Leong Mun Wai

Closing Speech on the Motion on Public Finances

Mr Speaker Sir,

I thank the Prime Minister, Minister and the Members for participating in this debate. Indeed, it is an honour for Hazel and myself.

 There has been a lot of discussion and debate on various topics. We understand all the good things that the Past Reserves will bring to us and bring to our country, but what I want to emphasise today, is that all the good things that the Prime Minister, the Minister and other PAP Members have said will not go away even if we reveal our reserves. And it is right to reveal the reserves to the Singaporeans who are the rightful owners of the reserves. People in the know like myself, we can make an estimate. Just like any speculators, they can make an estimate from the data, from the statistics released by the Government. But Singaporeans need to know. We need to put Singaporeans, all of them on the same page because we are all in this together.

 So, all the good things that the Prime Minister, the Minister the PAP Members have said, they are not going to go away after we reveal our reserves. And the reasons, I will say afterwards again.

 And it will not go away. If some of the policies that PSP and WP have proposed are implemented – we have already said again and again. Of course, the Prime Minister said, a little here a little there, you are going down the hole, be careful. And with the wealth of knowledge and experience the Prime Minister has, of course, we will take his advice very seriously.

 But at the same time we still think that Singaporeans of today, there is a sense that they want to do better, but the environment is as such that they seem to be facing a lot of limitations. So, we are here, talking about better policies, than what the PAP is offering today. The PAP policies are not that bad, but we think we can do better together. This is because what we are proposing is only going to slow down the reserve accumulation, and in exchange for that, to postpone the taxes so as to help Singaporeans cope with inflation and rising property prices. By the way, inflation, rising property prices, we can also say part of it is attributed to the policies of the Government.

 So, we are talking about better policies here. I hope in this Chamber, we can discuss and debate things, so that we can bring these better policies out and not keep saying that whatever the Opposition says, this is going to bring us down. That is not necessarily true. If you look at the details of the things, the policies, the opinions that PSP, and I think – although I cannot speak every time for WP, those things that we are we are proposing. We aim to be a responsible Opposition.

 After today’s debate, I am sure many Singaporeans will continue to be disappointed, that this Government probably would still not want to disclose the figure of our financial reserves. Despite all the reasons I have given, that it will not compromise the stability of our Singapore dollar and our economy.

 Let me elaborate a bit more on that. Relying on the experience I have in the financial industry and also based on my exchanges with Members, Mr Liang Eng Hwa, and the feedback from Members Mr Saktiandi Supaat and Mr Sitoh Yih Pin.

 First, I think the issue of defending our Singapore dollar against speculators and the issue of disclosing our reserves are actually two different issues. Because to defend our Singapore dollar against the speculators, first of all, the PAP Members had mentioned about the Hong Kong Pact, George Soros’ attack on the Pound and all that. But they fail to point out that all these are what we call fixed exchange rate system. And, of course, the speculators will attack the fixed exchange rate system when there is a mispricing. But our Singapore dollar is essentially a float. It is a floating exchange rate system. As long as MAS runs its monetary policy properly and we have full confidence in MAS, and makes sure our Singapore dollar value is in line with our economic fundamentals, that is the most important line of defence.

 And, of course, there are short-term speculators who may still come in and try to test and try their luck. Then, our MAS today, I would say have sufficient official foreign reserve to defend ourselves. MAS has official foreign reserves equivalent to 80% of our GDP. How many countries in the world today have debt? That is a very strong defence already. In fact, there are other reasons why MAS have very good control over the forex market and control over the value of our Singapore dollar, but I would not go too much into that.

 So, we have all the tools and the position and advantages to defend the Singapore dollar. But to reveal the figure of our reserve to the Singaporean is important for the Singaporeans to have full confidence without any other misconceptions. Full confidence and full knowledge of what our country has in the reserves.

 I hope Singaporeans do not need to wait for another 56 man years before they get an answer about our financial reserves at least. I like to emphasise here again. That Singaporeans are the owners of the reserves and they are entitled to the precise information of at least the financial reserves.

 Mr Speaker, Sir, I hope that today’s debate has helped Singaporeans gain more insight into our public finances and has put more Singaporeans on the same page on Singapore’s financial position.

 Even though the budget and the reserves are very technical topics that may not appeal to many Singaporeans, I have chosen to make many speeches in this House on these issues, because they fundamentally impact our cost of living, quality of life, economic competitiveness, income equality and social cohesion. It is especially important in the past two years because the Government has made a number of tax increases that PSP thinks are not necessary.

 Given the fact Singaporeans are facing unprecedented problems in terms of cost of living and runaway property prices and, anyway, in our opinion at least our budget and reserves we still have the leeway.

 I also hope that by having more discussion on these issues, we can really dispel the misconceptions and fake news relating to our reserves.

 Today, I do not think the majority of Singaporeans are really fully confident that we have over $1 trillion dollars of reserves. Why? Because when you listen to some of the talk on the ground, they say, “If we have so much reserves, why the Government is keeping our CPS savings?” I have to explain to them actually these are two different issues. CPF are for your retirement, has nothing to do with the fact that we do not have reserves. But this is a misconception, nevertheless, and we have to address that.

