it a big economic cost. Hence, if we really need this Bill, there should be at least an annual RMGS issuance limit incorporated into this Bill as a check on the Government. The proposed $580 billion limit currently provided in the Bill is far too large and is not an annual limit. Mr Speaker, notwithstanding our concerns, we still support the Bill to give our Government maximum leeway in managing our financial affairs. But we request the Government to seriously take note of our concerns and not allow monetary and fiscal discipline to be weakened by this Bill.”
“Our reserves have continued to increase in 2020 despite the largest drawdown of $53 billion in the history of our nation to combat the COVID-19 pandemic. Our national reserves have continued to increase because we continue to accumulate new foreign reserves to the tune of about a $100 billion a year for 2020 and 2021, as explained just now. On top of that, we also earned net investment return of about $40 billion for each of those years. By my estimate, the total financial assets will increase further to $1.5 trillion in Fiscal Year 2021. Hence, it is puzzling, why the Government keeps insisting on raising more taxes when our foreign reserves are substantial, still increasing and earn good returns every year. Mr Speaker, in conclusion, I would like to emphasise three points. One, the Government should disclose the size of our national reserves to Singaporeans or at least confirm the information that is already made public. It should also account for the accumulation management and spending of the reserves. Two, given our huge national reserves which are still growing and giving a good investment return, our country's financial position is healthy and there is no need to raise additional tax revenue through the GST. Many Singaporeans continue to ask me how about Government expenditures? So, many of them would like to know how the Government has spent the $100 billion for the COVID-19 packages. I will request the Government to submit a full report to Parliament during the Budget Debate on 18 February before it asks Singaporeans for more money through the GST hike. Three, there is an economic cost in accumulating reserves too, as what Assoc Prof Jamus Lim also said just now. It is best to stick to Dr Goh's prudent style of reserve accumulation.”
“However, can the Minister explain what is the difference between the monetisation that you are explaining and the fact that in 2020 and 2021, we have accumulated assets, additional assets of close to $200 billion and at the same time, on the other hand, we have been spending for the COVID-19 packages. So, is this not indirectly monetisation of Government spending? Next, I shall touch on the transparency of our national reserves. The Government has always been unwilling to state officially the size of our national reserves; often citing national security as a reason. This reason, however, does not hold water. This is because the Government actually reports our country's financial position every year in a report entitled the Government Financial Statement (GFS). However, a few of us – busy and pressured Singaporeans – know of this report. Because yearly, up to 2020, only one hard copy of the report was available at the National Library. This report went online only after 2020 on SingStat. On the other hand, we can assume that the intelligence agents of foreign countries would not have missed this piece of information. Thus, it is rational that the Government announces our national reserves, or at least the financial assets reported in the GFS in the mainstream media every year so that Singaporeans will get to know about it. So, my second question is, does the Government still think that there is a need to keep our national reserves figures confidential? According to the GFS for Fiscal Year 2020, the total financial assets managed by the Government and belonging to all Singaporeans have grown from $1.35 trillion in 2019 to $1.4 trillion in 2020.”
“The large foreign reserve increases in 2020 and 2021, amounting to more than $180 billion in total, pushed the OFR to $566 billion by end 2021, far exceeding the targeted OFR limit of $325 billion. So, the excess has to be transferred to GIC. However, under the present rule the foreign reserves cannot be transferred from MAS to GIC if the foreign reserves were not paid for by Government deposits. The Government and MAS, a central bank, are independent operating entities, operationally. And the Government cannot take assets away from MAS without paying for it. As the Government has no money to pay, we are debating this Bill today to allow the Government to pay with an IOU. Hence, this Bill allows the Government to create a new class of IOU, called the Reserve Management Government Securities (RMGS) to pay for foreign reserves to be transferred from MAS to GIC. This Bill does open up the possibility for the Government to pressure MAS to print more Singapore dollars to accumulate foreign reserves and then buy them over from MAS with RMGS. Needless to say, this runs the danger of a collapse in monetary and fiscal discipline, leading to hyperinflation potentially. Hence, we recommend that there should be a strict annual RMGS, issuance limit, annual limit incorporated into the Bill, as a new check to reduce the potential dangers described above. The $580 billion limit for the RMGS proposed in the Bill is far too large and is not on an annual basis. So, the first question I want to ask is we appreciate all the safeguards that the Minister for Finance had explained just now about preventing monetisation of Government spending.”
