In a Facebook post, DPM Heng Swee Keat reiterated an important point that PM Lee made in his exchange with Leader of the Opposition Pritam Singh on the use of reserves, and asked: What is our mindset?
A founder’s mindset or an inheritor’s mindset?
“Do we have a founder’s mindset and build for the future, or do we have an inheritor’s mindset and look at what we have and spend it?” Mr Heng asked.
“For a country with no natural resources and having to import most of our food, it is remarkable that in this crisis, we have been able to allocate close to $100 billion, with over half from past reserves.”
Our founding leaders had a founder’s mindset
Our founding leaders and their generation had a founder’s mindset, Mr Heng said.
They ensure that what they have painstakingly built up can endure so that future generations can continue to improve on it.
They were ‘prudent and careful with our finances’. They saved for a rainy day.
Should we simply grow and not spend our reserves?
We are already spending our reserves.
Mr Heng said, “In recent years, we have been using 50% of the expected returns from our investment of the reserves (or the Net Investment Returns Contribution).”
This is the largest single source of revenues.
It is more than GST, personal income tax or corporate tax.
In other words, without NIRC, even doubling one of these taxes would not have been enough for budget spending, Mr Heng explained.
Why not use a little more?
Mr Heng said this is an alluring prospect, as it is seemingly “costless”.
But let us think about it carefully, he said.
“The global investment outlook is not looking very rosy. Long-term returns on our reserves will likely be lower than before. As our fiscal position tightens, we will generate less surpluses to put into the reserves. If we also draw more on the returns, we will be leaving less for the future.”
Would we need to draw from the reserves again?
We do not know when — but we must certainly be prepared, Mr Heng said.
“Our past experience showed us that we can never quite predict the nature or severity of the storm to come. No one predicted the scale of the Global Financial Crisis. Certainly not the upheaval that COVID-19 has caused. And possibly even more disruptive shocks in the future.”
There will be another crisis and we must build our capacity to deal with it
“So should we continue to build up our reserves, as our country develops and our needs grow?
Should we continue to provide for contingencies?
With my experiences managing the Global Financial Crisis, and now COVID-19, I am convinced that we must do so, for our long-term stability and our future.
We must remain prudent and build up our firepower, so that we have the capacity to respond when the need arises. It is not a question of ‘if’ but ‘when’.”
Every MP including opposition MP, must share an overriding objective to work in the long-term interest of Singapore
“We can expect more robust and open debate in Parliament. Parliament is an important forum for us to debate policy options, but every MP, whether from the ruling party or opposition, must share an overriding objective — to work in the long-term interest of Singapore, and to create a better future for Singaporeans. Let us stay true to the values that have made us successful as a nation,” Mr Heng said.