 Some fake news in the social media say Singapore has external debt equals to 200% of our GDP. You know how we get that? From the Government financial statements because we have total liabilities of about $1 trillion. But those are not real liabilities actually. But we must explain to the Singaporeans that we have all these assets. If not, the fake news will continue to be there. And, of course, all the rumours about the performances of GIC and Temasek, which I think are sometimes very unfair for the fund managers in those two organisations.

 So, I would like Singaporeans to have three takeaways from today’s debate.

 First, our financial reserves amount to more than $1.2 trillion at least. Ms Hazel Poa has explained two methods to calculate this based on the figures published by the Government in the Government financial statements.

 This $1.2 trillion, as I mentioned, will also continue to grow although the Prime Minister, the Minister and many Members have said that the rate of return on the financial reserves are not certain, not for sure. Yes, granted.

 But there are other sources of growth and by the way, the 4% the Prime Minister mentioned about a long-term investment growth, that is a standard assumption made by investment management entities. And, of course, you can say that okay, in a few years’ time the whole world will change but that 3% to 4% is based on a long-term forecast of the investment returns generated by this investment firm’s forecast. I mean, the actual track record of investment based on a universe of asset classes and this is a standard measure used by the investment firms worldwide. It is not something very special.

 So, we can use 4% or maybe a bit more conservative 3%, but that is a reasonable number because as long as this world, this Earth is still intact, human beings will have economic activities and their economic activities will generate a return.

 The second takeaway is that the continued accumulation of reserves comes at a cost to Singaporeans. The cost can come in the form of higher taxes, higher property prices, higher cost of living or lower interest for CPF balances, depending on which of the five sources of growth the new reserves come from.

 Hence, the cost of accumulating reserves has a direct impact on some of the top concerns of Singaporeans, such as the affordability of HDB flats, the rising cost of living, retirement adequacy, prospect for the younger Singaporeans and a host of other social ills.

 PSP also would like to continue to grow our reserves at the current rate, if not for the fact that the heavy costs to Singaporeans are becoming more and more apparent, especially with the Government’s tax increases over the last two years.

 We have asked about the reserves, we have asked about the land sales, NIR. And the Government has said all cannot be used.

 So, today in my debate, I then said how about NIR? The NIR also does not seem to be totally used for the benefit of Singaporeans. I mean, and it is a matter of interpretation, but I pointed out some of the NIRC has been locked up. Some of the NIRC has been applied to very long-term infrastructure projects, including coastal and flood protection, all that. Coastal and flood protection – these are these are our existential problem. Is this not an example that we should use our reserves or some some parts of the reserves and not rely all this on the NIRC, which from the PSP’s point of view is supposed to enhance the welfare of Singaporeans so as to avoid the necessity to increase taxes. Of course, you take that away, then you have to increase taxes.

 The third takeaway is, fortunately, we actually do not need to draw down our reserves, but just slow down the rate of reserve accumulation marginally to produce much better economic outcomes for Singaporeans. And that is the message that Opposition has been presenting in this House. We are not being fiscally irresponsible. We are just saying policies can be better.

 There is no tension between providing for present-day Singaporeans and continuing to provide for future generations – although hon Member Vikram Nair has cast doubts on that. But I have asked him that question whether he knows how much reserves we are accumulating each year and how much are our policies are going to spend, even at the very worst.

 The numbers are as follow. We are accumulating reserves by the tens of billions. According to my checking the Government financial statements and all that, probably about $50 billion a year, $50 billion to $100 billion, depending on which year it is.

 And over the last two years, we are lucky. When there was a huge influx of capital in our country, the Government was able to accumulate an additional $250 billion. Additional reserves over the last two years.

 So, with that, we are accumulating reserves at tens of billions and we are proposing policies that spend at the very worst, very worst a few billion dollars. Is not that a win-win situation? Because not that we want to spend the money but present-day Singaporeans, many need the money especially the second half of Singaporeans in terms of income.

 But this is not happening because the PAP Government was overly conservative fiscally and it has continued to raise taxes and fees which will maintain the current rate of reserve accumulation and in exchange giving out ad hoc handouts to appease Singaporeans.

 That is why we are confident that some of our policies, long-term policies, even implemented, it will not lead to a big increase in the budget because there are so many of these ad hoc schemes that you can actually integrate into some long-term scheme.

 PSP strongly supports fiscal prudence. But we believe we have set aside too many resources currently and inadequate spending and investment and heavy overall taxes have weakened the present-day Singaporeans. I am sure Singaporeans will much prefer to be taxed less than receiving ad hoc handouts from the Government.

 I hope this House today will appreciate that PSP is not even asking for more NIR or land sales revenue for the budget, at least for today we are not asking although we support all these policies. What we are saying today that even the NIRC has not been totally deployed for the full benefit of Singaporeans. And there is also this artificial deficit created by the current policy of charging land cost on HDB flats.

