Tharman Shanmugaratnam
Singapore
“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Ans…”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks.”
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“Our framework for admitting talent to Singapore remains unchanged. They must be talented, they must be experienced and they must be able to prove their worth. MOM's framework looks, as Members know, at a few criteria: how much they are paid, and Page: 39 not just how much they are paid at any age, it actually varies by age. So, if you are someone in your mid-40s, if you are talented and experienced, it will be reflected in your pay. So, it is not a framework where anyone who wants to come, comes into Singapore. They have got to meet some hurdles. But we have got to make sure that the framework does allow talented and experienced people – people with a track record that can add to teams in Singapore – to come to Singapore. It is what our firms need and what our economy needs. So, I would not worry too much about the perturbances in Europe leading to a sudden flood of the unwashed to Singapore.”
“Whether or not Brexit and its impact on the UK and European economies affect our long-term expected returns on investments, both GIC and Temasek and, for that matter, the Monetary Authority of Singapore (MAS), it is too early to say. My guess is that it will dampen somewhat the outlook over the medium term but it is too early to say what the long-term impact will be. You have to remember that the NIR Framework is really a framework of looking at the returns over the next 20 years, which is a reasonably long period, and applying that then to the asset base in order to derive how much money can be spent in the Budget. So, I would say we should not rush to a conclusion on the long-term implications of Brexit. For that matter, as far as Temasek and GIC are concerned, they have reasonably well-diversified portfolios. Temasek has a more concentrated portfolio in Asia and it is also more concentrated in equities. Even for Temasek, if you look at its equity portfolio, it is quite well-diversified across industry sectors. So, at any one point in time, you are hit by one cycle or another, but it is the overall portfolio over the long term that determines if you are fulfilling your mission of delivering good long-term value.”
“Global capital markets saw much larger declines than what we saw recently with the Brexit vote. MSCI World (Equities) fell by more than 40% from its peak to the trough during the Global Financial Crisis. The value of GIC and Temasek's investment portfolios declined significantly, together with the markets. But their portfolios recovered their value within one to two years and have continued to grow since then. Mdm Speaker, the Brexit Referendum outcome is an important turning point for the UK and the EU. We must expect a period of economic uncertainty over the next few years at least. What is especially critical is how politics will unfold in the UK and Europe. It will have lasting economic repercussions extending beyond Europe. We will continue to watch these developments closely, be prepared for their impact on Singapore and see what lessons might be useful for ourselves.”
“If the UK is unable to hold itself together as a union, or if nationalism gathers pace among the EU's member countries, there will very likely be a permanent weakening in their economies. More divisive politics in the UK and the EU will also weaken the resolve to undertake needed economic and financial reforms for the long term. Last week, the World Bank released a report stating that the Brexit Referendum outcome has marked a "historical shift in trade policy attitudes" that could impair global economic growth. If we do, indeed, see a shift towards protectionist policies worldwide, it will have major implications for Singapore, which thrives on an open global trading system. Mdm Speaker, it is premature to say what the longer term impact of Brexit will be, positive or negative. We must watch the developments carefully and be prepared to adjust our strategies so that we stay competitive as an economy and can retain good jobs in Singapore. Let me turn now to Mr Patrick Tay's question on the impact of Brexit on GIC and Temasek Holdings' investments. GIC and Temasek, like other major global investors, can never be insulated from volatility in the financial markets. However, both GIC and Temasek make investment decisions for the long term and look beyond the short-term market booms and busts. Their focus with regard to Brexit, for example, is to assess how it could fundamentally alter the long-term prospects for the EU and UK economies. From time to time, GIC and Temasek will face market dislocations. They aim to weather the ups and downs of the market and adopt investment strategies that can deliver good long-term Page: 38 returns. The 2008 Global Financial Crisis was a major case in point.”
“Both the UK and EU leaders will be mindful of their domestic political circumstances, and the EU will want to ensure that more member states are not encouraged to follow the UK. In short, there is no precedent for Brexit and no one can say how and when events will unfold. Until the future trade and investment relationships between the UK and the EU are formally settled, the uncertainties will likely reduce investments and economic growth in the UK and, to some extent, in Europe as well. They will present another headwind in a generally subdued global economic outlook for the next few years. As of now, MTI does not expect these developments on their own to result in a significant reduction of growth in Singapore over the short term or the next few years. However, if a European slowdown coincides with other factors, such as a sharper than expected slowdown in China or the US, we will see a more major impact on our economy. What happens over the longer term following Brexit is even less predictable and a deeper concern. Analysts have begun to paint the possible scenarios. In the more optimistic scenarios, the UK and the EU arrive at a new and mutually beneficial arrangement for trade, investment and immigration. If, as a result, the UK retains substantial access to the EU single market, we should not underestimate its ability to regain economic competitiveness and strength and to remain a valuable economic partner for us in Singapore over the long term. However, a more pessimistic state of affairs cannot be ruled out. The key unpredictability is in the political dynamics, both within the UK and in Europe.”
“The short-term impact of Brexit is mainly on the financial markets, more than on economies. The immediate impact of Brexit on currencies and stock markets has also not been a major concern for us. Following the Brexit vote, as Members know, the British pound has declined sharply in value, and the US dollar and the yen have strengthened in global markets. Other Asian currencies, including the Singapore dollar, also weakened against the US dollar, as is typical when there is a sudden increase in risks in global markets. The resulting movement of the Singapore dollar on a trade-weighted basis has been orderly and contained. Stock markets also fell immediately after the Referendum, but have since recovered. We can expect repeated bouts of volatility in financial markets as Brexit is debated and negotiated. But what is of greater concern are the economic and political uncertainties resulting from Brexit. These uncertainties will weigh on the UK, Europe and the global economy for at least a few years and are likely to dampen growth. The first uncertainty has to do with what Brexit actually means. There is no clarity within the UK, even among proponents of Brexit, on the nature of its future relationship with the EU. This state of affairs may persist for some time. It is also not clear when the UK will formally trigger Page: 37 Article 50 of the Lisbon Treaty, which serves formal notice to leave the EU. Second, even after formal notice is served, negotiations between the UK and the EU are likely to be complex and prolonged. The basic conundrum is that the UK wants free access to the EU market but control over immigration from the EU, whereas the EU sees free access to its market and free movement of people as one package. That is the basic conundrum.”
