SINGAPORE: The Budget is a “strategic plan” to ensure Singapore’s long-term success and it is not based on election cycles, said Finance Minister Heng Swee Keat on Tuesday (Feb 19) at a post-Budget television forum.
He was responding to a question from the show’s presenter about the Government’s balance sheet, and if the healthy surplus accumulated since the start of the Government’s term would “drive election strategy” with the next General Election due by early 2021.
Forecasts by some economists have tipped the accumulated surplus over the past three years to be more than S$15 billion, even after taking into account the estimated deficit of S$3.5 billion for this financial year.
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Mr Heng said: “The Budget is a strategic plan to allocate resources for Singapore to remain successful, vibrant in the long run and to be fair across generations.
“It is not about ‘we are near the election so let’s spend this, let’s spend that’ … (and) it doesn’t mean that next year, we are going to spend that S$15 billion.”
Asked about what he would say to those who describe the latest Budget as an election budget, the finance minister replied: “If they mean that they are very happy with the Budget then I’ll say that is good, but I don’t plan on that basis.”
Elaborating, he said he usually starts with a “very long list of requests” as he holds pre-Budget meetings with the heads of various ministries, before cutting it down to a few priorities following more discussions with ministers and the Prime Minister.
“This is the way that we plan our budget and I must say, let us maintain that.”
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Mr Heng said “unexpected developments” have helped to boost the Government’s coffers.
Take FY2018 for instance, the unexpected suspension of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project, as well as better-than-expected collections from stamp duties and statutory boards, contributed to a S$2.1 billion surplus. This is compared to expectations for an overall deficit of S$600 million.
While Singapore has been “fortunate” to have better balance-sheet results for recent financial years, these are “one-off events” and “good luck” cannot form the basis of Budget planning, he added.
All surplus left at the end of the Government’s term will become a part of past reserves, which will be invested to generate higher net investment returns contribution (NIRC) for the future.
This is a more sustainable way of using Budget surpluses, said the finance minister.
“It doesn’t mean that we have this surplus and we splurge it tomorrow. If our founding fathers had taken that approach, we would not even have one cent of this NIRC to talk about and we will not be talking about increasing goods and services tax (GST) from 7 to 9 per cent. It would be much more.”
Speaking to reporters after the forum where he was asked if the Ministry of Finance had been too conservative with its budgeting thus far, he explained that the economy goes through cycles.
Surpluses come along when the economy performs well but when a slowdown occurs, the Government will need to ensure it has sufficient resources to support the economy and its workers.
“So it’s important for us to plan not just from year to year, but plan with our needs in mind and be able to meet unexpected events.”
Finance Minister Heng Swee Keat at a post-Budget forum on Feb 19, 2019. (Photo: Jeremy Long)
COST OF LIVING AMONG QUESTIONS RAISED
Mr Heng on Monday delivered the Budget for 2019, which included details of the much-anticipated Merdeka Generation Package, a slew of measures worth S$4.6 billion to help firms and workers keep pace with changes, as well as a S$1.1 billion Bicentennial Bonus to mark Singapore’s bicentennial.
During the hour-long forum, questions were raised, among others, about how the Merdeka Generation Package encourages active living, as well as the ongoing economic restructuring’s impact on firms and workers.
Some in the audience also asked about “glaring omissions”, including policies concerning the local property market and the country’s birth rates. Others wanted more help for certain segments of the population, like the sandwiched generation and the middle class, when it comes to coping with rising living costs.
Mr Heng said it is not possible for a single Budget to “tackle A to Z” – a point that he repeatedly made during the show.
On the perennial issue of cost of living, he said it is important for the Government to keep costs affordable, and it does so through various ways.
This includes operating an open and competitive system where imports come from all over the world, as well as maintaining a strong economy.
READ: Cost of living in Singapore: Slow overall inflation but some pressure points
An audience member asked if the Government has considered absorbing GST for essential items, like food.
Mr Heng replied this was “very carefully studied” before GST was even introduced and he had also revisited the topic recently.
Citing his observations of different countries that have tried to differentiate essential items, he said this usually entails a “big quarrel” about what defines essentials and a “very distortionary” end result.
He went on to explain that Singapore’s “simple system” of having everyone pay the same amount but issue “targeted” help to those from the lower income, is much more effective.
Finance Minister Heng Swee Keat at a post-Budget forum on Feb 19, 2019. (Photo: Jeremy Long)
When asked by Channel NewsAsia if the Government needs to do more about cost-of-living concerns, he responded by highlighting two issues that contribute to the perception of things becoming less affordable.
These include changing aspirations and consumption patterns, as well as how people tend to feel the pinch when items that are purchased “very frequently” see price increases.
Nevertheless, the Government has continued to ensure low unemployment rates of below 3 per cent despite global uncertainties, alongside “quite credible wage growth” over the years.
“A very important element of tackling the cost of living is that (we) keep our workers employed,” said Mr Heng. “We must continue with this.”
