Did Workers’ Party propose more than one way to dip into strategic reserves?

reserves, generation, spend, future, wp, nirc, land, sale, proceeds, grow, propose, increase, netizen

Did Workers’ Party (WP) propose more than one way to dip into Singapore’s strategic reserves? Yes they did. 

WP in fact, proposed 2 ways to dip into our strategic reserves for recurrent spending: direct of land sale proceeds and increased use of NIRC. 

Land sale proceeds

Singapore’s reserves include physical assets like land.

Currently, when land is sold, the proceeds are put back into the reserves where they are reinvested together with the rest of the reserves. 50% of the Net Investment Returns (NIR) is then used for spending. So in fact, we are already from land sale proceeds, but in a way that generates a stream of income that can be used for budget after budget. 

The WP proposed instead that land sale proceeds be used directly for instead of being reinvested. WP’s proposal is thus a subtraction from the reserves. It takes away from the reserves and the proceeds, once spent, is gone. 

Finance Minister Lawrence Wong

Spend 60% of NIRC (Net Investment Returns Contribution) on current generation

The WP also proposed to increase the proportion of NIRC made available for for current generation of Singaporeans.

Under the NIRC framework, 50% of NIRC is used for for current generation and the other 50% is saved and reinvested for the future. This is a fair and equal distribution of the NIRC between current and future generations. 

The WP proposed that 60% of the NIRC be made available to the current generation, and 40% saved for the future. They argue that the reserves will still be growing. 

WP therefore proposed to shrink the reserves by using land sale proceeds directly for spending, and then spend more from the shrank reserves by increasing the NIRC to 60%. 

Netizens react…

Netizens were not convinced by the arguments. One netizen, Mathias Dan, commented that WP are not in touch with reality. 

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Another netizen describes WP’s arguments as simplistic. The netizen tells WP to work together for a better Singapore and a better future for our children instead of political gains. 

reserves, generation, spend, future, wp, nirc, land, sale, proceeds, grow, propose, increase, netizen

There are also comments in support of WP’s proposals, like this one from Joseph Chin. 

workers' party supporter

Joseph’s comment reflects the selfish attitude of some. If the generations before us were like him, and had focused on their own spending, we will have less in NIRC  to spend today. If we were to have just 20% less NIRC than today’s levels, our GST would need to increase to 11% instead of 9%, to make up for the funding gap.

So drawing more NIRC now, means that our children, and the next generation will end up paying more taxes.

Our low birth rates today means a smaller workforce tomorrow, which in turn means that the future generations will have less revenue collected from taxes. 

At the same time, a larger proportion of seniors in the population means more social including in healthcare. 

Let’s not forget that this ‘future’ generation includes everyone who is young and strong today. You will grow old in the future and be part of that silver generation that needs more support. 

Our reserves are growing but our is growing faster than our reserves. 

It is misleading for the WP to argue that we are fine because the reserves will still be growing. As pointed out, they have not factored in inflation. Not only that, they have chosen to ignore Minister Lawrence Wong’s remarks that our is growing even faster than our reserves. 

In a financial crisis, we must have the firepower to defend the size of our economy. 

Conclusion

No one can tell what the world will be like in 30 years’ time. But it is very likely to be a more dangerous world. Our children and the generations after them will have more – not fewer – emergencies to contend with.

The recent conflict in Ukraine reminds us that we are living in an increasingly divided and troubled world. 

We will always be at the mercy of these external forces. And we must ensure we have sufficient resources to defend and protect ourselves.

In the years to come, we will need to deal with many other major and pressing challenges, including warming and rising sea levels, as well as future public health emergencies, which public health experts are predicting will happen with increasing frequency.

Now, we are all thankful that our forefathers did not take the easy way out. Instead, they were disciplined, they considered our needs, and chose to keep faith with future generations, meaning us today, so we benefit from the reserves that they built up painstakingly. They cared for their future generations, which is us. So what about us now? What should our attitude be?I say we continue to husband our reserves, keep faith with future generations, and ensure that they too will always have access to this rainy day fund to meet any emergencies, and importantly, a steady stream of income for their future needs.

Excerpt from Minister Lawrence Wong’s Budget Round-up speech

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