“Mdm Speaker, as the topics are related, may I take Question Nos 21 and 22 together, please?”
“We will work closely with financial institutions to provide Singaporeans with more opportunities to gain cross-functional and overseas exposure and to develop leaders with capabilities to take on responsibilities in Asia and beyond. Page: 58”
“In recent years, we have stepped up efforts to empower Singaporeans to better manage their finances and safeguard their interests. MAS has expanded the suite of savings and investment options for retail investors by: (a) improving the availability of corporate bonds for stable, long-term returns; (b) enhancing access to exchange-traded funds for diversified equity returns; and (c) introducing the Singapore Savings Bonds for flexible risk-free returns. MAS will also regulate precious metals buy-back arrangements and collectively-managed investment schemes, to better safeguard consumers' interests when investing in such products. We are also reviewing the use of a complexity-risk ratings framework for investment products, to facilitate sound financial decision making. We are building a vibrant financial innovation ecosystem in Singapore. We will actively collaborate with the industry to make swift, simple and secure digital payments available to all individuals and businesses, encourage financial institutions to set up innovation laboratories in Singapore to test-bed solutions and provide a conducive regulatory environment for such innovation. MAS has also committed $225 million over the next five years to support initiatives under the Financial Sector Technology and Innovation scheme. Technology will open up new opportunities and change the nature of jobs in finance. Financial institutions will also face challenges from new players who are out to disintermediate them. MAS will work actively with the industry to maximise the potential of technology and will make full use of SkillsFuture to deepen skills, at all levels of the financial sector workforce. We will also ensure a strong Singapore Core in the financial sector.”
“The divergence in monetary policies in the advanced economies, volatile capital flows and financial vulnerabilities in some emerging economies also pose new risks for the global system. MAS' monetary policy of a gradual appreciation of the nominal effective exchange rate of the Singapore dollar since 2010 has brought inflationary pressures under control. In 2015, MAS eased monetary policy in a calibrated manner, in line with the softening of inflation and growth. MAS will continue to focus monetary policy on minimising overall economic volatility, while ensuring price stability in the coming years. Since the global financial crisis, MAS has strengthened the regulatory framework for banks and insurance companies. Capital and liquidity standards have been enhanced. Last year, MAS introduced a framework to strengthen the ability of domestic systemically-important banks to withstand shocks. MAS is reviewing the capital framework for insurance companies to make it more risk-sensitive. We are also collaborating with the industry and other public agencies to strengthen the cyber resilience of the financial sector. To strengthen Singapore's securities markets, MAS and SGX have been working to implement reforms, such as a minimum trading price for shares, short position reporting and collateralised trading. To make OTC derivatives markets safer, MAS will implement central clearing and reporting of trades, as appropriate. Page: 57 The financial sector is a critical gatekeeper in the fight against money laundering and terrorist financing. MAS has kept our rules in line with international standards and will continue to ensure that financial institutions have strong safeguards against illicit funds.”
“MAS will provide an effective anchor for economic and financial stability during a period of global and regional uncertainties. We will also actively promote innovations in finance. Technology will challenge many existing players, but is a major opportunity for our financial centre. We will work with the industry to use technology to increase efficiency and lower costs of payments, enable financial institutions to expand their reach abroad, as well as better manage risks and provide benefit to customers, including ordinary savers. Our core MAS policies should not change fundamentally. Our monetary policy decisions recognise that inflation is low today, but is likely to rise over the medium term amidst a tight labour market. They aim to secure price stability during a period of transition when cost pressures are still significant and while the economy moves gradually towards productivity-led growth. Financial sector supervision, the other major prong of MAS policies, will remain focused on pre-empting systemic risks to the financial system, promoting the safety and soundness of our financial institutions and ensuring well-functioning financial markets. MAS will also work with the industry to deepen our capital markets and the foreign exchange and derivatives markets; strengthen the asset management and insurance industries; and build a vibrant RMB ecosystem. We will regulate unconventional collective investment schemes to ensure consumers' interests are adequately safeguarded, while there will be wider bond and equity investment choices for retail investors. The Singapore economy is experiencing modest growth, against the backdrop of uneven global economic health and ongoing restructuring of the domestic economy.”
“The ASEAN Economic Community (AEC) will be launched at the end of 2015. Financial integration is an important part of AEC. It will support economic growth in the region, strengthen our financial markets and promote financial inclusion. Good progress has been made but the pace of financial integration has generally lagged behind trade integration. Financial integration is complex as it involves issues of harmonising national regulatory standards, market conduct practices, disclosure requirements and conditions of licensing. Further development and convergence in financial system maturity among the ASEAN economies would also aid the pace of financial integration. Notwithstanding the slower pace of financial integration, there has been progress in the areas of banking, insurance and capital markets. For example, in banking, ASEAN countries have established the ASEAN Banking Integration Framework (ABIF), which provides a platform for two or more ASEAN countries to agree on specific areas for liberalisation based on ASEAN banks’ commercial interests. The Page: 145 banks that meet ASEAN members’ respective admission criteria and prudential requirements will be able to enjoy greater market access and operational flexibility in the region. As there are presently limited details on the proposed Micro, Small and Medium Enterprises Growth Bank, it is premature to decide on Singapore’s support for the proposal. However, our surveys indicate that the SME loan and equity financing programmes offered by private financial institutions have been broadly effective in meeting the financing needs of SMEs.”
“AHPETC has not answered these questions. They are very reasonable questions, legitimate questions, and it has not answered these questions. And this is exactly the same thing as what happened in 2014. I think the Member will also know ─ and I do not have my materials in front of me ─ that what is owing from the operating fund to the Sinking Fund is actually a very substantial sum. Even if you take into account MND's grants ─ which MND is willing to discuss with AHPETC, and you have part of the MND grant that has to properly go into the Sinking Fund and another part which goes into the operating fund – the amount that is owed to the Sinking Fund from the operating fund would not be solved by MND grants. There is a more fundamental problem.”
