Not fiscally sustainable
It is not fiscally sustainable for a Government to sell assets to meet expenditure needs.
There are consequences
There are consequences when land sale proceeds are used directly to fund government expenditure. Such a policy creates an incentive for a Government to plan land sales based on fiscal needs instead of actual developmental needs and to favour high bids for more revenue. Higher land bids will, of course, lead to higher land and housing costs for Singaporeans.
Why hurt Singaporeans?
- During a downturn, bids for land are likely to be lower. The Government may find itself short of revenue at a time when it needs it most.
How to spend without depleting your assets?
To be clear, the Singapore PAP Government is already spending from land sale proceeds. They do so with a different approach.