Not fiscally sustainable
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.
It is a prudent approach by the PAP Government to treat land as a finite asset. The Government sells the land that Singapore need for urban development and invest the proceeds to generate a steady income over time. This is a sound approach and it has served Singapore well.