“This is like saying that, except for the fact that the pillars of my house are in serious danger of collapsing, everything is fine. The examples that I have given of the areas that the auditor has qualified do strike me, as a Finance Minister, as being fairly serious examples. They are not minor infractions which you put a coat of paint over. They are very serious examples. So, I would, really, strongly advise not to get into the game of saying whether it is three or eight and so on, but to look into the substance of the matter. These are very serious issues, of failure to transfer monies to the Sinking Funds, being unable to account for your S&CCs after a few years. They are very serious matters to be taken seriously by everyone up and down the line. I would strongly advise that. Second, on the matter of grants ─ was that what the Member asked about? Here, again, I have looked at MND's statement on the matter which I have in front of me. I am sorry to have to go through it again, but I will have to take Members through the key issues. Page: 21 First, AHPETC had made a rather unusual request that the MND grants ─ which ought to be split, going by the normal rules and procedures, between the Sinking Fund and the operating fund ─ AHPETC made an unusual request for all the monies to go into the Sinking Fund. And MND, despite the unusualness of this request, said it was prepared to consider the suggestion and merely asked for some cash flow information to ensure that, if MND does as requested, the delivery of essential services would not be compromised. That was an entirely reasonable request by MND. They are willing to entertain the suggestion AHPETC made, but they would like some information to make sure that delivery of essential services is not compromised.”
“The foundations need to be put in place. It is hard work. But you have had a lot of time to do so.”
“I have been reading the reports regarding the latest accounts. First, of course, it has to be noted that they were submitted very late, several months after they were meant to be submitted to the Ministry of National Development (MND). MND, in fact, issued a reply to queries on the matter, which I have read. The accounts are still qualified with disclaimers of opinion. They are qualified on several accounts. I should note also that these are new auditors appointed by AHPETC. They have flagged eight different areas of concern involving non-compliance with legal and regulatory requirements ─ eight areas where there was non-compliance. And these were fairly basic areas. They were not minor areas of infraction. There were still matters to do with related-party transactions, quite significant matters. There were lapses with regard to transfers to Sinking Funds, which are an extremely important matter for all Town Councils: failure to transfer monies to Sinking Funds when due is really putting the house at risk. The transfers that AHPETC made, according to its own auditors' report, were late. And as the Member will recall from the AGO's previous report, errors were discovered in the computations only after AGO's audit. So, there is something seriously wrong there. There were also problems to do with the accounts themselves: problems to do with the opening balances; problems to do with determining the accuracy of the service and Page: 20 conservancy charges (S&CCs) that were owed to the Town Council; problems to do with accounting for creditors and accrued expenses. So, it is not something to be white-washed. When the house is structurally unsafe, one does not just go and put a new coat of paint on the front walls. I think it needs a very hard look.”
“I would not be able to say that every fault or lapse found this year has never happened before. As the Member said, AGO, like any external auditor, can only make selective audits and focus on different transactions each year in different agencies. However, if the Member asks me for an assessment, looking at all the years of the AGO's reports ─ and I must say that AGO is a very thorough organisation ─ it is clear that lessons are taken in each and every case. There are one or two instances where you literally get a recurrence of the same problem, which we take very seriously. But by and large, lessons are taken. I have to emphasise that there will be no perfection in this matter. From time to time, there will be human lapses and, despite the rules having been put in place and strengthened after initial audit findings, you will sometimes get people overlooking the rules. But by and large, if we look at the way Government agencies have responded to the AGO reports, actions have been taken, disciplinary actions have also been taken and improvements have been made. We do track this. We also track whether there is a recurrence in the same agency or the same type of problem. In this year's report, for instance, there was only one recurrence out of that whole set. We track every single lapse to see, "Has this happened before? Were the lessons taken after the last time it happened?" And we found only one example where, in fact, there was a recurrence of the same type of lapse. Page: 19”
“As I have mentioned, AGO has given the Government an unmodified audit opinion on its financial statements, both in the latest audit as well as in previous years. This means that the accounts of all the Government departments, Ministries and Organs of State are reliable, and public funds are properly accounted for. The same is true for the Statutory Boards which have their respective auditors. They all received unmodified audit opinions from their respective auditors in their latest audits. If I can put it simply, the whole house of AHPETC's finances is unsafe, if you look at what the AGO findings say. Both AHPETC's own auditor and the AGO could not certify the AHPETC house as structurally safe, structurally sound. Apart from it being unsafe and unsound, there Page: 18 are also many individual defects and problems. By comparison, the Government agencies audited by AGO do not have unsafe houses. The house is safe. There is no question as to whether public monies are fully accounted for. There are some repairs needed to the house in specific areas but everyone can be confident that the house is safe. And there is also full visibility. The curtains are not drawn. There is full visibility. This is the fundamental difference.”
“On the first part of Mr Liang Eng Hwa's question, as I have explained, there are two types of audit. One is an audit of the reliability of the financial statements; the other is a selective audit that AGO does each year on different agencies on quite a wide range of issues, mainly to do with their compliance with the rules and procedures that we have put in place to ensure proper conduct. But it goes beyond that also. It looks at wasteful spending, whether there is value-for-money in spending, and a range of other issues. So, AGO has the remit to decide on what is relevant in its selective audits and it has ranged quite widely across our agencies. The fundamental issue which I highlighted in my answer is that AGO has given an unmodified opinion on the Government's financial statements. That is, indeed, the fundamental difference between the AGO's opinion on the Government, compared to the AGO's opinion after its special audit of AHPETC. The problems in AHPETC are fundamentally different. The entire system of accounts is a problem. If I can quote from the AGO Report on AHPETC, "There can be no assurance that AHPETC's accounts are accurate and reliable, or that public funds are properly spent, accounted for and managed". This is not just a matter of poor accounting procedures. It arose because there were so many weaknesses and omissions in the AHPETC accounts that its own auditors and the AGO were not able to determine if monies in the accounts have been safeguarded or how they have been used. That is the heart of the matter. It is the entire system of accounts. There is no remotely similar problem in the Government.”
“To conclude, let me reassure Members that we have a sound system of checks and balances in place in the public sector, which is why it is regarded as one of the cleanest and most reputable administrations in the world. Public officers and agencies know they have a responsibility to safeguard the use of public funds. Internal controls are in place within each agency, audits by an impartial AGO are carried out regularly and rigorously, and the AGO's findings are made public. The agencies take prompt action whenever problems are found and make no attempt to cover them up. And where there is any suspicion of fraud or corruption, investigations are thorough and errant officers face the full measure of the law regardless of their seniority. Any AGO audit must be expected to turn up some lapses and oversights. If nothing was found, I would be concerned about the independence and rigour of AGO's audits. We take every lapse seriously and ensure prompt remedy. But we cannot tighten controls to the point of eliminating all lapses. It is not possible to avoid human lapses completely in any large organisation and we would also be weighing down the system with more rules than is sensible for an effective administration. It would freeze decision-making within our agencies. We must, therefore, continue to maintain a sensible balance of rules, subject ourselves to regular and thorough audit, and take full and proper actions whenever problems are found. Finally, I should emphasise once again that AGO's findings on compliance with rules and procedures do not impinge on its assessment that the Government's financial accounts are reliable. They leave no doubt as to whether the public's money is fully accounted for and in safe hands.”