 None of the policies that PSP recommended will weaken fiscal prudence and compromise our future ability to spend on any crisis that may come up in the future. In fact, what our policies are aiming at is to increase our social cohesion, increase, improve the conditions and the quality of life of Singaporeans, so that we have a stronger, present-day Singaporean Core and we can take crisis in our stride.

 Mr Speaker, we want Singaporeans to be confident in Singapore’s future by giving them the true and complete picture of a strong financial position. A strong financial foundation is a good start. With the resources we have accumulated as as a nation, we are confident that we can realise a new social compact together.

 The 4G PAP leadership has presented a new social compact, Forward SG, which contains many invaluable insights from 200,000 Singaporeans on what future Singapore they want. We share Singaporean’s aspirations to pursue fulfilment and contentment, instead of simply focusing on material needs. What is needed next are concrete policy prescription to realise their future.

 PSP thinks that financial freedom is the key to enabling Singaporeans to realise the aspirations they have articulated in Forward SG. When relieved of their financial burden, Singaporeans will be free to exercise their creativity, make their plans to realise their own potential and lead a happy life.

 As the most important way to enhance financial freedom for Singaporean is to lower housing cost, PSP has tirelessly pushed for the Affordable Homes Scheme and Millennial Apartments Scheme to be implemented. I would like to reiterate again that implementing these schemes will not need to draw down our reserves, but just accumulate a little bit less. The raiding of reserves allegation by the Government is just a distraction.

 PSP will continue to share with Singaporeans policies to facilitate a happy life and to ensure Singapore remains a secure place to live in, with rising incomes and good jobs for everyone, not just the rich and famous.

 Today, many Singaporeans are struggling with their finances, even as Singapore becomes a paradise for the rich and famous, and sometimes the unscrupulous, like those in our recent money laundering case. The household expenditures survey in 2020 shows that the bottom 20% of Singapore households by income, in 2018, spent $2,235 in expenses and got $2,570 in income, including employer CPF. This means that after deducting the employer and employee CPF contributions, the bottom 20% of households, or more than 200,000 households are essentially, in deficit and must rely on Government handouts, charity or loans from legal or illegal moneylenders to survive. For the second quintile, it is $3,752 in expenses versus $5,981 in income, again, including employer CPF. After accounting for CPF contributions, this group of Singaporeans have very little left to save each month.

 The survey suggests that the bottom 40% of Singapore households are really struggling to survive while the Government has accumulated lots of savings or reserves. It will be the right policy for the Government to start to relax its fiscal grip, which may reduce reserve accumulation slightly, but to offer more financial support to this group of Singaporeans.

 We should also be worried about the many social ills we are grappling with today, which can be traced back, at least partly, to financial difficulties. The most important ones today are the low total fertility rate and increasing mental health issues. A pre-conference poll share by the IPS at the Singapore Perspective Conference last week found that high costs and stress were the top reasons for not wanting to have children across all age groups. If the current generation of Singaporeans are struggling to maintain their standard of living, what incentive do they have to have children?

 We acknowledge that the share of welfare spending in the Budget has increased significantly since 2011. But these spending do not address the root causes of the harsh economic realities faced by Singaporeans. Ad hoc handouts do not change the structural economic realities that are faced by present-day Singaporeans. After receiving the temporary relief, they continue to be burdened by the rising cost of living and the prospect of having to downgrade from their current HDB flats in order to retire.

 Without policy changes to address these structural economic issues, lower-income and even middle-class Singaporeans will become more and more dependent on Government handouts to survive. This is not the kind of future we want for Singapore and Singaporeans. We must find other ways to improve the conditions of the Singaporeans. PSP wants all Singaporeans to benefit from our economic prosperity, not just the rich and famous. This is the future that PSP wants for Singapore and Singaporeans.

 Mr Speaker, our Past Reserves is the pride of our nation, a monumental task achieved by the trust between the people and the Government. To maintain that trust, the Government must now ensure that the Past Reserves are put to work for present-day Singaporeans to ensure that they can be competitive and lead a happy life in a globalised world.

 The well-being of the current generation affects the ability of the future generations to thrive. A family that is constantly stressed by financial worries is not a good environment for children to grow up in. More than leaving behind national reserves to our future generation, it is more important to ensure that they are being brought up in a conducive family and social environment which allows them to develop the necessary skills to do well in the globalised world.

 PSP’s policy proposals like the Affordable Homes Scheme and Millennial Apartments Scheme are aimed at making our Past Reserves work harder for both the present-day generation and future generations. We especially want to give the financial freedom to our younger Singaporeans to establish themselves quickly so that they can strive towards their ambition early in their lives.

 When this House supports this Motion, it will reaffirm that our budget and reserve accumulation policies should aim at laying the financial foundations for every Singaporean of every generation to achieve a life of fulfilment and contentment. Mr Speaker, in Mandarin, please.

(In Mandarin): [The speech is being worked on by Parliament interpreters and will be forwarded to the hon Member for verification soon.]

(In English): Mr Speaker, I beg to move. For country, for people.

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