After the initial furore surrounding Halimah Yaacob being, err, elected as president, Singaporeans have predictably decided it wasn’t worth the fuss and gone back to their daily lives.
Despite the initial outrage, most people have no clue how having Halimah Yaccob as president can have an effect on our lives. After all, the word “figurehead” is commonly bandied about in relation to the presidential post.
Well, guess what, it’s not a given that our new president will necessarily have zero impact on our daily lives.
One of the president’s roles is safeguarding Singapore’s reserves.
The government’s reserves are basically their assets and savings, which they can draw upon to fund local schools, pay out Baby Bonuses, subsidise childcare centres, provide healthcare subsidies, upgrade HDB flats, dole out GST vouchers and so on.
The president can choose to exercise certain powers pertaining to the government’s reserves, such as the following.
APPROVING THE ANNUAL BUDGET
Lots of Singaporeans pay attention whenever the budget is announced each year. People want to know where all that money they pay in the form of income tax, GST, COE, vice tax and so on will be going.
That’s where the president comes in. She has the power to reject the budget… but only if it proposes to draw upon past reserves.
Think of the government’s reserves as a savings account where the cash saved up over the years has been stashed. If the government is making enough money that year, through taxation, COE and so on, to fund its entire budget, there will be no need to draw upon past reserves.
It is when expenditure exceeds revenue and the government needs to dig into its past reserves that the president can veto the budget.
To be fair, the Singapore government has traditionally been very careful about spending its reserves. The first time the government ever had to dip into its reserves was 2009.
But given the rapidly aging population and tough economic times ahead, it’s likely that the government will have to start dipping into its reserves more and more, which is when the president will get to use her powers, if she wants to.
APPROVING THE APPOINTMENT AND REMOVAL OF GOVERNMENT OFFICIALS, BOARD MEMBER OF STAT BOARDS AND GOVERNMENT COMPANIES, AND KEY PUBLIC OFFICERS
You don’t need me to tell you that the people who govern Singapore and those who sit at the top of stat boards and government companies such as the MAS, the CPF Board, GIC and Temasek have a great deal of power.
That’s why it is important to have some safeguards over the appointment and removal of these very important people.
The president has the power to veto the appointment and removal of these people, as well as other major public officers including the Chief Valuer, the Accountant-General and the Auditor-General.
INFLUENCING HOW INVESTMENT RETURNS FROM PAST RESERVES ARE TO BE USED FOR THE ANNUAL BUDGET
Not only does the president have to approve the government’s annual budget in the event that it requires dipping into the government’s reserves, her approval also has to be sought regarding the way in which the reserves are used.
Simply put, there are some rules governing how investment returns are used, based on the expected rate of return of the government’s investments (after deducting for inflation and liabilities).
They’re only permitted to spend a maximum of 50 per cent of the expected real returns.
But of course, what an “expected rate of return” is can vary greatly depending on whom you ask. That’s why the president has the power to veto this estimation if she disagrees with it, in which case the government will be required to use the 20-year historical average rate of return when determining how much they’re allowed to spend.
As you can see, the president does have some powers, especially in years where we’re looking at a budget deficit, which while very rare in the past (so far we’ve only had a deficit in 2009 and 2015) could well happen more often from now on thanks to our demographic woes and economic uncertainty.
Of course, only time will tell whether the president chooses to exercise her powers or remain compliant to the government.
What are your views on the election of Singapore’s new president? Tell us in the comments!