“Because of the consistent way we have dealt with lapses in the past, all public officers and their supervisors know that if they are responsible for any misdoing, firm measures including disciplinary actions, will be taken whenever necessary. All officers know that. If there is any misdoing, firm measures will be taken, including disciplinary actions wherever necessary. Except for one case in the latest AGO findings which has been referred to the Police for further investigation, all the other cases were due to administrative or procedural lapses. These were mainly due to a lack of knowledge, carelessness or poor supervision. But even where there is no evidence of fraud or corrupt intent, an officer may face serious disciplinary action, such as having his salary increment withheld and being debarred from promotion for a few years. And this, indeed, does happen. Mr Mohd Ismail has also asked if Ministries' investigation reports will be made public. The Public Accounts Committee, comprising Members of this House, can and has called up Page: 16 public agencies to give a full account for areas which are of concern to the Committee. Agencies are required to submit all materials related to their cases, including investigation reports, to the Committee if asked. The Committee then gives its opinions and observations, including its assessment of the agencies' follow-up actions, to Parliament and to the public. To go beyond this and make public each agency's investigations into every lapse each year will not help in ensuring the thorough internal investigations needed to get to the bottom of things. What matters is that agencies take each and every lapse seriously and take steps to minimise recurrence.”
“All of AGO's audit findings are looked into by the Heads of the respective agencies. In the case of Ministries, this is the Permanent Secretary. The Permanent Secretaries and the other Heads of the respective agencies are responsible for ensuring that the lapses are rectified and steps taken to minimise recurrence. This includes the need for further investigations within the agencies when required, and to take disciplinary actions where warranted. Any suspicion of corruption or fraud is referred promptly to the Police and investigated thoroughly. With regard to Statutory Boards, their audit findings and any further investigations are also reviewed by their respective supervising Ministries. In this year's report, AGO has observed lapses in some agencies regarding their administration of grants, management of procurement or revenue contracts, management of contract variations and related-party transactions. All the agencies involved have conducted their own investigations into the lapses. Except for one audit finding concerning an agency's procurement of event management services, all the other audit findings in this year's AGO report were not repeat lapses. All agencies where lapses were found have taken steps to improve. Depending on the problem, this includes closer monitoring by supervisors and internal auditors, improved and clearer internal guidelines for officers, enhanced IT systems to enable better tracking, and developing fund administration guidelines for management of programme vendors. Further, officers responsible for the lapses are taken to task.”
“I thank Mr Mohd Ismail Hussein for his question. Before I get into the specifics, let me briefly explain that there are two types of audit conducted annually by the Auditor-General's Office (AGO). The first type is a financial statement audit. AGO checks if the Government Financial Statements have been prepared in accordance with the law. The Government Financial Statements incorporate the accounts of all Ministries, Departments and Organs of State. AGO's audit hence covers the accounts of all these agencies. The second type of audit is a selective audit. AGO checks on individual public agencies' compliance with rules and procedures and also on their internal controls. AGO does these selective audits on a selection of agencies every year. For its audit of the Government Financial Statements, AGO has given an unmodified audit opinion this year, just as in previous years. That is to say, the Government Financial Statements, containing accounts of the Ministries, Departments and Organs of State, are reliable, and public funds are properly accounted for. The same is true for the Statutory Boards, all of which received an unmodified audit opinion from their respective auditors for the Financial Year (FY)2014/2015. The findings reported in the Auditor-General's latest report for FY2014/2015 did not affect AGO's opinion of the Government Financial Statements. The findings, which are the result of the various selective audits performed by AGO, highlight lapses in complying with the rules and procedures which the Government imposes on itself to ensure proper conduct. Each of our agencies takes every lapse seriously and ensures improvements are made Page: 15 promptly. I will now address the specific questions that Mr Mohd Ismail Hussein has raised.”
“Public agencies have also, at different times, procured corporate gifts made by VWOs and persons with disabilities under the Heartgifts initiative, led by the National Council of Social Service. Page: 88 The public sector will continue to support and encourage the employment of persons with disabilities wherever possible and welcomes suggestions on how it can do better. For our mature workforce, the Public Service has since July 2011 taken the lead to offer re-employment to officers up to age 65 years. This was ahead of national legislation which took effect from January 2012. Since January 2015, the Public Service has further raised the re-employment age from 65 to 67 years, again, ahead of nationwide implementation. There are now 1,887 public officers aged 65 and above, compared to 534 in 2010. This is a three-fold increase over four years and we expect the number to grow further. Page: 89”
“The Public Service selects candidates based on their merit and job-fit through open and fair recruitment processes. Candidates, including persons with disabilities, are assessed holistically and the best person for the job will be offered the position. As of 31 December 2014, there are about 150 persons with disabilities employed by Ministries and Statutory Boards. They constitute about 0.1% of the Public Service workforce. In addition to the Public Service's direct recruitment of persons with disabilities, the Ministry of Social and Family Development (MSF) has also set up SG Enable, an agency that helps persons with disabilities to be independent and gain employment. SG Enable engages both public and private sector employers, provides job-matching services, identifies and, where appropriate, redesigns jobs for persons with disabilities. It also trains persons with disabilities to prepare them for work. Two of its recent successful referrals were to MSF and the Ministry of Home Affairs (MHA). In addition, SG Enable provides training to colleagues of persons with disabilities and advice on appropriate workplace modifications. For example, screen magnification software can be used to help employees with visual impairment and height-adjustable tables can help employees in wheelchairs. Whenever possible, public sector contracts have been awarded to support the employment of persons with disabilities. For example, Adrenalin, an events management company that provides training and employment opportunities for persons with disabilities, has several public agencies among its clients and organised events, such as the President's Challenge Social Enterprise Award ceremony.”