“The OFR under MAS is also technically not considered part of our national reserves. Given our position as a financial centre of Southeast Asia, there is usually a net inflow of foreign money year after year. So, the MAS has ample opportunity to accumulate foreign reserves. The MAS can utilise the Government deposits or increase the supply of Singapore dollars to accumulate foreign reserves. In the past, the foreign reserves were mainly accumulated using Government deposits. We have substantial Government deposits because it is actually our huge excess domestic savings, channelled into the public coffers through the CPF system and the structural Government surpluses derived from land sales and a whole range of indirect taxes and public services fee. Accordingly, the accumulation of reserves is limited by the amount of excess savings we have. So, what do we do when the inflow of foreign money far exceeds the amount of the Government deposits or our excess savings? We can decide not to accumulate any more reserves or to continue accumulating. If we choose the former, then we will have to either allow our Singapore dollar to appreciate further or to implement new policies to control the inflow of foreign money. If the Government wishes to continue accumulating foreign reserves, MAS will have to print new Singapore dollars since there is no Government deposits to pay for it. This seems to be the case in 2020 and 2021. When MAS probably increased the Singapore dollars to absorb the sudden surge in foreign money inflow. This in turn has caused the accelerated rise in property prices from 2022 to today.”
“In layman's term, while MAS cannot do quantitative easing in the past, it can potentially do so – and I say potentially, not necessarily so – if this Bill is passed. So, let us bear that in mind, as I proceed through my speech today. My speech today will start off with explaining the reserve accumulation process and the dangers of the RMGS and then ends with a call on the Government to be more transparent about our national reserves. The reserve accumulation process. The Government, specifically MOF, oversees the reserve accumulation and management process, but it is the MAS and GIC which are the operating entities. MAS as central bank of Singapore has the power to print Singapore dollars as and when the need arises. MAS is also the banker for the Government, holding the nation's cash in the form of Government deposits. MAS buys and sells foreign currencies with Singapore dollars on the Foreign Exchange Market to manage the value of Singapore dollar. When foreign currencies are bought, they become the Official Foreign Reserves (OFR) of MAS. Under our reserve management arrangement, MAS will keep OFR up to a stipulated amount for managing the Singapore dollar. The stipulated amount currently is about $325 billion. Foreign reserves in excess of the stipulated amount will be transferred to GIC. GIC is a 100% Government-owned investment company formed in 1981 to manage the excess foreign reserves as an endowment fund for Singaporeans. Unlike the OFR, an endowment fund can invest in more long-term and risky investments to achieve a higher return. As substantial assets have been transferred to GIC over the years, GIC holds most of our national reserves. The balance is held by Temasek Holdings, which is not involved in the reserve accumulation process explained here.”
“Mr Speaker, our huge national reserves are the pride of our nation. But few Singaporeans know the size of our reserves and how the reserves are accumulated, managed and spent. The reserves are actually accumulated through a mechanism which operates on a few key principles put in place in the 1980s by the late Dr Goh Keng Swee. The mechanism essentially uses our large pool of domestic savings to soak up the foreign money that flows into Singapore because of its strategic position as a trade and financial centre of Southeast Asia since the late 19th century. This mechanism has worked well and will put us in a strong financial position for generations to come. However, this MAS (Amendment) Bill that we are debating today will violate a key principle of this mechanism laid down by Dr Goh and runs the risk of compromising the mechanism altogether. That principle stipulates that the Government must purchase foreign reserves from MAS with Government deposits, which is essentially the cash owned by the Government or the nation. As the amount of Government deposits equals the excess savings in our economy, the accumulation of foreign reserves is limited by the size of the excess savings as envisaged by Dr Goh. However, this Bill opens up the possibility of the Government accumulating foreign reserves through simply getting MAS to print Singapore dollars. This is effected through clause 2 of this Bill, which deletes and substitutes section 23(6) of the MAS Act, to allow the MAS to subscribe to the Reserve Management Government Securities (RMGS) although section 23(5) states that MAS shall not directly subscribed for any securities issued by the Government or any public authority. Hence, this is a major change in the conduct of a monetary policy.”
“No, I note the point but I have my question. Can I ask —”
“Mr Speaker, thanks. Can I ask the Minister —”
“Yes, I want to clarify that that is where I got my information, yes.”
“I have clarified where the information comes from.”