“The following table shows the number of limited partnerships (LPs)6 registered from 2011 to 2014. Page: 163”
“In November 2014, ACRA launched the Directors’ Compliance Programme to train first-time offending directors who have failed to file the Annual Return. The training focuses on general director duties and common statutory requirements under the Companies Act, and is offered in lieu of prosecution. To date, about 1,500 directors have been trained under the programme. ACRA seeks to train up to 9,000 directors in FY2015. Page: 162 For new and aspiring business owners, ACRA conducts outreach talks to help them understand the requirements for starting a business and their statutory obligations. Over 3,000 individuals have attended these talks since the latest series of talks started in 2013. ACRA has also published a handbook to help directors understand their statutory obligations5.”
“Under section 197 of the Companies Act, every locally-incorporated company is required to file its Annual Return with the Accounting and Corporate Regulatory Authority (ACRA) within one month after its annual general meeting. ACRA sends out letters and emails to companies to remind them to hold their annual general meetings and file their Annual Returns. About nine in 10 live companies comply. If a company fails to file its accounts in its Annual Return submission when required to do so2, it will be treated as non-compliant in filing its Annual Return. The following table shows the number and percentage of companies on ACRA’s register that were non-compliant from 2010 to 30 June 20153. 9.5% of companies were non-compliant as at end- Page: 161 June 2015, down from 11.3% about five years ago. As at 30 June 2015, two listed companies were non-compliant in filing their Annual Returns. This constitutes less than half of one percent of all listed companies4. The most common reason cited by companies for not filing Annual Returns punctually is oversight or ignorance on the part of the director. Other reasons include (a) internal disputes among the directors and/or shareholders of the company; (b) inability to locate the managing directors of the company, with the remaining directors lacking the information required to file the Annual Return; and (c) inability of the director responsible for filing the Annual Return to do so for medical reasons. Mandating non-compliant companies to hire corporate service providers or professional secretarial firms to train first-time directors will increase business costs without necessarily addressing the reasons for non-compliance. ACRA’s approach has instead sought to raise awareness in a targeted way.”
“For unsecured borrowers who have already accumulated significant unsecured debts before June, the banking industry, together with Credit Counselling Singapore (CCS), launched a new debt repayment solution in April this year, known as the Repayment Assistance Scheme, to help them repay their debts over time. The application window for the scheme closes at the end of this year, so I urge eligible borrowers to apply soon if they find it suitable. Borrowers who are unsure can contact CCS to find out more about the Page: 158 scheme and other repayment solutions that are available. MAS will also continue to work with MoneySENSE, a national financial education programme, to raise public awareness on debt management.”
“According to the Insolvency & Public Trustee’s Office, 1,760 individuals became bankrupt last year, compared to 2,000 and 1,750 individuals in 2013 and 2012 respectively. Among those who became bankrupt, 41% cited excessive use of credit as the cause, slightly down from 46% in 2009. The types of credit include not only credit cards, but also business loans and hire-purchase spending on cars. While the number of individuals made bankrupt as a result of credit card debt is not very large, Mr de Souza has raised a valid concern about the dangers of excessive borrowing. MAS has put in place various measures in recent years to encourage prudent borrowing. These include the Total Debt Servicing Ratio framework for housing loans, to ensure that individuals purchasing property do not borrow beyond their means. MAS also imposes loan-to-value and loan tenure limits on housing and motor vehicle loans extended by financial institutions to encourage financial prudence. For credit cards, only individuals with annual incomes of $30,000 or more can qualify for credit cards. The amount of credit that each financial institution can extend via unsecured credit facilities is limited to four times the monthly income of the borrower. These are long-standing safeguards. Further, last month, a limit to how much an individual can borrow from all financial institutions came into effect. It caps the total outstanding unsecured credit that a borrower can obtain from all financial institutions. The borrowing limit has been set at an initial level of 24 times the borrower’s monthly income, and will be lowered progressively to 18 times from 1 June 2017 and 12 times from 1 June 2019.”
“Prior to August 2012, fund managers who served 30 or less qualified investors1 were not required to hold a capital markets services licence for fund management under the Securities and Futures Act. These fund managers were known as Exempt Fund Managers or EFMs. All other fund managers had to apply for a licence and meet prescribed regulatory requirements. In August 2012, MAS decided to discontinue the EFM regime and gave the EFMs a grace period to either apply for a licence, or register as Registered Fund Management Companies (RFMC). This was to raise regulatory standards and supervisory oversight of the fund management industry. Unlike EFMs, RFMCs have to meet prescribed admission criteria and business conduct requirements. RFMCs can only serve up to 30 qualified investors and manage up to S$250 million in assets. All other fund managers will require licensing and have to meet regulatory requirements that are more stringent than those applicable to RFMCs. The number of fund managers who obtained EFM status in 2011 and 2012 (up to August 2012), are as follows January to December 2011 95 January to August 2012 80 When the EFM regime was discontinued in August 2012, there were 527 EFMs. Of the 527 EFMs, 408 applied to be licensed or be registered as a RFMC. The remaining 119 ceased their fund management activity. All fund managers are listed on the financial institutions directory on the MAS website. Page: 157”
“The Government has accepted the Security Tripartite Cluster’s recommendations for the Progressive Wage Model (PWM) to be introduced to the Page: 146 security industry and fully supports implementing the PWM in public sector security contracts, even before PWM becomes a licensing condition on 1 September 2016. We have started discussions with our Tripartite partners on ways to identify early adopters of PWM in the security sector and to give them due recognition when awarding contracts.”
“Since July 2013, MOF has required Government agencies to remind bidders for Government contracts, particularly those involving security, cleaning and landscaping services, that they should adhere to National Wage Council (NWC) recommendations on wage increments and factor it into their bid prices. For multi-year contracts, bidders may also present a year-by-year break-down of their bid price, to reflect wage increments over the contract duration. This clearly signals the Government's interest to ensure that bidders have realistic projections of their wage costs and willingness to pay contract prices that support good labour management practices. New multi-year tenders called by Government agencies since then provide for such year-on-year Page: 139 break-down.”
“The AIIB will start with a total authorised capital of US$100 billion. The Singapore Government plans to subscribe to US$250 million, or 0.25%, of the AIIB’s total authorised capital. Of this US$250 million, 20% or US$50 million is to be paid-in over five annual installments, in other words US$10 million a year. The other 80% or US$200 million of our capital subscription does not need to be paid in, except when called by the AIIB in extraordinary circumstances. This is similar to the practice in other multilateral financial institutions. Page: 128 The AIIB will focus primarily on infrastructure, while the World Bank and the Asian Development Bank have additional priorities, such as education and health. While Singapore is not a major donor country, we have an active partnership with these international institutions to promote regional and global growth. There is good support for the AIIB, both within and outside the region. Fifty countries signed the AIIB Articles of Agreement last month, including our regional partners among ASEAN member states and major European economies, such as France, Germany and the United Kingdom. The AIIB Bill, tabled for First Reading in Parliament today, will provide for Singapore to become a member of the AIIB.”
“The scale of infrastructure needs in Asia is large, with some US$8 trillion needed by 2020. As part of the region, Singapore views the Asian Infrastructure Investment Bank, or the AIIB, as a timely initiative that can help close this infrastructure gap. Singapore has itself benefited from the assistance of institutions like the World Bank and the Asian Development Bank. In 1966, we joined these Banks to access additional sources of loans. While Singapore is no longer a borrowing country, we should play our part in supporting regional connectivity and growth, which will also benefit the Singapore economy. Singapore is one of the first few countries to be involved in the establishment of the AIIB. We are working with other founding members to build up the AIIB as a first-class international financial institution, with strong governance and high standards. Singapore played an active role in hosting and co-chairing the negotiations of the AIIB Articles of Agreement here, which were concluded in May this year. Singapore, as a global financial centre and a base for major infrastructure companies, is well placed to collaborate with the AIIB and facilitate new opportunities for businesses here. In fact, the World Bank partners many Singapore-based companies along the infrastructure value chain, and uses Singapore as a base from which to provide urban and infrastructure solutions to countries regionally and globally. With the AIIB, companies can similarly bid for infrastructure projects, or provide advisory services for project structuring, among other opportunities. While businesses have to conduct their risk assessment for deals with the AIIB, we expect that the risk would be comparable to that of partnerships with other multilateral development institutions.”
“Now, Madam, I beg to move, "That the Bill be now read a Third time."”
“Thank you. Well, if I could just explain this again to Mr Low. Essentially, on the Government's balance sheet, there are assets in the GIC, MAS and Temasek, and there are liabilities. Some of them have their own liabilities. For instance, the MAS issues treasury bills and Temasek issues bonds – they have their own liabilities. In addition, the Government has liabilities. It issues Singapore Government Securities. The Government also issues Special Singapore Government Securities (SSGS) to the CPF Board. We ensure that all the liabilities are deducted from the assets, so that we arrive at net assets that are the basis of what we can spend on the Budget. This way, we ensure that the investment income on the assets that match the liabilities – that provide backing for the liabilities – are fully available to meet the debt servicing cost of the liabilities. That is the first thing that we ensure. Second, it enables us, and it enables, in particular, GIC and Temasek, as investment entities, to take an endowment mindset. They think about how to grow the endowment over the long term, as unencumbered assets and invest for the long term. This is the privilege that we have in Singapore.”
“If we had to start today, with a population that is getting older, an economy that is slowing down and an international environment that is quite different, much less favourable than before, it would take us far longer to build up these reserves, or it may be not possible at all. So this unusual strategic advantage that we have, and that our children and grandchildren will have, is something that we should cherish and protect. But remember, it is a result of deliberate, conscientious and continuous efforts of successive governments over 50 years. Page: 84 As Mr Liang Eng Hwa emphasised, we must never lose the values of fiscal conservatism that got us here, and the sense of obligation to both current and future generations that our pioneer leaders bestowed on us. Mdm Speaker, I thank you. [Applause.] 4.54 pm”
“And I would like to assure Ms Foo Mee Har that we do take very seriously the assessment of spending effectiveness even after we have started. Our healthcare infrastructure is a very important area, where we are putting a lot of emphasis on this – MOH and MOF – on assessing the effectiveness of spending and where it should be spent. Should it be in the acute hospitals, or should we be spending more on step-down care and primary care; how do we spend in a way that truly enhances benefits for citizens, and a critical issue - how do we ensure that future treatments, particularly as technology advances, provide real value rather than just higher costs? How do you ensure that SkillsFuture, which is a major new investment in the future, will be money well spent and not just money chasing after educational programmes? Important issue. We have got to assess our spending as we go along and ensure that they are providing value for money. Let me conclude briefly, Mdm Speaker. First, I thank all the Members for having emphasised the need to maintain fiscal discipline. I note in particular Mr Pritam Singh's statement, that the Workers' Party supports our commitment to fiscal prudence, as a key part of the Singapore system. Singapore has an unusual strategic advantage of having a financial endowment – the opposite of most countries' debts. For a country without natural resources, this financial endowment that we have is critical. If we have to start from zero today, it would take us far longer to build up the reserves, and in fact, it may not even be possible at all.”
“But the big drivers of increased spending on the Budget are healthcare capacity − because of an ageing population – transport infrastructure, and, thirdly, investing in our human capital, in Singaporeans themselves, because that is the ultimate source of strength in our society and our economy. Those are the big drivers. We have essentially followed the life cycle of our society. Many other countries, during their younger and rapid growth years, spent the larger revenues that came up. We saved surplus revenues when there were Budget surpluses in good times and during the years of rapid growth. We saved Budget surpluses and did not spend them simply because they were there. This now puts us in a very strong position today. Because now, as our society goes through the second half of the life cycle – gradually getting older and our economy is slowing down – we are now in the position of having this endowment, which we can draw on in a disciplined fashion. Following the lifecycle of our society has been a sensible and prudent policy that we have through the years. We should never see our aim as that of looking for new spending Page: 83 needs and then looking for the revenues in order to meet that spending. Our aim should be, first and foremost, focused on outcomes. The real outcomes we want are: a vibrant economy that provides good jobs and careers for Singaporeans; a low tax burden on the middle-income group – and it is, in fact, much lower than in most other countries; and a fair and equitable distribution of taxes and benefits in our society. That is what we focus on, rather than looking for new spending and then looking for revenues to be able to meet these needs.”
“Our aim is, first and foremost, to ensure that we are spending wisely, in the interest of Singaporeans today and tomorrow. And as Assoc Prof Randolph Tan pointed out, we have got to guard against an inexorable rise in spending. He noted, and I think you will see this if you were to look at the history of social spending in many countries, that social spending only goes up, it does not come down. Unless you are forced to bring it down in a deep crisis, which is what Greece and some European countries are going through in a very painful way. Not just painful adjustments in crisis but also quite inequitable, I would say, because the people who are taking the pain of budget cuts are typically the young and the poor. So, we must avoid in normal times, an inexorable increase in spending, where promises today are layered upon promises yesterday. It is what has happened in so many countries and it is a natural tendency in society, a very human tendency for that to take place. We should guard against that and Assoc Prof Tan sounded a useful caution. Our spending is increasing. Why is it increasing? First, because we are engaging in a major new cycle of investment in Singapore's future. In our healthcare capacity, our transport infrastructure and our human capital. It is a major new cycle of investment that I spoke about in this year's Budget, and those are the big three drivers. We are also recalibrating and rebalancing between collective and individual responsibility, in various areas of social support – from the early years all the way to the retirement years.”
“The spending rule caps how much we can spend based on the expected returns of our investment entities. Having determined the maximum amount that we can spend, the question is whether we have got sufficient cash for that spending. The Government has a variety of sources of cashflow from which it can meet its cash needs. These include our tax revenues which are coming in at different times during the year. It also includes funds raised outside the Budget, such as the proceeds from land sales. These land sales proceeds cannot, under our constitutional rules, contribute to the Budget and they do not count as Government revenues. But they are part of the cashflow that the Government receives. There is also a healthy level of Government deposits placed with MAS. A substantial amount of Government deposits placed with MAS that we can draw on when we need it, if we need it, for cashflow purposes. The Government basically pools all its sources of cashflow, all its sources of liquidity together and manages its cashflows as a whole through a disciplined procedure. We have more than sufficient cash to ensure that NIRC spending based on expected returns can be met. There is, hence, no need, even when actual returns are weak or negative, to require the investment entities to divest existing investments in order to provide cash to the Government. Finally, let me move on to a broader theme that came up in Members' comments, which is the whole issue of fiscal conservatism. I am glad that it was raised. Mr Liang Eng Hwa, Ms Foo Mee Har, Assoc Prof Randolph Tan, in particular, raised valid questions over how we should shape our spending priorities and how we ensure that we are getting value out of our Page: 82 spending. Our aim is not and cannot be to spend all the revenues we have.”
“It helped us to avoid going through a "feast and famine" in NIRC and in Government spending. We all know what happened during the crisis. If we look at equity indices, say, we take the MSCI World index, it declined by almost 40% in 2008 and recovered by 31% the next year – a big crash and then a big recovery. And we would not have wanted Government spending to be shaped by those sharp gyrations in world markets. We have instead been able to avoid pro-cyclical Budgets. If you spend based on actual returns and actual returns are highly volatile, it will typically mean that you are pro-cyclical; in other words, during good times, you spend more, and during bad times, you spend less. That would not be wise from an economic policy perspective. Page: 81 Liquidity is an important issue. I think Mr Liang Eng Hwa and Mr Pritam Singh had asked about how we manage liquidity within this framework. The essential issue is this − if we are spending on the basis of expected returns, and expected returns are not matched by actual returns year-to-year, where do we get the cash in order to spend? Expected returns is the basis on which the spending rule is defined, but if actual returns vary from expected returns and, in particular, may fall well short of expected returns, where do we get the cash? And that is an important question. I had addressed it in 2008 when we introduced the NIR framework and I touched on it briefly in this year's Budget debate as well, but I will explain it again. First, to be very clear, this is not an issue about the spending cap. It is not an issue about investment strategies. It is purely a cashflow management issue. It does not have to do with the size of our Government Budget surplus or deficits. It is a cashflow management issue.”
“And this allows both GIC and Temasek to adopt an endowment mindset − of investing for the long term and growing the value of their assets by taking advantage of opportunities that short-term investors or those who are liquidity-constrained cannot take advantage of. Overall, this approach has enabled both GIC and Temasek to perform creditably in relation to the market indices and they are both extremely well regarded amongst their peers. What if future returns are expected to be structurally lower because of a deterioration in the investment environment? It is possible. It is entirely possible given the problems in the world today – the fiscal challenges, low productivity growth, and the possibility of disruptions in the international environment. It is possible that we have to settle for a structurally lower rate of return over the long term. If that is the case, then the Government has to adjust its spending. We will have to accept that as a reality that there will be lower expected returns, lower NIRC and we have to adjust our spending, or we have to find alternative forms of revenue through domestic sources. That is the right approach, rather than asking the investment entities to take more risks in the search for yield so that we can still get the same amount of NIRC. And that is the approach we must stick to. Ms Foo Mee Har has asked whether we have learnt any lessons coming out of the Global Financial Crisis. I think it has been a very useful episode. The main lesson is that spending based on expected returns instead of actual returns was the right decision. We made our amendment to the Constitution in good time. Spending based on expected returns rather than actual returns turned out to be a wise decision.”
“I am satisfied that with the safeguards we have, that conservatism will be maintained. I should add, in relation to Assoc Prof Randolph Tan's suggestion, that we do not look at projected values of the asset base, whether it is based on value at risk or any other way of drawing a cone of possibilities. We actually use the asset base that is based on historical values. That itself is a form of conservatism. Smoothed historical values are the asset base on which we apply our expected returns to determine spending. So, there, too, is some conservatism built into the system. Next, the impact on the investment entities themselves. Will their investment strategies be influenced by the NIR framework? Ms Foo Mee Har, Mr Liang Eng Hwa and Assoc Prof Randolph Tan had asked this question. I had mentioned this during the Budget debate and I will have to emphasise it again. Being included in the NIR framework does not change the investment strategies of GIC, Temasek or MAS. It leaves their strategies unaltered. The NIR framework does not set a target rate of return for the investment entities. They have to be faithful to their mandates. Their mandates, particularly in the case of Temasek Page: 80 and GIC, are to invest for the long term, to aim to grow the value of their assets over the long term and to ride out short-term market cycles. They determine how much risk they can accommodate, and within that amount of risk they aim to maximise their returns over the long term. Why are we able to take that approach of letting them focus on their mandates of investing for the long term? The reason is because our NIR framework is purely about the unencumbered assets − I explained this earlier − assets that are not matched by liabilities.”
“And if you have persistently low or negative actual returns, it will mean that the asset base grows more slowly, and that affects how much Page: 79 spending we can have because the expected returns are applied to that asset base. So, that is another check on the system and it constrains how much we can spend. So, the system that I have described involves several layers, not just one layer, that amount to a strong structural safeguard in how we spend our reserves. The system helps to safeguard against over-spending based on over-optimistic expected returns. Assoc Prof Randolph Tan and Ms Foo Mee Har pointed out that the Temasek portfolio, in particular,was a more volatile one. I think there were some useful questions. Let me first say that when we designed the NIR framework, we designed it for all three entities. The 50% rule and the other features of the framework were designed for all three entities, although we first proceeded with GIC and MAS. Assoc Prof Randolph Tan had a couple of questions and suggestions. One was whether we should apply a different spending cap to Temasek compared to GIC and MAS because Temasek has a higher risk portfolio. It is a meaningful question. We have a range of investment entities with quite different risk profiles. MAS at one end, the most conservative; Temasek at the other, which takes more concentrated stakes and is basically an equity investor, which has higher risk compared to an investor with a balanced portfolio. We can, in theory, apply different caps to each of them but I think there are merits in keeping the system simple and applying a common 50% cap to all the sources of investment income under the NIR framework and being conservative in the way we go about operating the system.”
“First, within the organisations themselves, within the investment entities – Temasek, GIC, MAS. It is a rigorous process, to project the expected rate of return over the long term, based on the views of seasoned professionals and experts. They take a long-term view, based on history as well as an assessment of the future environment and seek not to be swayed by short-term sentiments. That is an extremely important part of the culture – not being swayed by the short-term sentiments of the markets. The Government then decides whether to accept the Boards' proposals. We consult independent experts when necessary. And where there is significant uncertainty in the outlook, the Government will err on the conservative side when it recommends the expected rate of return to the President and the Council of Presidential Advisors (CPA). The President and the members of the CPA themselves are experienced people. The CPA comprises people with very serious, proven track records in their professions and businesses. They are people who can question Government on the assumptions we are making, or the judgements we make. They can question the Government as well as the investment entities themselves. So, the process that I have described has features which mitigate the risk of over-spending, particularly the risk of having expected returns that are above what can be realistically achieved in the markets. What if there are persistently low actual returns, lower than expected? Well, this will in fact be reflected in the asset base, because the asset base is not based on expected returns. The asset base is based on actual returns.”
“The net assets are basically the unencumbered assets and the spending rule is based on these unencumbered assets rather than the full gross amount of the assets. We do not spend any of the returns earned on the encumbered assets, in other words, the assets that provide backing for our liabilities. And what this means is that we ensure that the full investment returns on the encumbered assets are available to cover the debt servicing costs on the liabilities. The fourth safeguard is the smoothing of the asset base − the asset base on which we apply expected long-term returns. This means that the temporary booms and busts in the market that lead to changes in the value of our asset base are smoothed. A sudden boom in asset prices, which will happen from time to time, does not mean that we can immediately Page: 78 spend more through NIRC. So, that is the fourth safeguard − the smoothing of the asset base. The fifth safeguard is very important. The four safeguards I have spoken about are in the design of the NIR framework. But there is an important fifth safeguard, which is in the governance processes in the NIR framework, that also ensure that we do not spend on the basis of over-optimistic assumptions about expected returns. The process by which expected long-term real rate of returns are decided has checks and balances, and is shaped by a sense of realism about the risks in the investment world. The process involves annual review within each of our investment entities so that the Boards can make a proposal to the Government. It is not just about the Boards coming up with a number, Government ratifying the number and the Council of Presidential Advisors (CPA) and the President agreeing to the number. It involves detailed deliberation at each stage of the process.”
“The second issue is whether the safeguards are in place so that we do not risk a situation where the expected returns over the long term, which is the basis for today's spending, do not materialise and we find that in the meantime, we have drawn on too much NIR monies and inadvertently overspent. It is a fair question because there is no assurance that actual returns over the long term will match expected returns. And I would like to emphasise that when we thought through the NIR system in 2008, we paid particular attention to ensuring that the system will be sustainable, and that there is no bias in favour of over-optimism in expected returns and thus the likelihood of facing a situation where actual returns are, in fact, much lower than expected returns. There are several safeguards in our system that will ensure sustainability, and I will go through each of them briefly. First, the 50% cap itself − ensuring that at least 50% of real returns are retained in the reserves and we do not face depletion of the reserves over time. Second, ensuring that it is real returns and not nominal returns that we look at, so that we do not get a situation where you have high inflation globally and high nominal returns, and you spend on the basis of the nominal returns, when really what you are doing is depleting the real value of the reserves. So, that is the second safeguard. The third safeguard, which is important, is that the spending is based on investment returns on net assets, not total assets. In other words, it is based on the excess of assets over the liabilities of the Government, which includes borrowings such as SGS and SSGS.”
“An endowment is meant to be a permanent benefit for Singaporeans − draw some today, but ensure that future generations continue to enjoy that endowment. And it is not just about preserving the endowment so that there will always be a stream of income coming onto the Budget for regular spending. It is also about providing security for Singaporeans. Without any natural resources, our financial assets are a critical part of our defence against any future crisis. And we do not know what crisis it may be − it could be a financial crisis, a natural calamity, or a crisis coming out of geo-political disorder. We do not know what crisis it may be, but it is critical that we allow our reserves to grow, not excessively but to be able to grow together with our economy and future conceivable spending needs. Is a 50% cap the right balance? Ms Foo Mee Har has just reminded us of what the Prime Minister had said in 2008 when we introduced the NIR framework. There is nothing scientific about the figure 50%. It is a judgement. It is a judgement of what is a fair balance between the needs of today and those of the future. As I had mentioned in my speech earlier, we expect NIRC to be about 3% of GDP, with the amendment to the framework that we are proposing today. The NIR framework will also Page: 77 mean that we have a reasonable chance of sustaining this stream of income for spending on the Budget for many years to come. So, we will get a lift in resources, roughly speaking of about 3% of GDP, but the framework – because of its checks and balances and its safeguards – will give us a reasonable chance of sustaining this stream of income in the Budget for many years to come, rather than seeing a dwindling stream over time because we draw too much for spending today.”